The Importance of Monitoring Foreclosure Sales
As many of you know, the association is entitled to collect a super lien payment from a foreclosing lender when a property enters into public trustee foreclosure. The super lien amount consists of up to six months of regular assessment charges that came due prior to the filing of the foreclosure. This is a monetary threshold rather than a requirement that there be six months of unpaid assessments due. For example, if an association had monthly dues of $100.00, a super lien could be claimed for $600.00 so long as the account ledger showed this balance as due. The balance could be comprised of any combination of assessments, late charges, interest, legal fees or other charges.
There are, however, additional reasons for monitoring a foreclosure besides collection of the super lien. While property values continue to rise, it is important to also monitor the sale date of a property together with the sale price of the property at the public trustee auction. If, for example, a property sells for more than is owed to the foreclosing lender, the association may be entitled to those funds in addition to its super lien payment. Further, an association’s assessment lien may allow it to request title to a foreclosed property for the amount of the successful bid at the sale plus payment of additional nominal fees and expenses. While the prospect of an association taking title to a property may be daunting, it is sometimes a great option for recovering a large delinquent balance owed to the association together with a small profit on the resale of the unit.
It is important to note that there are very strict deadlines for claiming excess proceeds from a sale or requesting title to a property, so it is important that an association have legal counsel monitor the foreclosure sale dates.