When a foreclosure is first initiated by a bank or some other third-party, the association has three choices:
- Do nothing and hope that the foreclosure is actually completed and that the entity foreclosing actually has a lien superior to the Association;
- Monitor the foreclosure internally; or
- Send the file to an attorney to protect the association’s interests.
A policy of doing nothing could be a potential breach of a board member’s fiduciary duty, especially if the result of the policy would be to allow third parties to foreclose out an association’s superior interests. The Husch Blackwell Condominium & HOA Law Team will monitor the foreclosure to make sure that the foreclosure is actually completed timely, will keep the association advised of the date of the confirmation of sale so that the association can start assessing the new owner, and will ensure that any transfer fees are properly charged and collected. You can learn more about bank and third-party foreclosures, and our strategy in this white paper.