RE: Auction of Old Unreleased Assessment Liens

I saw you posted this in a few other postings. It's best that I just address the issue here. It appears that your HOA filed liens against non-payers and that owner has filed bankruptsy and has moved. It's unclear if the bank foreclosed on them or not. However, after explaining the situation you will see the answer.

Filing a lien for a HOA is NOT a 100% guarantee the money will be seen. The same with a lawsuit. (Which is NOT the way to go). A lien is a court judgement and is attached to the property. Typically that means an owner can NOT sell the property until the lien is paid off. A lawsuit judgement is attached to the person and they CAN sell the property. They can do so without ever paying the judgement unless someone remember it exists and renews it every 7 years. (Depending on your state). It also means tracking the person down to collect. A lien it should be found at the home's closing and held off then.

Unfortunately, there is a risk with filing a lien even though it is the strongest and best solution for collecting the unpaid dues/assessments. That is whenever the bank forecloses or the owner files for bankruptsy. If the bank forecloses on the property, they get paid FIRST and FOREMOST. The HOA is next in line IF there was any kind of profit from the foreclosure sale. Which there is mostly never is. So the lien is no longer valid and void. Not to say that there aren't other legal ways to MAYBE collect but you can't get blood out of a turnip and the expense of pursuing isn't worth the effort.

If the owner filed bankruptsy, it doesn't exactly absolve the debt to the HOA. Usually if they are filing bankruptsy, bank foreclosure isn't that far behind. It also means the HOA has to wait it's turn to collect. It's not next in line and could be behind other debtors who will see the money first if any. A lien should still be filed even if they filed bankruptsy and still own the home, but don't expect to see any money.

Foreclosure is a stop the bleeding step for the HOA. The HOA never ever wants to own the house. If the HOA does the foreclosing it is basically doing the work of the bank. The bank still gets paid FIRST and FOREMOST before the HOA. The first bid does go to the HOA for $1 of the debt owed (Legal costs of foreclosure/overall debt owed). So the HOA not only paid to have the foreclosure done but then would pay those costs again plus $1 to own the home so they could use the sale of the home to make any kind of profit. Which if you ever owned a foreclosed property they are in terrible condition and costs lots of money to repair. Plus if the owner still owes the bank money, the HOA would have to get a loan in addition. Let's say the HOA forecloses on a house for $5K. They at the auction would pay 5,001 and get the house. However, the house has a mortgage on it for 75K. That means the HOA has to get a loan for that 75K. Plus the HOA would have to pay for the repairs to fix the house up to sale/rent. In addition to that the HOA would have to pay the assessments/dues on the house while it owns it too. I don't know may HOA's who can afford to take on a house payment, repairs, maintenance, selling costs, and dues payments. Considering if this house is only worth $50K.

That is a short run down of the situation. Basically, the answer is NO your HOA can no longer collect on these outstanding liens. Especially since the person no longer is a member of the HOA once they sell the home.

Richard,

I would approach this with eyes wide open and trusting no one.

If you have an actual judgment where the court has ruled that homeowner X owes your association and you know where the debtor is, you may want to look into various avenues within the court system. For example, you can subpoena the debtor to appear with all his financial records to determine whether he has the means to pay (such as a job). If he is working, you can garnish his wages. If he has unencumbered assets, you may be able to seize them and sell them to pay the debt.

Basically, you have the same power to enforce these judgments that a commercial collector would have. If the judgments are collectible, the commercial collectors may offer only ten cents on the dollar. If they are not collectible the commercial guys will have no interest in them at all.

Be wary of collection agencies. They are cannibals and you are the barefoot pilgrim they plan to eat for lunch. I have heard of agencies that offer to collect for, say, one third of the debt. They then start collecting from the debtor, but the first third goes into their own pockets and you never see a dime. After they have collected that first third, the debtor still owes two thirds and the collector has no incentive to pursue it, leaving you high and dry.

There is merit in what Richard says. If the HOA does not intend on persuing any of this debt then what harm is there is selling it to a collection agency?
Notice I do say selling as in getting something for it and the HOA being done with it not.

As Larry says debt collection is a snake pit business so the HOA would have to be sure they are legally covered.

If you can get 20 Cents for the Dollar owed versus nothing for the Dollar owed, I say it should be looked at.

Moved means what?

Sold and moved, Foreclosed and moved or moved and is renting?

IF they are renting the property out, you should start the foreclosure process. You might not collect any money but you may stop the bleeding.

IF the unit was sold, the lien should have been paid at closing (unless it wasn't properly filed).

IF the unit was foreclosed on, as Melissa pointed out, you may or may not have gotten some money from the sale (taxes and first mortgage get paid first then if anything is left, other liens are paid). Once the foreclosure was final, and the bank took possession, the lien would likely have become unenforceable.

I was asking a question for you to verify a statement. You said that the owner moved. I asked what that meant.

My info/opinion about liens would apply to any HOA lien (1 or 1,000).

As for MD HOA liens, they must comply with the Maryland Contract Lien Act which, per this article the MD legislature is wanting to better clarify.

In my state, I would laugh my butt off. The number of entities who may seek foreclosure is limited. Mortgage lenders, trustees under a deed of trust, and HOA's are all specifically authorized to seek foreclosure. To the best of my knowledge, a debt collector has no such authority so the threat of foreclosure would be hollow.

The problem is that the right to foreclose on real estate, at least in my state, does not arise from the judgment but rather from the statutes that grant the right to certain parties under certain situations.

And remember: "Not all information found on the Internet is accurate." -- Abraham Lincoln.

Personally, I'd have the HOA foreclose on the properties and rent them out for years until the banks finally foreclosed on the HOA. You would make your dues back and more.

On the banner page of ths site, there is an article about a association tasking possession of a unit that owes back dues:

Illinois is the only state that gives associations the remedy of temporary possession to satisfy judgments against owners who are in arrears. Associations in other states typically initiate foreclosure proceedings and are awarded permanent possession of the unit.

Simply goes to show different things can be done in different states and we all need to keep that in mind.

Read the Banner Page

Have you contacted companies to see if they would be willing to purchase and, if so, by how much?

OR

Is this just a hypothesis and you haven't actually contacted companies?

Richard

As Tim said:

You don't have to convince anyone on this site about your idea, it's your board that you need to convince. If you were to convince me that it's a good idea, you would need more info, like actual proposals from companies.

Okay go and check this option out then. Make a few phone calls. We don't know the companies in your area that would do this. So why not go find out yourself on how this process works by calling a few collection agencies... I will give you a few days on this...BTW I have done this myself and as I state earlier NOT every collection agency collects on these types of debts. Especially ones involving bankruptsy or foreclosures. They can't get money out of this either. The collection agencies I have dealt with only pursue those that are related to INSURANCE claims or cases won in court due to judgement. You know those commercials that state they got "100K" from my injuries? They go after that 100K claim that may not have been paid out by the insurance companies/lawyers.

Good luck and do the actual research instead of bragging about it on here. We know better on these type things and wouldn't touch it with a 10 foot pole. It's just not worth it to us to collect on old debts but move on to concentrating on collecting from ones we can.

Richard,

Your proposal is likely as polished as it will be without actual proposals from companies or private investors.

I wish you luck in convincing your Board.

If you do convince your Board, let us know.

So after all those questions asked and requests for proof of concept it becomes what I thought the title of this thread was going to be in the first place. Another advertisement for a collection agency.

HEY RICHARDA you wouldn't happen to be Richard Atzrott the owner of the company you just advertised now would you?

Heck, the company and you are both out of Maryland.

All,

I do believe we have just been SPAMMED.

Lets Summarize:














My guess is his Board said the same thing we did.

For anyone who is or has been a volunteer who serves on the Board, irregardless of what office, they know that there are no set hours.


Not that it's relevant, but for me and the shift I am currently on it's effectively the middle of the night for me.

Typically when the discussions goes off the pros and cons of the topic and results to insinuations and name calling, to me, that shows that the individual can no longer support their opinion on it's merits and have already lost the debate.

You of course are doing your job promoting your company and it's services on a site that will reach the most number of potential clients at the least possible cost to you. I personally don't have a problem with that. That is capitalism which has been one of the core beliefs of this Country.

I do have a problem with the method (omission of facts) you used to promote your company. Had you come out at the very beginning and stated that you own a company that provides this service which may be helpful to collect delinquent accounts, I, (providing you complied with the posting rules and never mentioned the company and I suspect others, would have been happy to debate the pros and cons of that service with you from the perspective of members of the Boards we serve on. Members of this site have done this in the past and heck, in reading the thread I believe we have done that.

However, by hiding this fact, skirting around the rules by linking to a press release that was written by your company, and only admitting it once someone else disclosed the probability you were the owner of the company and asked you about it (and I do give you credit for admitting it), from my perspective you tainted the debate and gave the impression that it wasn't a debate you wanted to achieve but a sales pitch.


I thought we had already done that.

Many members gave opinions on the technique you promoted but haven't provided actual statistics of that technique being successful.

Many members of the forum gave other options on what they have used successfully when actually implementing those options.

From reading the two threads this has now taken over, we have discussed the process and the pros and cons of the following techniques:

1) Foreclosing on the property and have the Association take control of it.
2) Obtaining a judgement lien and go after other assets the member may own.
3) Obtaining a judgement lien and selling that lien (note) to another
4) Hiring a collection agency
5) Selling the debt to a collection agency
6) The FL Law which actually obligates the new owner to pay the previous owners debt
7) Writing the debt off.

To repeat some of your previous post:

Common sense does dictate the most profitable course.

I do believe that all the pros and cons have been fully discussed. If the moderator happens to allow these posts to stay, then you have succeeded in your goal. You promoted the technique that you believe will be best. At the very least that technique, if the Association used your service, would be profitable to you.

Now let others use their own common sense, do their own research and, by majority vote of the Board, make their own decision.

Lets us vote.

Is Richard spamming?

Either Yes or No pleae.

I say YES