What is the HOA Show Cause Foreclosure Process
In my last post, I highlighted just what is at stake with the new foreclosure law. In brief, the newly amended Florida Statute 702.10 now allows for the HOA, a junior lien holder on most homes, to foreclose on your property from within the bank’s lawsuit in as little as 45 days. Many foreclosure defense attorneys are referring to this as an HOA Show Cause Foreclosure scenario.
This sent shock waves throughout Florida – and most notably in Hillsborough County (where foreclosure rates are among the highest in the state. Not only could HOA’s foreclose on properties for pennies on the dollar, but they could do so at a rate much faster than many of the big banks.
How can they Foreclose on my home that quickly?
In Florida, an HOA is paid assessments. These assessments go toward the upkeep of the community where the home is located – things like grass clipping, public maintenance, and even mailboxes. When these assessments are not paid, the HOA can basically put a lien on the property. This lien is recorded against the property and can be foreclosed on.
In Florida, this lien is generally a junior lien. This is why in a standard mortgage foreclosure action you will see an HOA noticed in the law suit. Within this lawsuit, only banks used to be entitled to an accelerated process. They would file a motion, get an order (with a hearing date), serve you with a complaint, and then you only had a finite period of time to defend yourself in the foreclosure action. If you failed to put on a defense, you were foreclosed at the show cause hearing. It is an extremely important hearing – if you have been served with a show cause order in a foreclosure lawsuit it is highly important that you contact an attorney!
How can an HOA use this expedited process?
Inside a foreclosure lawsuit if the HOA is a defendant they can use the show cause motion and subsequent order to expedite the foreclosure, they can foreclose on your property as a co-defendant. Once they get a show cause order they essentially speed up the bank’s case to a final hearing well before the lawsuit has fully ran its course.
Now, I know what you are thinking. What’s a show cause hearing anyways? Basically, it is a summary judgment hearing. This is a final judgment prior to trial. If this is the case, and the bank or HOA is successful in winning at the hearing, it can have dire consequences in your foreclosure action. It could potentially cost you your chance at a loan modification or short sale.
What can I do to prevent this?
A show cause hearing places an extremely high burden on defendants. It requires a very nuanced knowledge of the foreclosure process as well as current Florida foreclosure law. If you are interested in discussing your options prior to a show cause hearing, you can schedule a free consultation with my office.