Foreclosure

questions & answers

Question: We own a unit in a condo complex that is being foreclosed upon as a whole. We need to know if we have any recourse for the loss of our investment and how this will affect our credit rating.

Answer: Your question is difficult to assess. Condominiums are governed by the Arizona Condominium Act (Ariz. Revised Statutes sec. 33-1201 thru 33-1270). Under these statutes, when a condo complex is created, the very first person to buy from the developer holds separate title to a separate piece of property. Each person who holds his or her own deed to a unit holds sole ownership over that unit, unaffected by any other owner's financial obligations, including foreclosure. What this means is that unless a person happens to own all of the units in a condo complex (or the developer actually owns them and the person happens to only rent from the developer), the complex as a whole cannot be foreclosed upon. Specifically, if a person received a deed when he or she bought the unit, then so long as that person is current on his or her payments to the lender under his or her mortgage (or deed of trust), then no one can foreclose on their unit and their ownership rights in the common areas (which the law views as part of the parcel). Where a unit owner in a condominium was issued a deed upon a purchase of the unit, and that unit owner is current on all payments, it cannot be included in a foreclosure action on other units. Thus, any owner current on his or her house payments should not be affected by any foreclosure going on with other units. I hope that this helps.