Category Archives: Foreclosures

Collecting Unpaid Assessments from the Association’s POV

This question comes from the Florida Condo & HOA Law Blog, published by Becker & Poliakoff, one of the most recognized condo & HOA association firms in Florida. A writer asked:

Question: We recently had a home sell in our community, which is governed by a homeowner’s association. However, the title company handling the closing only collected a portion of the amount we stated was due prior to closing. We were of the understanding that the title company would be required to collect all amounts at closing. Now, it appears that the new owner is trying to flip the property and leave the next owner holding the bag. We sent a demand letter to the new owner but must wait 45 days before filing a lien. Are we correct in believing that the title company should have collected all amounts we claimed in our estoppel, and if so, what recourse do we have? S.J. (via e-mail)

To summarize the question, the association wants to know which party is responsible for paying unpaid assessments- the old home owner, the new owner, or the title company?

As Joseph E. Adams explains in the article, the title company cannot be held responsible to the association because there is no privity of contract between the two parties. In other words, since the association and the title company did not have a contractual agreement of any sort, the title company cannot be held liable to the association.

We know that Florida Statutes provides in the Florida Homeowners’ Association Act that a current owner is responsible for all unpaid assessments on the property left by the previous owner. It would truly be a nightmare situation to purchase a property that had thousands of dollars in unpaid assessments on it and not have previously know about that liability. The liability is only capped by the Act if the new owner acquired title via foreclosure or by taking a deed in lieu of foreclosure and is a first mortagagee.

An association’s governing documents may alter the liability limits for a prior owner’s assessments when a new owner acquires title through foreclosure. They may also allow an association to pursue the old owner and/or the new owner for unpaid assessments, including filing a lawsuit for money damages against the old owner or recording a lien against the property (held by the new owner) and foreclosing the lien if it remains unpaid.

A new property owner can avoid being left holding the bag by making sure a lien search is conducted and estoppel information is obtained prior to taking title to the property in an association. This is equally applicable to those who take title through a foreclosure sale because, although their liability may be capped under the Act, there still will be liability.

Only by getting estoppel information from the applicable associations (there may be more than one!) will a purchaser know what unpaid assessments she would be liable for. How does one go about obtaining this estoppel information? By using a trusted, professional company that specializes in navigating the complexities of association ownership. One such company that does that and is relied upon by some of the largest title companies in the Florida is Premier Lien Research, LLC.

To read Joseph E. Adam’s full article, click here.

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Filed under Associations, Buyers, Foreclosures, Investors, Legislation, Lien Laws, Nightmare situations

Top 10 Code Violations; Florida Named as #1 State for Violations

Field Asset Services (FAS), a Texas based property preservation, REO maintenance and repair services company released its list of Top 10 Types of Code Violations. The list is based on FAS’s research compiled from its work with 30 mortgage and asset management clients nationwide. Here’s the list:

"No". House in Mid-City New Orleans,...

By Editor B / Bart Everson via Wikimedia Commons

Top 10 Types of Code Violations
1.    High grass and weeds
2.    Nuisance such as abandoned vehicles and trash at the curb.
3.    Graffiti
4.    Open or vacant structures
5.    Junk, trash, and debris
6.    Minimum housing standards or habitability usually pertaining to the condition of the property.
7.    Substandard structure such as dilapidated sheds or detached garages.
8.    Unmaintained or unsecured swimming pools
9.    Dead trees and landscaping
10.  Vacant property registration

Said Dale McPherson, Chief Executive Officer, Field Asset Services about code violations:

Cities and local municipalities across the nation are becoming more vigilant towards issuing code violations to reduce blight and improve neighborhood conditions. With foreclosure timelines reaching nearly 21 months, these fines can add up over time, even exceeding the value of the property itself in some cases.

According to FAS data, Florida surpasses all other states in the amount of these violations. For example, FAS once encountered a property in Coral Springs, Florida that, since 2008, had violation citations accruing for an overgrown lawn, roof discoloration, a stagnant pool, and poor exterior maintenance. At at rate of $125/day for 927 days plus additional penalties, the property owed the City of Coral Springs $434,654.50.

While FAS worked to remedy the code violations and lower the fine amount for the Coral Springs home, hundreds of thousands of properties in Florida are without the benefit of FAS’ services and the daily accruing code violation fees for those properties are unrecorded in official records. Only by performing an unrecorded lien search can a prospective owner, lender, asset manager, real estate agent, attorney, or title/closing company know the true value of the subject property. Premier Lien Research, LLC is here to assist you! For more information please visit PremierLienResearch.com.

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Filed under Buyers, Code Violations, Florida Real estate, Foreclosures, Nightmare situations

Proposed Bill Tries to Accelerate Foreclosure Cases

Florida courts are still backlogged with foreclosure cases. They have been for the past couple of years now. In a new attempt to speed foreclosures through the judicial system, the House of Representatives introduced HB 213. Of particular note for lien holders of the subject property, the bill would provide a mechanism to accelerate the foreclosure process. If passed, it would read:

702.10 Order to show cause; entry of final judgment of foreclosure; payment during foreclosure.
(1) Any lienholder may request an order to show cause for the entry of final judgment in a foreclosure action. For purposes of this section, the term “lienholder” includes the plaintiff and any defendant to the action who holds a lien encumbering the property or any defendant who, by virtue of its status as a condominium association, cooperative association, or homeowners’ association, may file a lien against the real property subject to foreclosure. Upon filing, the court shall immediately review the request and the court file in chambers and without a hearing. If, upon examination of the court file the court finds that the complaint  is verified, complies with s. 702.12, and alleges a cause of action to foreclose on real property, the court shall promptly issue an order directed to the other parties named in the action to show cause why a final judgment of foreclosure should not be entered.

According to the bill’s definition, “lienholders” include condo and homeowners’ associations (they have lien rights for assessments and fees due on properties part of the associations) and municipalities (they have lien rights for unpaid utilities, assessments, improvements, etc.). Click here to read about the source of their lien power.

HB 213 would allow lienors to ask the foreclosure judge for an Order to Show Cause, which if granted would essentially force the parties to explain why the the court should not enter a final judgment of foreclosure disposing of the case immediately.

Not only will the parties be able to move the case forward via an Order to Show Cause motion, but they will also be able to 1) move to default co-defendants who never responded to the complaint and 2) request a case management conference where a timetable of dates would be entered to keep the case on track.

I’ve personally experienced cases where foreclosing plaintiff-banks did absolutely nothing to move their cases forward, leaving my former clients, like HOAs, in limbo with unpaid assessments growing by the day. It would have been empowering to take charge of those cases and force them to a disposition. If HB213 passes, that can be done.

Stay tuned for more info on HB213 and what it means for new owners of abandoned properties.

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Filed under Associations, Foreclosures, In the Courts, Legislation

Florida real estate predicted to stabilize; grow in 2012

English: This is a modern day picture of downt... Clear Capital, a California-based real estate research company, said in recent statement that it expects several Florida real estate markets to experience continued growth:

Miami and Tampa are projected to be among the five highest performing metros with 8.8% and 7.4% growth, respectively, and Jacksonville is forecasted to gain 4.3%, placing it at a respectable eighth among the top metro markets. The exceptional growth in these markets can be a result of several factors, including being hit especially hard in the downturn. While fighting back, they remain significantly off their highs of 2006. Other factors in play in these markets include large increases in the values of their lower priced homes (near double-digits for all markets) when compared to higher priced segments of the market, and a high percentage of all cash transactions (51.8%) when compared to other metros. This indicates a high degree of investor activity as they look for bargains in the region, driving up demand.

Read the full report at

http://www.clearcapital.com/company/MarketReport.cfm?month=January&year=2012

 

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Buyer lucks out after realizing $100K+ foreclosure deal is ‘worthless junior lien’

This is such an appropriate story for this site’s first post. It is a textbook case of what could happen when a prospective real estate purchaser does not do all his homework on the property he is looking to buy. Gus Armenakis of Coconut Creek didn’t pay for a title search but instead did his own due diligence on a four-bedroom Parkland home and determined it had only one mortgage worth $90,500:

Armenakis, a 38-year-old doctor, logged in to the Broward County foreclosure auction website and spent six figures on what he thought was a bargain-priced four-bedroom home in Parkland. It turned out to be a worthless junior lien. The lender, Wells Fargo, still had a first mortgage worth $386,593 [on the property].

Armenakis filed an objection to the sale, which was denied by a Broward judge. Wells Fargo filed to foreclose, and the auction was scheduled for Wednesday. “It might be legal, but ethically it’s not right,” Armenakis said last month. Wells Fargo apparently agreed because the lender gave him his money back. Armenakis cashed the $102,600 check on Friday. Novice investors routinely make the same mistake Armenakis made and they don’t typically get their money back, auction officials say. (Source: http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2011/05/wells_fargo_returns_102600_to.html)

Jason Menke, a spokesman for Wells Fargo, said in a statement: “Bidding on properties at foreclosure auction is a very different process from a standard home purchase. As with any real estate transaction, prospective buyers should carefully research the property before the sale to fully understand what they are bidding on.” For sure, Armenakis learned his lesson from that nightmare situation and, if he had to do it again, would have sought out professionals skilled at researching title and lien information… Knowledge is power; knowledge is peace of mind.

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