Homeowner · PA · Member since 2010 · 7 posts · 0 votes
I'm looking at a few lots in a county repository. Once they go into this repository, they are supposed to be free and clear of all liens, but in researching them, the HOA has told me there are 3 years of dues owed on the lots. The dues on the lots add up to more than the purchase price.
So my question is, how can the HOA still have a claim to the property, but the original lender's claim can be wiped?
I'm not sure this is an actual HOA... They call it a country club, and charge annual dues on improved and unimproved lots.
"...a few lots ... are supposed to be free and clear of all liens, but in researching them, the HOA has told me there are 3 years of dues owed on the lots. The dues on the lots add up to more than the purchase price.
So my question is, how can the HOA still have a claim to the property, but the original lender's claim can be wiped?"
Here's a start:
The lender and the hoa are two different entities. The hoa is a corporation, licensed by state law, and supported and upheld by state law. When one buys into an how/coa/poa, s/he is NOT buying a home, S/he is buying a share of a corporation. S/he will NEVER own the property free and clear, because the corporation (hoa) almost always have a CONSTANT lien on the property for the amount of the dues.
Hoas rarely foreclose because the lender is likely to be in first position and get all the money. When the lender forecloses, the corporation (hoa) probably won't get any. BUT, they still are owed money. SOME states laws MAY wipe out hoa debt, too, but probably not, so be very careful.
You need to understand that if the members of the board of the corporation and management co say that debt is owed, you better believe they WILL collect it. Even if you could negotiate a "deal" with them so the you have it in writing that they would accept a percentage, do not depend on it. THey have deeper pockets than you do, and you would be paying them to prosecute you for the rest, as well as paying them to defend themselves from you.
There are other places. Walk away.
I'm not sure this is an actual HOA... They call it a country club, and charge annual dues on improved and unimproved lots. "
It may not be. Search your state corporation website. Use the name that you have, and any other that it was called previously. If it's registered as a corporation, it is. Read the ccrs, too. It should tell you in the first several pages.
Though most corporations (hoas/poas) are mandatory, meaning the buyers are required to belong, some are voluntary, buyers are asked to volunteer to belong.
It may be that either that hoa is a voluntary one, or that the lots you are interested in were by accident or mistake, not included in the hoa paperwork for some reason, and are not in the hoa. It is possible, but highly unlikely.
Either way, the hoa can and will make your life miserable until you cough up those dues they say they are owed.
And even if this board approves a reduction, the next board may not. The do have the attorneys to collect.