Articles, Case Study

Why Lien Foreclosures Work

An HOA turned over an account to our firm that was stalled in mortgage foreclosure and delinquent in HOA fees since January 2011. The Association attempted to cooperate with a payment plan, but decided to move forward with a lien foreclosure after the owner became combative and non-responsive. Our firm obtained a judgment despite delay tactics by the property owner. Three days before the scheduled lien foreclosure sale at the courthouse, a real estate agent wishing to facilitate a short sale requested an estoppel and cancellation of the lien foreclosure sale. The agent was advised that the sale would not be cancelled unless payment was delivered in certified funds at least 24 hours before the sale. On the eve of the lien foreclosure sale, owner’s agent dropped off a certified check for over $19,000.00 which satisfied all amounts owed!

What we can learn from this case is that even the most difficult owners might pay in full if heavy pressure is applied. Even if the owner cannot keep the home, pressure from a lien foreclosure might compel the owner to pay the HOA and complete a short sale. Lenders are offering financial incentives to homeowners to do short sales, but many owners have no incentive to do this if the HOA is not aggressive. Even if lien foreclosure does not compel this same result, it does allow the HOA to take control of the problem. If the HOA ends up completing the lien foreclosure process, it can rent the property or consider other options for applying pressure to the stalling bank. The last alternative for most delinquencies is to stay passive and allow the owner to enjoy the community at the expense of other owners. As always, feel free to contact us to discuss any issues in your community.