Purchasing Foreclosured uUnits

The new owner isn't responsible for the prior owner's debts. They get a clean slate and are considered a new member. The HOA should have put the lien on the property BEFORE the bank foreclosed. Even then, the bank is paid first. Which means the lien may not be paid if the bank doesn't recover enough of their money.

The HOA dropped the ball and can't go back and clean up their mess. Call it a lesson learned and apply it to the next situation. By the way, you can find out about liens/foreclosures in your local paper in the classified LEGALS section of your local newspaper. They publish them on a various schedule per whatever paper is setup to do. Ours publishes the legals section twice a week. This should help give the HOA a heads up on who is facing a bank foreclosure before it happens to have time to place a lien.

I've run into this same situation. A LLC is very difficult to lien against because they are a limited liabilty Corporation. It provides them some protections versus being a fully incorporated. It's not worth pursuing the old dues but taking steps to be more pro-active in the future.

mellisa is 100% on target. A lesson we probably all have learned at some point.

Jeff you mean the FORMER owner not the current one. It is possible to pursue the former owner to collect against. Each state is different in regards how and if you can do that. However, not having filed a lien prior to the foreclosure may make it more difficult. It's just not a fruitful pursuit to do this. The money is better spent concentrating on not letting this happen again.

The HOA needs to set up a time limit when liens/foreclosures can take place. We collected dues every month. It was at 6 months of non-payment we preceeded to put a lien on the property. At 6 months this allowed the owner to make efforts to catch up or make arrangements. After about a year or considering the circumstances of the situation, foreclosure procedures may start being looked into. A HOA foreclosure does the work of the bank for the most part and isn't a profitable endeavor. It's just a "Stop the bleeding" measure. If the bank is foreclosing on the property, then the HOA should NEVER consider foreclosure. Just leave the lien in place. The bank is paid first and always anyways. (Some states have "Super liens" which make those liens equal to being paid to the bank).

It's good to have a policy on when your HOA considers too much money owed. It will help when doing the research to find the owners and keeping an eye on the legal section of the newspaper. A lesson I found out the hardway...