Mortgage Servicing Fraud
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George Burns
Does anyone have any insights into or info about foreclosures by Home Owners Associations  especially in Florida?

In the particular case the HOA is foreclosing on properties  which have had Property Tax Certificate sales for 2 or 3 years  each. What happens with the Tax Certificates if the HOA gains possession of the properties?

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William A. Roper, Jr.
George:

I am very much shooting from the hip on this and you need to carefully review Florida law to be certain, but in general in most places a tax lien takes priority over almost every other type of lien.  Condominiums or planned unit developments (PUD) with common areas are usually creations of the deed creating the development and HOA fees are usually a contractual obligation and priority over the mortgage or other liens of individual units.

It is for this reason that lenders are particularly concerned about escrowing for payment of taxes.

When a HOA foreclosures in most parts of the country, the HOA will take title SUBJECT TO the tax liens.  The HOA would typically also name the various other entities, including junior lienholders.  The foreclosure sale typically extinguishes the junior liens when the lienholders are named and served.  If the proceeds from the foreclosure sale exceeds the amount of the HOA lien and legal expenses of the foreclosure, the junior lienholders would be paid off in order.

So the HOA would end up with the unit subject to the tax liens but free of the junior liens.  But this is NOT uniformly the case everywhere and whether this is the law in Florida is unknown to me.    
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