I'm currently in the process of closing on my first home which happens to be a Freddie Mac owned condo. They just sent me a closing checklist that shows back assessments due totaling $1,554 marked "Amount due from 3rd party purchaser" with the assumption that I am to pay them no questions asked. What are my options here? Can I pay them then go after the original owner for recompense; try to get Freddie Mac to cash up or like a pig to slaughter just pay them as told? I'm already $800 in for 2 dead AC's that they refused to repair and all this before closing!
I always thought it was up to the last 6 months. Not sure if you can fight it or not. I am interested to see what others input.
It is up to you to take the deal. Freddie mac is a large firm and I doubt fighting them for $1,500 will be profitable as lawyer fees will most likely exceed that amount.
The bottom line is, do you think you can still come out on top of the deal if you pay them $1,500 plus the $800 for the AC's? factor in other repairs you may have to do and the expenses. You do not have to pay the 1,500 from the 3rd party unless you choose to do so and freddie mac may back down and give you the property regardless.
It sounds like Freddie Mac is trying to charge you for the HOA dues that they should have been paying but didn't.
In California, the present owner of a condo owes HOA dues only during the time of his or her ownership. I would think it would be the same in your state because it makes sense but I don't know for sure. A current owner is not responsible for delinquent dues from previous owners. I've purchased several condos at trustee sales and I've had several HOA's try to get me to pay the previous owner's bill. They eventually back down when faced with resistance (or a call to their lawyer who verifies that they can't do that). An HOA can place a lien against a current owner's condo for delinquent dues and can foreclose on them. They can also take the owner to small claims court and attempt to collect on a judgement. HOA dues do not stay with the property like property taxes. HOA dues are owed by that current owner only and stay with that person.
Once Freddie Mac foreclosed on the previous owner, it became responsible for paying the HOA dues. I suspect that they never bothered to do so and are just trying to stick you with the bill. Personally,I would put up a fight and refuse to pay it because it's not right for them to charge you for that but then I don't know how badly you want the house. Are you willing to walk away over it? At the very least, though, you should attempt to negotiate it down.
@Eseza Nakandi Fannie Mae and Freddie Mac can not, by law, pay certain fees and charges such as transfer taxes, and I believe HOA fees may be one of them. Since I do not deal with HOAs as a rule, I am not certain if it is one of the ones that they can't pay.
If it were me, I'd find out if there is a limit to what they can charge you, then speak directly with the HOA Board, explain they are putting the closing in jeopardy with this added surprise fee that Freddie says they won't pay, on top of repairs they already won't cover, and see if they will negotiate down so that the unit will no longer be a vacant foreclosure ruining their neighborhood. I'd offer 50% (maybe start with $500) as long as they provide a letter stating this brings you up to date at closing, that unit's balance due is 0, and you start fresh from your own closing date. It guarantees them a new owner that will pay the dues on time instead of more months of vacancy and problems for them.
All other noise aside, read your contract and addendums. It will tell you if this is to be expected. Here, they pay, as they're delivering clear title. They don't pay transfer fees as Walt said, but should be paying past HOA dues. State laws vary on carry over of dues to subsequent owners.
I just bought a rental property (condo) a month ago. Purchased in an auction and it was a REO; to get the payed assessment letter (PAL) The bank wanted me to pay the $2300 in arrearage (in IL your supposed to pay the past 6 months HOA Dues plus attorney fees) I told my lawyer, I wouldn't pay, although I would have, and he told them to kick rocks. Long story short, the day before the scheduled closing date they emailed my attorney saying if I closed the next day they would cover the arrearage. I've done this twice so stay strong, get your lawyer on same page and bluff them to the end. If they try to pull the deal just pay. Remember next time that this can likely happen and be prepared. Good luck.
I've bought Freddie Mac & Fannie Mae properties in MN that are in HOA's and they always have covered past HOA fees. That said, your state may be different of they may have changed their tune at some point.
I'd probably walk on the deal unless the numbers are so good anyway that it makes sense. I certainly wouldn't try and negotiate with the HOA - I'd just deal with Freddie Mac and try and put it back on them.
I always make my offers conditional on arrear HOA charges and also any special assessments that were assessed prior to closing being paid as at the time of closing.
I have not dealt with Freddie or Fannie since I purchase outside of the US. I typically purchase condo though so I never submit an offer without that condition. Owners typically try and sell when their HOA want to make a large assessment for a CapEx project.
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