Court Decision in Florida May Affect Bank Repo Houses for Sale Market- By: John Cutts
In a possible ground breaking move, a court in South Florida made a decision that can put an end to banks’ tactic of delaying taking the title of financially troubled repo houses for sale. According to market observers, banks use this method to avoid paying assessments that are past due and legal fees that should be given to homeowner associations.
The Association Law Group, or ALG, authored a procedure called reverse foreclosure designed to address situations wherein a homeowner’s association is already in possession of the property title through foreclosure, but the foreclosure action of the bank involved is still stalled or pending.
In the landmark case, ALG represented the homeowners’ association, Keys Gate Community Association. The core detail of the case is that the association waived its public sale rights for the property in question, which means that property ownership was transferred to the other party, HSBC Bank USA.
The situation became significant to the bank repo houses for sale market because the ALG reverse foreclosure process resulted in HSBC being required to pay a share of legal fees, past due assessments, court costs and other assessments. The bank, in this case, could have used the strategy of delaying the proceedings of foreclosure to avoid paying for the fees if the process of reverse foreclosure was not used.
The legal strategy developed by ALG has been touted as an effective method of minimizing bank owned properties for sale and foreclosure home sale backlogs. The habit of most banks to delay proceedings in a foreclosure situation usually has a negative impact on home owners’ associations as they accumulate more bad debts while banks are delaying the process of owning the title; and with it, the responsibilities of paying fees.
The reverse foreclosure method is expected to benefit condominium owners, home owners’ associations and other small time property owners, even those in the fixer upper homes real estate business. ALG has so far been successful in using the process in Broward and Miami Dade counties in Florida.
The procedures involved in bank repo houses for sale and bank foreclosure auctions can be dramatically changed by the strategy called reverse foreclosure developed by ALG. The group is planning to use this procedure again in other counties of Florida.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.