Will the Bank Pay My HOA Dues As a Part of My Short Sale?
The short answer is maybe. Often once Santa Maria CA homeowners are no longer able to make their mortgage payments they throw in the towel on paying taxes, insurance, and HOA fees too and this can complicate a short sale. Each one of these can be a big mistake for different reasons, and I will write another post about the payment of taxes and insurance in the future. However, potential short sale sellers should be aware that the payment of past due HOA fees can loom large. Now of course, if you don’t have the money, you don’t have the money — I understand that. But that also supports my other advice for Santa Maria short sale sellers — start early. If a financial hardship is imminent, you should be aware that your lender may still consider your short sale application – accordingly, you should begin discussions with your team of advisors (attorney, CPA, and Short Sale Agent) early.
All too often I see people who have run through their options – they’ve sought a loan modification even though they do not have the income to support one, or they just (understandably) stall hoping that their financial situation will improve – and they end up months or (in the current environment where some lenders are slow to foreclose) even years behind on their mortgage payments and HOA dues. Accordingly, many homeowner associations will either send the file to collections and/or file a lien on your property. Certainly, resolution of past due fees and a lien is still negotiable with the HOAs representative or the short sale lender. But, a short sale can become much more difficult to negotiate once this occurs.
It costs associations additional monies when dues are unpaid and they can be understandably inflexible about reducing the total amount owed. Once dues are unpaid for a significant amount of time, many associations will take steps to protect the financial solvency of the association. And, too many foreclosures and financially distressed homeowners can put an undue strain on an HOA’s financial position. Major expenses of a short sale (commission, escrow and title fees) are just deducted from the banks net. However, banks often object to paying large amounts to second or third lien holders including liens for unpaid HOA fees. Even without a lien, a large amount of unpaid dues can become an issue. And, if the bank won’t pay and you as the seller can’t pay – it could make your short sale difficult to close. A better solution is to start on your short sale early while not much is owed on HOA dues, keep those dues current, or, at the very least out of collections.
If you are considering a short sale of your Santa Maria CA, Orcutt CA, or Nipomo CA home, you should seek out an experienced short sale agent to guide you through this process. There are many pitfalls that can be avoided with the right upfront advice. If you would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.
Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist, and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.
*Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Not affiliated with the government. A lender may refuse to change a loan.
Copyright © 2011 Tni LeBlanc *Will the Bank Pay My HOA Dues As a Part of My Short Sale?*