If your condo has been foreclosed on by the HOA, what happens to an equity line of credit on the condo?
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If your condo has been foreclosed on by the HOA, what happens to an equity line of credit on the condo?
The condo was foreclosed on and the owner did not receive any of the proceeds from the sale. Can the credit union sue the ex-owner? He has been paying the payments each month early so he is not behind what can he do to stop this?
Asked on October 4, 2011 under Real Estate Law, Florida
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If there was a line of credit in junior position to a loan secured by the condominium that was foreclosed upon, the lien (mortgage or trust deed) of the line of credit was wiped out as a matter oif law by the foreclosure. However, the loan obligation still stands as a form of the contract that the property owner signed for.
If the lien securing the loan for the line of credit was eliminated as a matter of law, most likely the obligation is still owed by the former condominium owner in that the line of credit most likely was not a purchase money loan. If it was, then the lien for the line of credit was also eliminated most likely by the foreclosure if your state has anti-deficiency laws.
A purchase money loan is a loan obtained by a person to ourchase his own personal residence.
Good question.
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