When a bank takes over a condo in a foreclosure sale, does it assume any of the debt owed to the HOA by the previous owner of the unit?

UPDATED: Mar 2, 2012

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When a bank takes over a condo in a foreclosure sale, does it assume any of the debt owed to the HOA by the previous owner of the unit?

I am with a small condo HOA. We have a unit that went through a foreclosure sale. The current owner Fannie Mae is refusing to pay off any of the debt that was owed to us from the previous owner. Part of the debt was a special assessment for a repair to the complex that has not yet been started because we were waiting for the payment from that unit’s owner. Is there any way for us to collect this debt? Who, if anybody, is responsible for paying this debt – the original borrower, his lender, or the new owner?

Asked on March 2, 2012 under Real Estate Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If the HOA debt is junior to the lien of the lender when the lender forecloses on the property, the lender owner is not responsible for unpaid HOA fees owed by the prior owner for the unit that was foreclosed upon. However, the lender owner would be responsible for all future HOA assessments under its ownership.

The former owner of the unit foreclosed upon would be responsible for the unpaid HOA fees up to the time of the foreclosure of the Fannie Mae loan by this entity.


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