HOA Fine Wiped out at foreclosure?

Question

I know the winning bidder at a trustee foreclosure sale takes title subject to all senior liens, but is a HOA fine (not a lien) the responsibility of the new owner?  The same question if lender took title via deed-in-lieu?  My guess is the HOA doesn't have a leg to stand on.  However, I'll bet it will come up when the property is finally sold in a more conventional sale.

Tom Gimer · Answer

In your foreclosure scenario did the title company contact the HOA and get a statement ... so that the HOA dues, etc. could be adjusted as of the settlement date? They should have.

However, if the lender took title via deed-in-lieu and did not address this... then the lender assumed all of the HOA debt.

Tom Gimer · Answer

Thanks for clarifying, Jay. I agree that if he forecloses, junior liens (without some form of super-priority) would be a non-issue. But if he accepts a deed-in-lieu I don't see an argument for avoiding payment.

Tom Gimer · Answer

Those dues don't just disappear... they follow the property (on this coast anyway). Check local law and review the HOA organizational docs as to whether those dues are a lien regardless of whether a "lien" per se is filed among the land records.

Account Closed · Answer

Thanks guys.  I did a lot of reading last night.  @Jay Hinrichs is right ... lien or unrecorded assessment it is not the responsibility of the new owner at trustee sale.  However, because HOA won't let go easily you may have to pay delinquent assessments to get the resale done in a timely manner, then sue to recover...HOA will most likely settle before day in court.   Not much discussion about deed-in-lieu, lenders seem to prefer foreclosure over deed-in-lieu no matter what the situation, it's always safer.

Account Closed · Answer

I'm the lender and may have to foreclose and possibly get the house back.  One cannot get title insurance at a foreclosure sale here in CA.  So, no title or escrow contact with the HOA, and since no escrow then no settlement date.  And the HOA fine does not show up in the county title records because it's not a lien.

Tom Gimer · Answer

Except it's a big red flag to the title company. No sale but somebody wants title insurance? Full search, perhaps additional risk premium.

Ron S. · Answer

that's one way to do it...

Jay Hinrichs · Answer

@Ron S.  I always buy title insurance when I get a deed in Lui  normal escrow .. I would never just accept one.

Ron S. · Answer

...always safer to foreclose than accept a deed in lieu. I can attest to that.

Jay Hinrichs · Answer

@Tom Gimer  out this way they are extinguished at trustee sale.. or let me put it this way the buyer of the property at sale is not responsible for them and the HOA just loses the money..  they will call threaten beat their chest but you buy at trustee sale and you don't owe them. they are not super liens like other states were utls can survive.

only thing that survives a west coast foreclosure is IRS  and some senior deferral tax's and ad valorum.

everything else junior to the DT or not recorded goes away..  not that the bill goes away but it does not attach to the property.

now taking a deed in Lui not sure on that one.. that is almost like sub too in a way.. and he may be responsible on that one.. I have not been in that scenario.. its why I always ran title before doing a deed in Lui sometimes you have to foreclose to wipe out juniors or these type of issues.. if they are substantial enough.

HOA Fine Wiped out at foreclosure?

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