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LawTalk
LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 27871
Experience:  I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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I am not sure if this falls under real estate law or some other.

Customer Question

I am not sure if this falls under real estate law or some other. It involves a mortgage. The HOA foreclosed on my property in FL which surprised me considering I owed more on the mortgage than the property was worth. I had been trying to get help from the bank for years and got all kinds or reassurances without action and a lot of "sorry we didnt receive or lost your application". The bank continues to charge me interest while they drag their feet. The bank has started foreclosure (last september) proceedings, but there is no hearing scheduled. I notified the lawyer that the property was already foreclosed on by the HOA and that there was a sale of the property to the HOA. I no longer own it, but still get charged interest. I recently received a notice from the bank that they have no record of home owners insurance and they are going to bill me for it. I notified them that I do not own the property. They sent another letter stating my mortgage documents state I agree to keep insurance on "your" property and failure to do so is breach of those requirements. I do not want the bank adding any more charges to my mortgage to pay for things that are out of my control like interest because they have dragged their feet and insurance when the property was seized from me. Am I required to pay when the property was foreclosed on and sold to the HOA?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  LawTalk replied 1 year ago.
Good afternoon,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today. In order to give you a clear and concise answer, I will need some additional information about the circumstances, please.

1. Did the HOA actually file a new deed with their name as the new titleholder? Or are you still the legal title holder?

Doug

Customer: replied 1 year ago.

I received a "Certificate of Sale" from the Lake County Court House. I certify...Clermont Yacht Club Master Association, Inc, to whom the property was sold." Published in The Daily Commercial.


 


I do not know if a new deed was ever filed. I will have to look into.

Expert:  LawTalk replied 1 year ago.

Good afternoon Kevin,

Thank you for the additional information.

First of all, in Florida, HOA's have what is known as super lien status. That means that they can foreclose on the property and collect their money first. However, that will not eliminate the lien of the mortgage lender, and that is still a valid encumbrance on the property that you will have to deal with.

So the lender really has little desire to foreclose on the property---because thereafter as long as they own it, they have to pay the HOA fees and assessments.

I presume that you no longer live in the home, and are not paying mortgage, taxes or HOA fees---and that you don't intend to return to do so. Consequently, I'm wondering why it will bother you to have the lender put insurance on the property. All it is going to do is increase a bill that they won’t likely ever collect from you anyway.

The reason that they need the insurance is because it is almost a dead certainty that the HOA is not insuring the property. The HOA could get their payment out of the bare land alone if the home were destroyed. It is the lender who stands to lose if there is no insurance---and so of course they are going to insist on coverage. And even if you are no longer the title holder, you are under contract with the lender to provide coverage so long as your loan is in existence.

So from a legal perspective, the mortgage agreement requires that you pay the loan, taxes and insurance.

What typically will happen in the future is that the lender will eventually foreclose, all the HOA to get their money, and then the lender will take what is left. And as property values are finally rising, the lender has no financial advantage in foreclosing right away---they can bide their time.

I wish you the best in 2013.

I understand that you may be disappointed by the Answer you received, as it was not particularly favorable to your situation. Had I been able to provide an Answer which might have given you a successful legal outcome, it would have been my pleasure to do so.

You may reply back to me using the Reply to Expert link if you have additional questions.

Kindly take a moment to rate my service to you based on the understanding of the law I provided. Please understand that I have no control over the how the law impacts your particular situation.

Thank you,

Doug


LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 27871
Experience: I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
LawTalk and 5 other Real Estate Law Specialists are ready to help you
Customer: replied 1 year ago.

Thank you.


 


I guess you are saying the requirement to provide insurance is tied to the mortgage and not the property. My concern is the bank will eventually issue a 1099C which I will have to pay taxes on. The more fees that are attached the more I have to pay in taxes; especially if the tax shelter expires the end of the year and the bank delays selling the property beyond that date.

Expert:  LawTalk replied 1 year ago.

Hi Kevin,

I'm not sure what tax shelter you are referring to. But the IRS has for many years allowed taxpayers to not pay income tax on forgiven/written off obligations to the extent that the taxpayer is technically insolvent.

Yes, if you have more assets that you do debts---including the mortgage debt---then you may have to pay taxes on the 1099 income.

But yes, the insurance obligation is attached to the mortgage, and not to the fact that you are, or are not, the title holder of the property.

I wish you the best in your future.

Doug

Customer: replied 10 months ago.

I have since discovered that the HOA is the title holder as of July 2012. There has been no activity on the bank foreclosure. Thank you.

Expert:  LawTalk replied 10 months ago.

Hi Kevin,

If you are trying to ask a new question, it eludes me. Were you simply making a statement?

Doug

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