HOA Lien and Avoidance

[DAE]

Is there any benefit to going through the process of avoiding a HOA lien on a house if there is no intention of keeping the house and it's underwater?

[despritfreya]

No. All pre petition HOA fees are discharged. . . the lien will survive but that is not your concern since you are letting the property go. You simply need to pay all post petition HOA fees until the property is lost to a foreclosure. Keep good records as you don't want the HOA to back apply the payments. Most HOA’s have figured the rules out but there still are some that have not.

Des.

[tobee43]

des, interesting enough, we (our HOA, i have been helping the handling of the lien process) and i'm doing work for a few local HOA assocs., we are adding the liens to the be carried over to the banks. (ran it by the HOA atty...he said go for it?) so we aren't going after the old owners. figured it may be a better way to get some of the money back? i was just figuring like any other costs to do with foreclosure why not hit the bank? no?....so far, one bank paid all back HOA fees at the closing. we have about 6 pending. i just figured one cannot get blood from a stone, so why not get some granite from the stone itself?

[despritfreya]

. . . we aren't going after the old owners. figured it may be a better way to get some of the money back? i was just figuring like any other costs to do with foreclosure why not hit the bank? no?....so far, one bank paid all back HOA fees at the closing. we have about 6 pending. i just figured one cannot get blood from a stone, so why not get some granite from the stone itself?

But. . . and since I do not do foreclosure work. . . is not the HOA junior to the 1st (PMSI) lien? If so, why would a lender cut a check to pay the HOA when all junior liens are extinguished when the property is foreclosed? (I do know that an HOA is ahead of any 2nd or HELOC type loan - but maybe not in the case of those stupid 80/20 100% finance loans.)

Des.

[tobee43]

yes, it's junior, the banks are passing on the costs to the new owners as well as some other fees they are now tacking on. some i have never seen before, must be these new "higher" closing costs are all rolled over into the bank fees they are charging the buyers with the new laws in place. i really have no idea how they are getting away with it. so really it's not the bank paying it's the new owner.

there are so few banks lending they can charge buyers anything and they apparently are.

[DAE]

Des, my HOA fees were accelerated for all of 2011. They were due and payable when the association filed for a judgement lien in March (pre-petition). Does that make ALL of the 2011 fees a pre-petition debt? Is the argument that I owe no HOA fees through 2011 (if the house is still in my possession) a valid argument?

[DAE]

I also understand that many banks are paying the post-petition HOA fees too. Not as a kind gesture to the former owner/debtor, but to clear the title. I guess whether the debtor ultimately needs to pay is part and parcel of the timing of the foreclosure sale. If the sale occurs long after the stay is lifted, I suppose the HOA files another suit rather than waiting for the bank to pay them. Is it correct to think that rather than filing for a lien, this time around (since the house is no longer in my name) they seek a judgement for immediate payment just as any other unsecured lender would?