Tag: hoa

HOA Foreclosure Sale Should Not Have Happened

Posted on by Emil Fleysher

The Fourth District Court of Appeal ruled against a Wellington homeowner association (HOA). The HOA barreled through a foreclosure sale despite the homeowner’s bankruptcy filing — and then failed to show up in court for the appeal. Scribner Village Homeowners Association Inc. won a final judgment of foreclosure against Marie Alexandre on a lien for unpaid assessments. The judgment set the property for sale, but Alexandre filed for Chapter 11 bankruptcy protection and notified the state court.

That move should have initiated the automatic stay. And, it should have delayed the foreclosure proceedings until the federal court resolved the bankruptcy —but it didn’t. “Despite appellant’s filing, the sale proceeded and the clerk of court issued a certificate of sale to HOA as the highest bidder as well as a certificate of title,” District Judge Dorian Damoorgian wrote in a unanimous decision Wednesday with Judges Melanie May and Jonathan Gerber concurring.

Sale Should Not Have Happened

Public records show the association paid $19,100 for the five-bedroom house in February 2015. Alexandre bought the house for $460,000 about 10 years earlier in April 2005. The HOA then filed for a writ of possession; prompting Alexandre to ask Palm Beach Circuit Court to deny the request and set aside the final foreclosure judgment and certificate of title. The state court rejected her request and ruled in the association’s favor, but the appeals court disagreed.

“The sale should not have proceeded until the stay was lifted,” Damoorgian wrote. “The trial court erred in denying appellant’s motion to set aside the sale and everything that flowed from it.” Scribner Village appeared to have dropped out of the litigation, making no appearance on appeal. “The court got it right,” Alexandre’s attorney, James Jean-Francois of Hollywood, told the Daily Business Review. “It’s time to stand up to the associations because they’re bullying homeowners and not following the law. A lot of HOAs are getting all types of judgments without following the correct protocol.”

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

HOA Prodding Resistant Banks to Act on Distressed Condo Units

Posted on by Emil Fleysher

In addition to homeowners, Home Owner’s Associations (HOA) are victims of the foreclosure crisis as well. When homeowners stop paying maintenance fees or assessments, associations start facing serious problems. Some associations have more than 50% of their units delinquent. Under Florida law, HOAs can foreclose on owners for the delinquent fees and can take a title that way. This is not always helpful. That is because the existing mortgage goes with it. And, the lender (the bank holding the 1st and maybe even 2nd mortgage) may not be willing to relinquish its claim. The association is then unable to rent, take possession, or sell vacant units. This leaves the up-to-date and present owners in quite a bind.

Some attorneys have begun to threaten the lender; if they do not take title to the defaulted units immediately, proceedings will be filed to have the court grant a judgment terminating their mortgages on the units. The legal theory backing this strategy is that the bank is unreasonably restricting the association as the new owner to sell the property since the old mortgage would go with it. In a case against Citibank, they employed this strategy. And, Citibank turned around and essentially told the HOA to keep the property. This strategy has a high success rate and continues to be successfully employed.

If you have questions about foreclosure, loan modification, or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to info@fleysherlaw.com, or complete the contact form below.

Can my Homeowner’s Association (HOA) foreclose on my home?

Posted on by Emil Fleysher

Many borrowers that have stopped making their mortgage payments are unsure as to whether or not they should continue making payments to their homeowner’s association; commonly referred to as their HOA. My clients that are facing foreclosure often ask what the consequences are for not paying the HOA. And, they are often surprised with my answer. With very few exceptions, I recommend paying your association in full and on time.

Homeowner’s Association and Florida Law

According to Chapter 720 of the Florida Statutes, a property owner that is at least 90 days late in paying HOA assessments may have his/her rights to common areas and association amenities suspended until the arrearage is paid. In addition, Florida law allows the HOA to charge a fine for each day the account is in default. Once the fines reach $1,000 or more, the HOA can place a lien on your property. Most HOA boards do not do this type of work themselves. So, they hire an attorney to handle liens, collections, and foreclosures. These services can get very expensive and the statute allows the HOA to stick you with the bill. Nonpayment of these amounts can lead to the HOA filing a foreclosure against you and the property.

The HOA can foreclose on your property in much the same way as the bank. Then, the HOA, like the bank, can also obtain a judgment against you for the unpaid assessments, fines, interest, and legal fees. The HOA bylaws set the interest rate. If the bylaws do not provide an interest rate, the statutory default rate is 18%.

Homeowner’s Association and Lien

Before the homeowner’s association can file a lien on your property they must make a formal demand for payment. This demand must meet the following criteria… First, they must provide you with 45 days to pay up on all amounts due (including attorney fees and costs). Second, certified mail and first-class U.S. mail must send the notice.

Reasons for Paying the Association

If a tenant is renting the property while the foreclosure case is pending in court, the HOA has an entitlement to appoint a receiver to collect the rent. And, apply it to the delinquent assessments. Furthermore, the expense of hiring the receiver will be added to the final judgment amount. This is if the HOA eventually prevails in the foreclosure.

If the bank holding the first mortgage gets title to the property through a deed-in-lieu of foreclosure or through a valid foreclosure sale, that bank will be responsible for paying all of the assessments accrued over the preceding 12 months or 1% of the original mortgage amount (whichever is less). This statutory requirement often pits the bank and the HOA against each other in cases where the HOA is desperate to complete a pending bank foreclosure so that they can collect fees. But, the bank is bogged down with problems arising from their paperwork or other legal hurdles to completing the foreclosure. With that in mind, the HOA can apply pressure to the foreclosure case and potentially accelerate the sale.

In addition to the above-mentioned reasons for paying your HOA assessments, it really is the right thing to do. The community or building and the people that live in it rely on the HOA for many important things; such as insurance, maintenance, cleaning, sanitation, repair, landscaping, security, etc. When one or more residents stop paying the assessments, the remainder of residents must bear the burden on a pro-rata basis. That is part of the rationale behind the statutory provisions that bestow so much power to the HOAs in Florida. Of course, it doesn’t hurt that the HOAs have a great lobby here in Florida.

Chapter 13 Bankruptcy May Be an Option for You

If you are too far behind in your HOA payments and the HOA is unwilling to offer you a repayment plan that you can afford, Chapter 13 Bankruptcy may be an attractive option for you. Upon filing a Chapter 13 Bankruptcy, any collections or foreclosure activity on the part of your HOA (or any other creditor) is suspended. This will give you a chance to put together a repayment plan over 3 or 5 years. Or, even strip off the association’s lien completely. Chapter 13 Bankruptcy is a relatively complex process and many factors must be considered prior to filing. However, under the right circumstances, it can be a tremendous tool for homeowners facing an HOA foreclosure.

If you have questions about HOAs, foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.