Archive for August, 2011
This post is for any of the OCYPN members who didn’t make our Lunch & Learn today – the info is too good not to share! Ryan Spitalnick, Prominent Escrow’s in house attorney, shared his strategies for getting HOA liens reduced so our OC short sale deals can get closed!
Spitalnick stated any reasonable HOA already knows they are in a 2nd or 3rd lienholder position, and they already know its very likely they get absolutely nothing if the short sale goes into foreclosure
…but…sometimes Homeowner’s Associations are still stubborn about back dues owed. This can cause good escrows to fall apart, and properties to go into foreclosure Ryan gave YPN 5 negotiation tips that he uses to get discounts on HOA demands.
What to say to the HOA??
Tip 1: “The law is not in your favor”
Some HOA’s forget there is a pecking order in which property liens are paid. The main mortgage always gets paid first, and then a 2nd mortgage and taxes, then HELOC’s, HOA’s, and other liens.
Tip 2: “The short sale lender is offering money now that will not be there if the property goes into foreclosure”
If a foreclosure occurs, all secondary liens mentioned above are NOT the responsibility of the new homeowner (bank or investor) to absorb. The secondary liens are then forced to go after the foreclosed homeowner personally if they want to recoup the unpaid debt. Now is a window of opportunity for the HOA to get something instead of possibly nothing at all.
Tip 3: “The HOA will end up spending good money chasing bad”
Even though HOA’s have the right to go after the foreclosed homeowner for back dues, what is the likeliness that person has the ability to pay? In addition to attorney fees, collection costs, and time spent, the HOA faces never getting their money after spending plenty of funds trying.
Tip 4: “Remember the bank or an REO sale is not responsible for paying back dues”
Many HOA’s will say “I’m entitled” to the full amount.l Technically, they are. But in a short sale everyone involved is losing money, and the HOA should not expect to be any different. Many times the HOA’s own CC&R’s state reminders they are not the primary lienholder in multiple places, so make sure you have a copy handy to point it out! Short sales are designed for debtors to recoup as many costs as possible and cut losses. Junior lienholders always get hit the worst Discuss this with your HOA contact and request a revised and discounted demand.
Tip 5: “Do you really want to force a vacancy for minimum 6-12 months on the slim chance you will get a payment?”
If the HOA does not revise their demand and the property is foreclosed, it will be vacant and there will be nobody paying monthly dues for the unit. On the other hand, if they accept less on the current amount owed, they will have a new homeowner within 60 days paying dues on the unit again. Knowing there is a slim chance the old owner will pay anyway, why not cut losses now and save vacancy and possible vandalism fees?
If you’re still having trouble, keep in mind that HOA’s typically have an attorney advising their board or property management company. The person you are talking to on the phone is probably NOT the decision maker. If you have to, work your way to the attorney or decision maker directly so you can be most effective in negotiations.
If you’d like more info on CA condo law, download the free Davis Stirling app or consult with a Real Estate Attorney like Ryan
Also, if you’re an Orange County Realtor interested in joining YPN, membership is FREE and you’ll get tons of valuable real estate tips just like this to help you close more deals and better serve your clients. Like us on Facebook and check the group out!Read Full Post | Make a Comment ( None so far )