If There Are HOA Dues Owed on a Short Sale, Should I Pay Them or Negotiate With the Bank?

Sometimes it is interesting to address real questions asked by my clients, knowing that they are not the only ones confused about all the intricacies and caveats involved in different real estate possibilities that we find on the market nowadays.

This question addresses short sales and how these pieces of real estate are sold.  As a refresher, a short sale is when a borrower cannot pay the loan  on their property, but the lender decides that selling the property at a loss is better than pressing the borrower.

Oftentimes the borrower (person that owns the house) has not paid taxes or HOA dues in quite awhile.  We’ve all seen the economy these days.  many borrowers have issues with unemployment, retirement or other similar issues. 

So…..you found this house you really like and it is a short sale…..Did they pay their HOA dues?  What happens if they didn’t and can you negotiate with the bank?

Each lender is going to be different.  A neverending frustration for buyer and agents too.  If the lender is requiring everything to be paid off in escrow, trust me, we have seen some transactions go South due to the stubborness and relentlessness of the lender to have every penny paid off.

Recommendations: submit the offer without HOA dues covered by you.  If there is no way that there is any wiggle room, the choice is up to you on whether or not you will move forward.