ARIZONA – Investors line up to buy bargain homes at Phoenix HOA foreclosure auction
Every Thursday, investors crowd into a garage-size room on the second floor of the Maricopa County Courthouse in Phoenix looking for a deal.
Among these veterans, bidding goes fast for bargain properties placed in foreclosure by homeowners associations, often for as little as $1,200 in unpaid monthly dues.
Last spring, bidding started at $50,000 for a condo in north Scottsdale, about $8,000 more than the owner owed his HOA. Five minutes and 40 bids later, a Phoenix investor scored the property for $153,000, about half the going price of neighboring condos.
After the auction, the Salida Del Sol Condominium Association and its law firm were paid. The previous owner had bought the home in 2006 for $270,000 in cash. More than $100,000 remained from the auction.
Attorneys, foreclosure experts and other parties interviewed for this story could not say what happens to any money that is left over, or whether anyone must notify the previous owner about the proceeds.
The former owner could not be reached for comment.
Maxwell & Morgan, the law firm handling the Salida HOA, referred questions to Carpenter Hazelwood attorney Joshua Bolen, who is on the board of the Arizona chapter of the Community Associations Institute.
Bolen said he could comment generally about HOA foreclosures rather than about specific cases. He said homeowners have the right to claim the money left over after their liens are paid.
(After a foreclosure auction) the investor pays the sheriff, the sheriff cuts a check to the association, and the association is completely out of it,” said Bolen. “That investor basically fills the shoes of the association.”
The Sheriff’s office says its not responsible for returning any extra proceeds from an auction to the homeowner.
“The homeowner must petition the court like any remaining lien holders for surplus proceeds from an HOA foreclosure sale,” said Bolen. “Few people understand the process because it’s been rare until recently that there are excess proceeds for a homeowner to claim.”
A Maricopa County Superior Court judge then reviews all of the petitions for the leftover funds and decides how the money is distributed.
A homeowner trying to recover money will face court costs. Read more: