HOA foreclosing on lender after lender foreclosed on owner?

[Dan Thompson]

Bigger Pockets Community,

I'm interested in a property near a current listing of mine. It's due to be auctioned by the county on February 5th as part of foreclosure proceedings. While researching the court documents and title/deed history, I discovered that both the HOA and the lender separately foreclosed on the original owner and EACH were issued Certificates of Title after adjudication and public auction were done.

It appears the HOA and lender fought back and forth for a while but then signed an agreement whereby the lender would pay the HOA a designated amount for past-due assessments and in turn the HOA would release its title claim via quitclaim deed or whatever instrument the lender wanted. The HOA seemed to want their owed assessments and then they'd get out of the way. Apparently, the lender proceeded to never pay the HOA anything and now the HOA has foreclosed on the lender as the new owner of the property for all the past-due HOA fees and penalties/interest.

In this case, the "lender" is a small LLC that apparently bought the owner's original mortgage.

The outcome of this foreclosure action was the scheduled public auction of the property after the foreclosure was granted to the HOA against the lender. I'm very interested because it's an HOA lien of about $50k for a property that would be worth about $325k after moderate rehabbing, so there's a wide gap there to include purchase cost, rehab costs, satisfying any other liens that may be attached to the property, etc. when comparing to the home's possible value at resale.

The fact that two separate Certificates of Title were issued by the same county court after separate foreclosure proceedings just adds another layer of uncertainty though.  A number of questions arise.

The lender's mortgage lien on the property would cease to exist once they technically took title to the property themselves, correct?  If a third party such as myself buys this home at auction, there won't be any mortgage lien attached?  Would the lender have any other claim besides to any excess proceeds of the auction?

If there already exists a Certificate of Title naming the HOA as owner as well, what complications could follow if I or other third party win this house at auction? I assume some negotiation (and likely buy-out payment) would be necessary to get the HOA to issue a quitclaim deed or something to vacate their title claim, similar to the agreement signed between lender and HOA previously.

Are there other issues that could exist that would make you avoid this property completely, in spite of the potential profit?  Thanks.