homeowner's association lien foreclosure - Posted by luke-NC

Posted by JT-IN on July 03, 2003 at 22:43:25:

Singing “Tiny Bubbles” as I went overhead, too…

Heck, you are probably too young to even put that one together… Any clues on that one Marcos…?

All the best,

JT

homeowner’s association lien foreclosure - Posted by luke-NC

Posted by luke-NC on July 02, 2003 at 22:37:44:

has anyone bought a HOA foreclosure?

I’ve found one that I could get very cheap, the mortgage on the property allows for excellent equity. I wonder if anyone here has bought homes foreclosed on by an HOA lien?

Re: homeowner’s association lien foreclosure - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 03, 2003 at 07:57:36:

Luke–(NC)--------

Nice to talk to you again.

Here in CA HOA can do a foreclosure either judically or non-judicially. Most are non-judicially done. So they sell like trustee’s sales on deeds of trust.

Most do not go to sale. Probably over 95% get paid up or postponed to allow the owners to pay off the delinquency over time. It seems like some owners get angry about something that is happening and so refuse to pay their HOA dues. When they are a few days away from losing their property on foreclosure somehow the principle of the fight becomes less significant and they pay up.

They are attractive because the opening bids are typically about $1500 to $4500.

They are unattractive because you may not be able to get title insurance on the properties unless you do a quiet title lawsuit. So check with the local title companies about their policies before you buy properties on HOA delinquent lien foreclosure sales.

In some states the HOA lien is superior to mortgages placed on the property. Here in CA the HOA lien used to be superior to junior loans secured against the property, but not to the first loan. That changed a couple of years ago and now the priority of the HOA lien is based on the date of recording of the “notice of lien” in the recorders office. That means they are usually junior to all mortgage loans.

I suggest that you read the state law in NC about foreclosure of the HOA liens before you try to buy anything at such a sale.

I went to bid on four HOA lien foreclosures on vacant parcels up in Calaveras County, CA, about eight years ago. The first three I was outbid by some woman, the only other bidder. I got the last one for about $1,400, the minimum bid. She did not bid on it. That might be because there were two deeds of trust recorded against the property, neither of which showed a reconveyance in the county recorders office. So I was taking a chance that the loans were still on the property.

The first loan had been put on when the property first sold many years earlier. I knew that those loans, from the development company for the subdivision were for 10 year terms, which had long passed. I figured that one was long dead. I was right. After I twice contacted the title company that was the trustee, they filed a reconveyance, no charge to me, as I recall.

The second loan had been a seller-carryback loan about 8 or 9 years prior to the foreclosure. I figured it was either paid off or paid down greatly. Also, the original amount was for about 1/3 or 1/4 the value of the property. When I contacted the beneficiaries they confirmed that the loan had been paid off and they had given the reconveyance to the owner, who obviously had not recorded it. I got a new reconveyance from the people and sent it in to the recorders office. Property then free and clear. I never heard from the prior owner.

Two years ago I sold the property for $15K through a real estate agent. Did a 1031 exchange of the money to buy a tax resale house in Midwest City, Oklahoma, that year, plus some of my own money. So no taxes on the profit yet.

Because I held for more than the five-year adverse possession period in CA and paid the properties for that five-year period, the title company did not require me to do a quiet title lawsuit.

For those who want to own rental propreties and have little money to invest, HOA dues foreclosures are potential goldmines. Renters never ask owners to do a quiet title lawsuit before they move in. Just remember that most sales don’t take place, so you need to be efficient in following them. Here in CA there are several companies that specialize in doing the sales for the HOAs.

Good Investing************Ron Starr***************

Yes… bought at Sheriff Sale - Posted by JT-IN

Posted by JT-IN on July 03, 2003 at 03:29:36:

Luke:

HOA’s have a lien on the property, much like taxes or any mortgage. Once they file and perfect their judgment lien, then foreclosure is the remedy to cure the default, thereby selling the asset and converting to cash. The judgment lien for unpaid HOA assessments, legal fees and costs is then paid in the priority of the judgment lien, which usually falls after property taxes, mortgages and anything else of record prior to the filing of HOA’s suit or judgment lien.

I actually bought a condo from a foreclosing HOA at Sheriff Sale where there was NO mtg on the property. There were unpaid taxes of 5K or so, and 3500 of unpaid HOA’s dues, plus atty fees. Never thought it would go to sale, but there were some extreme extenuation circumstances and it did sell. Of course it went for an inflated figure creating much surplus over the taxes and liens, but it sold.

Just the way that I view things…

JT-IN

An interesting story… - Posted by Ben (NJ)

Posted by Ben (NJ) on July 03, 2003 at 08:10:34:

I was recently foreclosing on a tax lien on a nice condo and the HOA was simultaneously foreclosing on their lien. The condo owner had died with no heirs so it wasn’t going to be redeemed and the first one to the finish line was going to acquire this nice condo. HOA tried to redeem my tax lien but an obsure law in NJ prohibits “judgment” creditors from redeeming tax lien holders so after some argument I blocked them with this law. Since I was winning the foreclosure race, they started playing dirty, filing all sorts of BS delay tactics and motions to stall my foreclosure while they continued theirs on a fast track. I finally had to settle with them by paying off most of their condo lien but I at least got them out of my way and ultimately acquired the property.

Ben - You’ll appreciate this story… - Posted by JT-IN

Posted by JT-IN on July 03, 2003 at 08:49:12:

Ben:

The condo that I refer to that I bought at Sheriff Sale, which had NO mtg, or other liens except the 5K in back taxes and the 3500 in back condo fees, was a very interesting situation.

The property was held in a Trust, acquired by the Trustee as a new condo in 1993. Paid CASH, never a mtg. The Trustee was a local Atty, who also happened to be a CPA and had more of a tax practice than a Legal practice; it seemed. His client, as he put it to me in our initial conversation, “had to go away”… Interpretation… “In Prison”, for Medicare Fraud, to the tune of 14 million, now serving a 6 year sentence in Fed’l Pen in New Hampshire…

So Mr. Medicare Fraud says to his two sons… live in the condo while I am on this 6 yr. vacation, all you have to do is pay the utilities and condo fee… Well, the sons were kinda p*ssed at ole Dad, because he kinda ruined their little playday lifestyle, once the lavish activities that were being funded by the lucrative gov’t dollars dried up… So the boys said, screw ole Dad, what is he going to do about it now…?

Apparently the Beneficial Interests earning power of 32 cents per hour couldn’t keep up with the condo fee, etc. nor was the Trustee about to front 250 per month for 6 years… so it actually went to Sheriff
Sale… of which I ended up the buyer. There was surplus funds of say 90K, which was released to the Trustee; eventually.

The one saga that remains unknown to this date is, whether the Trustee ever turned over the funds to the Feds… (happens to be a mega fed’l judgment against the perpetrator), which he was extremely leary of someday receiving a knock on the door from anyway… This case was a classic example of the benefits of a Land Trust, which had been properly executed, never having the Beneficial Interest on title from day one, only the Trustee. There was no tie to the incarcerated party, only that this happened to be his address of record; or one of them… Anyway, after two years, the Feds had still never contacted the Trustee, and maybe I will never know if they ever did… unless the Trustee wants to talk about; but he doesn’t… and I understand.

And that was the way it was… on that day in history… as Walter Cronkite used to say. Thought you might enjoy the details of this one…

JT-IN

Re: Ben - You’ll appreciate this story… - Posted by Ben (NJ)

Posted by Ben (NJ) on July 03, 2003 at 10:34:05:

That is interesting. Was it the land trust that prevented the federal lien from attaching to the real property?

Re: Ben - You’ll appreciate this story… - Posted by Marcos

Posted by Marcos on July 03, 2003 at 09:13:17:

I wasn’t Ben, but I still enjoyed it.

How’s the Keys coming along, you talk to that realtor?

Marcos

Re: Ben - You’ll appreciate this story… - Posted by JT-IN

Posted by JT-IN on July 03, 2003 at 22:41:04:

Ben:

Yes, I would presume so. The Fed’s have never knocked on the door of the Trustee to inquire… who holds the beneficial interest in the property.

This brings up an interesting point, since the Trustee is also an Atty, and he represent the Beneficial Interest, but in the criminal case… If the Dept of Treas inquired of the Trustee… Atty, would he be able to divulge anything about the Trust due to the Atty-Client priviledge…? Maybe this is why the Trustee has never heard anything from them…

My guess is, that after almost 2 years now, the funds are tucked away in some local bank earning 1.5% interest, and it will continue to do so until the Beneficial Interst is freed… At some point the Trustee may feel comfortable releasing the funds. As I said, he was ultra concerned about conveying the property prior to the Sheriff Sale, as in some day the Dept of treasury would come question him about the sale, and possibly find a reason why he should have done otherwise… Hence, begin asking him to pay Treasury for the proceeds of sale… which he wasn’t willing to chance happening.

The Trust kept there from being any connection between the property and the party with the huge judgment. All the feds would have had to do was knock on the Trustee’s door, and he writes them a check, as I see it… cut and dried. If they never knock, he never writes… Interesting dilemma.

What is your take on it Ben…?

JT-IN

Hey Marcos… The Keys are just fine… - Posted by JT-IN

Posted by JT-IN on July 03, 2003 at 09:25:07:

Marcos:

I can tell you that the Keys are just fine; was there last week in Key West… All pleasure and no business, so I haven’t spoken to the Agent that we discussed.

I am working on something up on the West Coast, Naples area for now, but I still intend on making that call to the Agent in the Keys… I move somewhat like a Turtle on some of these things, but when I get ready to strike I am much more like an Alligator… Enough of the analogies to critters…

If you get any more leads like the golf course home that we spoke about, I am interested in that too… so keep me on speed dial.

Talk to you soon,

JT-IN

I thought… - Posted by Marcos

Posted by Marcos on July 03, 2003 at 10:17:46:

I thought I felt a Hawaiian shirt pass over head last week. Hope you had a great time. Will give you a call soon to catch up.

Marcos