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HOA Foreclosure

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BigHandsome

New member
What is the name of your state? North Carolina

A friend on mines condo was foreclosed on by her HOA as a result of arrears HOA fees.
The date of the foreclosure is February 2018.
She has been paying her mortgage as usual and is still living in the condo.
The sale price that the HOA paid for the unit, according to Durham County, NC public records is $9,000.
Her mortgage company has not communicated with her at all.
According to the public records a law firm that represents the HOA acted as Trustee for my friend (the homeowner) and the HOA.
The public property documentation shows the foreclosure and transfer as a “warranty” deed.
My question; Since the property was foreclosed on by the HOA, is the homeowner still obligated to pay the mortgage?
Are there stipulations put on warranty deeds that would make the homeowner remain obligated to continue to pay the mortgage although the deed is in the name of the HOA?
When an HOA forecloses in a property do they get the deed free and clear?

Please advise and thank you, in advance for your time and attention to this matter.
 


LdiJ

Senior Member
What is the name of your state? North Carolina

A friend on mines condo was foreclosed on by her HOA as a result of arrears HOA fees.
The date of the foreclosure is February 2018.
She has been paying her mortgage as usual and is still living in the condo.
The sale price that the HOA paid for the unit, according to Durham County, NC public records is $9,000.
Her mortgage company has not communicated with her at all.
According to the public records a law firm that represents the HOA acted as Trustee for my friend (the homeowner) and the HOA.
The public property documentation shows the foreclosure and transfer as a “warranty” deed.
My question; Since the property was foreclosed on by the HOA, is the homeowner still obligated to pay the mortgage?
Are there stipulations put on warranty deeds that would make the homeowner remain obligated to continue to pay the mortgage although the deed is in the name of the HOA?
When an HOA forecloses in a property do they get the deed free and clear?

Please advise and thank you, in advance for your time and attention to this matter.
The HOA does not get the property free and clear. It is still subject to the mortgage lien. What the HOA foreclosure means is that the HOA would collect any money owed to them, if a sale is forced, after the mortgage is first satisfied.
 

Zigner

Senior Member, Non-Attorney
To be clear: YES - at this point your friend is still obligated to pay the mortgage per the agreement that your friend entered in to with the lender.
 

FlyingRon

Senior Member
Note, not only does the foreclosure not affect the mortgage, it doesn't affect the HOA fee arrears either. Note that the liens are distinct from the debt obligation. The new owner is only obliged (starting within ten days in NC) to pay the fees from the date of sale forward. The original owner still owes the arrearage.

Now, the question remains as to how much money was netted from the foreclosure sale. Those go to pay off the lienholders in priority order (typically, the tax man, the mortgage lender, and the HOA).
 

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