HOAleader.com - Tip of the Week - November 5, 2010
Published: Fri, 11/05/10
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What's Your HOA's Remedy When Lenders Slow-Walk Foreclosures?
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In this week's tip, we tackle new legal maneuvers your homeowners
association can try when lenders are stalling foreclosures to
avoid paying HOA fees.
"A reverse foreclosure is a method associations are using as an
alternative to completing a foreclosure action by the lender,"
explains Kyle Hooper, an associate at Atkinson, Diner, Stone,
Mankuta & Ploucha PA in Ft. Lauderdale, Fla., who represents
about 40 community associations. "Generally, in the lender
foreclosure action the association is named as a party defendant.
The foreclosure goes on for months, and there's very little
activity that occurs. The banks are stalling, or because of
governmental reasons, the banks aren't able to proceed. The
foreclosure just sits in limbo."
An association can move the process along by filing its own
foreclosure action, either on its own or as a counterclaim in the
lender's lawsuit. But when the association gets title to the
property, the lender will still hold a mortgage on it--often for
more than the property is worth. "The association is stuck,"
explains Hooper. "It can renovate the property and rent it out,
but there's no guarantee the lender won't crank up its
foreclosure action again and say, 'Thanks for doing those
renovations, association!'"
In a reverse foreclosure, after the association gets title to the
property in its own foreclosure action, it files a motion in the
lender's foreclosure asking the judge to move the process along.
"When this foreclosure the bank has initiated is going in, the
association can file a motion simply outlining the lack of
progress in the lender's foreclosure case and saying, 'We want
the bank to provide the court with a reason it's not moving or
else let us come back in and acquire clean title," explains
Hooper.
"The association is essentially saying, 'We'd be more than happy
to turn this property over to the bank. We'll waive all our
rights, but we want the lender to move on it.' If the association
wins, the court can say, 'You're right. You've been hurt, and we'
re going to tell the lender it has to move forward and set a sale
date for the property.' The sooner the lender takes title, the
sooner it has to pay the association's fees."
However, reverse foreclosures aren't possible in all states, and
even when you can try them, there are risks. To learn whether
your association could try one--and other alternatives if it
can't, see our new 3-part article:
http://www.hoaleader.com/members/502.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Can Your HOA Pull a Reverse Foreclosure?
Lawyers in Florida have begun to push back against slow-motion
lenders unwilling to complete a foreclosure to avoid assuming
liability for HOA fees. The process has been dubbed a "reverse
foreclosure." It's not risk-free for homeowners associations, so
here we discuss the pros and cons.
Click here to read full article:
< http://www.hoaleader.com/members/502.cfm >
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The Downside of Reverse Foreclosures for HOAs
The risk to a reverse foreclosure is that you can spend tons on
legal fees to be right back in the position you were in before
you filed your motion.
Click here to read full article:
< http://www.hoaleader.com/members/503.cfm >
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Reverse Foreclosures Not an Option for HOAs in Some States; Plus
a New Strategy to Consider
When a reverse foreclosure isn't legally viable or is too
expensive or risky, you still have options. Here's a new strategy
for homeowners associations that's gaining steam in Florida.
Click here to read full article:
< http://www.hoaleader.com/members/504.cfm >
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What Should Your HOA Board Do After An Accident?
In the middle of the night on Aug. 31, bricks began falling off
the Carol Shire Commons condominium complex, according to the
Carol Stream Press. By the time the fire department arrived, six
decorative exterior balconies had collapsed. No injuries were
reported, but 10 families were displaced.
Click here to read full article:
< http://www.hoaleader.com/members/500.cfm >
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Selling HOA Common Elements and Giving Proceeds to Owners;
Discussion Forum Follow-Up
Our reader's question is seemingly simple: "Our small Texas
property owners association is considering selling some unused
common area land on which we pay taxes every year but do not use.
Can the income be distributed to property owners, and how would
the tax liability be handled?"
Click here to read full article:
< http://www.hoaleader.com/members/499.cfm >
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