HOA Foreclosure

[159515951]

Hi everyone,

We surrendered our house in our 13, and the HOA is foreclosing ahead of the bank for arrears owed to them. This is GOOD news, as the bank is dragging its feet. However, we received the civil action summons from the court for the HOA's filing, and have a concern with one of the sections that states (paraphrased):

Plaintiff is entitled to a reasonable rental for the Lot, from the date of recording of Plaintiff's Claim of Lien, if Plaintiff's Claim of Lien is foreclosed...

The lien was recorded in July, and we do NOT rent the house. It is vacant, although the summons is against me as well as "unknown tenant".

The Big Question: Can they really collect rent from me for a house that hasn't been rented out for a time period in which they did not own the house? This seems ridiculous to me, and I hope I'm just being dense.

Many thanks for your input.

**EDIT** I thought more about this, and I think this might be boilerplate for those cases where the HOA liens and subsequently forecloses on owner occupied houses. They're essentially stating that we would owe them back rent from the date of lien if they are successful in foreclosure. Thoughts?

[AngelinaCatHub]

Hi everyone,

We surrendered our house in our 13, and the HOA is foreclosing ahead of the bank for arrears owed to them. This is GOOD news, as the bank is dragging its feet. However, we received the civil action summons from the court for the HOA's filing, and have a concern with one of the sections that states (paraphrased):

Plaintiff is entitled to a reasonable rental for the Lot, from the date of recording of Plaintiff's Claim of Lien, if Plaintiff's Claim of Lien if foreclosed...

The lien was recorded in July, and we do NOT rent the house. It is vacant, although the summons is against me as well as "unknown tenant".

The Big Question: Can they really collect rent from me for a house that hasn't been rented out for a time period in which they did not own the house? This seems ridiculous to me, and I hope I'm just being dense.

Many thanks for your input.

I'll give this a shot: When did you file, and what action, 7, 13? You should not receive a summons unless duly acted on. When did you vacate? Where you up to date with the HOA? You never rented anything as you own/owned it until foreclosure. If you are not foreclosed, you still own the place. The HOA fees can be discharged in 7. More info please. 'Hub

[justbroke]

You do not need to pay the rents. From experience on a tax lien (on a relatives property), the lienholder is entitled to the collected rents. However, you're not there so there are no "collected" rents. They are just preserving their rights to the rents. However, at what point they are "entitled" to the collected rents, is a matter of State non-bankruptcy law. In the tax lien case that I know of (not in Florida), the claim of rents did not "mature" to the point where they could actually collect rents until the lien was matured (which was 2 years in that State for a tax lien).

If you left, they are not entitled to any rents because you do not occupy the property.

[159515951]

I'll give this a shot: When did you file, and what action, 7, 13? You should not receive a summons unless duly acted on. When did you vacate? Where you up to date with the HOA? You never rented anything as you own/owned it until foreclosure. If you are not foreclosed, you still own the place. The HOA fees can be discharged in 7. More info please. 'Hub

I filed 13 in January, and surrendered the house. I actually encouraged the HOA to foreclose as a means to an end -- be done with this house once and for all. I vacated last year when I moved out of state. The house we surrendered is in Florida. I was up to date when I moved, but went into arrears with them before filing. They included that amount in violation of the 13 in their summons, but it's all but irrelevant -- I don't want the house.

[159515951]

You do not need to pay the rents. From experience on a tax lien (on a relatives property), the lienholder is entitled to the collected rents. However, you're not there so there are no "collected" rents. They are just preserving their rights to the rents. However, at what point they are "entitled" to the collected rents, is a matter of State non-bankruptcy law. In the tax lien case that I know of (not in Florida), the claim of rents did not "mature" to the point where they could actually collect rents until the lien was matured (which was 2 years in that State for a tax lien).

If you left, they are not entitled to any rents because you do not occupy the property.

This is in Florida, so I just need to make sure there isn't some bizarre loophole in Florida Statutes that entitles an HOA to collect rent after lien on foreclosed property. It makes no common sense, but Florida never does.

[AngelinaCatHub]

You do not need to pay the rents. From experience on a tax lien (on a relatives property), the lienholder is entitled to the collected rents. However, you're not there so there are no "collected" rents. They are just preserving their rights to the rents. However, at what point they are "entitled" to the collected rents, is a matter of State non-bankruptcy law. In the tax lien case that I know of (not in Florida), the claim of rents did not "mature" to the point where they could actually collect rents until the lien was matured (which was 2 years in that State for a tax lien).

If you left, they are not entitled to any rents because you do not occupy the property.

Thank you JB. You're always right on. 'Hub

[justbroke]

This is in Florida, so I just need to make sure there isn't some bizarre loophole in Florida Statutes that entitles an HOA to collect rent after lien on foreclosed property. It makes no common sense, but Florida never does.

I think it's all moot anyhow, since you surrendered in a Chapter 13 and the underlying debt is discharged. I believe that paragraph is boilerplate and is only to preserve the lienholder's rights to "collected" rents. The right to collect rents is probably in your Convents for your HOA. It probably rads that the HOA needs to actually foreclose and you still live there (remain in possession). That allows them to collect rent.

However, and again, the underlying debt is discharged and you have vacated, so you are not in possession. At least, that's my read.

[159515951]

Thanks JB - very helpful!

[159515951]

Miracles happen -- the HOA actually followed through and foreclosed, and the house was sold today at auction! In 10 days, assuming all goes well, the title will change to the new owner.

I assume this means my mortgage holder (that I included in my surrender/Chap 13) will have to foreclose on the new owner unless they pay the mortgage lien, correct? Regardless, this is all hopefully no longer my problem, and my credit will have 4 years to heal itself while I'm in the remainder of my Chapter 13.

Thanks again for all your help. Many lessons learned with this house...NEVER again!

[TBA]

I dont know if i understand this situation at all when it comes to hoas, but this is what i am thinking?? maybe someone with a bit more experience can chime in here.

i am pretty sure that the liens (mtg) do not survive after the foreclosure(that is why they are foreclosing anyway, right? to clear title...). Meaning, now that the house has been sold, hoa fees paid from sale, any surplus goes to first mtg holder (not sure how hoa forecloses first?) and they are left with a deficit if the sale didnt produce enough to cover the mtg.

Because you surrendered, you are not liable for the deficit?

[159515951]

I now have "private investigators" from all over Florida calling me and telling me that, because the house sold at auction for in excess of the HOA (priority) lien, I'm eligible to receive the difference. This can't be real. Any experience with THIS one? Even if it were true, I'm sure any excess I received would have to go right back into my Chapter 13 anyway. Why wouldn't excess go to the other lienholders??

I'm thoroughly confused how the law works in this regard, and my attorney can't help because he doesn't practice in Florida. Can anyone shed some light on what happens now? I assume the new owner now owns the mortgage liens. I surrendered this house in my 13, and I'm guessing that means the mortgage companies can't file a claim (because I no longer own the home)...correct? Help!!

[bcohen]

In some states, when the HOA forecloses, the mortgage lien is extinguished. As a result, the mortgage becomes just another unsecured creditor, which will be handled in your bankruptcy. Obviously, the HOA would not have been able to sell the house subject to a mortgage lien--no one would pay money for that. In states where the HOA's position is junior to a recorded mortgage, the HOA forecloses to take possession of the house and rent it out--or to pressure the mortgage holder into foreclosing so the house can be sold.

[TBA]

I now have "private investigators" from all over Florida calling me and telling me that, because the house sold at auction for in excess of the HOA (priority) lien, I'm eligible to receive the difference. This can't be real. Any experience with THIS one? Even if it were true, I'm sure any excess I received would have to go right back into my Chapter 13 anyway. Why wouldn't excess go to the other lienholders??

I'm thoroughly confused how the law works in this regard, and my attorney can't help because he doesn't practice in Florida. Can anyone shed some light on what happens now? I assume the new owner now owns the mortgage liens. I surrendered this house in my 13, and I'm guessing that means the mortgage companies can't file a claim (because I no longer own the home)...correct? Help!!

Heh. That is what i was saying - Can you confirm if the sale amount exceeded the liens? Check with the county clerk - you might be surprised.

As for the PIs - while i cannot confirm them individually, this is a legitimate business - I am curious, who contacted you? if you are willing to share, that is. (I am in a similar business). shoot me a PM if you dont want to share here. i will also share my experiences with you as well.

[159515951]

The sale amount exceeded the HOA lien, but I still can't believe that the mortgage liens wouldn't survive the foreclosure.

I looked into the "PI" thing a bit, and they're not doing anything I can't do for $50 with the Clerk of Court.

TBA -- I've been contacted by about a dozen of these guys...apparently there's not a lot of work for PIs in Florida.

[TBA]

tax deed sales were really popular for PIs when the market was booming and sales prices exceeded the amounts due by LARGE AMOUNTS. This must be the new area people are working on (although i am surprised there are enough sales to keep them busy where the sales value exceeded the liens - that is why i asked who contacted you)... My company did tax deeds for a bit during the boom. I am a PI but i dont work that side of it. I do genealogy and probate research.

As for the excess - i dont know exactly how it works, maybe the mortgage companies didnt respond in the proceeding so their interest was forfeit? Someone with more foreclosure experience might be able to answer that.

And yes, you can do it with the clerk yourself. most people dont know how to do the legal work to get it done, so that is where the PI comes in.