Help! Short sale held hostage by the association attorney

One of the most recent frustrations I am dealing with in closing short sales here in Bradenton, FL has been created by associations that are unwilling to bend on outstanding HOA and Condo fees. Has anyone else had an association attorney prevent a sale of a home over delinquent fees?

Banks that foreclose on homes in Florida, and are part of a HOA or condo association will get 12 months of fees paid upon the sale.

In two current short sale files I am representing the HOA fees are over 12 months in arrears, and as part of the negotiations with the seller's lender(s) they will agree to pay 12 months of the hoa fees. Their rational is that since this is all the HOA would get in a foreclosure sale, then they should be satisfied with the same amount with a short sale.

This is a common sense and rational conclusion.

Two association attorneys are unfortunately not willing to bend off the total amount of the back hoa fees, and the extensive attorney's fees, and penalties.

In both cases the attorney that represents the home owners association has taken the position that if you want the deal to close, then the entire amount that is owed shall be paid. In both cases the sellers are not in a position to pay these charges, and the buyers are either unable, or unwilling to pay these additional fees.

In one case the sale is around 100,000, and the total outstanding hoa, condo, and assocation attorney fees are in excess of 18,000! The lender in this case has agreed to pay the association/attorney 12,000.

This lender has stated "the buyer should pay the fees, or the real estate agents should."

I will say that the lender has taken almost 8 months to finally approve the short sale which in itself has really caused the charges to run up.

I find that it makes no sense that these home owner's associations are doing their residents any justice. By preventing the sale they are ensuring that they net the same or less money. They are also most likely going to cause that property to sit vacant, longer, and probably foreclose and sell for less money than the home's current value. Furthermore, there is all the lost revenue from having a new owner move in and start paying. The neighbors may not want to offer a break to seller who is short selling because they either don't care, or are made that they are selling but the net effect is lost revenue for the neighborhood, and a decrease in the value of the properties.

I am amazed that the HOA associations residents would allow this extortion to be allowed. Here is Sarasota and Bradenton there are in excess of 25,000 homes in some state of foreclosure. And this does not include those that are delinquent, and not yet filed. Everyone needs to get on board to help fix this crisis in housing, including the attorney's and the hoa/ condo boards that they represent.

I believe that the law that required foreclosing banks to have to pay outstanding HOA fees has done more damage to the short sale process. It was well intended, but the effect that it has had with Short sales is regrettable.

My best advice to my short sale customers is to keep paying the HOA fees to the best of their ability otherwise run the risk of putting in a ton of effort for no effect. My hope is that this is an isolated incident, and will not become a trend for more associations to pursue hardball negotiations in short sales.

www.manateemoves.com

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