Condo Foreclosure

When the owner of a condominium can no longer make mortgage payments, that property can go into foreclosure just as any other property can. For condos and other properties tied to an association, one owner's loss can have a big effect on others. This is not to say that a block or neighborhood remains unaffected by foreclosure, far from it. But when a condo unit goes into foreclosure, the rest of the unit owners lose money immediately in the form of condo fees and the ability to collect special assessments.

If you live in a condo and find that a unit owner is headed towards foreclosure, be aware that the association does not automatically get ownership of the foreclosed unit. The condo association still has to come to some kind of agreement with the bank who lent the unit owner the money to purchase the condo. More often than not, the bank will be willing to accept the deed to the property to avoid going through with the foreclosure process. So the condo no longer belongs to the unit owner; the property is now in the hands of the bank until it is sold to another owner.

If you decided to buy a bank-owned condo, you should investigate whether the former owner still owed the condo association in assessments and fees.