A foreclosure action will not necessarily remove you from any future liability for the amount owed and I would not recommend conceding to a foreclosure action if at all possible.
It is highly unusual for an HOA to complete a foreclosure action to collect on past due fees when there is a first trust deed against the property. If the HOA forecloses then they become the owner of record subject to any senior liens due against the property. The HOA would be obligated to make your mortgage payment from that point forward. If your home is upside down with no equity there would be no incentive for the HOA to carry the liability of a property that shows no sign of recovery through a subsequent resale of the home. They could possibly, lease it out and collect any rents they can until the first trust deed holder finally forecloses due to their lack of payment from the HOA. Once the first forecloses then the HOA’s ownership interest is terminated and any right to collect rents cease. However, they can STILL go after you for the balance due.
Here in California, the HOA is obligated to provide you with a request for a meeting to discuss your delinquency and how to resolve it. If a resolution is not reached then the HOA will file a lien against the property. After the lien is filed then the HOA has the right to collect through a non-judicial foreclosure action by providing you with a Notice of Default and intent to sell. Only when these official notices are properly served upon you and you have not made any arrangements for repayment will they file the final Notice of Trustee’s Sale which includes the date and time for the auction to occur. AND, if the HOA takes the property back through a trustee sale the homeowner has a 90 day right of redemption period before every last method of retention is exhausted by the former owner.
When a foreclosure action occurs by any lien holder any junior lien holders carry the right to sue for a deficiency judgment, except when the lien is established as purchase money to obtain the property when it was originally purchased.
Typically, an HOA lien for past due HOA dues is wiped out in a foreclosure. That does not mean that your obligation to pay the past due dues has been wiped out. It becomes like an unsecured debt. As with most unsecured debts, the only sure way to eliminate them from collections would be to settle them, make payment arrangements and only as a last resort, include them in a bankruptcy discharge.
****DIANE WHEATLEY IS NOT A LICENSED ATTORNEY. THIS EMAIL IS COMPRISED OF HER OPINIONS,
OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE.
PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON
INFORMATION IN THIS POST****