Seeing more HOA's with Notice of Default on unit here in California

Recently I have noticed some HOAs recording Notice of Defaults (NODs) here in California. And, this is without a NOD from the lender on the unit. Could it be that people are not paying their HOA dues but continuing to pay their mortgage OR that the lender is holding off on recording the NOD.

My understanding is that after a property is foreclosed, the HOA lien may extinguish. However, I have seen a situation where the lender had to pay off the HOA lien before closing escrow with the new buyer. Has anyone had a situation with a NOD from the HOA and if so, how was it handled in regards to a short sale?

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Comment by carlos espinoza on June 25, 2010 at 3:23am
i have never seen hod filing foreclosure. i know they can put a lien on the property like the IRS lien
and if they file foreclosure and take the property to trustee sale, they would have to buy out the first lien. so for me it does not make sense. i think that the HOA company is crazy if they want to foreclosure on a property that is underwater
Comment by Sara Mehrpouyan Los Angeles CDPE on June 24, 2010 at 5:18pm
I actually had a conversation with someone at a HOA company and they said that they rarely record NODs because it's expensive. They can foreclose as long as they beat the lender to it. However, if there is money owed to the lender and the lender takes the unit after the HOA has foreclosed then it's a short stay for the HOA.

I was also told that some HOAs are staying out of short sale proceeds and taking the homeowner to small claims court to collect.
Comment by Angelica Molina on June 21, 2010 at 3:09pm
Good Afternoon Sara-

They can file a lien against the property or they can file the NOD. I've seen instances in which the property is sold at auction(county level) and the investor(person/company buying the property at the county) is require to pay up to 6 months worth of HOA's. If doing a short sale, and the sellers are behind on payments, some banks will accept an escrow of up to the 6 months worth of HOA dues, the remaining amount is the seller's responsability regardles of situation. I haven't seen a NOD from the HOA company here yet.
Comment by Joseph C. Alfe on June 17, 2010 at 6:37pm
HOA's can sometimes file foreclosure and replace the lender as 1st lien


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