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Old 06-13-2013, 08:01 AM
 
2,732 posts, read 3,130,834 times
Reputation: 2913

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Quote:
Originally Posted by middle-aged mom View Post
Nothing trumps the fort mortgage lien.
Think you meant the "first mortgage lien". However, in many states the HOA lien is given a "super priority" at least for a set amount of months of assessments. The super lien means that even if the first lien holder forecloses it would have to pay X months of assessments as set by the statute in that state. The purchaser at the foreclosure sale will be on the hook for all subsequent assessment - even if the purchaser was the prior lienholder.

Quote:
Despite internet noise to the contrary, it is highly unusual for an HOA to foreclose on a property. The reason is that when an HOA forecloses, it become responsible for the mortgage and property taxes. Most who are delinquent on their assessments are also not paying their mortgage or property taxes.
Not true. It is extremely common for the HOA vendors to i) threaten to foreclose to extract fees off-the-books of the HOA which go to the vendors; and ii) to actually foreclose. This problem has been note by HOA experts and academics in your state who have written about the problems for years. Indeed the trade groups push "public policies" in order to create and preserve the ability to extort monies from homeowners that do not even go to the HOAs at all. One such policy adopted by the trade groups is opposition to the Fair Debt Collection Practices Act. They would like to be able to engage in what is known as the "priority of payment scam" in order to extort money from homeowners. The Fair Debt Collection Practices Act is a barrier for the trade group - that's why they oppose it. Their standard operating procedure is to threaten or to actually foreclose. Not "noise", reality. With the priority of payment scam the vendors manufacture junk fees and divert assessment payments to themselves making their own client's assessments the last to get paid, if ever.

Quote:
Unless the property is owned free and clear by the owner or if the owner has substantial equity, it make no sense to consider foreclosure action.
Sure it does for the management company and attorney that have taken over the collection process and get paid for foreclosing and ancillary "services".

There is no doubt that homes with larger equity are more lucrative for the vendors - that's why they sold Captain Clauer's $300,000 paid-for home out from under him over an alleged $800 while he was stationed in Afghanistan. Vendors and their insiders stole a house. Or Hern in San Antonio where the attorney threatened to foreclose unless Hern paid the attorney $25,000 over a $300 debt that Hern tried to tender multiple times to the HOA. These are just a few examples.

The primary business of the HOA attorneys and HOA management companies is threatening or actually foreclosing on property owners. HOA foreclosure isn't "rare", it is rampant. The first thing the vendors try to do is to get 100% control of the banking and the collections process.

Quote:
Please seek counsel from a competent attorney familiar with HOA law and foreclosures in your state.
...and make sure they aren't a member of the HOA trade lobby group Community Associations Institute because they won't be representing your interests if they are a member of that trade group.

 
Old 06-13-2013, 09:59 AM
 
Location: Barrington
41,297 posts, read 31,315,546 times
Reputation: 13925
Laws vary state to state. About half the states require judicial foreclosures. Texas is not one of them.
( BTW, Mother Jones is reporting that Captain Mike Clauer got his house back. No details beyond that wifey reportedly became depressed when he was deployed and stopped opening the mail, paying her bills, answering the phone and door. )

If this family financed a car and stopped making payments, it would have been repossessed after missing a few payments, regardless if the car was needed to get to work. If this family were renters, they would have been evicted.

I am curious which states give HOAs a super lien that trumps any/all prior liens. More specifically, which states give an HOA more rights than the first or second mortgage or the municipality for back property taxes?

Regardless, despite threats to foreclose, it remains uncommon for this to happen. Most owners who are seriously delinquent on HOA assessments are not paying their mortgage or property taxes. There is no equity. They also tend to have a lot of unsecured debt ( credit card). In other words, there's a pattern. Such owners usually intend to occupy their homes for as long as possible without paying anyone a dime.

There is an owner in my HOA who has not paid his mortgage, property taxes or HOA assessments since 2008. He is still in his home. One of these days it will be sold at auction back to the bank. The bank becomes responsible for assessments only after they take possession- closing of the resale.The eventual resale buyers will be on the hook for about $440. The association will write-off about $5000 in uncollected debt. This owner could have attempted a short sale at any point in time. Instead, he chose to squat.
 
Old 06-13-2013, 11:55 AM
 
Location: NC
6,034 posts, read 7,113,247 times
Reputation: 6327
^^ My HOA has been very successful with foreclosing and renting out properties after taking the deed. The Banks had these properties sitting in limbo (a few were empty) and vandals kicked in some glass etc, which the bank put PLYWOOD over rather than fixing properly. After some research, the bank was HOLDING off on their foreclosure to avoid paying HOA Dues/Maintenance items, BUT had changed the locks to the property. The HOA took the deed, repaired the property and has successfully leased it out.

This strategy allows an HOA to recoup some of those lost dues, bring in funds for the up-keep while keeping the community nice, and force the bank to come to some sort of resolution rather than "sit" on the property for years.

Ohh IC Delight is an HOA troll, lol. He believes that people don't have to pay their financial obligations.
 
Old 06-13-2013, 12:34 PM
 
2,732 posts, read 3,130,834 times
Reputation: 2913
Quote:
Originally Posted by middle-aged mom View Post
Laws vary state to state. About half the states require judicial foreclosures. Texas is not one of them.
( BTW, Mother Jones is reporting that Captain Mike Clauer got his house back. No details beyond that wifey reportedly became depressed when he was deployed and stopped opening the mail, paying her bills, answering the phone and door. )
...how about the details where the law firm filed a [false] affidavit claiming verification that the husband was not in the military?

...how about the fact that the named partner in the law firm is an active lobbyist for CAI at the legislature and appears every session promoting legislation good for the vendors, not the homeowners?

...how about the fact that the $300,000 free-and-clear home was sold for around $3,000 (the bulk of which went to the attorney) - and the "investor" flips it for around $165,000 to someone that contacts the Clauers asking if they want to rent their own house.

...how about the fact that not once did anyone in this "community" bother to knock on the door or try to contact Ms. Clauer?

This was nothing but equity theft on a large scale. Never mind that there were several other homes in the subdivision that were "in arrears". Clauers was targeted because it was paid for.

Because of the RAMPANT abuses, Texas no longer allows non-judicial foreclosures on HOA-burdened property. The "compromise" that the industry sought was to allow them to continue to engage in their unscrupulous practices with respect to condominiums. So Texas still permits non-judicial foreclosures on condos but not HOA-burdened property. HOAs can only pursue traditional judicial foreclosure or alternatively an expedited judicial foreclosure process - but no more non-judicial foreclosures. The Clauer case was one of many, many cases used to illustrate how rampant these vendor practices were in the state.

Quote:
If this family financed a car and stopped making payments, it would have been repossessed after missing a few payments, regardless if the car was needed to get to work. If this family were renters, they would have been evicted.
Non-analogous examples. The HOA did not provide any purchase money to the family nor was the family renting the property from the HOA corporation. The family OWNED the property. The HOA corporation did not contribute a dime to the purchase of the property. The HOA corporation is not a landlord.

Quote:
I am curious which states give HOAs a super lien that trumps any/all prior liens. More specifically, which states give an HOA more rights than the first or second mortgage or the municipality for back property taxes?
Your question is answered in general, however, there are differences in the way states that have them have implemented them.

HOA liens start off as "junior" liens under restrictive covenants or else the industry would never have been able to get financing for the homeowners to get stuck with these abominations. Lien priority is traditionally "first in time, first in right" under the common law.

An HOA lien (shouldn't really be called that) is in the declaration/restrictive covenants prior to the homeowner purchasing a home using a mortgage. Thus the HOA lien is typically "prior in time" but no lender is going to finance HOA property if the HOA is given senior status relative to the lender.

"Junior" status for the HOA lien means that regardless of when a first mortgage is recorded, the HOA lien will be junior to it. This means that a foreclosure of the HOA lien will have no impact on the senior lienholder (only on the homeowner). If the senior lienholder forecloses, the HOA loses collateral for the amounts allegedly owed by the homeowner up to the foreclosure date.

The HOA industry subsequently got legislation in many states that gives HOA corporations a limited super priority lien.

The HOA lien has "super priority" in some states regardless of relative timing of the liens. The "super priority" is state specific but is often limited to a certain number of months of assessments. For anything beyond that the HOA lien is junior. Ordinarily a junior lien is completely wiped out by a foreclosure of the senior lien. In a super priority lien state, however, the HOA lien has "limited super priority". It is better to note that it has "limited super priority" to avoid assumptions that would be made if it classified as a junior lien.

If the senior lienholder forecloses, the senior lienholder cannot wipe out the last X months of assessments. That means the buyer at the foreclosure sale will be responsible for all assessments moving forward and the HOA is going to get say 6 months' assessments from the proceeds of the foreclosure sale. If the mortgagee was also the purchaser at the foreclosure sale then the mortgagee (now owner) will be the entity that has to pay the last 6 months assessments plus all assessments moving forward.

If the HOA forecloses, the situation may depend upon what state you are in. If the HOA is the purchaser at the foreclosure sale (using a "credit bid"), the HOA will get the house subject to the senior lienholder's lien. In other super lien states, the senior lienholder will have to pay X months assessments or else the HOA's foreclosure can wipe out the senior lienholder's lien - giving the HOA and its vendors a tremendous windfall at the expense of the homeowner and owner of the first lien. The outcome really depends upon how the super lien legislation was implemented and is very state specific. HOA industry vendors players did very well ripping off homeowners in non-super lien states as long as there was equity to steal. The vendors do well in super-lien states because the value of the house is at stake rather than just the homeowner's equity in the house.

States that have super priority liens for include: Alabama, Alaska, Colorado, Connecticut, District of Columbia, Florida, Massachusetts, Minnesota, Nevada, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Washington, and West Virginia. In some cases the super priority lien is only applicable to condos in other states it is applicable to condos and HOA-burdened property. Generally there are state-specific requirements and limitations for the super priority liens.

Quote:
Regardless, despite threats to foreclose, it remains uncommon for this to happen. Most owners who are seriously delinquent on HOA assessments are not paying their mortgage or property taxes. There is no equity. They also tend to have a lot of unsecured debt ( credit card). In other words, there's a pattern. Such owners usually intend to occupy their homes for as long as possible without paying anyone a dime.
The threat of non-judicial foreclosure in particular (the magnitude of which is conveniently not publicized anywhere) is the primary shakedown tool for HOA management companies and HOA attorneys in many states. These vendors con a board into adopting "resolutions" allowing the vendors to misapply funds in order the vendors to generate windfall fees to their own client's detriment. The management contract will purport to authorize the management company to "directly charge" or "back charge" the homeowner - meaning that the monies paid by the homeowner are not reported as being received on the books of the HOA. The management company's contract will provide that the management company shall be entitled to "late fees", "collection fees", etc. for late payment. So the management company works to create artificial arrearages on paper and then to keep homeowners in default to benefit the management company (and attorney who starts heaping on attorney fees due to the manufactured arrearages.

This "resolution" is known as the priority of payment scam. Legislatures in many states have had to adopt laws to protect homeowners from the practices of these unscrupulous vendors. Texas, California, and Arizona come to mind. In other states, the HOA industry trade groups have tried to get the priority of payment scam instituted by the legislature. Ohio and Florida come to mind.

Foreclosures and threats of foreclosures are touted by the industry as the "last option". However, it is quite apparent that the HOA vendor industry's claims are only public relations pablum. The threat of foreclosure is primary source of income and many of their policies and practices are designed to create and maintain a "default" situation for profit.

Quote:
There is an owner in my HOA who has not paid his mortgage, property taxes or HOA assessments since 2008. He is still in his home. One of these days it will be sold at auction back to the bank. The bank becomes responsible for assessments only after they take possession- closing of the resale.The eventual resale buyers will be on the hook for about $440. The association will write-off about $5000 in uncollected debt. This owner could have attempted a short sale at any point in time. Instead, he chose to squat.
He is not a squatter, he is an owner. The HOA does not own the house and did not provide any purchase money for the house. He is not renting from the HOA corp. The HOA corp can deny services for nonpayment - whatever services that might be. Your restrictive covenants probably did not even obligate the HOA corp to provide any services in return for the assessments. The HOA might not be providing any service of value to this homeowner to begin with. Begs the question as to why anyone needs the HOA.

As to "uncollected debt", exactly what services were provided for this $5,000 - or are you claiming that the $5,000 was owed simply because the HOA corporation demanded money?

Last edited by IC_deLight; 06-13-2013 at 01:20 PM..
 
Old 06-14-2013, 06:32 AM
 
Location: NC
6,034 posts, read 7,113,247 times
Reputation: 6327
Quote:
Originally Posted by IC_deLight View Post

He is not a squatter, he is an owner. The HOA does not own the house and did not provide any purchase money for the house. He is not renting from the HOA corp. The HOA corp can deny services for nonpayment - whatever services that might be. Your restrictive covenants probably did not even obligate the HOA corp to provide any services in return for the assessments. The HOA might not be providing any service of value to this homeowner to begin with. Begs the question as to why anyone needs the HOA.

As to "uncollected debt", exactly what services were provided for this $5,000 - or are you claiming that the $5,000 was owed simply because the HOA corporation demanded money?
Much of what you wrote is blathering bunk, but you cannot deny services to a property owner if the HOA covenants and state law state they must have access to them. Thus one of the main recourse's is foreclosure.

Do you make the same arguments for people who do not pay their property taxes or car loans?

Bottom line is that people signed these contracts to be a part of a property with an HOA that provides certain services in return for dues. In communities where the HOA maintains exterior building insurance and some utility service, non-payers are THIEVES from those paying.
 
Old 06-14-2013, 08:22 AM
 
Location: Ocala, FL
3,106 posts, read 5,677,880 times
Reputation: 2611
Don't worry about IC, he has no clue. Don't waste your time trying to debate anything with him, it is like talking to a brick wall.
 
Old 06-14-2013, 10:20 AM
 
1,263 posts, read 2,618,608 times
Reputation: 1872
Quote:
Originally Posted by Suncc49 View Post
^^ My HOA has been very successful with foreclosing and renting out properties after taking the deed. The Banks had these properties sitting in limbo (a few were empty) and vandals kicked in some glass etc, which the bank put PLYWOOD over rather than fixing properly. After some research, the bank was HOLDING off on their foreclosure to avoid paying HOA Dues/Maintenance items, BUT had changed the locks to the property. The HOA took the deed, repaired the property and has successfully leased it out.

This strategy allows an HOA to recoup some of those lost dues, bring in funds for the up-keep while keeping the community nice, and force the bank to come to some sort of resolution rather than "sit" on the property for years.

Ohh IC Delight is an HOA troll, lol. He believes that people don't have to pay their financial obligations.
Fantastic - congrats to the HOA! Much better to have renters in those units than squatters or boarded up messes.
 
Old 06-14-2013, 12:58 PM
 
2,732 posts, read 3,130,834 times
Reputation: 2913
Quote:
Originally Posted by Suncc49 View Post
Much of what you wrote is blathering bunk, but you cannot deny services to a property owner if the HOA covenants and state law state they must have access to them. Thus one of the main recourse's is foreclosure.

Feel free to identify the blathering bunk. HOAs rarely have any obligation to provide any kind of service. The restrictive covenants usually purport to give the HOA authority to do something but not the obligation to do something - unless of course the "obligation" was to relieve the developer that created the HOA of his financial obligation to do something.

Quote:
Do you make the same arguments for people who do not pay their property taxes or car loans?
Those are completely non-analogous examples - did you actually read? I'm not aware of any car loans where the lien continues into perpetuity no matter what is paid nor can one party or a third party unilaterally declare how much the owner must pay on a car note ... into perpetuity. Property taxes are imposed only by legitimate local governments - political subdivisions of the state. An HOA corporation is not a government and is not a political subdivision of the state. Your comparison suggests an unconstitutional delegation of taxation power to a private corporation.
Quote:
Bottom line is that people signed these contracts to be a part of a property with an HOA that provides certain services in return for dues. In communities where the HOA maintains exterior building insurance and some utility service, non-payers are THIEVES from those paying.
What state are you in where you "sign these contracts to be a part of a property with an HOA". You didn't contract with the HOA nor the other homeowners.

Rarely does the HOA have an obligation to provide services. Contracts usually require consideration - what enforceable "benefit" does the homeowner have against the HOA corporation in return for perpetual assessments unlimited in time or amount? Not sure what "exterior building" insurance refers to but it sounds like you are talking about a CONDOMINIUM and not an HOA. Neither a condominium nor an HOA have any business intervening between the customer and the utility. Whatever utility issue you complain about is easily resolved by eliminating the HOA from the business it has absolutely no business being involved in - the relationship between the regulated utility and the consumer.
 
Old 06-14-2013, 05:51 PM
 
Location: Fort Payne Alabama
1,052 posts, read 1,453,230 times
Reputation: 1982
Well good to know IC is a guy, we have a couple of his type that are owners at our complex. Never comes to a meeting, never proposes anything constructive, but knows the answers for everything.
TexasWoman44 what did IC do, not pay his HOA fees? Not pay a special assessment? Continually violate the Docs? Or is he just a Wacko?
 
Old 06-14-2013, 06:16 PM
 
12,973 posts, read 12,024,936 times
Reputation: 5397
Quote:
Originally Posted by IC_deLight View Post
Waste of time. I don't have any questions of you and certainly none that you would answer honestly. Depositions and live testimony in the courtroom are the only suitable environments to ask questions of you. I look forward to watching you claim "I don't recall" in the courtroom - it works against you after a while.

You are the epitome of the subject of this thread. When the HOA treasurer uncovered the scandalous land transactions you were involved in you sought to have the treasurer position removed to prevent any further uncovering of your past and continuing financial misdeeds. Good luck explaining that in your current lawsuit. How about your self-enrichment plan for settling lawsuits to which you are a party at the expense of the rest of the homeowners in the WPOA?

How many property owners did you use the WPOA to foreclose on?
How many of those properties did you gift to insiders and affiliates?
How many of those did you then excuse the recipients from having to pay assessments - forever?

You and your admin can explain your answers to those and other questions in front of the judge and jury in current and future lawsuits in which you are a defendant.
On a quick bit of research it would appear the WPOA problem is the classic HOA problem - Apathy. They can't get sufficient attendance to hold a meeting.

While you belabor purported bad behavior by the Board it appears apathy is the biggest problem in that Association.

In general that tends to be the problem with many HOAs - Apathy..
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