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Since you moved out four years ago, your HOA has continued to incur & pay for expenses for something that legally belonged to you (your trust). Maybe they've been dipping into the HOA reserves to cover your unit's share of the property expenses. Now it's time for the HOA to pay back their reserves to avoid increasing assessments to other property owners. Sounds like if they settle then the other homeowners will have to cough-up the difference. And pay for legal fees. If the HOA won't settle, then they must feel they have an air-tight right to the monthly dues and legal fees.
Are they just putting a lien on the property (amount determined in court), and then collect later when the property is sold?
Puhlease. These "expenses" will almost certainly consist almost exclusively of attorney fees and management company junk fees for pursuing this to begin with. Anyone that actually has experience with an HOA knows that this isn't a group of homeowners "negotiating" with each other but rather a private corporation run by vendors that prey on the homeowners. The "they" isn't the homeowners, its the HOA attorney and management company.
The law in the OP's state is most relevant. The OP made inconsistent statements such as
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The title is granted to the family trust
and
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We have spoken to few lawyers and they all suggested we settle since our names are still on the title.
Who has legal title to the property - the trustee(s) in capacity as trustees of the family trust (no personal liability) or the individual homeowners? Either title is held by the trustee of the family trust for the benefit of the beneficiaries or the title is held by the homeowners.
If the actual homeowners do not have legal title, the HOA corporation will be limited to pursuing the family trust (i.e., the trustee in its capacity as a trustee, not personally liable) because the beneficiaries of the trust are not the legal titleholders. If the only asset in the family trust was the house then the HOA corporation vendors will end up with a worthless judgment. Consider NOT settling with the HOA after consulting with a real estate attorney in your state to determine your exposure.
It's rather interesting that the sales pitch by the true believers is that HOAs "preserve property values". Here's isolated instance # 53,165,778 illustrating that the HOA preserves value only for the developer, local government, and the vendors NOT the homeowners. There sure have been a lot of ridiculous assumptions here such as the assumption that this was a "condo" rather than HOA-burdened property or that the HOA corporation provided services of any sort to these homeowners or the property. The HOA could have mitigated its damages if it had foreclosed in 2010.
The reason the HOA did not foreclose is not out of some altruistic behavior but rather because the VENDORS hope to get more or at least some money by shaking down the homeowners with the threat of foreclosure. Many of these vendors enter into contingency fee agreements with the HOA corp and they make more off of the threat of foreclosure as opposed to actual foreclosure.
The HOA corporation can foreclose and whoever purchases it at the foreclosure sale will get wiped out when the bank forecloses. As a practical matter, the purpose of HOA foreclosures is to feed the HOA attorneys and the HOA management companies, not the HOA corporation.
Last edited by IC_deLight; 10-15-2013 at 08:02 PM..
Sounds like the HOA figures they can stick the owners with a white elephant -- presumably the house has negative equity, so they can't sell it. They can't use it because the bank changed the locks. So they figure they can force the titular homeowner to pay fees indefinitely for a house they can't sell and can't use.
The HOA could foreclose, but then they're left with the white elephant themselves -- an HOA foreclosure does not clear the primary mortgage, so the HOA would have to pay the mortgage or risk foreclosure by the bank.
IANAL, but I'd be tempted to let the HOA get a default judgement. How would they enforce it.... file another lien on the upside-down property, right?
Puhlease. These "expenses" will almost certainly consist almost exclusively of attorney fees and management company junk fees for pursuing this to begin with. Anyone that actually has experience with an HOA knows that this isn't a group of homeowners "negotiating" with each other but rather a private corporation run by vendors that prey on the homeowners. The "they" isn't the homeowners, its the HOA attorney and management company.
The law in the OP's state is most relevant. The OP made inconsistent statements such as
and
Who has legal title to the property - the trustee(s) in capacity as trustees of the family trust (no personal liability) or the individual homeowners? Either title is held by the trustee of the family trust for the benefit of the beneficiaries or the title is held by the homeowners.
If the actual homeowners do not have legal title, the HOA corporation will be limited to pursuing the family trust (i.e., the trustee in its capacity as a trustee, not personally liable) because the beneficiaries of the trust are not the legal titleholders. If the only asset in the family trust was the house then the HOA corporation vendors will end up with a worthless judgment. Consider NOT settling with the HOA after consulting with a real estate attorney in your state to determine your exposure.
It's rather interesting that the sales pitch by the true believers is that HOAs "preserve property values". Here's isolated instance # 53,165,778 illustrating that the HOA preserves value only for the developer, local government, and the vendors NOT the homeowners. There sure have been a lot of ridiculous assumptions here such as the assumption that this was a "condo" rather than HOA-burdened property or that the HOA corporation provided services of any sort to these homeowners or the property. The HOA could have mitigated its damages if it had foreclosed in 2010.
The reason the HOA did not foreclose is not out of some altruistic behavior but rather because the VENDORS hope to get more or at least some money by shaking down the homeowners with the threat of foreclosure. Many of these vendors enter into contingency fee agreements with the HOA corp and they make more off of the threat of foreclosure as opposed to actual foreclosure.
The HOA corporation can foreclose and whoever purchases it at the foreclosure sale will get wiped out when the bank forecloses. As a practical matter, the purpose of HOA foreclosures is to feed the HOA attorneys and the HOA management companies, not the HOA corporation.
The HOA will just go after the trust. No matter what if the house has not changed ownership to the bank whoever is the legal owner weather it's the OP or his trust they will go after the owner.
The vendors take care of all the properties not just the OP's. Someone other than the owner of that property paid for that portion of the maintenance. The tacked on fees are just that.
If you had a outstanding bill to a customer I bet you would tack on late fees, service fees etc right. Financially its smarter for the bank and HOA to sit back and rack up the fees. The homeowner is still liable so why should they hurry to foreclose. It's no skin off their back.
Lots of homeowners are finding out that banks never foreclosed when they walked away and they are still legally liable for back taxes,fees etc. People think ill just walk away its now the banks/someone else's problem. Well yes and no. Banks don't give a flying f about your house. Banks want MONEY not houses.
Most people don't seem to get that the bank does not own your house. You own the house. The bank simply uses the house you own as collateral for the money they lent you. You are liable for taxes repairs and fees otherwise the bank would be paying those if they were the owners. If you buy in a HOA you knowingly enter a separate agreement to follow their rules. You don't want HOA fees? Don't buy in a HOA.
Personally I would try to get what I could but HOA's can be pretty bullheaded. If the bank forecloses the HOA debt won't get wiped out as you put it. You can't sell the house with a lean. I guess you can if you do a conditional release. You have to satisfy the lean. Bank foreclosing means squat if HOA leans. Someone is gonna pay that lean either original owner their estate the bank or the new owner. But I guarantee you someone is gonna pay.
OP have you been paying the property taxes on the property! If you haven't you or the trust can be on the hook for those also. A trust protects the property from some things not all things.
Last edited by Electrician4you; 10-15-2013 at 11:30 PM..
The HOA will just go after the trust. No matter what if the house has not changed ownership to the bank whoever is the legal owner weather it's the OP or his trust they will go after the owner.
The vendors take care of all the properties not just the OP's. Someone other than the owner of that property paid for that portion of the maintenance. The tacked on fees are just that.
B.S. First off, you have no idea what the nature of this property was. It's amazing to me that people assumed these were condos or that the property was inherited. Now people are imagining that maintenance was provided to the OP's property.
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If you had a outstanding bill to a customer I bet you would tack on late fees, service fees etc right. Financially its smarter for the bank and HOA to sit back and rack up the fees. The homeowner is still liable so why should they hurry to foreclose. It's no skin off their back.
The HOA corp isn't racking up the fees. Don't you listen? The HOA VENDORS are the prime beneficiaries. They claim to be representing the "HOA" and at all these fees are owed to the HOA corp. Most of the fees are likely junk fees for NO services and certainly no services benefitting the titleholder. Maybe the HOA corp should be held liable for loss in value of the property.
The bank, on the other hand, may be delaying for several reasons. For starters, the bank may be masquerading as the principal when it is actually a servicing agent for some other entity. The bank knows it can wipe out any lien imposed by the HOA corp. The bank might just be waiting until the market turns around. Whatever amounts the HOA attorney and HOA management company claim are owed are irrelevant to the bank. The bank can wipe it all out when it forecloses. The bank would be liable if it acquires the property at the foreclosure sale. By delaying a sale, perhaps the bank is minimizing its exposure to HOA assessments. After all, the banks know that HOAs don't preserve value for owners. Why take on such a liability?
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Lots of homeowners are finding out that banks never foreclosed when they walked away and they are still legally liable for back taxes,fees etc.
The bank can't wipe out back taxes with a bank foreclosure. The taxes will get paid one way or another or else the property will be foreclosed by local government.
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People think ill just walk away its now the banks/someone else's problem. Well yes and no. Banks don't give a flying f about your house. Banks want MONEY not houses.
The bank is likely just a servicing agent for another entity. If the bank wanted money it would foreclose. The bank knows that HOA-burdened property is nothing but a liability.
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Most people don't seem to get that the bank does not own your house. You own the house. The bank simply uses the house you own as collateral for the money they lent you. You are liable for taxes repairs and fees otherwise the bank would be paying those if they were the owners. If you buy in a HOA you knowingly enter a separate agreement to follow their rules. You don't want HOA fees? Don't buy in a HOA.
stop building all new housing as HOA-burdened property and you will have few people choosing to be subjected to involuntary membership corporations with perpetual liens that can never be paid off.
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Personally I would try to get what I could but HOA's can be pretty bullheaded. If the bank forecloses the HOA debt won't get wiped out as you put it.
Wrong. HOA burdened properties throughout the country were generally set up to provide that the HOA lien will be inferior to a lien held by an actual lender. This means that even if the HOA lien is earlier in time, it is junior to and inferior to the mortgagee's lien. If the mortgagee forecloses, it wipes out all junior liens - in this case the HOA loses its security interest in the property as to the amounts allegedly accrued prior to the foreclosure.
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You can't sell the house with a lean.
A "lean"? It might be harder to sell a leaning house...but that's an issue for a different thread.
You probably meant "lien". However, as stated above the HOA's claim gets wiped when the mortgagee forecloses because the HOA lien is junior to the mortgagee's lien. In some states, the HOA management companies and HOA attorneys have lobbied for HOAs to have "super liens", i.e., the HOA lien is wiped except for say 6 months worth of assessments. The HOA corp may not see a penny of it. The management company and HOA attorney expect to be the prime beneficiaries - that's why their trade groups lobbied for such a scheme. California is not a super lien state.
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I guess you can if you do a conditional release. You have to satisfy the lean. Bank foreclosing means squat if HOA leans. Someone is gonna pay that lean either original owner their estate the bank or the new owner. But I guarantee you someone is gonna pay.
Not correct. In some states the HOA might have a limited "super lien" but the HOA lien is otherwise inferior to the mortgagee's lien and will be wiped out when the mortgagee forecloses. The purchaser at the foreclosure sale is at risk only for assessments that accrue after the foreclosure sale - not any prior to the sale. California is not a super lien state. After the foreclosure sale, the HOA will not have a security interest in the property for amounts accrued prior to the foreclosure sale. So the HOA lien for amounts prior to the foreclosure sale means "squat" to the foreclosure sale seller or purchaser.
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OP have you been paying the property taxes on the property! If you haven't you or the trust can be on the hook for those also. A trust protects the property from some things not all things.
The purpose of the trust is not to protect the property but rather to protect the beneficiaries. The local government will be limited to pursuing the trustee of the trust in its capacity as trustee, not for personal liability. Usually local government just conducts a tax sale of the property.
My wife and I owned a property in northern california. The title is granted to the family trust. We moved out of the property in November 2009 because BOFA was going to foreclose. Until now the property is still not foreclosed and we have no physical access to the property (all locks changed by the bank). for the past 4yrs we live in apartment with signed lease. The HOA is suing us for breach of contract of the CC&R. The HOA elected to foreclose the property in 2010, but did not follow through. They demanding about $10k at this time including legal fees plus ongoing assessment until the property is sold and our name not on the title. We have spoken to few lawyers and they all suggested we settle since our names are still on the title. We offered a settlement, the HOA denied it. We asked for a counteroffer and they said they are not going to settle. The are suing me, my spouse and the trust. We do not feel that we are obligated to pay this amount, however, we want settle and move on. What can we do here?
Bottom line:
1. You abandoned the property thinking it would be foreclosed quicker and got stuck in limbo in the mess
2. You want either the bank or the HOA to foreclose and be stuck with your property to remove the burden of your HOA fees and mortgage.
3. You thought a family trust protected you from individual financial liability on the debts
You ARE in breach of your contract according to the lawyers you spoke with. Furthermore, you are decreasing the value of that entire community with that foreclosure on record, dragging down the value of all the OTHER property owners.
I live in an HOA. Why should I assume your HOA fees and own your property?
You need to hire an attorney who will advise you about timing your bankruptcy or payments. They are your two choices. Doing nothing hasn't worked out very well for you.
Sounds like the HOA figures they can stick the owners with a white elephant -- presumably the house has negative equity, so they can't sell it. They can't use it because the bank changed the locks. So they figure they can force the titular homeowner to pay fees indefinitely for a house they can't sell and can't use.
The HOA could foreclose, but then they're left with the white elephant themselves -- an HOA foreclosure does not clear the primary mortgage, so the HOA would have to pay the mortgage or risk foreclosure by the bank.
IANAL, but I'd be tempted to let the HOA get a default judgement. How would they enforce it.... file another lien on the upside-down property, right?
OH RIGHT!
It's not like the deadbeat property owner is trying to stick the HOA with a white elephant.
This is a matter of contract law. Luckily it has nothing to do with people's opinions of HOAs.
Yes, wasn't think of that case. If the OP moved first then I understand it, though I wonder why the bank would drag its feet for nearly four years. Usually they're over-eager to foreclose, with the people still in the house....
Sounds like their lawyer is acting in his or hers own best interest and hoping for a big payday.
I think you have no clue what's really been going on in the foreclosure arena and homeOWNERS abandoning properties thinking they can just walk away.
And you're completely ignoring the fact that MANY moratoriums were put on foreclosures since the real estate meltdown.
The HOA corp isn't racking up the fees. Don't you listen? The HOA VENDORS are the prime beneficiaries. They claim to be representing the "HOA" and at all these fees are owed to the HOA corp. Most of the fees are likely junk fees for NO services and certainly no services benefitting the titleholder. Maybe the HOA corp should be held liable for loss in value of the property.
WRONG. My HOA does forced maintenance of the property and will bill the homeowner and it's certainly NOT unique.
As IF we're going to allow floods from the hot water heater, mold from not running the AC and crap to destroy our community? NO.
Some didn't - and their property values reflect those poor choices.
The HOA could foreclose, but then they're left with the white elephant themselves -- an HOA foreclosure does not clear the primary mortgage, so the HOA would have to pay the mortgage or risk foreclosure by the bank.
The HOA couldn't pay the mortgage as the bank will not deal with the HOA in that manner, however, the bank could take the home into foreclosure at any time leaving the HOA with nothing. It is a calculated risk that an HOA can take. The bank will only deal with the current mortgagee until it is foreclosed.
Keep in mind that laws do vary from state to state and I am referring to FL and as a member of an HOA.
B.S. First off, you have no idea what the nature of this property was. It's amazing to me that people assumed these were condos or that the property was inherited. Now people are imagining that maintenance was provided to the OP's property.
The HOA corp isn't racking up the fees. Don't you listen? The HOA VENDORS are the prime beneficiaries. They claim to be representing the "HOA" and at all these fees are owed to the HOA corp.
The Property Management companies are ONLY authorized to proceed with fines, foreclosure proceedings, legal actions at the direction of the HOA and not until then. They are not authorized to do so with approval, they cannot take it upon themselves.
How did you come up with that "Pearl of Wisdom" ??
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