Navigating the ins and outs of real estate foreclosure isn’t always simple. Purchasing a home at auction can seem like a lucrative and astute method of acquiring property, but what many prospective bidders do not realize when entering a foreclosure auction is that when they purchase a property, they are liable for any and all outstanding liens against that property. It pays to know exactly what you’re getting into before biting off more than you could chew.
Florida Statute §718.116 expressly states that “A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title.”
This means that both the previous owner and the new deed holder are jointly and separately responsible for the HOA assessment lien on the property. The good news is that there is a statutory cap on the amount the HOA can collect from the new purchaser (up to 12 months’ worth of assessments or 1% of the original mortgage debt); however, full liability remains with the previous owner and the Association is within their rights to seek out full restitution.
If you are considering buying property at auction in the state of Florida, perform a title search of the particular real estate you’re looking to own prior to bidding in order to determine what kind, if any, liens are held against the property as you will be responsible for all of them, not just the HOA. Taking this extra step will eliminate ugly surprises and leave your feel-good memory of having the winning bid unblemished.