Question: We stopped making payments on our Scottsdale home 10 months ago and moved into an apartment in Chandler. Currently, the home is in mortgage default and is sitting vacant. We are just waiting for our mortgage lender to foreclose. Currently, our homeowner’s insurance is set to expire next month. We were wondering who would be responsible for any damage to the home when our homeowner’s insurance expires? Additionally, we continue to receive monthly bills from our homeowners’ association (“HOA”) even though we have moved out. Do we have to pay the HOA monthly bills even though we no longer live in the home?
Answer: Until the title to the home is transferred to the mortgage lender or to a third-party bidder, the homeowner is responsible for the condition of the home. Many mortgage lenders will voluntarily continue to keep homeowner’s insurance on the home, you must contact your insurance agent and confirm that until the foreclosure sale is final that the homeowner’s insurance on the home will continue. Inasmuch as most homeowner’s insurance policies provide for termination of coverage if the home is vacant for a certain period of time, e.g., thirty days, you must immediately contact your insurance agent to add an abandonment endorsement to your homeowner’s insurance policy and pay whatever the fee is.
Finally, you should continue to pay your HOA dues. HOA dues are the personal liability of the homeowner until the transfer of title to the home. This transfer of title must be bona fide. Although homeowners have attempted to avoid payment of the HOA monthly dues by recording a deed transferring title from themselves to someone like Barack Obama or John McCain, this type of deed is obviously not bona fide.