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Bucking the HOA system: Delinquent condo association unit owner tries bankruptcy, foreclosure, and buy back at sheriff's sale

Posted on Tue, Jan 12, 2010 @ 06:20 AM

When an owner of a unit in a condo association or HOA is delinquent in paying his condo maintenance fees and then the property goes into foreclosure, then to a sheriff's sale can the HOA force the new owner to pay the past HOA dues of the previous owner as a condition of the sale? We are in the state of Indiana.

I have tried to get someone in the industry to tell me exactly what a sheriff's sale involves (including the sheriff's office that I called 4 days ago have not heard back from yet) and so far I haven't been able to get any answers.

Last week the owner of the condo unit said that the information regarding his unit going to sheriff's sale is a mistake but as of today the delinquent property is still being shown on the list for the Feb. 2 sale.

There must be some way to get information about what liens are required after the amount listed by the sheriff is met and the highest bidder takes ownership. I have been told that the owner who is not the developer, bought the condo unit through his business or LLC and intends to bankrupt the condo unit to buy it back through another business he currently owns for pennies on the dollar. As a matter of fact he may have already bankrupted that shell and thus sending the property into foreclosure. That sounds illegal.

How much access to that type of information am I able to obtain before the sheriff's sale. I just want to know if there are going to be complications after the fact if I am the highest bidder on the property. Can the sheriff's sale be cancelled at any time prior to the sale and if so under what conditions would it be?

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Do you have a state omnbudsman? We have one in the state of Florida and so far I have found the office to be very helpful when inquiring. Where is the sale going to take place? Near you? If so, perhaps you can visit the office from which the sale is to take place.

posted @ Tuesday, January 12, 2010 7:57 AM by Cindi Waters

You REALLY need an attorney's opinion, not just some opinion here. It is my understanding that you may be able to go after the previous owner even if it is foreclosed, but that most likely would involve a money judgment, which is a fixed amount. Once passed, additional monies spent in trying to collect could not be added. 
The board needs to make a business decision on if this unit is worth the expense and effort to attempt to collect. It may cost more money than it is worth. 
I also recommend that unless you have proof, that the board not discuss this widely.

posted @ Tuesday, January 12, 2010 9:12 AM by Joe Schuirmann

As noted above, the HOA needs the opinion and assistance of a qualified condo law attorney knowledgable with the applicable laws in Indiana. Your management company should be able to refer you to someone they've had good experience with. If they used an HOA collections trustee - often off-shoots of condo law firms - your collections trustee should also be able to assist you in answering your questions. 
In California the law now protects the unit owner from foreclosure. In my experience, if the HOA follows the law to the letter (and doesn't forget that it's a corporation and shouldn't take pity on scofflaw owners) it can generally collect on delinquent HOA dues - assuming the unit can be sold for enough to cover the outstanding mortgage(s) (1st, and sometimes 2nd lienholder(s). However, there is ALWAYS a loop hole, which your unit owner appears to have found. Of course, the unit can be sold to any buyer at the highest price - be it the current unit owner, someone else, or even the HOA if it wishes.  
That said, once the unit is sold - and unless the HOA is the owner of the unit - I do not believe there is anyway you can force payment of the prior debt which the previous owner owes, without going after his assets, or those of his corporation.

posted @ Thursday, January 14, 2010 1:21 PM by Allison Cease

The process is fairly streamlined in WA. But I see that the sale date has already passed. I would be interested in finding out how this all turned out? 
HOA Receivables Management

posted @ Monday, February 08, 2010 1:01 PM by Darron

Builder has about 11 units left of a 110 unit condo project to sell. Project is over 4 years old and the streets are private. He has not completed the final surfacing of roads and township will not permit him to close any more units till he complets roads. He claims no funds and may go bankrupt. Can we foreclose and if we do, can we collect the past due monthly maintenance fees from mtge holder

posted @ Friday, August 13, 2010 8:52 AM by Alan D. Reuter

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