Who is Responsible for Paying the Mortgage after a Foreclosure?

The Georgia Property Owners’ Association Act (POAA) permits an association to foreclose on a home with a superior mortgage, but the mortgage survives the foreclosure sale.  The prior owner remains personally obligated for the mortgage until it is satisfied and for assessments that come due while he or she owns the property.  The purchaser at foreclosure has no individual obligation to pay the old mortgage, but, if it is not paid, the bank will most likely foreclose. 

If the foreclosure sale amount is greater than the outstanding mortgage, the sale proceeds will pay off the mortgage company, with any surplus paying off the HOA lien.  If there is enough money to pay the mortgage and the HOA lien, the surplus belongs to the prior owner.  If the foreclosure does not result in a sale because the combined mortgage and past-due assessments exceed the property value, the association can “purchase” the property for the amount of the assessments – thereby extinguishing the lien – and allow the bank to foreclose and sell the property to a new owner.  O.C.G.A. §44-3-232(c).  For non-POAA communities, you can visit the Georgia HOA Laws Guide to find applicable statutes.

 

 

DISCOVER MORE


Was this information helpful?
Was this information helpful?