Foreclosing on a bank – Is this the best option?

Written by: on Tuesday, June, 7th, 2011

In April, I wrote a newsletter article entitled The Association’s Superlien: What Was it Intended to Be, What Is It, and Where is it Going. Now that you know more about the superlien, what can your association’s do to collect it … and collect it quickly?  The answer is to simply foreclose on the lien if it hasn’t been paid.  The association’s superlien is senior in priority to all other liens against the property for “an amount equal to the common expense assessments [w]hich would have become due [d]uring the six months immediately preceding the institution of a foreclosure by either the association of the holder of a lien senior to the association.”

The bank is not going to pay what is due to the association until it is forced to do so (i.e., there is a closing or the association forecloses on its lien).  The bank is not going to lose the property for an amount of six months of dues, so foreclosing on a bank for the superlien (and any unpaid assessments after the sale) is almost a sure thing (you know lawyers, we never guarantee an outcome!).  And in the rare event that the bank does let the property foreclose, the association would end up owning the property free and clear!  No mortgage and nothing to pay!

So, review those delinquency reports and get moving on those bank-owned properties!

Ashley M. Nichols