Residential Real Estate Agent · Clermont, surrounding areas, FL · Member since 2011 · 12 posts · 2 votes
I am located in Florida & I have had so many issues with HOA attorney fees on past due assessments on properties that we purchase at Foreclosure Auction Sales. Has anybody had any luck fighting these impossible & ridiculously high fees in Florida? There is no regulation on attorneys fees, & YOU HAVE TO PAY or you can't close on the home! If you want to fight them, then you need an attorney that will charge you MORE than the fees, & you still end up paying them.. CRAZY!!
Considering looking to purchase bank owned just to avoid this nightmare of past due assessments. I noticed on BP that many people purchase short sales and bank owned at discounts and rehab.. can anyone tell me if that is better than courthouse auctions? Thanks so much everyone, your opinions are greatly appreciated!
Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
15y
In AZ, HOA past due amounts do get wiped out. HOAs have responded by creating a whole bunch of BS fees that can get quite expensive. We checked with our RE lawyer and he said that if the fees are properly passed and part of the HOA by-laws, then we are kinda out of luck and have to pay the fees. So these days, if we find a high fee, we ask the HOA for a copy of their by-laws to see if the fee is valid.
Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
15y
AMEN on the HOA fees! I too have had trouble working with the associations attorney. I also learned from talking with title companies and searching Florida law that HOA's are well protected and many are broke. So, trying to negotiate lower fees is almost impossible. Especially with the attorney, because the attorney generally abides by the commands of the board and has to be paid by the board, so it's probbly not going to happen. The attorney doesn't want to lower their fee and the broke board cannot afford to lower their fees.
Now, depending on who actually bought the properties from (HUD or a GSE), you may not have to pay as much fee as being quoted. I think there is a limitation of 6 months.
Real Estate Investor · Alpharetta, GA · Member since 2010 · 415 posts · 484 votes
15y
Are you saying that the HOA's lien for past-due assessments and attorneys' fees lives on after the foreclosure? I do not think that is correct. Perhaps it is different in Florida, but I know first-hand (as an HOA board member) that in Georgia foreclosure wipes out our lien.
If the lien does live on, then no, I would not expect them to negotiate. Why would they? They have a secured lien, and the property can't be transferred without paying it off. That's sort of the whole reason you get a secured lien to begin with, right? Again, though, I would be surprised to learn that this lien lives on after the foreclosure sale -- assuming that we are talking about a true foreclosure and not just an auction. Since you said "courthouse," I'm thinking these are bona fide foreclosure sales.
As for the attorneys' fees, it could also be that the HOA has paid them already, so they are looking to be reimbursed. Although some lawyers will bet paid on the back-end (ours does this in collection matters), many do not.
I will say this. You have guts buying properties on the steps. I could never buy a property that I had not been inside or that I did not inspect. Too risky. It seems to me, however, that if you're able to tolerate those kinds of risks, you should be able to stomach past due HOA assessment and fees.
Residential Real Estate Agent · Clermont, surrounding areas, FL · Member since 2011 · 12 posts · 2 votes
15y
Thanks for replies! Yes, the HOA fees do live on after the foreclosure if you are a third party bidder at auction(courhouse foreclosure sale), but not in the case of buying a REO that is listed on the market.
So the issue that I have run across too many times to count is that there is one law firm in particular that has ridiculous crazy fees for not doing ANYTHING at all! They label the account for their fees, just because it was foreclosed on. Attorneys fees aren't regulated, and they do not have to give you a breakdown on what they have done for the file. An attorney can charge $6,000/hr if they want to and they don't need to prove anything to anyone! (even if the statute says "reasonable attorneys fees") My understanding is that if the attorney that is charging them, feels they are reasonable, then he can charge them.
In my situation, I have come across this 1 time too many with this law firm, it is so outrageous on what they charge in comparison for services that were done. ie, NOTHING but answering a motion on behalf of the HOA.
So, when a bank takes possession of the home after auction, they can only go back one year for HOA fees, but when a third party bidder buys it at auction, they can charge whatever.. example: Lien 2 months before foreclosure for $100. I tried to get an amount owed for 20 days from the attorney, after the HOA member insisted that she needed to forward file for review with attorney(because it was a foreclosure) then I get the bill almost a month later.. drum roll... $4368. owed, when I asked for a breakdown they refused to give me one, and then I ended up paying it, because it costs more to fight it then pay it.
Just the other day I came across one that was $1,000 past due and NO LIEN recorded, and the fee owed on estoppel $6900. yes.. this is what I call CRAZY fees! This is what has been happening on every transaction with this attorney, and sometimes they only have the file for 15-20 days. So over it! I don't think any investor has a problem with paying HOA fees, but when they add those attorneys fees they are killer! That is why I am wondering about REO aquisition if you all have had luck with that. Let me know please :)
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
This varies by state. Some states have the HOA lien survive foreclosure in full, some have it wiped out in full, and some have a patial amount that survives the foreclosure. you have to really know your state's laws on how HOA liens are handled at foreclosure.
Even the REO will have those liens where the HOA liens survive foreclosure; it's just that the bank owning that REO now has the obligation of covering those amounts, so the buyer doesn't have that worry.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
15y
This does vary state by state and is changing fast as HOA's are pleading for relief because so many owners are not paying while in FC. So whatch for new rules in your state.
In Illinois, if you are a 3rd party buyer at a Sheriff Sale, you can owe as much as 6 months assessments. The lawyers re not allowed to tack on for their fees but they still try. Fighting one now.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
At foreclosure you should be able to find out before bidding begins. If it's REO, why don't you limit or include all attorney fees and existing liens in the offer?
Rehabber / Flipper · Simi Valley, CA · Member since 2010 · 597 posts · 259 votes
15y
Theresa, to answer your question, yes many people are having good luck buying REO properties. The banks will generally take care of any liens prior to reselling the property, so the property will likely be clear when you buy it.
I am surprised that any bank would lend on a property where junior liens were not wiped out. That means their whole security on the loan could essentially be worthless - who knows what the HOA fees/liens could be if they have to take over the property in foreclosure? That seems like a stupid loan for a lender to make.
Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
15y
In AZ, HOA past due amounts do get wiped out. HOAs have responded by creating a whole bunch of BS fees that can get quite expensive. We checked with our RE lawyer and he said that if the fees are properly passed and part of the HOA by-laws, then we are kinda out of luck and have to pay the fees. So these days, if we find a high fee, we ask the HOA for a copy of their by-laws to see if the fee is valid.