HOA past dues and Short Sale

[gorvieto]

Hello everyone,

My townhouse is on the market and as I have fallen behind in my mortgage, I have also not paid my HOA dues for the last 3 months. I have already received a nasty letter from a lien company hired by the HOA indicating that I need to pay all past dues plus about $450 worth of fees ($1450 total). They say that if I do not pay by April 14, they will put a lien on my house, and could even foreclose (which is exactly what I am trying to avoid by doing a short sale!).

The realtor handling the short sale told me that I should try to negotiate with the HOA in order to get this debt paid prior to submitting an offer to the bank. The problem is that I don't have that kind of money (otherwise I wouldn't be in this mess). Will late HOA dues and property taxes be something that the bank takes from their net proceeds at the time of sale, or should I try to negotiate with the HOA to set up some sort of payment plan?

By the way, I owe 382,000 and the house is selling for 179,000 ...

Thank you.

[Moe Bedard]

Hi gorvieto,


In most cases,

Delinquent property taxes, HOA fees and any other liens are usually paid off by the proceeds from the sale. The bank ends up with whatever is left after the liens have been satisfied. However, the bank could choose to go after the seller for any of these funds and deficiency left, depending on the laws of your state. It is best to clarify the potential for this......with a real estate attorney in your state.

but not all cases............as in some cases if there are liens against a property, such as junior, taxes, or hoa...........a first position lender might instead choose to foreclose which will wipe out any liens and convey the title free and clear.

[gorvieto]

The state is CA. I brought this back to my realtor and once again she advised that I should try to pay outstanding HOA dues so that they don't place a lien on the property. She said that in all her years of doing short sales, she has only seen 1 example in which the bank paid for past-due HOA fees. She says that usually lenders flat out say that they will not pay outstanding HOA fees and simply wont close the file until these are paid (even if there is a qualified buyer with an accepted offer).

Has anyone else here dealt with this situation?

Thanks.

[mbmullen]

I'm sure your Realtor has been handling short sales longer than I have but I have not had a problem with the lender paying outstanding HOA dues. Just make sure that those fees are included on the HUD that is submitted to the lender with the offer to purchase. That way they know what the final numbers will look like and can counter the offer accordingly.

[Tony12154]

I also live in the dismal state of CA. My property has been in foreclosure since May but as of yet no sale date has been established. My funds are rapidly growing thin,in that I havent worked for a while. My question is, if I stop paying my HOA FEES will I some how end up in court having to pay them plus penalties.....I thought I read some where on this site that HOA fees would not be excused after a foreclosure. To all who respond, thank you.