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9/29/2012
VerifiedHi,
The condo association does not have a priority over the first mortgage, although it has a priority over everything else. So, the full sale price would go to the first mortgage. If there's money left, it goes to the condo association, then the second mortgage, then the owner (if there's any remainder). Any lien holder may choose to foreclose the lien if the amounts owed are not paid. The lien holder does have to request a judgment. Depending on the amounts involved, there could potentially be up to three liens. The foreclosure extinguishes all liens, so a lienholder could not foreclose again on the original debt after a new owner takes ownership. They would need to get a judgment against the original debtor.
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The condo association does not have a priority over the first mortgage, although it has a priority over everything else. So, the full sale price would go to the first mortgage. If there's money left, it goes to the condo association, then the second mortgage, then the owner (if there's any remainder). Any lien holder may choose to foreclose the lien if the amounts owed are not paid. The lien holder does have to request a judgment. Depending on the amounts involved, there could potentially be up to three liens. The foreclosure extinguishes all liens, so a lienholder could not foreclose again on the original debt after a new owner takes ownership. They would need to get a judgment against the original debtor.
Please rate my service before signing out, as this is the only way that I get credit for the time I spend helping you. I hope that you are 100% satisfied - if not, please click "reply" so that we may continue the conversation. Good luck.
The HOA is allowed to resell it - in fact, they have to, because they have a fiduciary obligation to the other homeowners, and it's in the best interests of the entire association to have the units not sit vacant falling into disrepair (and to have all of the units full of people who are paying HOA fees every month). And they're not really getting it for $100, since, if the HOA is the one that foreclosed, they'll have attorneys fees (which are usually several thousand dollars).
The condo association still has to pay the holder of the first mortgage with the money they get. That's because, no matter what, the first mortgage holder has priority and, legally, is entitled to the proceeds from a sale. They do not have to pay the holder of the second mortgage, unless there's enough money left.
The condo association still has to pay the holder of the first mortgage with the money they get. That's because, no matter what, the first mortgage holder has priority and, legally, is entitled to the proceeds from a sale. They do not have to pay the holder of the second mortgage, unless there's enough money left.
VerifiedLucy, Esq. and 87 other Real Estate Law Specialists are ready to help you
Maybe I'm not being clear, either. Maybe we're just having a disconnect somewhere.
Here's what the statute says. "The association has a lien on each condominium parcel to secure the payment of assessments. Except as otherwise provided in subsection (1) and as set forth below, the lien is effective from and shall relate back to the recording of the original declaration of condominium, or, in the case of lien on a parcel located in a phase condominium, the last to occur of the recording of the original declaration or amendment thereto creating the parcel. However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located. " Fl. Stat., Section 718.116. So, the first mortgage is ahead of the condominium's lien - it's a priority, but not a super-priority. If the winning bid at the foreclosure sale is $200K, the first lien holder would get $200K, unless the amount owed is less than that, in which case they would get the full amount owed on the mortgage, and the condominium would get whatever is left.
The first lienholder does have to get a judgment against the original debtor, unless they want to allow the person to continue making payments (I don't really see this as a likely scenario, but it's theoretically possible). The foreclosure does not remove the owner's liability for paying the original mortgage. When the HOA sells the property, they have to pay the mortgage company. But the mortgage company also has to agree to the transfer. They can require the new owners to take the property subject to the mortgage - but this is something that the new owners would be aware of, and they'd have to agree to pay someone else's mortgage, and agree that they would not be on the property, and that they would have no rights if the mortgage weren't paid, and maybe the problem here is just that it doesn't make any sense to me at all that anyone would do that. It makes much more sense for the bank to get a judgment against the original debtor, or require the purchaser to pay off the mortgage before moving in (by getting a mortgage in their own name).
If you're talking about things that are theoretically possible, even if they seem completely illogical, yes, a new purchaser could take the property subject to the first mortgage, and hope nothing goes wrong. If the first mortgage was never paid, the bank could foreclose, and the buyer would be left with nothing.
Here's what the statute says. "The association has a lien on each condominium parcel to secure the payment of assessments. Except as otherwise provided in subsection (1) and as set forth below, the lien is effective from and shall relate back to the recording of the original declaration of condominium, or, in the case of lien on a parcel located in a phase condominium, the last to occur of the recording of the original declaration or amendment thereto creating the parcel. However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located. " Fl. Stat., Section 718.116. So, the first mortgage is ahead of the condominium's lien - it's a priority, but not a super-priority. If the winning bid at the foreclosure sale is $200K, the first lien holder would get $200K, unless the amount owed is less than that, in which case they would get the full amount owed on the mortgage, and the condominium would get whatever is left.
The first lienholder does have to get a judgment against the original debtor, unless they want to allow the person to continue making payments (I don't really see this as a likely scenario, but it's theoretically possible). The foreclosure does not remove the owner's liability for paying the original mortgage. When the HOA sells the property, they have to pay the mortgage company. But the mortgage company also has to agree to the transfer. They can require the new owners to take the property subject to the mortgage - but this is something that the new owners would be aware of, and they'd have to agree to pay someone else's mortgage, and agree that they would not be on the property, and that they would have no rights if the mortgage weren't paid, and maybe the problem here is just that it doesn't make any sense to me at all that anyone would do that. It makes much more sense for the bank to get a judgment against the original debtor, or require the purchaser to pay off the mortgage before moving in (by getting a mortgage in their own name).
If you're talking about things that are theoretically possible, even if they seem completely illogical, yes, a new purchaser could take the property subject to the first mortgage, and hope nothing goes wrong. If the first mortgage was never paid, the bank could foreclose, and the buyer would be left with nothing.
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