Florida Court Orders Bank to Takeover Condo
A judge in Miami ordered HSBC Bank USA (HBC) to take over ownership of a condo after the homeowners association (HOA) could not find a third-party buyer. The HOA foreclosed after the homeowner did not pay the association’s fees. However, the property also had a bank lien placed on it by HSBC, and the HOA could not legally sell the property. A Miami-Dade Circuit judge ruled HSBC must take ownership of the home and pay future HOA fees and assessments. The HOA has since waived its claim on the property. Miami Beach city commissioner Jerry Libbin called the “reverse foreclosure” ruling a precedent for legislative changes in Florida. “This is an important legal ruling for condo owners who are saddled with huge special assessments because greedy banks refuse to take financial responsibility for their reckless lending,” Libbin said. “I hope that the Florida Legislature heeds this ruling and finally enacts meaningful and comprehensive foreclosure reform.” Libbin said loopholes in state law have allowed banks to escape paying their share of condo association fees when a property goes into foreclosure, forcing other condo unit owners to pick up the tab. Under current law, banks can indefinitely postpone foreclosing on condo units homeowners who stop paying their mortgages and association fees. When a bank does initiate a foreclosure, the lender is only required to reimburse condo associations either six months in dues, or 1% of the mortgage, whichever is less. Libbin said many times associations only recover that sum after suing the lender. Libbin is spearheading a statewide campaign to change the laws. “Our state can't afford any more foot-dragging and excuses from state lawmakers,” Libbin said. “The banks and banking lobby must be held accountable and pay their fair share. Our state's condo owners, tax base and economy depend on closing these outrageous loopholes.” HSBC Bank did not immediately return HousingWire's request for comment late Thursday. Write to Austin Kilgore. The author held no relevant investments.