HOA Lien + HOA has leased property to a tenant

8 Replies

I bought a property in NJ via a foreclosure auction. Prior to my foreclosure acquisition, the status was as follows:  

a) There was a prior HOA lien on the property for outstanding dues. The HOA had taken possession of the property and executed a rental agreement (significantly below market) with a tenant to recover the o/s HOA

b) This rental agreement between the HOA and tenant expires at end of this year.

c) Now that I own this property via foreclosure purchase, can I get this lease terminated (HOA does not have standing). What are my right regarding access to this property and being able to get this tenant to either pay market rent or exit the property.

Thanks so much!

Shefali

If there are any HOA experts who might have some insight into this - would love to hear your thoughts! Thanks so much

I am not an HOA expert, nor am I an attorney. I strongly suggest you get an attorney.

From my understanding of contract law, the lease should transfer to you, upon sale of the home. This is no different then someone being foreclosed on who has a tenant in the property. This is assuming the lease does not say anything about it being voided upon sale fo the house.

State law prevails, as the fed Tenants In Foreclosure Act expired.
Example, in FL if you buy at auction and there is a valid, arms length lease in place, you can void it with 90 days notice.
The fact that it is an HOA should have no bearing.

You may have however inherited any unpaid monies toward that HOA lien. Again, state specific, in FL you would.

Agree with @Wayne Brooks .  This will depend on your state law and a lawyer who specializes in foreclosures is your best bet.

I see you are in New York, so I am going to err on the side of the tenant on this one. The tenant likely has the right to stay in the property at the rate on the lease until the lease expires, but all rents should now come to you instead of the HOA.

More than likely, the HOA lien remains in place and you are now liable for it.

The receivership company that the HOA has engaged with (the HOA can't manage the property directly, usually) is likely very expensive, so you'll have to work to get them out of the picture.

I'm the president of an HOA that has a unit like what you're describing.

Generally a legal lease transfers to the new owner and must be honored. However, you could approach the tenants and offer to somehow buy them out of the lease. How much is it worth to you to have them gone? 

Teri S.

    Thanks you @Wayne Brooks , @Andrew Boettcher , @Linda Weygant and @Teri S. - I appreciate all the feedback. The property is located in NJ and the lease is 50% of market rate, zero security deposit with specific disclosures that property is subject to foreclosure (but does not explicitly say lease is automatically terminated at that point). I will look at NJ law around this.

    If anyone has additional suggestion, look forward to hearing them! 

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