05/31/2023
Listen and a warning to my friends.
When buying a foreclosed property from an auction site in Illinois there may be a large expense you do not realize that could be on the closing statement.
When there is an HOA on a foreclosed property it is likely the dues have not been paid for a very long time. It is also likely the HOA is going to ask you, the buyer, to pay 6 months of those dues, plus perhaps attorney collection fees and perhaps a special assessment as well. I have even seen where they attempt to collect more than this and it has had to be litigated.
No title company will close without a paid assessment letter from the HOA, if present and active, and the auction contract will likely obligate you to close regardless of your objection to a paid assessment letter buyer fee.
In a typical non-foreclosure deal with a standard suburban contract the seller would be responsible for any outstanding HOA fees and you would not have to worry about that on your end.
Not so with these types of deals in many cases. Also, the contracts very likely do not have an attorney view provision for changes after you sign like a typical suburban real estate contract does. The contract terms are often not negotiable.
Those fees can be many thousands of dollars and take away any quick profit you may have been seeking from the purchase and perhaps thensome.
If you are planning to bid on a foreclosure property and the property has an HOA I would contact the HOA before you submit any bid to see if they will tell you what fees they will be seeking at a closing for the property from the buyer. They will likely refer you to their online management company and ask you to pay a fee for it.
Real estate is often a great investment as land is finite, this is not investment advice, talk to a financial advisor for that purpose.
I was just warning of an extra cost many buyers don't expect or see coming on foreclosure auctions.
Have a great day!
