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I am the listing agent in a short sale of a property

transaction in Chicago. My client has...
I am the listing agent in a short sale of a property transaction in Chicago.
My client has an unpaid Assessment balance of $5000 with the HOA(including late fees).
We are trying to have the Buyer pays this balance,but buyer doesn't want to pay the whole balance.
Therefore,I want to try negociating with the HOA to reduce and settle the balance for half(its currently 24 months unpaid Assessment at 300 per month).What arguments from the ones below are correct(to convinse the HOA they are better off in negotiating with me ,instead of letting property foreclose:
1)by Illinois law,buyer has to pay only 6 months of hoa ,so 1800
2)if property foreclose,the bank will be forced to pay the HOA the full balance????or only 6 months??
3)if property forecloses,my client/seller will file Bk 7 anyway,so the HOA won't be able to collect from my client anyway.Please correct if the affirmations above are not valid.Thank you
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Answered in 8 hours by:
10/8/2016
Attyadvisor
Attyadvisor, Attorney
Category: Real Estate Law
Satisfied Customers: 8,985
Experience: 30 years of experience in General Practice, Real Estate Law and Estate Law.
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1)by Illinois law,buyer has to pay only 6 months of hoa ,so 1800

The 6 months that you are referring to sets in when the bank (lender) forecloses.

"The Illinois Condominium Property Act states that if you buy foreclosed property from the bank, you are responsible for assessments for the six months immediately prior to when the association instituted legal action to collect the assessment, assuming that such assessment is still unpaid. Take note: if the homeowner did not pay assessment for more than six months before the association took legal action, you are still only liable for six months’ assessments. If the association never took legal action, you are not responsible for the assessment at all. In fact, I’ve had a few clients benefit because they were purchasing a foreclosed condo in an association that never filed suit for past due assessments."

This is how works with all HOA's in Illinois. This based on Public Act(###) ###-####http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=094-1049

In a short sale the purchaser is generally purchasing from the seller (owner) is that correct this situation? http://amdanilaw.com/2008/07/condominium-assessments-when-buying-foreclosures.html

2)if property foreclose,the bank will be forced to pay the HOA the full balance????or only 6 months?? The buyer pays 6 months under Public Act(###) ###-####http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=094-1049

3)if property forecloses,my client/seller will file Bk 7 anyway,so the HOA won't be able to collect from my client anyway. This falls under

11 U.S.C. § 523(a)(16) Under 11 USC 523(a)(16) of the United States Bankruptcy Code there is an exception to discharge for any fee or assessment that comes due and payable after the case is filed. Any that were due prior to the case being filed are discharged but any that rack up later the debtor is responsible for as long as he or she remains on title. http://bankruptcylawofficemn.com/homeowners-association-dues-still-owed-after-filing-a-bankruptcy/

http://codes.lp.findlaw.com/uscode/11/5/II/523

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Ideally in a short sale the bank/lender takes on the delinquent dues. This is not a hard and fast rule and the amounts owed can be negotiated to expedite a closing. The lender may agree to split the purchaser and the HOA may agree to a reduction.

BK does not discharge the owner/seller debt to the HOA. Delinquent HOA dues are considered both a real property debt and a personal debt. If property is already in foreclosure the purchaser agrees to 6 months. If no foreclosure has been filed, the purchaser is not responsible for the past due assessments. In reality you may find that the short sale will not close depending on the amount of dues owed and what all parties will agree on.

You just need to remember that the lender won't always agree to a short sale nor are they required to do so. On the other hand the Board of an HOA is required to collect all assessments and special assessments and that is why they are difficult to negotiate with. There is leeway with the attorneys fees and costs but not generally the actual dues.

This is the link to file the complaint http://portal.hud.gov/hudportal/HUD?src=/topics/housing_discrimination

Please do not hesitate to ask me any additional questions that you may have with regard to this matter as it would be my pleasure to assist you.

If you would be kind enough to rate my service positively so I will receive credit for my work I would appreciate it.

Please do not hesitate to ask me any additional questions that you may have with regard to this matter as it would be my pleasure to assist you.

If you would be kind enough to rate my service positively so I will receive credit for my work I would appreciate it.

Attyadvisor
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