Foreclosed Unit, new renter

I just found this sight a few hours ago and have already found interesting and useful information. This will be going out to the Board members for sure.

I have a question that may be a little different than most. We currently have a unit in our community that is being foreclosed. The owner rents this unit out and just lost his last renter when the sheriff showed up and served the papers. Scared her pretty bad.

This owner is also delinquent by several months in paying dues. Our documentation is old, very very old. We are one of the first associations formed and nothing has ever really been done to update the documents. We are also only 16 units in size, and this lengthy delinquency is hurting us. We had started the do the foreclosure thing and aren't MCIOA.

My question is this, is there anything that the association can do to force this owner to pay his dues, short of taking him to small claims court? Is there any legal recourse to keep him from signing a new renter while he is in foreclosure?

Thanks,

Brad

Brian is right, I am not sure on Minnesota law but lien the property..that won't guarantee anything in a foreclosure.

We have filed liens, placed late fees and interest. There is nothing in our documents that gives us any method other than liens or foreclosure for dealing with these issues. You need to understand that these documents are from the early 70's, so they don't really contain anything useful in them. We have been trying to get them updated, but we suffer heavily from lack of interest in anything.

The board removed the property manager three years ago, as it was found they were not actually involving the board in decisions. Insurance has been hard to find due to their filing any and all claims against the HOA policy instead of the HO's when it was applicable. I apologize if it seems that we have not been doing anything, but a lot of work has been done just to try and get things where they should be.

I believe there is also a way, during some point in the foreclosure action, where the rental income can be court ordered into a separate account pending the outcome of the lawsuit.

No - there is nothing you can do about what he does with his property, including renting it out, until he goes thru a very long foreclosure process.

Believe me, I see this all the time. People are "PLANNING out" the foreclosure process here in Michigan. - using the 6 months it takes for the authorities to actually throw someone out to save up enough money for a new house!!

In Ohio a COA can:
5311.18
(B)(2) In a foreclosure action a unit owners association commences pursuant to division (B)(1) of this section or a foreclosure action the holder of a first mortgage or other lien on a unit commences, the owner of the unit, as the defendant in the action, shall be required to pay a reasonable rental for the unit during the pendency of the action . The unit owners association or the holder of the lien is entitled to the appointment of a receiver to collect the rental. Each rental payment a receiver collects during the pendency of the foreclosure action shall be applied first to the payment of the portion of the common expenses chargeable to the unit during the foreclosure action.

George perhaps you missed this part of my post:add language to the lease, while nothing is guaranteed to hold up in court I would imagine that they had their attorney either draft it or look it over, so it would probably be valid for their community. This is the language of that particular section. This is not legal advice and anyone wanting to use similar restrictions should consult an attorney as to whether or not it would be valid in your location.

4. Payment of Assessments. Upon written request by the Association and after written notice to Landlord, both notices by certified mail return receipt requested, Tenant shall pay to the Association all unpaid annual assessments, special assessments and charges, interest, costs and attorneys' fees, as determined and payable by Landlord to the Association during the term of the Lease and any other period of occupancy of the Tenant. Tenant may deduct such payments from the monthly rental payments due to the Landlord; provided, however, Tenant need not make such payments to the Association in excess of, or prior to the due dates for, monthly rental payments due at the time of the Association's request. Landlord waives its rights under this Lease and Lease Addendum for any sums owed by Tenant to Landlord as rent which Tenant has paid to the Association pursuant to this provision. All such payments made by Tenant to the Association shall reduce by the same amount Tenant's obligation to make monthly rental payments to Landlord and such amounts shall reduce Landlord's obligation to the Association.

Thanks for the clarification and the specific language. I did see the reference. I was thinking of the case in which the specific language is not included in the lease. That would make the lease technically invalid, but only the owner and lessee, not a third party, would have standing. (Most covenants, I have reviewed, have a section that requires the declaration of covenants to be incorporated by specific language into the terms of any lease.)

I seriously doubt the renter can be held liable for unpaid assessments outside the period of the lease. The covenant contract is between the owner and the association. The renter is a "innocent" but benefiting third party. I have not run across a situation in Hoosierland where a tenant was named as a party in a lawsuit or evicted in a dispute between association and owner.

I gotta say, though, that condo law may allow this in other states.

This is a bit like a garnishment of wages. But it would take a court order to invoke payment to the association for unpaid assessments by a renter. A simple covenant provision would not do the job in Hoosierland.

Of course, were I a renter faced with a court order to pay someone else other than the lessor, I would think twice about renewing the lease. Indeed, I would seek in via motion in the same court to invalidate the lease so I could move.

And, given the court situation today, it would take at least a year, if not longer, for a suit to be heard. So the whole think would be moot by the time it came up for adjudication.

Sadly, just because an attorney--even one with significant experience in homeowners association practice--approves a document or a change, does not reassure me that a provision is enforceable. I see too much really crap (excuse the language) legal work being done for homeowners associations. I think the legal profession relies too much on questionable language and the threat of expensive litigation they know they will not win, to intimidate homeowners.

From a purely intellectual point of view, it would be interesting to see a case like this develop.