Short Sale / Probate with HOA back dues

Foreclosures
12yFollow

Short Sale / Probate with HOA back dues

Sam Leon
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes

Not sure if this should go to the HOA forum or the short sale forum.

Location is Fort Lauderdale, FL. Small building with a condo association. Monthly condo fee is $300 which basically pays for water/sewer/trash, landscape, common electric (washer dryer exterior lighting) and the major expense is insurance.

One of the units had a diseased owner - death occurred overseas actually, and it has been two years, was in probate, then a short sale, with two lenders, basically it's been "PENDING" for a long time.

Meanwhile, no one has been paying the condo fee for this unit for over two years.

Since there are only 4 units to this building, missing 25% is a lot and so we had a few special assessments to make up the difference.

I was told the back money owed can't be collected in full, the most they will get from the bank is about $1000 at closing. So the other three owners have to absorb the loss?

Now to make things a tad trickier...the buyer currently on the short sale contract for this unit, is also one of the existing owners, he is also the one handling the HOA finances. Is this a conflict of interest? In other words, why wouldn't the HOA file a lien against the current owner of the unit for the entire amount owed - instead of accepting some minimum negotiated amount?

0Reply
39 views

3 Replies

Jump to latestLatest
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    @Sam Leon

    HOA debts are one the biggest problems/killers in a short sale. So the debt is about $7500? Typically the bank will only pay a small amount, since under the Safe Harbor laws, they would only have to pay 1% of the original mtg (or 1 year fees, whichever is less) and the HOA must accept it as payment in full, if they get it back at the mtg foreclosure auction. Typically, the HOA will settle for somewhere around 50-60% of what's owed, with the buyer kicking the rest, above the bank paid portion. Yes, the fact that the buyer is handling the HOA finances, and determining the accepted pay off, is a serious conflict of interest. The HOA does not have to accept just the $1,000, or anything less than the full pay off. The option of course is the 1% of the mtg they'll get if the bank gets it back at auction. A 3rd party bidder would be responsible for the full amount. The other owners should not let the settlement be approved unless the buyer is willing to kick in additional money. Of course if nothing is resolved now, it may be an indefinite amount of time, with no monthly collections, until the foreclosure auction. Leon, do know where the foreclosure stands? Do you know how to look up the case Docket in Broward? If not, PM me and I'll show you where it is.

    0Reply
  • Duncan Taylor
    Real Estate Investor · Member since 2013 · 866 posts · 487 votes
    12y

    @Sam Leon, it is DEFINITELY a conflict of interest.

    0Reply
  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
    12y

    This might help:

    "Four remaining super-lien states (Florida, Massachusetts, New Jersey and Oregon) have adopted what has been referred to as "stand alone" statutes. These allow limited priority for unpaid condominium and community association common-expense assessments and are described below:

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free