Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
I have a opportunity to purchase one HOA deed at 25 cents on dollar. I can rent it out and negotiate with bank for clear title in the meantime. My cost is 35k for a nice condo, A property in B+++ hood worth 132k. Anyone ever attempt such an unusual play?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
Quite common. The thing to bear in mind is of course the mortgage will stay attached. Being an HOA buyer doesn't make the bank negotiate with you. 25 cents on the dollar means little if the mortgage is 125 cents on the dollar. Basically you are just buying the rental income until such time as the bank forecloses.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
Also, the value of that rental income stream you're buying is dependent on how quick the bank can foreclose. Check the underlying mortgage foreclosure status, if any.
Quite common. The thing to bear in mind is of course the mortgage will stay attached. Being an HOA buyer doesn't make the bank negotiate with you. 25 cents on the dollar means little if the mortgage is 125 cents on the dollar. Basically you are just buying the rental income until such time as the bank forecloses.
No, they would just foreclose you out and poof your investment is gone. You're buying subject to any senior liens and unless you want to pay those all off in full they can foreclose and take the property. People only buy HOA foreclosures if they can make all their money back in rent really quick (before the senior mortgage finishes their foreclosure). The HOA's tend to foreclose a lot faster than the big banks.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
Exactly, I thought that was apparent. Here, most of the HOA foreclosures that go back to the HOA are because bidders realize there's a bank foreclosure scheduled soon, or looks like it may be just around the corner.
No, they would just foreclose you out and poof your investment is gone. You're buying subject to any senior liens and unless you want to pay those all off in full they can foreclose and take the property. People only buy HOA foreclosures if they can make all their money back in rent really quick (before the senior mortgage finishes their foreclosure). The HOA's tend to foreclose a lot faster than the big banks.
Understood. This is in Nevada. I think it is the exception for these HOA deeds or same nationwide? This is not an auction type sale if that matters.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
The District Court concluded that Nevada's statutory scheme is clear and that Section 116.3116(2) unambiguously provides that an HOA's super priority lien is prior to a lender's first deed of trust.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
Likely the HOA received the property as a plaintiff when the HOA foreclosed. Get a title search, and it will all become apparent. Talk to a local RE attorney.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
Ok great, I will check title again. It appears in Nevada HOA liens are superior to first deeds. Which brings me back to the bank question, that is one of us will have to buy the other out to clear title. We are both stuck is my interpretation.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
Hire your enemies! Go find a seasoned, high-end real estate attorney in Nevada and get the skinny, especially how s/he would oppose you or outmaneuver your position.
Say you spend $1,000 to get you super-priority lien position confirmed by counsel. You'll not only know how to work thus deal but now have a niche that can be repeated, maybe scaled. Then you become the expert, the go-to guy and build a reputation.
I spent $250 about 25 years ago. Has never stopped paying.
Hire your enemies! Go find a seasoned, high-end real estate attorney in Nevada and get the skinny, especially how s/he would oppose you or outmaneuver your position.
Say you spend $1,000 to get you super-priority lien position confirmed by counsel. You'll not only know how to work thus deal but now have a niche that can be repeated, maybe scaled. Then you become the expert, the go-to guy and build a reputation.
I spent $250 about 25 years ago. Has never stopped paying.
Yes Rick, I like your thinking! I agree with that logic and I can get 100 more these on my desk right now.
Ok great, I will check title again. It appears in Nevada HOA liens are superior to first deeds. Which brings me back to the bank question, that is one of us will have to buy the other out to clear title. We are both stuck is my interpretation.
thanks,
Matt
If a foreclosure of a superior lien position occurs, all junior liens are extinguished (debt still remains the responsibility of the original debtor) provided proper notice of the foreclosure was given to the junior lien holders. At least that is how it works in most places.
So you are being given the task of getting a legal opinion on the above for the state where this occurred and reporting back to us ;)
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
I have to run the math on these. You are potentially tighing money up forever if you can't get the bank to work with your offer. If one day it appreciated I assume you could get a hard money situation pay the bank off and sell/ refi. So many variables with this one. If you were a buy and hold guy you could go with it forever as is I assume - 100 year old lien. This is where I think the bank will cut a deal to get something going I imagine. Strange niche no doubt. Another thing, the seller is completely cosmetically rehabbing the joint. This is not your grandfathers hoa lien:)
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
Awesome Steve, i got to spend a couple weeks on this. I believe the banks first position remains no matter what. It is just they got a partner they were not needing:) And this little bug now controls their forclosed asset. They can't sell the npn either or no one would ever knowningly buy it. They really got to deal with the buyer or they will get nothing it appears. Now they could go infront of a judge and try to argue this is redic but they signed on to it. I could see this law changing but not retro actively. I hope it is Wells Fargo:)
Vendor · Lake Worth, FL · Member since 2014 · 712 posts · 149 votes
12y
technically depending on how the HOA is structured, it's a superior lien that usually agrees to be subordinate to the mortgage holder. @Wayne Brooks This is where the lawyers I introduced you to base their cases on.
Awesome Steve, i got to spend a couple weeks on this. I believe the banks first position remains no matter what. It is just they got a partner they were not needing:) And this little bug now controls their forclosed asset. They can't sell the npn either or no one would ever knowningly buy it. They really got to deal with the buyer or they will get nothing it appears. Now they could go infront of a judge and try to argue this is redic but they signed on to it. I could see this law changing but not retro actively. I hope it is Wells Fargo:)
thanks,
Matt
Now you have introduced confusion here. If the HOA lien is superior in position, then the lender can't be first in line - the HOA is first in line by definition of superior position. The lender might be first in line to collect overages of course, but that is different from being first in line to collect the payoff from auction proceeds.
So maybe you should really sit down with legal counsel practicing in that state to get a clear understanding of this.
has stated notice is foremost consideration in both Sheriff Sales mortgages and tax sales. The law is very clear that somebody can not be deprived of their property without sufficient notice. If there is no notice, the sale is invalid; and the law has to be strictly complied.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
Yes Steve, these are confusing and I expect legal cost to get clear title. I am still green but I will learn exactly what I am up against. The 1st lender will dispute these but would rather settle is what I am told.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
You think lender would rather settle? Only if they're hurting.
When you have staff attorneys or legal counsel under retainer contract, it makes more sense to wait the opposition out. After all, you're in a hurry to monetize and real your gain. They, on the other hand, deal with multiple cases, many times every day.
Harmon's rule # 2 - never play the other man's game unless you are a true contender.
Lender · Redmond, WA · Member since 2014 · 553 posts · 490 votes
12y
I have been following this thread with interest. Rick's comment makes sense to me. So I guess the strategy here would be to rent the condo out while you are waiting for the bank to make a move. I am unclear though what would happen if the bank took the deed holder (investor) to court and won. I assume they get the right to re-attach their lien to the property. Is that right? If so, then one major thing to look at when evaluating the investment is the unpaid balance of the lien compared to the value of the condo.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
ok guys here is what I found out so far.
The super priority hoa lien is junior to 1st lender however since it is super-priority it must be handled in order to have clear title. The lenders have been short selling at 50 to 60 cents on 1st to the hoa position. It is not guaranteed but common. They are trying fast to change law. 99.99% of lenders have paid the hoa inorder to avoid this. The lenders who did not are the ones up for grabs sort of speak. People are over payng for the hoa liens to get this position. They used to sell for 5k tops and now they are over 20k. I am still investigating.