Who Pays Liens After Foreclosure?
I posted on the "Home Finances" forum, too.
An 'expert' writing in the Chicago Tribune Sunday criticized a condo board for allowing an owner to run up $22,000 in unpaid association fees before the condo went into foreclosure. (HOW did he think the association could force the owner to pay?)
He said that if the condo owner sold before foreclosure the lien for fees would have to be paid before the title could convey. (I'm OK with that.)
Then he said that the lien would likely NOT be paid after the condo was sold by the mortgage holder, the lien being a *secondary* claim and the property likely selling for less than the outstanding mortgage. (Huh? How does the title convey with outstanding liens?)
In answer to my "Finances" post, a forum member gave me a link that seems to say the mortgage holder must pay off the liens (as I'd presumed before reading the Trib 'expert). BUT, that attorney raises another concern. He is writing from the perspective of a bankrupt owner and says the owner is not liable for payment of association fees due between the time the condo is taken by the mortgage holder and the time it sells. (So...who IS?)
My concern stems from ownership in a 320-unit condo in Hawaii. There has been one forclosure -- that brought less than half the market value. Currently 10% of the units are listed for sale. I want to know how the association is protected. Responses from the treasurer were along the lines of, "We don't have those kinds of problems." I feel that they may not have had them in the past, but this is a different climate.