Expert: liznarr - 6/10/2010

Question
I recently purchased a condo at a foreclosure auction.  There is $22,000 due the condo association for past due monthly assessments and an $11,000 special assessment.  My first question is: Is there any legal way to reduce the amount that I pay on the past due assessments?  The reason I ask is I have been made aware that if the mortgage company had purchased the condo, their total liability would have been 1% of the original loan, or 6 months of monthly assessments, which would total $2,100.  That is quite a difference from the $22,000 I am being asked to pay.  My second question is, If I am responsible to pay the total in full, do I have any legal recourse against the previous owner who, of course, allowed the arrearages to accumulate?  Thank you.

Answer
Hi Bill,

I do not claim expertise as a foreclosure expert.  However, I will give you the benefit of what I know about some of the rules in my area.  Yours could be different.

Purchasing at a foreclosure auction can be very risky for an inexperienced bidder.  Rules and procedures of a foreclosure auction should ALWAYS be investigated in advance of bidding if one is not familiar with the process.  And it is recommended that a novice sit in on several auctions and do as much research as possible in advance of any bidding.

When you bid at auctions (foreclosure or tax sale), there is sometimes information (which can be limited information) at a Courthouse which is available for bidders to read.  For what is not available for a prospective bidder to read, the bidder is expected to do his/her own homework in advance of bidding so that there will be no surprises after a successful bid.  The “homework” search would include a full title search – including unpaid taxes and judgments which might attach -- and/or property inspection, if allowed.

Bidders should always be aware that some states might have a statutory right of redemption period after a foreclosure sale in which the former owner has the right to exercise his legal option of coming up with the past due balance, plus interest, plus penalties, plus attorney fees, plus interest owed to a successful bidder, etc., and reclaim the property – within the statutory redemption period.  So, during the redemption period, a successful bidder should not make any repairs/improvements to property that he/she would not be willing to risk losing should a former owner redeem.

If I were you, I would direct my questions to the foreclosure auction where you placed your successful bid and ask about their rules.  If you do not get the information you feel you need, you should seek competent legal counsel.

You can also go to Google or another search engine and enter words such as “Foreclosure auction procedures rules” for your state.  Here is one site that supposedly gives foreclosure rules for all 50 states:  
http://www.biggerpockets.com/foreclosure-process.html

I would doubt that you, as the successful bidder at a foreclosure sale, would have any recourse against the person who allowed the arrearages to accumulate.  Again, this would be an attorney question for your particular state, as many states and counties can have varying rules.

Sorry I was unable to give you specific answers, but I hope some of the above will point you in a direction that may be of some help to you.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth