Can a new developer invalidate an existing HOA and establish a new one?

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Can a new developer invalidate an existing HOA and establish a new one?

A developer started a subdivision and was foreclosed on. There are approximately 10-15 vacant lots still standing. My home was the only home completed and we bought it thinking this would be a great place to live. The lots are in litigation. I want to sell my house but not sure what my obligations to the new buyers are with regards to the HOA that exist but has never been funded. I assume the HOA is defunct since I am the only homeowner here. Does the HOA stipulations apply to the new owners or is it no longer valid because of the foreclosure?

Asked on May 7, 2012 under Real Estate Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The HOA stipulations would not be valid due to the foreclosure. Unlike a sale (such as if a developer in financial distress sold the development to a new one), in which buyers take subject to all contracts and agreements then in force, a foreclosure terminates such agreements, such as leases or HOA agreements. The party which acquires ownership after foreclosure has essentially a "clean slate" in that regard.


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