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Bidders Beware when Acquiring HOA and Condo Association Liens at Auction

Foreclosure_For_SaleThe old expression – if it seems to be too good to be true – it probably is too good to be true – seems to have been written about bidding on HOA and Condo association liens at sheriff’s sale. Coral Gables attorney Marlyn J. Wiener ( has been contacted many times by successful bidders at sheriffs’ sale – after they realize that bidding on a foreclosure brought by a Homeowners Association or Condominium Association was not what they thought it was. These unfortunate bidders did not understand that they acquired the property subject to all the other liens on the property – including, in most cases, huge mortgage loans that exceeded the value of the property.  The only lien that is satisfied when a bidder successfully acquires a property at a sheriffs’ sale of a foreclosure of an Association’s lien – is the Association’s lien.

The successful bidder does acquire title to the property. However, as Coral Gables real estate attorney and closing agent Marlyn J. Wiener points out – the successful bidder is now at the mercy of the mortgage lender – waiting in limbo until the lender accelerates or initiates a foreclosure action on its mortgage. If the mortgage lender completes the foreclosure on its lien– the bidder who acquired title by bidding on the Association lien will lose ownership.

What can the successful bidder at the foreclosure of the Association’s lien do? As the new owner of the property, the bidder can rent the property out and attempt to recoup the funds it bid on the Association lien. If the mortgage lender moves slowly on its foreclosure, there may even be time to earn rental income that exceeds the amount paid to clear the Association lien.

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