Archives for January 2011

Can a Homeowners Association (HOA) foreclose on my house in Utah?

Yes. But the real question is why would they?

I was contacted today by a homeowner in Traverse Mountain Lehi Utah who had an HOA who had appointed a trustee who was instructed to foreclose on the property and force the sale of the property at public auction.

One of the issues with this is that the home owner owes about 35K more than the property is worth. So if the trustee continues with the trustee sale and auctions the property for the $1800 they are owed, and there are no bidders they will end up taking title to the property subject to all SR liens. IE first mortgage, second mortgage etc…The end result would be the HOA would end up owning a property that is underwater 35K. They could then wait fore one of the SR liens to foreclose them out and they would be right back where they started.

How does this benefit the HOA? Well as in most cases the foreclosure process is an attempt to collect a debt. They are hoping to scare/force the homeowner into bringing the balance current. My understanding is that using the law to scare/force/bully others is against the professional code of conduct for attorneys in Utah, but it doesn’t seem to stop them. If this home owner had significant equity it would make more financial sense for the HOA to pursue this option, however in this case it doesn’t make much sense at all. Unless the HOA wants to take title, just to have to evict the home owner, to try and rent the property out short term, to just be foreclosed out by a SR lien a few months later. Seems like a lot a work to collect $1500 if anything.

If you have a notice of trustee sale in Utah and need to stop foreclosure please contact me for a free consultation to discuss your options.

*this is not legal advise. Please call for a consultation or seek legal advise regarding you specific situation from an attorney.*

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