Did you get a great deal on foreclosure property?
Are you sure?
Did you buy it from the foreclosing bank? Did you buy it from someone else and THEY bought it from the foreclosing bank?
If you did, don’t be surprised if the HOA or condo association hits you up for more money.
Foreclosing Banks hate paying delinquent assessments to associations. They may argue the “takings clause” of the constitution, or other contrary interpretations against Florida legislation but the underlying reason is that, what with America’s financial crisis (you know, the one they helped create) they think assessments are the least of their problems and don’t pay them even when there is no argument that Florida law says they owe them, as in the case of condominiums under Sec. 718.116 Florida Statutes.
Clients are coming to see me holding big fat invoices in their hands. The unexpected bills are for association assessments that were not paid by:
a) the previous owner; or
b) the previous owner and the bank that foreclosed on the previous owner or
c) the previous owner, the bank that foreclosed on the previous owner, and the owner who bought the foreclosed property at a huge discount from the bank and who then flipped it to my client or
d) all the above.
Sure, the banks should have paid SOMETHING, especially if the foreclosure invovled a condo. Foreclosing banks owe the association 1% of the original mortgage or 6 months assessments, whichever is less (Fla. Stat. Sec. 718.116) but, guess what? The banks didn’t pay anyway: what are you going to do? They foreclosed, owned the property for about as long as it takes you to say ”government bail-out!” and then they sold it to someone who they presume will take the hit for them. If you want to track down the person at the bank who will take responsibilty for this ”oversight” in their vast, labyrinthine organization, good luck with that. I’ll give you a telephone, a case of Super-Caffeinated soft drinks and in six weeks, help you find a good therapist.
So, if you buy a house or a condo and get slapped with several years’ past due assessments and interest, do you really have to pay it? Well… yes, and… no. (I’ll remind you, this IS written by a lawyer, after all!)
On the “yes, you owe them” side of the answer, HOA and condo statutes hold both the new and the old owners as “jointly and severally” liable for unpaid assessments, along with the interest, the legal fees, court costs, and the whole nine-yards. The good news is the bank is liable along with the previous owner. The bad news is that even if you could find the people responsible at the bank OR locate the previous owner, it would take a lawsuit to get either one of them to contribute their fair-share to the payment of the bill.
Is it entirely “legal” for the association to come after YOU for money owed by everyone under-the-sun EXCEPT you? I mean, you just got here, for pity’s sake! Why should YOU pay? Well, if you want to argue on principle, you can spend an amount of money equivalent to what it takes to fill a scoop on a front-end-loader, twice, on a lawsuit to find out. Brain-replacement surgery is probably more fun.
What do you do instead? Before you close your “great foreclosure property deal” make sure your closing papers include title insurance. Your title company or agent or both should have contacted the HOA or condo association and gotten an estopple letter BEFORE you sat down at the closing table. If there was money due, you should have known about it. If you didn’t, they didn’t do their job and now they may be liable for paying whatever money is due.
For associations, this is who they should go after to collect the money that is probably well deserved. (Remember: the HOA/condo association didn’t create the financial crisis, either. They have bills to pay like everyone else.) The association’s estoppel letter is something that should be secured by sellers/buyers all the way down the chain of title: when the bank forecloses, when the bank passes the hot-potatoe to some middle-market entity, and especially when it transfers to the person intending to make that property their own home. This is the last person who should be surprised with a letter saying, “welcome to the neighborhood, now pay up!”
