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Vol. 15 No. 22- March 25, 2015

REAL ESTATE

Super priority liens

 

There are a lot of things in life that are boring and tedious, but which we really need to have at least a broad understanding. A discussion of liens against real property is one of those things that could make you go running for the TV remote but even a little information is better than none.

Most homeowners understand that a mortgage is actually a lien against the property; the mortgage must be satisfied before the property can be sold. There can also be other types of liens – tax liens, mechanic’s liens, judgment liens, child support liens. But there is something called a super priority lien that homeowner’s associations can place on a property for non- payment of association fees.

Generally a first mortgage on a property is recorded first and becomes the first lien. If a second mortgage is taken out, it becomes the second lien. Priority is usually established by the recording date and determines the order in which lien holders are paid with the proceeds of a foreclosure sale.

Homeowners’ association liens are generally junior liens satisfied after the first lienholder is paid, unless you’re in a state that gives the lien a higher priority. Approximately 22 states have state statutes that give HOA assessment liens super lien status, therefore, giving them even a higher priority that the first mortgage holder. Florida is one of those states.

The law was established in order to protect the other residents who are part of a homeowners’ association from incurring additional expenses as the result of non-payment of association fees. HOAs are responsible to maintain the property values for the entire association and are, therefore, placed in a position to perform preventative maintenance, make repairs and incur electrical costs on abandoned homes.

Lenders, especially in recent years, have been slow to foreclose on abandoned properties so as not to be responsible for the current HOA fees as well as some of the previous fees. This leaves homeowners’ associations in the position of not being able to recoup any of their monies until the property is sold and a new owner is in place.

What really happens when a HOA in a Super Lien state initiates a foreclosure is to force the lender to initiate its own foreclosure judgment in order for it to preserve their position as the first lien holder. Most of the time these cases are settled because the lender has a vested interest in the property, but it’s not without a great deal of pain and expense on the part of the HOA.

In December, the Federal Housing Finance Agency acting on behalf of Fannie Mae and Freddie Mac got into the act by sending a warning to HOAs. Since these agencies guarantee most mortgages, their position is that the existence of super-priority liens increases the risk of losses to taxpayers by removing the mortgage lender’s first lien position.

For sure there will be a great deal of litigation about this law creating yet another fight between the federal government and the states currently carrying super priority legislation on their books. Florida is one of those states that can be adversely affected by the outcome of this since, it is home to a huge number of condominium associations that have had their ups and downs in recent years with thousands of abandoned properties.

If you own property in a homeowners’ association, pay attention to what develops. It’s been said that a little knowledge is a dangerous thing, but in the case of property liens a little knowledge can very well put you in first position.

Real Estate Transactions
November 2014

Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

02/17/2015 424,000 603,829 204 Willow Ave 1114 3 Br/2 Ba SFR, Bank Owned
02/20/2015 699,000 643,000 240 Chilson Ave 1747 3 Br/3 Ba SFR
02/16/2015 749,500 690,000 307 North Bay Blvd 1701 57.5x110 2 BR/2.5 Ba SFR
02/05/2015 995,000 900,000 231 Willow Ave 2023 80x148 3 Br/3.5 Ba SFR
02/27/2015 275,000 260,000 522 Pine Avenue 4B 822 2 Br/ 1 Ba Condo
02/13/2015 499,000 480,000 523 Kumquat Dr 75x117 Lot

Bradenton Beach

02/27/2015 199,900 215,000 2412 Gulf N Dr #121 459 1 Br/ 1 Ba Condo, Bank Owned
02/12/2015 369,900 359,000 1801 Gulf N Dr # 162 1080 2 Br/2 Ba Condo
02/27/2015 109,999 100,000 2601 Gulf N Dr 625 456 1 Br/ 1 Ba Mobile Home
02/27/2015 415,000 415,000 2513 Avenue B 1600 50x100 Duplex

Cortez

02/27/2015 95,000 79,000 12506 Safe Harbour

Holmes Beach

02/20/2015 499,000 465,000 510 Key Royale Dr 1441 2 BR/2 Ba SFR
02/26/2015 599,000 500,000 7304 Palm Dr 1528 2 BR/1.5 Ba SFR
02/27/2015 595,000 550,000 207 65th St 1281 59x100 3 Br/2 Ba SFR
02/02/2015 635,000 600,000 622 Foxworth Ln 1973 3 Br/2 Ba SFR
02/02/2015 629,000 600,000 301 74th St 1860 2 Br/2 Ba SFR
02/26/2015 696,900 650,000 4004 5th Ave # 3 3088 4 Br/4 Ba SFR, Bank Owned
02/18/2015 729,900 670,000 618 N Point Dr 2778 100x83 3 Br/3 Ba SFR
02/11/2015 1,395,000 1,250,000 503 69th St 2797 3 Br/2 Ba SFR 02/23/2015 1,645,000 1,550,000 110 72nd St 2354 100x100 5 Br/4.5 Ba SFR
02/17/2015 234,900 224,500 5400 Gulf Dr 20 810 1 Br/ 1 Ba Condo
02/26/2015 375,000 360,000 5608 Gulf Dr # 104 1092 2 Br/2 Ba Condo
02/13/2015 379,000 369,000 3302 6th Ave # 4 750 2 Br/2 Ba Condo
02/02/2015 475,000 453,000 6250 Holmes Blvd # 67 1536 3 Br/2.5 Ba Condo
02/27/2015 579,900 580,000 4808 Gulf Dr # B 2048 90x100 3 Br/2.5 Ba Condo, Bank Owned
02/27/2015 599,000 585,000 311 64th St # 311 2001 3 Br/2.5 Ba Condo 02/23/2015 749,000 730,000 7310 Holmes Blvd 1872 3 Br/3 Ba Half Duplex 02/27/2015 419,000 405,000 6321 Gulf Dr 1206 3 Br/2 Ba Townhouse

Source: Mid Florida Multiple Listing Service


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