Real Estate & Property Law

Pay and Stay - Why it Works for Everyone, Except the Banks that Delay Foreclosures.

I recently wrote a blog on my condolawguru blog which focuses on owner issues. Read that blog and this one.

This issue is a big one. Many owners are walking away from common interest development properties they cannot afford, assuming that neither the lender nor the association will come after them for accrued debt after the lender foreclosure goes through. This is a misconception that hurts, and they find out when the HOA comes calling for the personal debt of assessments . Yes, most assessment debt in California can be pursued either through an HOA or condo foreclosure, or as a personal debt action against an owner during the term of their ownership. That debt is not wiped out by a foreclosure sale of the lender.

It really hurts HOAs and Condo associations (and the guilty and non-guilty owners) when people walk away from their homes. (Note, I will let the lenders cry their own river, partially which "sprang" from their own actions of initiating such creative financing that they ended up eating alot of their own debt.)

Delays in lender foreclosures and in scheduled sale dates are common these days. We are talking weeks and months and in many cases more than a year. If owners who cannot pay the mortgage would just stay put and pay the assessments (what a concept), they would be better off because they could avoid the accrual of the association debt plus all the collection costs which often later bite them in the "pettuti." (An Iowa word for ">>tt".)

Yes people, you are only hurting yourselves when you move out and go somewhere else and pay rent, only to find out you could have stayed in your "diggs" another year for a lot less "rent". I just had a consultation with a client who had a sale date notice from the lender and paid his assessments to that date, and left. Later he received a bill for over $12,000 for assessments and costs. Lenders are postponing foreclosures and sales for longer and longer periods and it hurts everyone. Maybe it is just better to stay put and pay the assessments until someone with a trustees deed or Certificateof sale comes knocking - it's usually cheaper than rent. And even often then, the party that got the property at the lender sale might be looking for a renter.

Think about it.

Full post as published by California Condo & HOA Law on April 03, 2010 (boomark / email).