Question:So the foreclosure has occurred and the bank now owns a property in our community. What can we do now? How can our association collect assessments now that a bank owns the property?
Answer: With the increase in foreclosures it is more likely than not that your association has at least one property owned by a bank. It’s also likely that the bank isn’t paying assessments. Unfortunately, many of these homes or condominium units may remain vacant for long periods, may have yards full of weeds, maintenance issues, and assessments may not have been paid in months.
Fortunately, if your association is having problems with bank owned properties, you also have several good options for solving these problems. These include:
- Treat the bank like any other owner – don’t wait for a sale to get paid;
- Use liens to ensure payment of assessments;
- Aggressively pursue foreclosures if the banks refuse to pay after you have completed the procedures outlined in your collection policy.
Since there is no longer a mortgage against a bank-owned property, any association lien will be in first position. This means it is extremely likely the association will be paid quickly after a foreclosure action begins. If the owner-bank does not pay the association in full and a foreclosure sale is completed, the association would end up owning the property FREE and CLEAR! No mortgage, nothing to pay.
Foreclosures on bank owned properties are a sharp tool in associations’ collection tool boxes and should not be overlooked.
“Ask The Experts” Articles have been Reprinted with permission from the Charlotte Observer
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