Article Courtesy of Your Observer

By Pam Eubanks

Published July 27, 2015

LAKEWOOD RANCH — Looking at the cream-colored home on Sandhills Place, it’s hard to notice any difference between it and its neighbors in the Lakewood Ranch Golf and Country Club — aside from some missing mulch in the front flower beds and faded paint in a few not-too-obvious places.
 

But it is different: It’s the first home now owned, at least temporarily, by the community’s homeowners association, the Country Club/Edgewater Village Association. “It’s the first house we’ve taken title to,” CEVA President Steve Peters said, noting the property had already been abandoned by its previous owners. “We knew this house was vacant, and there was no other recourse for us.” CEVA began the foreclosure in December 2014; an online auction for the property in May yielded no bidders. So CEVA purchased the property for $500, court records show. It took title to the home June 3.

Typically, homeowners associations’ hands are tied in maintaining distressed properties, but one Lakewood Ranch HOA is in a unique position to protect its owners.

Peters said the board has several options: own the home and do nothing but pay for electricity and perform other maintenance to prevent mold and other issues inside it; rent out the property and recover some costs (and potentially generate income); or sell the home at at online auction, if the court permits it.

What happens to the mortgage?

Per Florida Statute 720.3075, an association may foreclose a lien for assessments in the same way a mortgage of real property is foreclosed upon to bring action to recover unpaid assessments without waiving a claim of lien.

Regardless, the HOA is subject to the bank’s mortgage and will lose title once the bank forecloses on the property.

As specified in state law, at the time of bank foreclosure, associations generally receive the lesser of the parcel’s unpaid common expenses and regular or special assessments accrued during the 12 months immediately preceding the acquisition of title and for which payment has not been made; or 1% of the original mortgage debt.

CEVA prefers the latter option, Peters said. It plans to petition the court for a second online auction because a buyer would assume the liability of the Bank of America mortgage, which is $338,000 plus interest, plus pay the $8,015.13 owed to CEVA. That option also would keep the board out of the property-management business.

“Our first preference was to have someone buy it (at auction). We’d get our full value (of assessments owed),” he said.

CEVA has filed 11 total foreclosure actions on properties; 10 of those concluded with an online sale of the property.

At its next board meeting in August, CEVA board members will discuss the possibility of renting the home out, along with other options, until Bank of America completes its foreclosure process and retakes possession of the property. Determining the best “next step” could take a few months.

“(Renting) has the potential of adding significant costs — insurance, appliances, inspections,” Peters said. “We’ll evaluate it as a board.”

By the numbers
2,000 — Single-family homes within CEVA
735 — Condominiums in CEVA
11 — Foreclosure actions taken by CEVA
$8,015.13 — Final summary judgement amount for CEVA

Any lease created by CEVA with a tenant would be subject to a quick 90-day out for a tenant if Bank of America does complete the foreclosure process.

But, CEVA is prepared to do whatever is necessary for ensuring the property keeps to community standards.

“The main reason for the homeowners association is to maintain the value of the properties for its members,” Peters said. “Obviously, an abandoned property does not enhance the value for the neighbors and their investment. Everything else that follows, stems from that.

“All this is for the best,” Peters said. “We don’t want prospective buyers to see problems with deteriorating homes.”

The Sandhills property has been in the bank foreclosure process since May 2010, when Bank of America Home Loans Services filed foreclosure actions for the property’s remaining mortgage principal.