Is an Association foreclosure process similar to the process for a bank?
Yes, it is substantially similar. However, Associations have additional statutory processes to follow that banks do not, such as:
A Condominium Association must send an advance 30 day notice to the homeowner of its intention to record a lien. Prior to filing the foreclosure action the law firm must send an additional 30 day Intent to Lien.
A Homeowner Association must send an advance 45 day notice to the homeowner of its intention to record a lien. Prior to filing the foreclosure action, the law firm must send an additional 45 day Intent to Lien. Once sued, the delinquent homeowner may admit the allegation and be granted a stay of the proceedings for up to 60 days to make payment. Failure to make sure payment would result in the Association immediately being granted a foreclosure judgment.
If the Association takes title to a property in a foreclosure, does the Association have to pay the mortgage or property taxes?
There are two (2) common misconceptions in relation to an Association taking property in a foreclosure:
An Association is NOT required to pay the mortgage on the property. If the mortgage is not paid or other arrangements made with the lender, eventually the bank will take possession away from the Association. However, the lender cannot sue the Association for mortgage payments.
An Association is NOT required to pay the property taxes. If the taxes are not paid, after two (2) years, possession of the property may be taken from the Association through a tax deed sale. However, the County cannot sue the Association to collect or otherwise make the Association pay these taxes.
What happens if a delinquent homeowner fails to pay assessments?
If the Association has lien rights, the Association can pursue a lien foreclosure action against the homeowner. Florida has two (2) statutes, 718.116 and 720.3085, which specify the requirements needed to be completed in order to foreclose on an Association lien. The Association can also pursue a personal judgment action against the homeowner. If an Association knows of other assets owned, not subject to homestead exemption in Florida, we can have the Association’s judgment domesticated in that State/County where the property is located, and attach the judgment to that property.
What is a Condo or HOA lien?
A Condo or HOA lien is a legal instrument for the Association to secure their right to the assessments against the property. An Association lien is only subordinate to a first mortgage holder and any federal or property tax liens. The priority of Association liens between master and sub Associations is determined based on the date of recording the declarations for the respective Associations. Whichever Association’s declaration was recorded first will have priority over all other Association liens.