Last week was a primer on how foreclosures generally work and how banks get off the hook when they get back a unit when they foreclose on an owner’s unit or home. We learned that the banks are protected by the law because they only owe a few bucks to the association when they get title to the unit or home despite the fact that the owner owes a fortune to the association. That’s called a “safe harbor” and it’s provided to the banks because the banks claim that if you make them responsible for paying unpaid assessments, they simply won’t loan money to buy a condo or a home in an HOA.

But there is some good news……….suppose the bank does not buy the unit at their foreclosure sale and a third party winds up becoming the successful bidder and the owner? What does that new owner owe the association if that unit owes thousands to the association in unpaid assessments? And the answer under the law is EVERYTHING! They owe it all. Florida Statute 718.116 states:

Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title.

So, when a bank forecloses on a unit, or when the association forecloses on a unit, the association hopes and prays that a third party purchases the property at foreclosure sale because that guy owes everything to the association. UNLESS………………….

Remember last week that I said that some of you have language in your governing documents that allows the bank to get off the hook even though they would owe money to the association if they wind up foreclosing and owning the property? Well…..some of you have language in your governing documents that allow third party purchasers off the hook if they buy the property at a foreclosure sale. So…..even though the association gets lucky and a third party purchases the property at foreclosure sale, your own docs kill you and lets the third party purchaser off the hook. They owe nothing. Disaster.

So……over the past two weeks we learned that it is vital for the board to check their governing documents to make sure that neither the bank nor a third party purchaser is let off the hook should they purchase a unit or home in your community. Make sure your docs don’t kill you. If they do, amend them immediately!!!!!!