Risk in Purchasing Property Subject to a Pending Foreclosure and Lis Pendens
When real property is the subject to a pending foreclosure action where there is a lis pendens (a formal notice), a buyer that purchase the property outside of the foreclosure ?does so at his own risk because he is on notice that the property is subject to the foreclosure action [through the lis pendens].? Bymel v. Bank of America, N.A., 159 So.3d 345, 346 (Fla. 3d DCA 2015). The buyer is not permitted to intervene in the pending foreclosure action. See id. at 346-47.
In a recent case, The Bank of New York Mellon v. HOA Rescue Fund, LLC, 43 Fla.L.Weekly D1312b (Fla. 2d DCA 2018), the bank (mortgagee) filed a foreclosure action and lis pendens. After the bank?s action was pending, the mortgagor?s homeowner?s association foreclosed an unpaid assessment lien. A buyer obtained the property at the foreclosure sale of the assessment lien and then moved to intervene into the bank?s previously filed foreclosure action, which the trial court allowed. (It appeared the bank, although its action was previously filed, did not aggressively prosecute the foreclosure and was fine with allowing its action to sit idle.)
Two issues were addressed on appeal.
First, the buyer that purchased the property through the homeowner?s association?s foreclosure of an assessment lien should NOT have been allowed to intervene. ?A purchaser of property that is the subject of a pending foreclosure action in which a lis pendens has previously been recorded is not entitled to intervene in that foreclosure action.? The Bank of New York Mellon, supra. This language is the reason why filing a lis pendens is powerful! The lis pendens puts the subsequent buyer on notice that he is purchasing the property at his own risk knowing the title to the property is subject to a pending lawsuit.
Second, even if the buyer could intervene, the buyer purchased the property subject to a superior interest. In other words, the mortgage was superior to the homeowner?s association?s assessment lien so when the buyer purchased the property at the foreclosure sale of the assessment lien, the purchase was always subject to the superior mortgage. Selling and buying homes is stressful and you will need a solicitor when moving house. They can help you with any situation, such as this foreclosure scenario. Even if the intervention was proper, the buyer still would not be able to participate in the bank?s foreclosure action as if the buyer were a party to the original note and mortgage. If you feel like you can take on these foreclosure laws and do everything by the book, being in the know on how to find houses in foreclosure could actually save you money on buying a home.
It is extremely important in situations like this that you get a Foreclosure Lawyer involved to go through the case with you. It is a very complex situation to be in, and I would recommend not doing it alone.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.