March 11th, 2011 at 10:52 pm
Q: (Eric Eaton) In a short sale, if there are fees outstanding that should have been paid to an HOA, can the HOA pursue the seller? Can delinquent HOA fees paid by the buyer to close escrow later be collected from the seller? Do delinquent HOA fees have to be paid at all in order to close a short sale? Are they truly a lien on the property?
A: Eric, by statute, an HOA is entitled to lien a property if agreed upon dues or fees are not paid. So, yes, an HOA lien is a true lien. That being said, in our experience, most HOAs will not agree to release their lien without getting paid so they typically must be dealt with in order to close a short sale. As a result, the HOA’s “pursuit” of the seller is typically to record the lien and demand payment at sale. Of course, if those fees are paid by the buyer at closing, the seller no longer has any liability. The HOA is not entitled to collect the fees twice just because they were paid by the buyer rather than the seller. Most importantly on this issue, because HOAs are so difficult to deal with, it is very important that you address this issue early in the deal. Don’t wait to see if there is an HOA lien. Investigate it up front so you know what you are dealing with. Giving yourself more time to deal with these issues will make your short sale easier to close.
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