Can a Condo Association Collect Unpaid Dues and Fees After the Property is Foreclosed On?
Full Question:
Answer:
I am assuming that the foreclosure was due to a loan on the property (mortgage) by a lender separate from the condo association. The loan contract is separate from the obligation to pay condo fees, and the condo association is not a party to the loan contract, therefore, their right to be paid is generally unaffected by the foreclosure. It is possible for a homeowners association to foreclose on property after a lien for unpaid dues.
Priority of liens is determined by the date of recording. A judgment lien is created after a plaintiff gets a judgment for money damages against a defendant and records a judgment lien in the county where land of the defendant is located. Often, the the mortgage holder will have priority over any later filed liens (junior creditors), and the liens junior creditors hold will only be able to be collected out of any remaining proceeds after the mortgage holder is paid. If the property securing the mortgage is sold in foreclosure and no proceeds remain to pay junior creditors, it is possible the junior creditors could attach other assets of a judgment debtor.
In the case of a lender, a deficiency judgment is a judgment lien against a debtor, defendant or borrower whose foreclosure sale did not produce sufficient funds to pay the mortgage in full. This option may or may not be available to the lender, depending on whether they have made a recourse or non recourse loan. A non-recourse loan means the buyer cannot be personally held responsible for any deficiency in the loss of a property due to foreclosure or other factor, and the lender generally can't pursue a deficiency judgment.
Please see the information at the following link for further discussion:
http://realtytimes.com/rtpages/20060104_newlaw.htm
http://www.searchlightcrusade.net/2007/02/nonrecourse_purchase_money_loa.html
