Condominium Association Lien Foreclosure?

[Zach Ataiyan]

Hey everyone. I am newer to BP and real estate investing. I am still trying to figure out my niche and so I am analyzing all the deals I can. Can anyone tell me what the listing below is indicating?

NOTICE OF CONDOMINIUM ASSOCIATION LIEN FORECLOSURE SALE 

WHEREAS, default has been made in the terms and conditions of the Declaration for Prairie Bend Condominiums (henceforth the Declaration) dated May 31, 1995 and recorded in the Office of the County Recorder in and for Scott County, Minnesota on May 31, 1995 as Document No. 353122 as amended by Doc. Nos. 353750, 354269 and 357113, which said Declaration covers the following described property situated in the County of Scott and State of Minnesota, to-wit: Unit No. 2703, CIC Number 1024, Prairie Bend, a Condominium, located in Scott County, Minnesota. Street Address: 705 Roundhouse Street, Shakopee, MN Property ID #27 1991300. WHEREAS, pursuant to said Declaration, there is claimed to be due and owing as of the date of this Notice by Jacob Szyperski, as unit owner, to Prairie Bend Association the principal amount of Two Thousand Seven Hundred Thirty-seven Dollars and No/100 ($2,737.00) for condominium assessments, interest and past due attorney fees through March, 2019; and no action being now pending at law or otherwise to recover said debt or any part thereof, and; WHEREAS, pursuant to said Declaration, and the statute in such case made and provided, said debt creates a lien upon said premises in favor of Prairie Bend Association. NOW, THEREFORE, notice is hereby given that by virtue of the power of sale created by statute, said lien will be foreclosed by the sale of said premises with the hereditaments and appurtenances, which said sale will be made by the Sheriff of Scott County, Minnesota at the Scott County Law Enforcement Center, Civil Division, 301 Fuller Street South, in the City of Shakopee in said County on May 23, 2019 at 10:00 a.m., at public auction to the highest bidder, for cash, to pay the amount then due for said condominium assessments, together with the costs of foreclosure, including attorney's fees as allowed by law. The time allowed by law for redemption by the unit owner, his personal representatives or assigns, is six (6) months from the date of said sale. TIME AND DATE TO VACATE PROPERTY: If the real estate is an owner-occupied single family dwelling, unless otherwise provided by law, the date on or before which the unit owners must vacate the property if the lien is not reinstated under section 580.30 or the property is not redeemed under section 580.23 is 11:59 p.m. on November 23, 2019. If the foregoing date is a Saturday, Sunday or legal holiday, then the date to vacate the property is the next business day at 11:59 p.m. Dated: March 19, 2019 PRAIRIE BEND ASSOCIATION FULLER, SEAVER & SWANSON, P.A. 

[Andy Mirza]

Originally posted by @Zach Ataiyan:

@Andy Mirza I definitely stumbled across that thread. I went from not knowing a thing about HOA foreclosures to understanding a fair deal of why they could or couldn't be a good deal (in addition to everyone's opinion on their ethicality...)

Thank you for your input! Now I have a couple follow up questions: If I am not looking to do business in California, will that be an issue for me, or are you just speaking from personal experience? Have you ever pursued an HOA foreclosure deal?

I am speaking from experience and, if it's an issue with title companies in CA, there's a good chance it will be an issue in other states. Title companies don't seem to like HOA foreclosures and believe that there's additional liability in insuring them. They'll list the transfer as an exception and suggest that you do a Quiet Title Action. This makes selling an HOA lien foreclosure as a fix and flip a problem. I solved that problem by eventually finding a title company that would insure title. If you're considering doing a fix and flip of one of these properties, I highly suggest that you run the scenario by your title company to see if they'll insure it. If you're planning to hold the property as a rental, this is not such a big deal if you're not worried about selling or refinancing right away. Some of the title companies mentioned that they would insure title if 5 or so years had passed from the time of the transfer. Their thinking was that if that much time had passed, there was a small likelihood that the previous owner would dispute the HOA FC.

I've bought 4 properties this way. Two, I still hold as rentals and were refinanced with no title concerns about 4-5 years after the transfer. For two others, I bought them at the HOA lien FC sale subject to existing mortgages, about two weeks before the mortgages were about to be foreclosed. I was able to reinstate both loans and, knowing what I know now, I would never have done that. The lenders were under no obligations to allow me to reinstate and they could have gone forward with FC and I would have lost my money.

I got lucky, flipped one and rented the other. It was during the flip that I found out about the title problem. When it came time to sell the other one, I ran into the same title issue with the same title company that issued the policy for my flip. With some persistence and finding the same title officer, I straightened it out. BTW, we sold the rental because we couldn't get insurance on it that covered our interest. The lender had forced place insurance on it, wouldn't add us to the policy, and threatened to accelerate the loan on which they were accepting our payments. No insurance company would issue us a policy since there was already a policy on the property. We were stuck. And we got lucky again because the house never burned down and we sold it for a nice profit.