Q. One of the homes in our community is going to a public auction this weekend, which is strange since the bank never took title to the property and the property is still titled in the owner’s name. Of course, the owner abandoned the property 9 months ago and stripped the appliances. How can the property be auctioned off if the bank never finished the foreclosure and never received title from the Clerk? Does the HOA need to have a lien on the home in order to ensure payment of the past due assessments after the auction?
A. It is certainly unusual that the property is going to auction without the bank having ownership. You should have your association’s legal counsel search the title to the home to ensure that the bank did not acquire title by foreclosure sale or deed in lieu of foreclosure from the delinquent homeowner. Recently, we have been seeing banks foreclose and obtain a judgment but purposely delay the foreclosure sale, or if they complete the sale, delay the recording of the certificate of title issued by the Clerk which is how they officially acquire title. When the bank acquires title, it has liability for the abandoned property and also owes your association past due assessments and also assessments going forward as the new owner.
It is possible here that the bank is waiting for the auction to be complete and has either a deed in lieu from the delinquent homeowner or a certificate of title from the Clerk ready to record simultaneously with the sale to the auction buyer. It is an interesting strategy, but it should not adversely affect the association. The association will have solid grounds to pursue any new owner for the delinquent maintenance fees owed on the property. You do not need a lien to pursue these charges, as the new owner’s obligation to pay is imposed by Florida statutes regardless of a lien. The lien is only necessary if the association wishes to put itself in a secured position to foreclose in its own name.