Q: I recently was the successful bidder on a condo. The closing was within 15 days of the sale, and a special warranty deed was conveyed for the amount of my bid. The closing agent told me after the closing that I had signed a memorandum of foreclosure agreeing to reimburse the seller for prepaid taxes and all amounts claimed owing by the condominium association.
The deed has been recorded and I paid the amount billed by the substitute trustee, which was my bid amount. Two months later, I have not heard from anyone about reimbursing the seller for prepaid taxes or any other charges. Should I be concerned about being billed for these items?
A: Have you reviewed that memorandum? Is that what it really says? In any event, if in fact you are legally obligated for those payments under the memorandum, I would not worry about reimbursing the seller for prepaid taxes. Let the seller come back to you if moneys are, in fact, owed.
Also, look at your HUD-1 settlement statement that you should have received when you went to closing. Typically, all such adjustments — including prepaid real estate taxes — should have been adjusted at settlement.
I would, however, be concerned about the unpaid condominium fees. In general, those fees may create a lien against your property, and the condominium association could come after you for payment.
Once again, however, the settlement company should have adjusted those fees at closing. I suggest you consult your lawyer because different states have different procedures about condominium fees.
Q: What if one has a mortgage on a home that is seriously damaged in a tornado, flood, earthquake or some other disaster for which one does not have the appropriate insurance coverage? It would seem the only option the homeowner would have is to “walk away,” even though there may not be anything to walk away from. What happens to the mortgage?
A: Despite the disaster, you remain legally obligated under the terms and conditions of your mortgage. Are you sure you do not (did not) have adequate insurance coverage? This is surprising, since every mortgage lender I have ever worked with (or against) always requires proof of insurance before the loan is funded.
Walking away, in my opinion, is a cop-out. Your lender will track you down, so it’s better to contact them first before they try to reach you. Discuss the situation with the lender and talk to a person at a bureaucratic level where he or she has authority to make decisions. See what assistance the lender can provide you; perhaps there is insurance that you don’t even know about, such as private mortgage insurance, that would cover a good part of the outstanding balance.
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Also, talk with a local attorney about other options, such as selling the land or filing for bankruptcy relief.