Just what is a bank’s responsibility with respect to a foreclosed property in a community association?
The Office of the Comptroller of the Currency (“OCC”) recently issued guidance to national banks and federal savings associations regarding the obligations and risks related to all foreclosed properties, including those within community associations. On December 14, 2011, OCC released Bulletin 2011-49, which confirms that lenders who acquire title to foreclosed properties assume the primary responsibilities of the owner, including maintenance and security, paying taxes and insurance, and, most importantly, assume liability for payment of ongoing community association assessments.
The Bulletin also provides notice to banks that they must record their ownership interest in local land records and should communicate with municipalities and community associations about specific requirements once title to the foreclosed property is transferred. You can view Bulletin 2011-49 here.
In a letter dated January 6, 2012, CAI Chief Executive Officer Thomas M. Skiba expressed appreciation to the OCC for its recognition that management of foreclosed properties is a critical issue to community associations. Mr. Skiba pointed out that a recent CAI survey indicated that less than 30% of bank-owned properties pay the required assessments in a timely fashion, putting strain on the rest of the owners within the association. You can read CAI’s letter to the OCC here.
For more information on this issue or any other issue concerning your community association, please contact one of our Community Associations attorneys.