I wold have the Broker of the agency you work at check in with your Local Associations Legal department.  Most associations have wsome kind of Q A for Brokers to set them on the right track.

It makes no sense if there is a mortgage on the property, since the mortgage company would be in first lien position, not the condo association. They might want to consult with an attorney.

Yes, here in Hawaii, home owners associations can foreclose, but they do so subject to the mortgage. If the HOA is allowed to actually pay off the mortgage and own the property outright, and be able to resell it, that I don't know. If the homeowners have voted on it, I don't see why not.

In Hawaii, also, a HOA has a right of first refusal to buy the leased fee interest if the lessor decides to sell the fee interest to anyone other than the existing individividual apartment owner. At least 75% of the unit lessees must approve the purchase.

So it's not unprecedented that HOAs can buy property.

Oh, and, no the HOA does not pay on the mortgage if the HOA has foreclosed. The HOA can turn around and rent out the unit to get the arrears caught up.

Another thing HOAs do here in Hawaii, if the owner is late by 30 days to the HOA, and is renting out the unit, the rental can be diverted to the HOA unless the owner is up-to-date with HOA fees.

Hi Ginger - In Colorado, HOA's have a super-lien position and can force a foreclosure because of unpaid dues. We dealt with that when I was on our board, and never considered a foreclosure, even though we could have. And doing it with HOA funds to profit from someone else's misfortune seems incredibly ugly.