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WiseOwl58, Lawyer
Category: Real Estate Law
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Experience:  Experienced real estate lawyer and real estate broker.
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I am considering purchasing a country foreclosure auction in

Customer Question

I am considering purchasing a country foreclosure auction in Palm Beach County, Florida next week (I've done it before so no need for the warning), but I see during the lien search there is substantial outstanding debt to their POA as well as the to the Country Club the home is located within (mandatory membership). The thing that is throwing me off is that the HOA foreclosed on the homeowner one year ago. Now the Mortgage company is foreclosing on the HOA next week. So, my question is, were the POA as well as the country club outstanding balances wiped out when the HOA foreclosed on the homeowner a year ago? Or will they still be attached to the foreclosure the mortgage company has now initiated against the HOA and f I purchase it am I liable for the POA and CC dues? Or do they not survive regardless?
Submitted: 11 months ago.
Category: Real Estate Law
Expert:  WiseOwl58 replied 11 months ago.

Florida is a deficiency judgment state, which means the prior claims remain and are not wiped out. You should take this into consideration in your bid price.

When a lender forecloses on a mortgage, the total debt owed by the borrower to the lender frequently exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.” In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower. (Learn about methods that creditors can use to collect judgments.)

Effective July 1, 2013, the period of time in which the lender may seek a deficiency judgment is reduced from five years to one year for residential properties with no more than four dwelling units.

Additionally, the deficiency judgment cannot exceed the difference between the judgment amount and the fair market value as of the date of sale if the property is:

  • owner-occupied and
  • residential.

Deficiency judgments for short sales involving owner-occupied residential properties are limited to the difference between the outstanding debt and the fair market value.

Customer: replied 11 months ago.
the lender can get a deficiency judgment against the borrower for the difference between the foreclosure price at auction and what they were owed, but not against the purchaser of the foreclosure auction. correct? OK, but my question is specifically what happens in my particular situation. The HOA foreclosed on the Homeowner a year ago. Now the Mortgage Lender is foreclosing on the HOA. There is also a POA named as a defendant, as well as there are outstanding POA and Country Club dues. Did those get wiped out with the HOA foreclosing on the homeowner last year? Or did they survive and if so, if I purchase the auction next week will I then be responsible for the POA and the CC dues. If so, for how many years?
Expert:  WiseOwl58 replied 11 months ago.

No it doesn't get wiped out and the lien would be against the property, not against the prior owners individually. You would remain liable for all uppaid fees to the POA and CC, which is why you should factor that in to the bid price. You can find out from them or from the court filings what the amount owing is.

Please rate 4 or 5 and close out the question. Good luck to you. I wish you all the best.

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