Florida law provides that if someone other than the Lender who foreclosed on the property, is the successful bidder (Third Party Purchaser) and the property is subject to either Condominium assessments or Homeowner Association assessments, that person is liable for those unpaid assessments. This includes all unpaid assessments up until the purchase at auction and thereafter for as long as the third party purchaser owns the property. The third party purchaser’s only remedy is to sue the previous owner to collect the money he or she paid on the old assessments. Since the property was in foreclosure, the odds of success in collection are probably not real great.
Here is the danger. The property is worth $75,000. The third party purchaser pays $70,000 at foreclosure auction. He or she thinks she is going to make $5,000 on the investment. Then the Lien Notice comes in from the association attorney demanding $18,000 in past due association assessments. The third party purchaser has just lost $13,000.00 on the deal. Those assessments will have to be paid or lose the property in foreclosure by the association. At the very least, he or she will have to pay that lien in the event he or she sells the property, even if the association does not foreclose. This lien continues to grow with late fees, interest and attorney fees.
Unless you know for certain the amount of the assessment liens on the property and you consider it in setting the amount you are willing to bid, it is wise to avoid buying these properties at clerk’s foreclosure auctions.