The foreclosing lender will often pay up to a point, but we have seen many cases in which the back HOA fees exceed $50,000. We are working on one now with a $65,000 HOA lien on it!
The lenders know that they only have to pay for the most recent twelve months in past due HOA fees should they foreclose the property, so they are often less than enthusiastic about paying more than that. Knowing this, many HOA’s will negotiate the fee down to facilitate the transaction.
It is often a win-win if the HOA can come out with much more than the stautorily mandated twelve months worth of fees. However, in a short sale, both buyers and sellers should be prepared to contribute should the foreclosing lender and HOA reach an impasse.