office condo purchase - Posted by Don Shimizu

Posted by Natalie-VA on February 25, 2011 at 13:00:50:

Interesting thing I need to add, Rick.

In VA, when a 1st DOT forecloses, the POA and condo associations are usually out of luck; HOWEVER, when a 2nd DOT forecloses, condo liens jump in front of the 2nd DOT. This is only for condos, not POAs.

Just thought I’d throw that in to complicate it a little.


office condo purchase - Posted by Don Shimizu

Posted by Don Shimizu on February 23, 2011 at 12:08:28:

In my purchase contract, it states:

11.8 Owners Association Fees. Escrow holder shall: (i)bring Seller’s account with the association current and pay any delinquencies or transfer fees from Seller’s proceeds, and (ii) pay any up front fees required by the association from Buyer’s funds.

This was a foreclosure sale and the fees and assessments from the previous owner were extensive. The bank (Seller) has refused to pay any of the fees. Are they required to pay these fees according to the contract?

Thank you,

Don Shimizu

Re: office condo purchase - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on February 24, 2011 at 15:11:58:

In the HFC v. Thaler case, the most widely cited that I’m familiar with, the court ruled in favor of the new buyer; that it is the responsibility of the HOA to collect from the former owner(s).

So, this supports Natalie’s post, too. HOA’s frequently try to stick buyers with old dues. Foreclosure sale buyers even have this problem when the HOA lien, even when junior to a foreclosing lender’s lien (mortgage) and wiped off title, still make a play for the new buyer’s money. Such buyers would often have to accept the situation, acquiesce, and then sue the HOA for the disputed amount.

Now here’s my take on this: As long as the buyer is going to acquire via an escrowed transaction with title insurance AND it comes out of the seller’s proceeds, what do you care just so long as when you are the new owner, you don’t get stuck with the old owner’s baggage?

I think this clause works in the buyer’s favor.

Re: office condo purchase - Posted by Natalie-VA

Posted by Natalie-VA on February 24, 2011 at 10:36:26:

Don - I’m not a lawyer and the answer to your question is going to be state specific.

Usually, the bank will be required to pay the fees starting at the date of the foreclosure sale.

Anything prior does not have to be paid by the bank. The associations normally write those off as losses and/or pursue the previous owner.

Again, this is probably state specific and I only know how it works in VA.

The association management will always try to collect those fees, but they are not always aware of the law. Your closing attorney or settlement agent should be able to help with this. Just because the association asks for it doesn’t mean they are entitled to it.