Can you HOA foreclose on your property if you do not pay your HOA dues?
It could, but usually no.
Priorities of the interest in real property are generally determined by chronology, first in time, first in right. The Covenants, Conditions, and Restrictions (CC&Rs) are created and filed when the developer initially develops and creates the planned subdivision. This occurs before any of the lots within the subdivided land are sold. All of the lots within the community are bound by the terms of the CC&Rs, which set up and delineate the terms of the Home Owners Association (HOA).
To enforce an interest in property, a lienholder may foreclose when a property owner fails to meet his or her obligations . When a lienholder forecloses, this action wipes out the property interests of all junior lienholders. Because the CC&Rs were recorded before any of the properties were individually sold, the HOA’s lien is superior to any mortgage interests on the individually purchased properties. If there were to be no modification in priority, then an HOA’s lien would remain superior and any foreclosure action by the HOA would wipe out later-in-time liens. (Note that there are some liens that retain their superior position, including tax liens).
However, CC&Rs usually contain what’s called a subordination clause. This clause expressly states that the lien by the first mortgagee is superior to that of the HOA’s lien. This is done to permit future property owners to obtain financing to purchase property in the subdivision.
Lenders would not be very enthusiastic about lending on properties where an HOA had the ability to foreclose and thus eliminate the lender’s lien. The effect is that the first mortgage lender has priority, and the HOA lien is eliminated if and when the first mortgagee forecloses on the property.
If there is no subordination clause in the CC&Rs, the lender will ask for the HOA to agree to a subordination clause before financing the property. Likewise, if you apply for a second loan, that lender will also request for a subordination agreement from your HOA. The CC&Rs may have been drafted to include a required fee and/or a requirement that all dues be brought current before agreeing to the subordination agreement.
While the HOA does have lienholders’ rights in regards to your property, it is usually not the case that the HOA is in a position to foreclose on the property.
Sort of.
Using Zillow and other real estate websites is a good way to start to generate comparable sales on a subject property.
For example, Zillow lists recently sold properties that are similar to a subject property.
BUT, be aware that it will show all sales, and will not take out homes that are in a different condition or have more/less upgrades than the property you are comparing to.
ALSO NOTE that the “recently sold” list on Zillow might contain some properties that were sold not-so-recently. To establish comparable value, you need to look at similar homes that were sold within the last few months. With our volatile market you should look back 3 months. You can go back 6 months if needed to generate more data, but take these older sales with a grain of salt.
Market value means what a property will sell for at a given time. Comparing to sales that took place a year ago, or even 9 months ago, does not accurately reflect what the home is worth now.
The easiest way to get accurate comparables is through the resources that realtors themselves use. Realtors have access to resources that enable them to precisely select closed properties in a given neighborhood. Realtors can hand-select closed listings that have features and characteristics that are most similar to the subject property.
I encourage buyers to pull their own “comparables” by using Zillow and similar sites, AND THEN compare the closed homes to what a realtor pulls up. Then ask your realtor to explain why he/she picked the homes that were selected in his/her comparable market analysis.
In sum, it will be the most recently sold homes with the most similar features and condition that will reflect the most accurate picture of a subject property’s current market value.
3 terrific resources to learn about the Valley of the Sun!
1. State of Arizona’s Department of Revenue: Moving to Arizona – Frequently Asked Questions
2. The official Arizona travel and vacation guide from the Arizona Office of Tourism
http://www.arizonaguide.com/
3. Arizona’s news source: The Arizona Republic & 12 News KPNX-TV
www.azcentral.com
What’s in store for the second home market in the Valley?
More and more it seems that Canadians have been making their way down south over the years to buy a place in the Valley of the Sun. In fact, this past spring, Canadians were the largest group of out-of-state homebuyers in Arizona. Canadians now top out-of-state homebuyers
With the Canadian real estate market suffering, will we see fewer Canadian buyers this winter season?
Many Canadians use the equity in their homes in Canada to pull cash and buy a home in Arizona. Reports indicate that in the past several months the Canadian real estate market has been suffering. Several markets appear to be experiencing a real estate bubble. Canada’s Housing Bubble: An Accident Waiting to Happen
Might this mean a downturn in Canadians buying real estate?
If the home values take a heavy blow, the cash won’t be as easy to pull out of Canadian real estate. This might mean that fewer Canadian buyers will show up to soak up our inventory. With the snowbird season upon us, time will tell whether the Canadian real estate market will affect Arizona’s market.
PHOENIX real estate market report over the past several months,
based on the Cromford Report:
1. Active listings growing markedly.
2. Sharp decline in sales during July ‘10.
3. Price per square foot gradually decreasing.
4. Downturn in price per square foot solds, after a
steady increase over 5 months.
5. Sharp increase in notices of trustee sales.
6. Small increase in trustee sales during July ‘10.
TO VIEW REPORT: http://alturl.com/98a6z
*Let Lara know if you’d like info on another city or
specific zip code.
ARMLS Statistics for Cities
www.cromfordreport.com
From Realtor.org
Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.
Who Qualifies for the Extended Credit?
- First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
- Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
How is a Buyer’s Credit Amount Determined?
Each home buyer’s tax credit is determined by tow additional factors:
- The price of the home.
- The buyer’s income.
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale
Some General Information on the First Time Homebuyer’s Tax Credit:
For the tax credit program, the IRS defines a first-time homebuyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
The tax credit does not have to be repaid.
The amount of the tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
The tax credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
What Types of Homes Will Qualify for the Tax Credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes), and houseboats.
The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain exclusion for principal residences. It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), you lineal descendants, (children, grandchildren, etc.) or your spouse.
For more information or help contact us at broden@russlyon.com or lchubaty@russlyon.com.
Make an offer. Time and time again I see buyers hesitant to make an offer on a home that they perceive to be a bit over-priced. You never know if the seller’s personal and/or financial situation has worsened since initially listing the property.
Or, maybe they simply listed on the high side in overly-optimistic hopes that they’d attract an overly generous buyer who feels bad for the seller and wants to give them as close to what they’re asking as possible. Strange enough, these buyers do exists, but they are extremely hard to come by.
Perhaps the growing days on market of their listing is starting to frustrate and scare them. While the rational thing to do in this situation is reduce the price of the home, sellers are often reluctant to do so.
I’m in no way suggesting that you offer half of the asking price—an offer that is ridiculously low will be perceived as offensive.
Go ahead and make an offer 20 percent below the asking price. Some sellers might dismiss the offer as too low to dignify with a response. BUT, there are also realistic sellers out there that know that the way to get to a negotiated sales price is by putting a number down on paper.
Considering the tough market we’re in, sellers have no business putting their properties on the market if they aren’t cognizant of the fact that they’re going to get “lowball” offers.
So why not get the ball rolling? You might just be able to get that place at the price you want!
Make an offer. Time and time again I see buyers hesitant to make an offer on a home that they perceive to be a bit over-priced. You never know if the seller’s personal and/or financial situation has worsened since initially listing the property.
Or, maybe they simply listed on the high side in overly-optimistic hopes that they’d attract an overly generous buyer who feels bad for the seller and wants to give them as close to what they’re asking as possible. Strange enough, these buyers do exists, but they are extremely hard to come by.
Perhaps the growing days on market of their listing is starting to frustrate and scare them. While the rational thing to do in this situation is reduce the price of the home, sellers are often reluctant to do so.
I’m in no way suggesting that you offer half of the asking price—an offer that is ridiculously low will be perceived as offensive.
Go ahead and make an offer 20 percent below the asking price. Some sellers might dismiss the offer as too low to dignify with a response. BUT, there are also realistic sellers out there that know that the way to get to a negotiated sales price is by putting a number down on paper.
Considering the tough market we’re in, sellers have no business putting their properties on the market if they aren’t cognizant of the fact that they’re going to get “lowball” offers.
So why not get the ball rolling? You might just be able to get that place at the price you want!
Many sellers have a compulsion to try to get back every penny they put into their house. They begin with the price they paid when they bought the property and then follow up by tallying every repair and all the maintenance done on the home. They stack up all their home depot receipts to calculate every crack sealed, outlet repaired, and bush planted.
But they forget to subtract out the value that they have received from living in the home. The home has given you so much…isn’t that worth something?
ARGUMENT
Real estate is an investment, and if I put money in, it follows that I should get it back when I sell. The thinking is, “I maintained every working appliance and part of machinery in this house, and therefore I deserve to get reimbursed for it.”
No, you don’t. Regular maintenance is an expected expense and part of your responsibility as a homeowner, not an upgrade.
COUNTERARGUMENT
Your home has already given you a lot of value. You and your family have lived there, laughed there, argued there.
Pricing effectively is accomplished by looking at your home’s current market value. In other words, you have to assess how it stacks up against the competition in the current market.
Your home has to appear to give buyers the most bang for their buck. So, if you intend to sell your home in a buyer’s market, forget about the money you put in and look at what’s on the market around you. If you can’t live with selling your home at the current market price, then you’re just going to have to wait until the market turns around.
Many first time buyers mistakenly believe that they will have to pay commission if they use a real estate agent to find and buy a home. But in reality, it is the seller that pays for the commission. Most homes for sale are listed with listing agents, who have a contract obligating the seller to pay commission if they bring a ready, willing, and able buyer with the transaction leading to a successful close. These agents offer to split their fee to a buyer’s agent who brings a buyer for the home.
Is there a way to avoid commission in hopes of sellers taking a reduced price since they will have to pay less out of pocket? Not really.
If you call a listing agent for a home you like, and proceed to make an offer to buy it, there will be no reduction in commission. The seller is already committed to paying a commission most likely as a result of having signed an exclusive right to sell listing agreement. This contract commits the seller to paying a set commission no matter who sells the house. So, what will happen is that the listing agent will step in as a dual agent. That means that the listing agent will play the role of both buyers’ agent and seller’s agent and collect double the commission than if you had come in with your own agent.
With the availability of listings of homes for sale on the internet, it’s pretty tempting to think about buying a property without the help of a Realtor. So if you think you can step in without a buyer’s agent representing you, and have the seller take less since you don’t have an agent to pay….Think again!
