TAKE TITLE TO PROPERTY AFTER FORECLOSURE?
BE CAREFUL WHAT YOU WISH FOR!
By Jan Bergemann
Published January 29, 2012
what you wish for was the warning given to board members who listened to
specialized attorneys pushing for fast foreclosure for unpaid dues. Make
no mistake: These attorneys make big bucks pushing the foreclosure
proceedings. As soon as the foreclosure took place these attorneys get
their money – paid for by association funds. Now it’s up to the
association to recover the money already owed on the unit plus the
thousands of dollars in legal fees spent on the foreclosure. The golden
carrot dangled in front of the board members’ faces? Rent out the unit/home until the first mortgage holder finally
forecloses. Don’t forget, the association has the right – now being
the deeded owner – to rent out the home/unit and collect the rent.
please think twice before you fall into this treachery trap. Many
associations have found out that attempting to recover lost income this
way comes with a high price. In many cases associations never recovered
all the money they had to spend before being able to rent the foreclosed
upon property before the foreclosure of the mortgage holder takes place.
forget, before the first rent reaches the association coffers, the
association has spent thousands of dollars to get to the point where the
property can be rented out, not counting the assessments, late fees and
interest already owed to the association. Many board members only found
out that thousands of dollars were needed to restore the property to a
state that allowed the home/unit to be advertised as a rental.
Add the latest decision of the Florida Third District Court of Appeals in the case of Aventura Management, LLC vs. Spiaggia Ocean Condominium Association, Inc.. In that ruling the court tells associations: Once you foreclosed on the property and became the deeded owner, all prior demands and debts are wiped out. No more demands on third party buyers who buy the property at the foreclosure sale initiated by the mortgage holder. The provisions that allows associations to collect prior debts from third party buyers (FS 718.116(1)(a) and FS 720.3085(2)(a)
moot. The association doesn’t receive one dime when the first mortgage
holder finally forecloses.
am not an attorney, but after reading this ruling over and over again, I
come to the conclusion that this ruling of “prior debts being wiped
out” goes as well for the money an association is entitled to get from
the first mortgagee [FS
718.116(1)(b) and FS
720.3085(2)(c)] – the so-called Safe Harbor payments.
my opinion the ruling of the 3rd DCA clearly means one thing:
Once the association took title to the property the association can’t
make any monetary demands to anyone after the foreclosure initiated by the
first mortgagee took place. Period!
the association could now go again after the original owner – but
honestly: Good luck on that attempt! That attempt might as well be listed
under the headline: More
Lost Legal Fees!
members beware when listening to the push of your association/collection
attorney to foreclose fast on that property with assessments in arrears
and take title a.s.a.p.. You could lose your shirt over it and spend a lot
more money on taking this path than you might recover. It’s like a
lottery: We may win – or we may lose (remember the Eagles?), but should
we really use association funds to play the lottery?
court ruling shows again that the system called community associations
sure doesn’t favor the owners who own property in these associations –
and pay their assessments as required!