The economy is still in the doldrums. In most communities in Palm Beach County, 20% or more of the residents are facing some sort of delinquency in relation to their monthly maintenance fees. A good portion of those who are behind on their maintenance are now, or soon will be, facing foreclosure. In October alone, foreclosures were up more than 7 percent as compared to September.
In the state of Florida, banks have 20 years to process a foreclosure finding. That insanely long time restraint will all but guarantee that homeowners will continue to feel the effects of the recession while banks drag their feet to foreclose on properties that have long been abandoned.
The incredibly slow speed at which banks are processing foreclosures doesn’t normally cause an additional financial impact to homeowners; especially those who have already filed bankruptcy . However, some borrowers who previously paid homeowners association (HOA) fees will still be liable for these charges until the foreclosure is complete and the bank takes ownership of a property. In most cases, homeowners who experience this should consult a foreclosure and bankruptcy attorney.
Why Are Homeowners Liable for HOA Fees?
The cause of most homeowner liability for HOA fees — even during or after the bankruptcy or foreclosure process — leads back to the 2005 bankruptcy law changes. The law states that “as long as the debtor or trustee has a legal, equitable or possessory ownership interest” in his or her home, he or she is responsible for any HOA fees. So, as long as the foreclosure is still in process and the lender has not yet taken possession of a property, the HOA may continue to assess fees to the homeowner, who still has an ownership interest in the property. The law as written in 2005 also gives HOAs increased power to foreclose on the homes themselves, which sometimes leads to a battle between the bank and the HOA down the line.
How Long Do Foreclosures Take?
According to RealtyTrac, a real estate firm in California, the national average number of days that foreclosures take to complete has risen over the past few years. In the first quarter of 2007, foreclosures took about 151 days. In the first quarter of 2010, this number rose to 340 days and then climbed to 400 days in the first quarter of 2011. RealtyTrac cites the costs of owning the property that lenders must assume as the main reason for the increase in foreclosure delays.
What Can Homeowners Do?
It is imperative that you remain current on your HOA dues. If you cannot afford them, you need to meet with an experienced bankruptcy attorney.
In Arizona, for example, a bankruptcy can discharge, pre-petition, homeowners association dues. However, post-petition homeowner’s dues, fees, and penalties (costs coming due after a bankruptcy is filed) are NOT dischargeable by the bankruptcy and will continue to accrue. For this reason, it is imperative that, even once a bankruptcy is filed, all homeowner association assessments be kept current post-petition until the home title has been transferred into someone else’s name.
How Can a Foreclosure Attorney Help?
In many cases, outstanding HOA fees are rolled into a property’s foreclosure sale and paid by the lender. When this is not the case, problems can arise for both previous and future owners of a property until the outstanding HOA fees are paid in full.
Regardless of which option default borrowers consider taking to resolve HOA issues, they should consult a local bankruptcy attorney with experience in foreclosure and real estate-related issues before acting. Bankruptcy attorneys know about the recent changes to bankruptcy laws and will be able to assess your unique case and which options would best fit within the current legal framework.
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Information in this article was obtained from 24-7PressRelease, a free press release website.