Legal Question in Real Estate Law in California
Questions on a foreclosure sale. Sorry for the elementary nature of the question, but I am not an attorney and the legalese is confusing the hell out of me and I can't seem to get a straight normal English answer out of our HOA attorney.
First, I am in a 3 unit condominium complex in San Francisco. One of the owners was the treasurer. His unit has always been a rental, so we could not get a hold of him, nor would he supply records. In short, our insurance and utilities were unpaid for 3 years and our accounts were in the red. He has never paid HOA dues. We are now foreclosing on the unit as the HOA has an unpaid balance of ~ $25k. It is to be sold on Monday 3/14/2011. There are two bank loans on the property, one of which is ~ 650k, the other ~ 100k.
Questions are: #1. If the unit doesn't sell, who owns the property?
#2. If the unit does sell, will we get our monies back as the bank has two larger loans?
#3. Can the owner of the unit, through proxies, buy the unit back himself and continue his shenanigans?
Thanks in advance for your time.
3 Answers from Attorneys
At the foreclosure sale, either the foreclosing party 'buys" the home by paper bidding the debt owed them or someone else buys the property. So the unit definitely sells at the foreclosure auction, the only question is to whom for how much. The former owner can bid at the auction but they have to bid at least the amount owed the party holding the auction; so while
they might be able to get the property back, you have been paid off all the debts owed you. Usually the other mortgage holders have requested notice of any foreclosure sale and will file for foreclosure themselves. Any money form the sale first goes to pay off the costs of the sale, then to the first lien holder, then to the next lienholder,
I need to go out right now, e-mail me your URL and I can get back to you.
#1 It cannot just "not sell." If there are no bids the sale should be postponed. In most cases, however, the lien holder forcing the sale will have submitted a credit bid, and they wind up owing tthe property. So in your case, if there are no other bids, the HOA should own the property. #2 The sale is subject to senior liens. The loans don't get paid out of the sale, but whomever buys it will have to pay them off sooner rather than later or those lenders will foreclose. Therefore, the bids will only be for what the buyers think the property is worth over and above the loans. So if the property is worth $760k at auction, the bid will only be $10k and you would get that, less expenses of the sale. The buyer would then have to refinance or otherwise pay off the bank. #3 Sure he could, but why would he? If the HOA is willing to credit bid up to the balance owed the HOA, he would have to pay more than what is owed the HOA to win the auction. Wouldn't he just pay the HOA?
Both answers are correct; Mr. McCormick's is a little more precise. This is a pretty hefty debt load ($750K) for a bidder to take on, and it would be interesting to know the market value of the condo; with that, we could give you a better idea of what may happen, longer run. One wonders how a three-unit condominium will handle this acquisition (if it buys) and how it will manage itself.
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