Last week
was a primer on how foreclosures generally work and how
banks get off the hook when they get back a unit when they
foreclose on an owner’s unit or home. We learned that the
banks are protected by the law because they only owe a few
bucks to the association when they get title to the unit or
home despite the fact that the owner owes a fortune to the
association. That’s called a “safe harbor” and it’s provided
to the banks because the banks claim that if you make them
responsible for paying unpaid assessments, they simply won’t
loan money to buy a condo or a home in an HOA.
But there
is some good news……….suppose the bank does not buy the unit
at their foreclosure sale and a third party winds up
becoming the successful bidder and the owner? What does
that new owner owe the association if that unit owes
thousands to the association in unpaid assessments? And the
answer under the law is EVERYTHING! They owe it
all. Florida Statute 718.116 states:
Additionally, a unit owner is jointly and
severally liable with the previous owner for all unpaid
assessments that came due up to the time of transfer of
title.
So, when a bank forecloses on a unit, or when the
association forecloses on a unit, the association hopes and
prays that a third party purchases the property at
foreclosure sale because that guy owes everything to the
association. UNLESS………………….
Remember last week that I said that some of you have
language in your governing documents that allows the bank to
get off the hook even though they would owe money to the
association if they wind up foreclosing and owning the
property? Well…..some of you have language in your
governing documents that allow third party purchasers off
the hook if they buy the property at a foreclosure sale.
So…..even though the association gets lucky and a third
party purchases the property at foreclosure sale, your own
docs kill you and lets the third party purchaser off the
hook. They owe nothing. Disaster.
So……over the past two weeks we learned that it is vital for
the board to check their governing documents to make sure
that neither the bank nor a third party purchaser is let off
the hook should they purchase a unit or home in your
community. Make sure your docs don’t kill you. If they do,
amend them immediately!!!!!!
