Why it's so important for short sale owners to maintain their HOA payments.......
If you are planning on short selling your home, please read this article from Ralph Gorgoglione of Los Angeles, CA. Negotiating with the lender will be far more productive than trying to negotiate with your Homeowners or Condo Association. Pay those fees first!
Why it's so important for short sale owners to maintain their HOA payments.......
Short sale properties are usually surrounded by some very unique energy. They are classified as a distressed property for that exact reason: there is some sort of distress and/or stress being undertaken by the owner.
The reasons to short sale a property can vary - financial hardship, death, domestic issues, job-related issues, relocation, etc.
And much of the time the distress revolves around finances that typically result in mortgage payments in arrears. Some of the properties are those within a homeowners association, with monthly dues or annual dues.
Not only am I a certified, hired short sale facilitator, but I am also the President of my homeowners association in the single family home tract in which I live. So I am fortunate enough to know the perspective from both sides - the short sale home owner as I represent them in a transaction, and the homeowners association itself.
Typically these HOA dues, for the most part, are used to maintain the common areas of the association, but they are also used to cover insurance expenses, unforeseen repairs, legal costs, and other common expenses incurred by the residents of that community.
In a short sale, although a past due HOA amount and/or lien may not seem like a huge amount in comparison to multiple missed mortgage payments with late penalties and interest, it nonetheless can create a huge problem the closer you get towards closing on a short sale.
The main reason is, much like any other standard sale, the property must be delieverd to the buyer free and clear of all liens. If the HOA is far enough in arrears to the point where the HOA has placed a lien on the property, that lien will need to be paid off by some party to the transaction in order for it to be reconveyed and removed.
Whether or not the bank will pay for the past HOA dues and or liens is to be seen. These types of selling expenses vary from one situation to the next, and are approved or not approved from one short sale bank to the next depending on the underwriting guidelines for that particular file from the short sale investor.
But beyond the financial aspect of this situation, there is a much deeper issue at hand that most short sale owners do not realize - YOU ARE PART OF AN ASSOCIATION.
Meaning, you are part of a common effort to maintain the financial integrity of your association, and thus maintain the property values, safety, well-being, and quiet enjoyment of all residents' property within your community. It is a duty all of the residents have to each other when they made the decision to become a homeowner in that community.
So in essence, by not maintaining your HOA payments in a short sale, you are putting the other residents in your community at risk and making the burden that much heavier for everyone else.
From my experience, if the homeowner has foregone mortgage payments, they are more than likely in a position to keep maintaining the HOA payments. I dont' have a crystal ball, and of course I cannot speak for every situation, but once again based on my experience it has almost always been the case where the owner is in a position to maintain their HOA payments if they have chosen to forego the mortgage payments. If they are one of those fortunate individuals that are needing to short sale their property due to other reasons than financial hardship, then even more so they have an obligation to maintain the HOA payments.
One more thing: In the biggest picture of all, do yourself a favor and use the Boomerang Theory - put the positive energy out there by caring enough about your fellow residents, and that positive energy will come back to you at time when you're probably going to need it.
All the Best,
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