Foreclosing on the Forecloser: HOAs take on the banks

For most homeowners, foreclosure is the end of the story.  The end of a long, painful story, for most.

 

A slideshow on foreclosure and bankruptcy law basics

 

But many homeowner associations could only hope that foreclosure were the end of the story.  For HOAs, foreclosure usually follows a lengthy period of unpaid assessments, collection efforts, and perhaps ongoing maintenance violations.  The foreclosing bank may even have dragged its feet on taking title until it had a post-foreclosure buyer lined up.  I have tried to summarize foreclosure basics for HOAs here.

In Idaho, this tactic leads to increased liability for the original owners of the property, and probably increased chances of bankruptcy.  For the most part, the bank that takes title following a foreclosure is responsible and pays assessments from the date of the foreclosure forward. However, this is not always the case.

In what is often a David and Goliath story, some HOAs are seeking to even the odds by foreclosing against the bank on their post-foreclosure assessments.  This article makes several good points about the pros and cons of this approach, and the position taken by banks.  It applies as well in Idaho as in Florida.

 

Most of the bank in possession has a strong interest in maintaining clear title so that the property can be sold.  Foreclosure, though a drawn-out and relatively expensive process, puts the pressure back on the bank to get current.

Jeremy O. Evans 

 

 

 

 

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One Response to “Foreclosing on the Forecloser: HOAs take on the banks”

  1. Foreclosing on the Forecloser II: Florida Foreclosing Fun « HOA Lawyer Says:

    […] Yes, an HOA CAN do that.  In fact, a lot of the usual reasons not to turn to foreclosure don’t apply when a bank owns the house.  The HOA can actually end up looking like the good guys compared to a foreclosing bank. […]

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