Medina County Courthouse

Monday, February 15, 2010

Bill Would Give Condo Owners' Associations Priority Over Lenders in Foreclosures

There is a bill introduced in the Ohio House of Representatives that would give condominium owners associations priority over liens held by lenders in foreclosures. The bill, which is House Bill 408, would allow owner associations to receive up to six months of unpaid association dues before the lender received its money in the event of a foreclosure. The intention is that this money would then be available for the association to use in maintaining the common areas of the condominium development.

At the present time when a condominium unit is sold in a foreclosure sale, any unpaid taxes are paid first, followed by the amount owed to the lender who has the first mortgage. At best, a condominium association is going to be third in line behind the county treasurer and the bank. Since most condo owners stop paying the association when they default on their mortgages, the amount that is being lost by associations can be relatively large, especially if the foreclosure action is pending in court for a long time.

The bill is modeled on laws that have been adopted in at least a dozen other states. You can read more about this proposed law, and the problems that foreclosures are causing condo owners' associations by clicking here.

No comments: