Should I keep paying my HOA if I’m doing a short sale – Irvine Real Estate – Irvine Homes for Sale

by Robert Mack on May 9, 2011

in Sellers

If you are in the process of selling your home as a short sale and confused whether or not to continue paying your HOA payment, take a moment and learn about the different consequences of paying or not paying.  Stop guessing and start knowing and learn why it is or isn’t important to continue paying or not.


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Post by Robert Mack

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{ 2 comments… read them below or add one }

Joe McDermott - Temecula Real Estate May 17, 2011 at 4:31 am

Yes, yes, yes you should keep paying your HOA dues. The complications and costs delinquent HOA dues can cause a short sale effort are not worth the benefit of not paying.

Some will disagree with me on this, but I tell clients to skip mortgage payments before falling behind on their HOA dues.

Case in point: a client of ours who didn’t follow our advice ended up with an $8500 lien slapped on a condo we were trying to short sell for $49,000 in Hemet (You’re lucky you sell in Irvine Robert! Our condos go for the same price as a car in the OC.). This was the result of being behind only $1200 is actual dues! The rest were penalties, late fees and, finally, attorney fees. It took another 4 months to clear this up and get the deal closed.

Banks will not pay to remove these liens because they get scrubbed in a foreclosure so its up to the seller and, if the seller is lucky, the buyer to get this stuff taken care of. Just pay the dues and move on. The short term savings are not worth the hassle.

-Joe

Robert Mack May 17, 2011 at 7:56 pm

Joe, I agree with you 100%. If a seller must choose (and only has the resources) to pay either one or the other, I always stress the importance of keeping the HOA current. I’ve been in situations like yours as well, where a seller will stop because their friends or family tell them otherwise, and in many cases, the delinquent HOA was enough to create a gridlock and destroy the short sale, resulting in foreclosure – which is what we want to avoid from the beginning. It’s great to hear that you were able to close that transaction with an $8500 lien on a $49,000 home! That’s close to 20% of the purchase price and I’m sure you worked real hard on that one.

It is a bit easier when dealing with higher priced properties because the buyer and sometimes even the seller do have the funds to contribute, but that’s like pulling teeth as every buyer wants the best deal ever and a typicall short sale seller does not want to lose more than they already are.

thanks for your feedback and for sharing your story! It’s always great to hear about other’s experiences out there!

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