Lien research help needed.

[Linda Weygant]

I sit on the board of the HOA of one of the properties I own and we're trying really hard to collect almost $200,000 in back dues that are owed. It's a long story as to why they weren't collected, but it's time to move forward now.

We have many liens recorded in the county and, I guess up until now, we've just let them sit, waiting for the owner to sell.  We've been going through and doing equity analysis on each property to figure out if we should foreclose or not.  We have one that's a real challenge that we're really struggling with, so I figured I would ask the folks on BP for a little guidance.

In 2003, the owners put what looks like a reverse mortgage on the property (Adjustable Rate Home Equity Conversion) which google tells me is a reverse mortgage in the amount of $177,000.  The properties have never been worth that in anybody's wildest dreams.  They are currently the top of where they've been in their entire lifecycle at about $145,000.  The term on it was for 72 years at 2.85%.

The husband passed away in 2010.

In 2011, the mortgage was assigned to HUD in consideration of $10.00

The wife passed in February 2015. HOA dues have been unpaid since December 2014. The obituaries for both spouses indicates that they were survived by two daughters, but doesn't list their names. All of their possessions are still in the condo. Utilities have been shut off and, based on the odor coming into the common areas, we suspect there is now 10 month old spoiled food in the fridge.

Colorado is a Super Lien state which is something that still confuses me a bit.  I had originally thought that meant that the lien comes first and if we foreclose, we get paid and if there isn't enough to take care of whatever mortgages come after, it's too bad for them.  Other people tell me that no, the mortgage still has to be satisfied.  

Will HUD eventually do something with this?

What should we (the HOA board) do next?

[Wayne Brooks]

@Linda Weygant Talk to aLocal RE attorney, not us yahoos.  "Super Lien" doesn't always mean Superior, there can be required conditions to be met, etc.

[Jeff B.]

"In 2003, the owners put what looks like a reverse mortgage on the property (Adjustable Rate Home Equity Conversion) which google tells me is a reverse mortgage in the amount of $177,000."

• The loan accumulates on the back-end (ie increasing the principle) and thus easily takes the property upside-down :(
• Which debts are settled first ?? you need a legal, binding opinion - - mine happens to be a 1st TD means what it says and the only exception known is a TAX LIEN which wipes out everything else.
• as to finding liens, call a title company and get a "preliminary title search".

[Aubrey Bailey]

Liens are typically satisfied in the order they were recorded, not by who chooses to initiate the foreclosure.

In other words, a second lien holder (2nd mortgage) would get paid only if the house brought more money at the courthouse steps than was needed to satisfy the 1st mortgage. If the home sold for enough to satisfy the 1st and 2nd mortgage, then whatever was left would go to satisfying the other liens in the order that they were recorded...until there's not any money left. Any overages, after all liens are paid, would go back to the old owner. If the HOA is way down the list as far as the position their recorded lien holds (the date when it was recorded), they typically won't get paid anything because there's usually hardly even enough money to cover paying off the 1st mortgage/lien holder (at least in GA anyway).

Side Note: I've never had to personally pay any of the old HOA dues as the new home owner after buying a home at the courthouse steps.

Hope that helps.

[Linda Weygant]

thanks @Jeff B. - do your opinions still apply in a state like Colorado, where HOA liens are deemed to be "super leins"???

[Jeff B.]

My understanding is the hierarchy is

1. Tax Lien
2. 1st td
3. ...
4. nth td
5. any other liens

[Wayne Brooks]

@Linda Weygant Talk to aLocal RE attorney, not us yahoos.  "Super Lien" doesn't always mean Superior, there can be required conditions to be met, etc.

[Linda Weygant]

Will do, @Wayne Brooks.  Thanks!

[Bill S.]

@Linda Weygant call your favorite title company and order an "O&E" (Ownership and Encumbrances). That will tell you who is in line for money. Here is a super lien primer for Colorado. Be aware that not all of those reverse mortgages were lump sum payments some were simply LOCs. The balance can be smaller because they didn't spend it all. It's not likely but it can happen. You might get a title company to order a payoff so you could see where you stand.

Finally, your HOA should have an attorney. They should be able to provide direction on those items. There are a number of attorneys that specialize in that field so you should start with those folks. With $200,000 at play you should be able to pay someone something to get something back.

You can use a skip trace service to find the heirs if you really want to. Sad thing is that the folks probably died in debt and the kids are not doing anything about it.