HOA foreclosures in Florida can look like incredible deals. A condo listed for $25,000 at foreclosure sale sounds like the deal of a lifetime. But what most buyers do not realize is that an HOA foreclosure does not eliminate existing mortgages — it only transfers the HOA’s lien position.
If you buy a property at an HOA foreclosure sale without doing your homework, you could inherit a massive mortgage balance on a property that is worth far less than what you owe. This is not hypothetical — it happens regularly in Florida.
HOA Foreclosure vs. Bank Foreclosure
Understanding the difference between these two types of foreclosure is critical:
Bank Foreclosure
When a homeowner stops paying their mortgage, the lender files a foreclosure lawsuit. If the lender wins, the property is sold at auction. The sale proceeds pay off the mortgage, and any remaining equity goes to the homeowner (in non-deficiency states). The buyer at the auction gets clear title — the mortgage is wiped out.
HOA Foreclosure
When a homeowner stops paying HOA assessments, the HOA files a foreclosure action under Florida Statutes §718.116 (condominiums) or §720.308 (HOAs). The HOA forecloses on its lien only — not on the mortgage. The property is sold at auction to satisfy the HOA’s debt.
The critical difference: The HOA foreclosure does not eliminate the existing mortgage. The mortgage stays with the property. The buyer at the auction inherits the mortgage along with the property. This is fundamentally different from a bank foreclosure, where the mortgage is satisfied at sale.
How an HOA Foreclosure Works in Florida
Florida HOAs and COAs (condominium owners’ associations) have significant power to collect unpaid assessments:
Step 1: Lien Notice
Under §718.116 (condos) and §720.308 (HOAs), the association can record a lien against the property for unpaid assessments. This lien has priority over most other liens — including, in some cases, first mortgages.
Step 2: Pre-Foreclosure Requirements
Before filing foreclosure, the HOA must:
- Send a notice of intent to lien
- Provide the homeowner with an opportunity to pay
- Offer a payment plan (for amounts over $1,000 under §718.116)
Step 3: Foreclosure Lawsuit
If the homeowner does not pay, the HOA files a foreclosure lawsuit. The homeowner receives notice and has the opportunity to defend.
Step 4: Sale at Auction
If the HOA wins, the property is sold at a public auction. The HOA’s lien is satisfied from the sale proceeds.
Step 5: What the Buyer Gets
The buyer at the auction receives the property subject to all existing liens and encumbrances — including the mortgage. The HOA’s lien is wiped out, but the mortgage is not.
The Hidden Mortgage Problem
This is where buyers get into trouble. Here is a real-world example:
Scenario:
- Homeowner owes $250,000 on their mortgage
- Homeowner owes $25,000 in HOA assessments
- The mortgage lender does not foreclose
- The HOA forecloses on its $25,000 lien
- Property sells at HOA foreclosure auction for $25,000
What the buyer thinks: “I just bought a condo for $25,000!”
What actually happened: The buyer purchased the property subject to the $250,000 mortgage. The mortgage did not disappear — it followed the property. The buyer now owes $250,000 to the mortgage lender on a property that may only be worth $200,000 (or less).
This is called buying a property “subject to” the existing mortgage. The buyer is not personally liable for the mortgage (they did not sign the promissory note), but the lender can foreclose if the mortgage is not paid.
Why This Happens
- Mortgage lenders sometimes do not foreclose — they may be waiting, or the property may be worth less than the loan balance (underwater)
- HOA liens can have super-priority — in Florida, HOA liens for assessments can take priority over first mortgages for up to 12 months of assessments (§718.116(5)(a))
- Buyers do not do title searches — they assume the HOA foreclosure clears all liens
Research Checklist Before Buying
Before purchasing any property at an HOA foreclosure sale, complete this checklist:
1. Conduct a Title Search
This is the most important step. A title search reveals:
- All mortgages and liens on the property
- The amount owed on each mortgage
- Whether the mortgage lender has filed any actions
- Any other encumbrances (tax liens, judgments, mechanics’ liens)
Do not skip this step. A title search costs a few hundred dollars and can save you from inherencing hundreds of thousands in debt.
2. Check the Mortgage Balance
Find out how much is owed on the existing mortgage. If the property is worth less than the mortgage balance, you are buying an underwater property.
3. Review HOA Financial Records
Request the HOA’s financial statements, including:
- Outstanding assessments on the property
- Any pending lawsuits against the owner
- The HOA’s budget and reserve funds
- Any special assessments that may be imposed
4. Verify the HOA’s Authority to Foreclose
Confirm that the HOA has followed all required procedures under Florida law:
- Proper notice was given to the homeowner
- A payment plan was offered (if required)
- The foreclosure action was filed correctly
5. Understand What You Are Buying
At an HOA foreclosure sale, you are buying:
- The property subject to all existing liens and encumbrances
- The HOA’s lien is wiped out
- The mortgage is not wiped out
- Any other liens (tax, judgment) remain
6. Get Legal Advice
Consult with a bankruptcy attorney or real estate attorney before bidding. They can review the title, explain the risks, and advise whether the purchase makes sense.
Florida HOA Foreclosure Laws
Florida has specific laws governing HOA and COA foreclosure:
Condominiums (§718.116)
- HOA/COA liens have super-priority over first mortgages for up to 12 months of assessments
- The association must offer a payment plan for debts over $1,000
- The homeowner has the right to pay off the lien and stop the foreclosure
HOAs (§720.308)
- HOA liens generally do not have super-priority over mortgages
- The HOA must follow specific pre-foreclosure procedures
- The homeowner has the right to cure the default
Redemption Rights
Florida does not provide a statutory right of redemption after HOA foreclosure (unlike some states). Once the sale is confirmed, the former owner loses the property.
Deficiency Judgments
If the HOA foreclosure sale does not fully satisfy the lien, the HOA may seek a deficiency judgment against the homeowner for the remaining balance.
How to Defend Against HOA Foreclosure
If you are a homeowner facing HOA foreclosure, you have options:
- Pay the assessments — the simplest solution if you can afford it
- Negotiate a payment plan — Florida law requires HOAs to offer payment plans for debts over $1,000
- Challenge the foreclosure — if the HOA did not follow proper procedures
- File for bankruptcy — the automatic stay stops HOA foreclosure, and Chapter 13 can help you catch up on assessments over time
- Sell the property — if you cannot afford the assessments, selling may be better than foreclosure
If you are facing creditor harassment from an HOA or considering bankruptcy, consult with an attorney to understand your options.
Talk to a Florida Foreclosure Defense Attorney
HOA foreclosures in Florida are complex. Whether you are a buyer researching a potential purchase or a homeowner facing foreclosure, the Dellutri Law Group can help.
Call us at 239-939-0900 or schedule a free consultation to discuss your situation. We serve clients in Fort Myers, Naples, Port Charlotte, Tampa, and throughout Florida.
Do not let a bargain turn into a financial disaster. We are here to help.
