Good news for all the homeowner associations! When a home owner goes into foreclosure there is a very good chance that they are not current on their HOA dues. But the HOA isn’t who looses on this, the bank is. When a property is foreclosed on, and there are back HOA dues, the bank who gets the property is required to bring the HOA dues current and to maintain them unit the property is resold. Some states have already passed laws requiring this and some are in the process. In general, the banks will do this without needing to be told to do so.
It’s been 50/50 with us when we include past HOA dues. We always include it in the HUD, but sometimes the lender will require an actual bill from the HOA. We had a ss held up because we needed a statement from HOA, and HOA was on vacation and couldn’t produce the statement for 3 days.
Once we shorted the HOA bill - not on purpose - there was a running violation penalty that added up and we didn’t know anything about it. We had already gotten approval from bank, so rather than upset the HUD, we paid it out of our negotiation fee.
It has been my experience that the banks liability for the HOA dues starts on the day they take title by foreclosure. Any REO I have ever bought where there was an HOA, the bank paid the HOA dues that accrued from their date of ownership.
If the former owner had HOA dues in arrears, after the foreclosure the HOA has always written that off as uncollectable.