Short Sale and HOA Question.... (short sales, real estate, foreclosures)

[spaceflight]

Looking for advice from those who have experience on the subject:

Short sale finally got approved, BUT the bank is holding the buyer responsible for past HOA. Past HOA fees are in thousands and bank has agreed to pay just 10% of the total HOA fees. Looking for advice on how to counter offer or create win-win situation for everyone involved in this process.

ALSO:

The current home owner is still living in the house, he seems very nice but how do I protect myself from damages or the seller taking out the entire kitchen before he leaves the house, should there be a clause in the counter offer that if there are damages or items take away from the home that we have a right to walk up to the closing date?

Thanks for your help,
Hopefully a new home buyer soon…

[annerk]

The only thing the HOA might be willing to budge on are the late fees. They want the dues and legal fees, as they should.

Either the owner needs to man up and pay their debts or the purchaser needs to decide that they are getting a great deal even with the added costs or the deal is off. I highly doubt the bank will budge more another 10% or so.

You will be allowed to do a walk-through the morning of your closing. I wouldn't close unless the current owner is 100% out, the home is clean, and there is no damage. Your contract of sale should have some sort of clause in it about that. If it doesn't, get an attorney that knows what they are doing.

Your sales contract should also indicate that all items "permanently affixed" which include all cabinetry, plumbing, appliances other than the fridge and washer/dryer, garage door opener, lighting fixtures, ceiling fans, and blinds need to stay. Other items such as draperies, washer/dryer/fridge, etc. need to be addressed in the contract if they are to be included--I highly doubt the current owner plans on leaving the appliances behind, the drapes are 50/50, depending on where they will be moving to.

[cully]

Foreclosures can be different than short sales. Short sales are kind of market driven; foreclosures, kind of payment driven...although lack of payments can be a sign of financial times in which prices go down.


In some areas it's treated more like a friendly foreclosure where the bank takes charge. In many areas, it's more the original intention... in that the seller still owns the house and negotiates all contracts based on the lower price the bank has agreed the house can be sold at per current market conditions.


Where the seller feels he still owns the house...he does...but where he actually feels this, and where he still lives in the home, cares about the home, we haven't seen him destroy the house. Foreclosures, yes, they can get mad at the bank.

As far as HOA fees. The thing is, even though some banks/owners/realtors want to think in short sales the bank has all the say as if they own the property...they don't. So, unlike in a foreclosure, in a short sale the bank does not take over the property including all hindrances, arrearages, etc. The bank does not, essentially, purchase the property and cover these expenses nor wipe them out by participating in a short sale with the owner. So all the debts are still there in your situation.

Also, in a foreclosure, the dues/debts should be wiped out for the next purchaser. But not in a short sale.

I hear in Ca you can't get a loan if there are any outstanding HOA fees. I know FHA has a requirement..as I daresay others should...that there be only a certain percentage of dues delinquencies in a community or they won't loan in there. So if the home you hope to purchase is in this situation...maybe others are too. Number of rentals vs. owner occupied dwelling in a community and number of vacant properties can effect getting a loan as well.

Once you see if you can get a loan in this community you could try negotiating with the HOA...lower amount for paid in full and no lien against the property (or removal of such since there can very likely be a lien on the property already.)
Get a good attorney.

A while after you close, check the title that everything has been done as it should be. Don't find out many years later there's a lien that wasn't removed.


BTW, when you have closed, see about challenging the home's assessment and thereby taxes. That can amount to quite a savings.


Also, make sure you get title insurance if you purchase this place. You never know what might turn up later on.


Crazy stuff is going on these days. I know a nice guy, fairly nice home, several good offers that looked good even to the lender representative the owner was working with but the lender higher ups wouldn't allow the owner to take them. Instead it eventually went to foreclosure for a whole lot less. Messed up the owner. And, with that attitude extended, one can understand an issue with our housing and ecomony.

[spaceflight]

Thank you both for the great information.

[LuvOrlando]

My very best advice is to not get your legal advice on the Internet. Pony up a few hundred and hire a real estate lawyer.

Good luck with your house!!

[cully]

PS FYI, you'd be challenging the assessment based on the more common lowered prices that seem to be going around your community, not only on a great deal.

[DipDog3]

As someone who has been on an HOA board, typically the buyer pays the HOA fees on a short sale because the seller hasn't been paying the mortgage much less any of the HOA fees.

If the HOA is reasonable, you can ask them to lower the fees because they haven't been getting any money and if the house goes into foreclosure, there's a good chance the HOA will get nothing.

More than likely the HOA wants that person to move out of the neighborhood and would be willing to negotiate to make that happen.