One of the first questions I ask when a Seller comes to me asking to list their home as a short sale is whether they’re current with their association dues. If the Seller is not current, I let them know that they need to make the fees current or work out a payment plan with the association before I take on the short sale. The only time I’ve ever had a short sale not close is because the association refused to budge on their back fees, the Seller couldn’t pay for it, and the lender refused to pay for all of it. I learned my lesson quickly and decided I wouldn’t take that risk again. Months and months of work to face that kind of wall is really frustrating and expensive (in terms of hundreds of hours spent on the file and then not close). But there’s another major reason why homeowners need to stay current.
Everyone knows that the bank can foreclose on you if you stop making payments, but not as many homeowners are aware that the HOA or condo association can also foreclose on you. Florida law allows the associations to place a lien against your property for the value of any unpaid dues or assessments. The associations then take possession of the property to recover the value of that lien. Because most back fees are less than $15K, the association may file for foreclosure in county courts, that are much less backlogged, and that means that they foreclose much quicker-usually less than 6 months. Some also believe that the association will not take possession of the property if there’s no equity, but that’s just not the case. Many associations are quick to take possession and rent out the property in order to recover those back dues until the mortgage company forecloses (could be years in Florida).
Also keep in mind that if you have filed a bankruptcy, the debt is forgiven for you, the human being, up to date of the discharge. That debt however, still remains attached to the property and continues to accumulate. So if you decide to do a short sale after filing for bankruptcy, the lien amount that will be on the property will be from the very beginning of when you stopped making payments. Lenders aren’t very fond of paying high delinquent association fees, so the responsibility falls on you to pay for those back fees before you close, or face a foreclosure on your record.
I understand that times are still tough, and the reality is that not everyone can keep up with their mortgage payments. But if you can keep current with your association dues, please do! I cannot stress how much of a headache you’ll be saving yourself!
If you or anyone you know need help Selling or Buying a Home in Broward & Miami-Dade Counties, please don’t hesitate to call me at 954.667.7253
Office :: 954-667-7253