Dear Socrateaser --
Thank you very much for your response. Very insightful....
Just to clarify:
Can we argue that fees incurred by the HOA trying to force foreclosure by the first lien holder and interest are not the responsibility of the new owner? (Excerpts of the covenants and restrictions of the community have been inserted above) and
Have courts held in favor of purchasers?
Thank you very much!
Are you practicing real estate law in Florida?
If so, could you please send us your contact information, we are looking for a real estate lawyer.
My husband and I bought a property at a foreclosure auction (first lien holder) in Florida. After the sale we became aware that pursuant to Florida Statute(NNN) NNN-NNNNwe would be jointly and severally liable for unpaid HOA assessments that had accrued. The HOA fees are for five years, the amount is substantial.
We read the case Coral Lakes Community Association vs. Busey Bank, in which it was held that the Statute would not apply as the HOA documents included specific provisions regarding payment of HOA dues for properties acquired through foreclosure. Our situation is very similar to the one described in that case; however, the HOA Declaration of our community is silent with respect to purchasers other than first mortgagees. The relevant provision reads as follows
“When any first mortgagee obtains title to a lot as a result of a foreclosure of mortgage or deed (or assignment) is given in lieu of foreclosure, such acquirer of title, his successors and assigns, shall not be liable for the share of assessments pertaining to such lot or chargeable to the former owner which became due prior to the acquisition of title as a result of the foreclosure or deed in lieu of foreclosure, unless such share is secured by a Claim of Lien for assessments and recorded prior to the recordation of a mortgage. Such unpaid share of assessments for which a Claim of Lien has not been recorded prior to the recording of the foreclosed mortgage or deed given in lieu of foreclosure shall be deemed to be assessments collectable from all lots, as the necessity may arise in the discretion of the Board.”
Although the HOA Declaration does not refer to a person other than the first mortgagee obtaining title to a lot as a result of a foreclosure, could we still argue that we should be covered by the HOA Declaration rather than the Statute for the following reason:
The first mortgagee is an intended third-party beneficiary of the Declaration. It is detrimental to a first mortgagee if a buyer that acquires the property in foreclosure auction is held liable for assessments chargeable to the former owner. That is, because a reasonable person acquiring a property in foreclosure will reduce the amount offered to the first mortgagee for the property by the amount of unpaid assessments payable to the HOA. In order not to undermine the protection afforded to the first mortgagee by the HOA Declaration, the provision of the Declaration (i.e., no liability for unpaid assessments) should be extended to any person obtaining title to property pursuant to the foreclosure of a first mortgage.
In other words, although the HOA Declaration is silent with respect to persons other than first mortgagees acquiring a property in foreclosure, it can be presumed that the intention of the parties at the time of execution of the HOA Declaration was to include persons other than first mortgagees.
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