HOA should have deed to foreclosed home

Q: I live in a gated community of 154 townhomes. I have a question concerning the homeowners association foreclosing on a townhome for unpaid assessments, and how the board treats that property. Do board members have a legal right to enter the property and change the locks?

We had a board member force his way into a unit and threaten the occupants. I would think this would put our HOA at risk for a lawsuit.

The home in question is a unit the owner has walked away from and the HOA, through a collection company, foreclosed on it for about $7,000. The bank also has a note on the property. Does the HOA have ownership of this unit to rent it out? My question is: Who owns the town house? Does the bank own it or does the HOA own it, and who is responsible for the it?

Our HOA had been renting the townhomes (which is a violation of our covenants, conditions and restrictions — no leasing or renting of units) until the bank finishes its foreclosure but has since stopped.

A: First, no board member should ever enter a home and change the locks without proper due process, and certainly not threaten the occupants. That is asking for a big lawsuit.

Assuming that this home was owned by the association, and assuming that the association wanted the occupants to move out, a proper eviction should have taken place. Once the eviction is approved, then the constable’s office should be notified to post the notice on the door of the home stating that the occupants need to vacate.

The day the constable evicts the occupants out of the home, the association could change the locks.

If the association properly foreclosed on the home, it would have a foreclosure deed. The association would then own the house even if there is a mortgage on the homes.

There is a legal issue, which this column has addressed. Does the association’s foreclosure extinguish the first deed of trust if the lender, when properly notified, did not pay the nine months superlien? That issue has not been addressed by our state Supreme Court even though there are some court decisions that would state, yes, the bank’s loan is extinguished. On this issue, we all will be awaiting the Supreme Court’s decision.

Because the association has a deed to the house, the association is responsible for insurance, property taxes, utilities, sewer, rubbish, and to some extent, maintenance.

The association can lease out the home. The association could sell the home subject to the payment of the mortgage (assuming that for the moment the association’s lien does not extinguish the bank’s loan).

As to the rental restriction about leasing the home? Associations should contact their legal counsel to ask whether they can lease the home even though there is a rental restriction in the community’s rules.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to the Association Q&A, P.O. Box 7440, Las Vegas, Nev., 89125. Fax is 702-385-3759, email is support@hlrealty.com

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