Heritage HOA FAQ
To HOA contacts,
I want to emphasize that Heritage strives to be a good neighbor, corporate citizen, and association member, and this letter is not intended to be antagonistic. It is our mutual interest to return the property owned by Heritage Select Homes to its original condition and remove the stigma of foreclosure from your community.
With that said, we encounter HOA managers that are not fully aware of Georgia case law in reference to prorated HOA fees as well as commonly assessed “foreclosure fees”.
According to GA Law, Heritage Select is not obligated to pay any HOA fees prior to foreclosure. These fees are wiped from the property during the foreclosure process.
Accordingly, Heritage does not owe any late fees access by the HOA in regards to improper statements of balance.
Accordingly, Heritage is not liable for any “Foreclosure Fee”. This fee, even though assessed after the foreclosure date by the HOA is illegal under GA Law. The intent of the foreclosure process is to deliver a property free and clear of liens. Many HOAs try to add a “foreclosure fee” after the foreclosure. They commonly argue this fee is in their operating docs for the HOA. It is irrelevant, this fee is not legal in GA according to foreclosure laws regardless of the date the fee is assessed by the HOA.
Heritage will only accept a zero balance account from the HOA upon our ownership of the property.
To Summarize:
Please provide a clean invoice prorated from the date we RECEIVED the deed from foreclosure to the current date. For this invoice to be paid it can NOT include any “foreclosure fee” or association dues prior to the date we received the foreclosure deed. Email this to bills@heritageselecthomes.com and we will get your community set up for payments in our accounting systems.
If you have questions you can email accounting@heritageselecthomes.com or consult with your attorney about the applicable GA case law.
We are excited to be apart of your community and look forward to working with you.
(f) In the event that the holder of a first priority mortgage or a secondary purchase money mortgage of record, provided that neither the grantee nor any successor grantee on the secondary purchase money mortgage is the seller of the unit, or any other person acquires title to any condominium unit as a result of foreclosure of any such mortgage, such holder or other person and successors, successors-in-title, and assigns shall not be liable for nor shall the condominium unit be subject to a lien for any assessment under this Code section or under any condominium instrument chargeable to the condominium unit on account of any period prior to the acquisition of title;
recording statutes do not affect the validity or force of deeds, as recording is not an element of a deed. See O.C.G.A. § 44-5-30; O.C.G.A. § 44-2-2(c). Even a deed which is not recordable, based upon a lack of attestation, it still remains valid as against the grantor and his heirs. Budget Charge Accounts, Inc. v. Peters, 213 Ga. 17, 18, 96 S.E.2d 887, 889 (1957).
The purpose of this letter is to highlight two principles of Georgia law. First, generally speaking, notwithstanding that a property foreclosure auction occurs on the courthouse steps on a certain date, title to the property (and liabilities incurred on account of ownership, such as liability for association assessments or dues) does not pass to a foreclosure purchaser until delivery of the Deed under Power.
Second, an association cannot recoup amounts which are incurred prior to the date a foreclosure purchaser acquires title, through a “foreclosure fee” or similar charge, as “[a] party cannot do indirectly what the law does not allow to be done directly.” Kingsmill Vill. Condo. Ass'n, Inc. v. Homebanc Fed. Sav. Bank, 204 Ga. App. 900, 902, 420 S.E.2d 771, 773 (1992).
The purpose of the foreclosure process is to clear a property of all outstanding debts and liens. When an HOA attempts to assess a single unit a foreclosure fee, they are violating Georgia law and the purpose of the foreclosure process. Any “foreclosure fee” is a lien between the HOA and the previous owner of the unit and should be collected from this owner.
Heritage maintains records regarding the dates that it receives deeds, and is willing to provide same when necessary. Though Heritage sympathizes with many entities regarding expenses and trouble they may have regarding foreclosures, the legitimate investment backed expectations of secured lenders and foreclosure purchasers are that the purchasers take title without
April 1, 2013
Re: Obligation to pay Association dues after foreclosure
Our client: Heritage Select Homes LLC
Our File No.: 2013.0001
To Whom It May Concern:
I, and this law firm of Merritt & Fletcher, LLC, represent Heritage Select Homes LLC (“Heritage”). This firm does not represent you, and neither this letter nor future communications from this firm or its attorneys or staff constitute legal advice. You may seek independent legal advice.
As a threshold matter, I want to emphasize that Heritage strives to be a good neighbor, corporate citizen, and association member, and this letter is not intended to be antagonistic. However, Heritage also bears a duty to its owners, creditors, and other stakeholders, and therefore is careful in ensuring that claimed liabilities are indeed owed by it before making payments.
The purpose of this letter is to highlight two principles of Georgia law.
First, generally speaking, notwithstanding that a property foreclosure auction occurs on the courthouse steps on a certain date, title to the property (and liabilities incurred on account of ownership, such as liability for association assessments or dues) does not pass to a foreclosure purchaser until delivery of the Deed under Power.
Second, an association cannot recoup amounts which are incurred prior to the date a foreclosure purchaser acquires title, through a “foreclosure fee” or similar charge, as “[a] party cannot do indirectly what the law does not allow to be done directly.” Kingsmill Vill. Condo. Ass'n, Inc. v. Homebanc Fed. Sav. Bank, 204 Ga. App. 900, 902, 420 S.E.2d 771, 773 (1992).
Heritage maintains records regarding the dates that it receives deeds, and is willing to provide same when necessary. Though Heritage sympathizes with many entities regarding expenses and trouble they may have regarding foreclosures, the legitimate investment backed expectations of secured lenders and foreclosure purchasers are that the purchasers take title without the burden of any expenses or occurrences for the period prior to the purchasers taking title.
No liability or lien for assessments “prior to acquisition of title”.
After the foreclosure of “a first priority mortgage or a secondary purchase money mortgage of record” on a condominium subject to the Georgia Condominium Act, the purchaser “shall not be liable for nor shall the condominium unit be subject to a lien for any assessment under this Code section [O.C.G.A. § 44-3-80] or under any condominium instrument chargeable to the condominium unit on account of any period prior to the acquisition of title…” O.C.G.A. § 44-3-80(f) (emphasis added). The Georgia Property Owners' Association Act at O.C.G.A. § 44-3-225(d) similarly provides that such a foreclosure purchaser “shall not be liable for nor shall the lot be subject to any lien for assessments under this Code section or under any instrument chargeable to the lot on account of any period prior to the acquisition of title…” In 2011, the Georgia Court of Appeals also held that a person is liable for association assessments from the date that she received title to property until the date her title was divested. See Villas at Stone Mountain Condo. Ass'n, Inc. v. Blair, 311 Ga. App. 718, 720, 716 S.E.2d 718, 720 (2011), reconsideration denied (Sept. 20, 2011), cert. denied (Feb. 6, 2012). Of note, associations cannot seek to recoup expenses for insurance, management, maintenance costs etc. for the pre-title period through any other mechanism, because such claim would be precluded by the Act. See e.g. Kingsmill Vill. Condo. Ass'n, Inc., supra.
Accordingly, it is Heritage’s position that a “foreclosure fee” which, in substance, seeks to recoup from the purchaser expenses which were incurred by the association on account of the period before Heritage took title, are also precluded by the Condominium Act, Property Owner’s Act, and Georgia title law generally, even if embodied in a Declaration.
Title is not acquired until a deed is delivered and accepted.
Because liability for assessments only attaches when title is acquired, it is therefore relevant to examine when title is acquired generally, and after a foreclosure sale.
The Georgia Supreme Court recently affirmed the principle that, in the context of a foreclosure, “[u]ntil a deed under power is transferred and consideration is passed, the sale itself has not occurred; there is only a contract to buy and sell.” Tampa Inv. Group, Inc. v. Branch Banking & Trust Co., Inc., 290 Ga. 724, 727, 723 S.E.2d 674, 678 (2012). The Georgia Court of Appeals also recently applied the rule requiring delivery of a deed and held that a foreclosure is not consummated until the title is conveyed by deed. See Bldg. Block Enterprises, LLC v. State Bank & Trust Co., 314 Ga. App. 147, 150, 723 S.E.2d 467, 470 (2012).
These rulings are consistent with a long line of previous decisions requiring delivery of a deed for title to be acquired. For example, in a 1922 case, the Georgia Supreme Court said as follows: “It is essential to the validity of a deed … that it be delivered to the purchaser. . . . In this case the grantor’s undisclosed intention alone that the instrument should be effective as a deed did not constitute delivery.” Stinson v. Woodland Bank, 154 Ga. 254, 114 S.E. 181 (1922). Later cases affirmed this principle. See e.g. Washington v. Walker, 221 Ga. 471, 473, 145 S.E.2d 510 (1965) (evidence in this case was sufficient for the jury to find that the deed had never been delivered and was void). See also Domestic Loans of Washington, Inc. v. Wilder, 113 Ga.App. 803, 805, 149 S.E.2d 717, 719 (1966) (“The delivery of a deed is essential to its validity and it is complete only when the deed is accepted.”).
Conclusion. In sum, Heritage is not liable for any assessments, ‘foreclosure fees’, or other amounts which embody amounts charged “on account of any period prior to the acquisition of title”, and Heritage does not acquire title until a Deed under Power is delivered to and accepted by Heritage. This result is also fair because inter alia Heritage does not have productive use of the property until it receives title, Heritage generally has no notice when making the purchase at foreclosure of any association expenses or potential foreclosure-related assessments it should take into consideration when making its purchase, and the lender has a right to maximize the foreclosure sales price without having purchasers reduce their bids to account for amounts an association does or might claim due.
Jim Fletcher
Direct: (678) 607-6053
1265 West Spring Street, Ste. A, Smyrna GA 30080 | Main Office: 770-433-9345| Fax: 1-888-224-9876
www.MerrittFletcher.com