Association Hits Hurdle in Foreclosure

The trial court has a deficiency subject of matter jurisdiction to hear the Homeowners Association foreclosure action where a bank or superior lien has already recorded a notice of lis pendens.

In this Broward County case, a bank recorded a lis pendens and filed a foreclosure action against a borrower. Furthermore, they claimed the homeowners association as having a possible interest in the property.  While the bank's lawsuit was pending, the association filed its own foreclosure lawsuit against the borrower in a different court. And, they received a final judgment of foreclosure. The borrower then attempted to have the association's final judgment vacated. However, the trial court shut down that motion, and the borrower appealed that ruling.

The Fourth District Court of Appeals sided with the association's final judgment; which was obtained after the bank's foreclosure action was filed and lis pendens recorded, was void because the trial court that granted the final judgment to the homeowners association lacked jurisdiction to hear the association's case.  The association's only avenue to attain their past due assessments would be through the bank's still pending foreclosure action.

This ruling is potentially very significant in affecting the rights of associations and junior lienholders. As well as investors whose business strategy is to purchase homes at the association or junior lienholder foreclosure sales.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.