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Don’t Let Associations Bully You Into Paying for Prior Unpaid Balances

By Kelly and Grant P.A.

Many property investors do not realize that when they buy a property at a foreclosure auction and the property is located within a condominium or townhouse association, they could be jointly liable with the prior owner for unpaid balances owed to the association. Often the association will threaten a lien against the foreclosure purchaser in pursuit of this unpaid balance, which can be tens of thousands of dollars. However, surprisingly often the governing documents of the association prohibit it from seeking that unpaid balance from you or your client, the foreclosure purchaser.

As a real life example, a client recently purchased property at auction in January for $108,000.00. In April, the client requested a payoff estoppel from the association so he could sell the property to a third party for $160,000.00, a $52,000 increase over purchase price. However, the association’s counsel served a demand for over $22,000.00 in unpaid charges which accrued during the ownership period of the prior owner. Rather than pay that demand, the client wisely referred the matter to an attorney at our firm, Mr. Cory Carano. Mr. Carano contacted the association’s counsel and cited to language within the governing documents of the community which prohibited collection of a majority of the balance sought. Rather than face litigation and almost certainly lose, the association agreed to accept $5,000.00 to settle its original claim of $22,000.00.

Even if the governing documents do not provide relief, many times the amounts sought by the association includes charges which cannot be recovered by law. Lawyers and collection companies acting on behalf of associations know this and yet a majority still demand these improper amounts from foreclosure purchasers. Do not let these associations, or their property managers, or their legal counsel bully you into payment of charges you do not legally owe. If you or your clients purchase properties at foreclosure, contact our firm immediately for a free consultation regarding your rights and learn how the firm of Kelley & Grant, P.A. can start saving you money!

Call Kelley & Grant, P.A. at 561-672-1161 if you have any questions.

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