Legal Question in Real Estate Law in California
Who pays overdue HOA fees after foreclosure?
An investor bought a condo at a trustee sale, and began paying HOA fees. Property manager told investor that there were outstanding HOA fees; investor told them they were from previous owner, because they paid the trustee what they asked (in form of opening bid) at the sale. After the rehab, the investor sold the condo to an owner-occupant; all HOA fees were current as of COE, and property management company confirmed there was no lien for outstanding HOA fees. The new owner-occupant's HOA fees are also current. The property manager hired a collection agency to recover the fee from the original owner, but instead, the agency is sending letters to the current owner-ocupant, who has nothing to do with it. The new owner wants to sue the real estate agents. The property manager wants to fire the collection agency, because they are aware thet the fees are from the original owner. The collection agency keeps hanging up on the agents, who are trying to give them the original owners name, so they can target the person who owes the debt. What is the law regarding overdue fees accrued before a foreclosure sale? Who should the new owner-occupant be suing? Thank you very much!!
3 Answers from Attorneys
Re: Who pays overdue HOA fees after foreclosure?
Liability for HOA dues are based on who owns the property at the time the assessment was levied. Even if the HOA had a lien on the property at the time, the foreclosure sale by a lender with a superior lien would have wiped out the HOA lien. In such a case, the usual remedy is a small claims lawsuit by the HOA against the previous owner.
The property management company should terminate the collection agency in writing if they won't take the phone calls. The management company could file a civil action, that that would be very expensive.
The new owner is probably the best person to take action. There is some case law stating that HOA dues are a consumer debt for the purposes of the federal Fair Debt Collection Practices Act (FDCPA). The new owner should send the collection agency a certified letter disputing the debt and demand the cessation of all further contact. The new owner should also consult a local FDCPA attorney to go over what remedies are available.
Re: Who pays overdue HOA fees after foreclosure?
The new owner should also file a complaint with the Federal Trade Commission ("FTC") at www.ftc.gov for violations of the Fair Debt Collection Practices Act and notify the collection agency that a complaint has been filed.
Re: Who pays overdue HOA fees after foreclosure?
Normally, a purchaser at a foreclosure sale is not liable for any association due prior to the date of the sale. An Association has the absolute right to fire the collection agency, unless the collection agency purchased the debt rather than just being assigned the debt. If a purchase occurred, then you may have a cause of action against the collection agency if your credit is tarnished. Please contact me if you have any questions.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
