Hey Kenan, it’s not a common situation, but it does happen.
In Florida, when a mortgage is foreclosed first, it generally wipes out any junior liens, like an HOA lien (this doesn’t apply to municipal liens). So if the mortgage was recorded before the HOA lien and the foreclosure sale happened first that day, the buyer at the mortgage sale gets the title. If the HOA still goes through with its sale later that same day, it’s usually a timing or system issue, that second sale has no real legal standing because the lien was already extinguished.
Some people think HOA liens survive foreclosure because of the Safe Harbor rule, where banks or whoever takes title after a mortgage foreclosure still owe up to 12 months of assessments or 1% of the original mortgage. But that’s not because the lien survives, it’s just a statutory payment the new owner has to make.
What I can tell you is that once both Certificates of Sale are issued, things can get messy fast, with challenges between parties that might delay or block the issuance of the Certificate of Title. In cases like these, honestly, it’s better to walk away.
Hi,
Fernando is correct. I have been a Real Estate REO (Foreclosure) listing broker
over 30 years in Florida. My experience when listing these REOs is that the
Tax Liens and HOA/Condo Liens survive foreclosure.
The Safe Harbor rule applies to Banks, Certain Mortgage Servicers/Mortgage Investors,
HOWEVER IF YOU ARE NOT A BANK OR ENTITY - SERVICER / LENDER
covered by the Safe Harbor rule. You COULD BE LIABLE FOR THE FULL DELIQUENT HOA/CONDO LIEN, NOT JUST 12 MONTHS !
I know buyers first hand who came to me after they bought at auction and found they owed
the full AMOUNT of delinquent HOA / COA Dues!
I advise getting a good real estate attorney; get preliminary title, lien search & HOA Estoppel letter BEFORE buying or Bidding on a Property at Auction (Clerk of Courts or third party auction).
Same goes for HOA Foreclosures & Tax Lien Sales.
If it is too ugly walk-away, wait for lender to foreclose. Thanks,
Randy L. Swihart, CRB, CDPE, SFR
BROKER / REALTOR
License # BK3213477
Florida REO Services of Jax, Inc.
Office Phone: (866) 547-2939
Mobile/Text : (904) 383-9221
[email protected]
www.fla-reo.com
