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kto14 · Sep 25, 2008, 09:58 PM

Hi All,

Thank you for reading. I have been in the process of buying this property in Oakland, CA for the past several months. It is a short sale. Received approval from both banks and all is go except for this lien that was put on the property because the former owner did not pay the HOA for 2 years. I'm pretty annoyed because I just heard about this yesterday, when they were telling me everything was fine and I shelled out $350 for the appraisal. Now the property has an $11000 lien on it and they are asking me if I am willing to pay for it because the banks are already taking a loss and not willing to lose more. The agent is trying to negotiate for less with the collections agency, but I'm almost deciding not to buy this place.

My question I guess is, if it is a short sale, is the seller still responsible for this debt or it's just on the house, which I guess, the bank now owns... and if the bank owns it, then isn't it their responsibility? Or will it go into foreclosure with a lien on it? What happens to the lien if it's foreclosed?

Thanks so much,

Kat

froggy7 · Sep 25, 2008, 10:14 PM

If it is foreclosed on, then the bank will have to pay off any liens when someone buys it. In a short sale, the bank doesn't own the property yet, and the seller is able to say that part of the price of buying the house is that the buyer gets to pay any liens against it. I'm surprised that your agent didn't advise you against buying a short-sale house. From what I understand, those can take forever to get worked out and close escrow, because of situations like this. The seller has no incentive to do anything, since they aren't going to make any money on the sale, and the bank is trying to minimize their losses, so they aren't willing to negotiate much.

ScottGem · Sep 26, 2008, 07:30 AM

$11K for 2 years? That's an awful lot of HOA fees, even with interest. Are you sure this a valid amount?

But a lien means that the lien has to be statisfied before the property can be transferred. Since a short sale means the seller gets nothing from the proceeds, that leaves the bank having to pay it.

froggy7 · Sep 26, 2008, 07:46 AM

Actually, it's not an unheard of amount for HOA dues in some places. Oakland... not sure. It probably does include legal fees and interest. But down here in LA, it's not unusual for HOA dues to be 300-400/month.

smearcase · Sep 26, 2008, 09:07 AM

You could offer them $ 11,000 less for the house, since you just found out about the lien.
You could contact the HOA officers and see if they will reduce the fee, so as not to have another vacant house in the development.
You could pay the extra $ 11k if you want the house.
I am not sure I would be willing to live in a community with these kinds of HOA fees. Maybe that's what drove the last owner in the ground. You had better review their covenants and restrictions and make sure you know what you would be getting into. What do you get for those exorbitant fees?

Fr_Chuck · Sep 26, 2008, 09:10 AM

On a short sale, no the bank does not own it yet, they have not foreclosed, they hold the mortgage and they have to agree to accept less than the loan value to allow the owner to sell it.

So the lien is in place and still valid.

So the issue is, are you willing to pay 11,000 on the home or not, if not, walk away.

froggy7 · Sep 26, 2008, 10:41 PM

Originally Posted by smearcase

You could offer them $ 11,000 less for the house, since you just found out about the lien.
You could contact the HOA officers and see if they will reduce the fee, so as not to have another vacant house in the development.
You could pay the extra $ 11k if you want the house.
I am not sure I would be willing to live in a community with these kinds of HOA fees. maybe that's what drove the last owner in the ground. You had better review their covenants and restrictions and make sure you know what you would be getting into. What do you get for those exorbitant fees?

Out here, one of the things you get for that amount is earthquake and fire insurance. Security, pools, tennis courts, weight rooms, landscaping, and a good reserve for repiping, roof repairs, and maintaining stucco are the things I generally see in the ones where the fees are that high.

What got me was an episode of Property Virgins, where they were looking at condos in Chicago, and the "maintenance fees" were 500-750/month. For 1200 sq foot highrise condos downtown, so I have no idea what those fees were covering.