‘Once. Twice. Sold for $4,400.’ How HOA foreclosure auctions cost owners their homes

Ames Alexander
·3 min read
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Given the stakes involved, it was a decidedly low-key affair.

At an October foreclosure auction at the Mecklenburg County Courthouse, two houses in homeowners association communities were on the block. The owners fell behind on paying their HOA dues and were in danger of losing their homes.

Just three people attended: a paralegal representing an HOA, a bidder and a Charlotte Observer reporter. Court officials would not allow The Observer to photograph the event.

The auction began just after noon, in a quiet corner of the first-floor lobby outside the courthouse cafeteria. On one of the polished stone walls nearby, plastic racks held notices about upcoming foreclosure sales.

Christina Tully, a bespectacled, soft-spoken paralegal, both conducted the auction and submitted bids on behalf of the HOA that was foreclosing. The only other bidder was a man who identified himself as Reddy Syam. Wearing jeans, tennis shoes and a red flannel shirt, he submitted the high bids on the two houses.

Hopes Foreclosed

NC rules make it easy for HOAs to foreclose on homeowners. State law allows them to force the sale of homes for any amount of unpaid dues, no matter how small. Our investigation shows how often it's happening — and how it can be devastating to homeowners.

The first house auctioned — a three-bedroom, 2,100-square-foot home in east Charlotte with a tax value of $335,300 — was owned by a woman who was delinquent in paying about $4,000 in dues and other costs to her HOA, the Cambridge Association. The HOA put a lien on her house last year and moved to foreclose on her this July, court records show.

Standing near a bare brown desk, Tully read a list of disclosures, including that the homes were being sold subject to restrictions, such as prior liens. Then she opened the bidding at $4,300, the amount the HOA contended it was owed for past dues, attorney fees and other expenses.

Without fanfare, Syam bid $100 more.

“Going once. Twice. Sold for $4,400,” Tully said.

The process took five minutes.

The second house on the block, similar in size, was just a half-mile from the first. Again, the owners had fallen behind on dues to the Cambridge Association. In July, the HOA’s attorney, Benjamin Karb, sent a letter to the homeowners, saying he’d been instructed to foreclose on their home. They owed $1,689 for homeowner dues, court costs and attorney’s fees, his letter said.

Tully opened bidding at $3,900.

“Let’s make it $4,000,” Syam said.

“$4,000 is now the highest bid,” Tully said. “Going once. Twice. $4,000 it is.”

The auction ended about 20 minutes after it began. Syam gave Tully two $750 cashier’s checks as deposits on the homes. He bid on behalf of two companies — Future Realty and CCSD Properties — whose principals have bought a number of foreclosed homes.

Tully, who has presided over many foreclosure auctions, said Syam is often the only person who shows up to the auctions to bid on the houses.

Upset bids

But as is often the case, in-person bidding was only the start of the sale proceedings.

Under state rules, would-be buyers have 10 days after an auction to submit higher bids. After an upset bid is submitted, a new 10-day bidding period begins. Once 10 days pass without an upset bid, the sale becomes final.

Bidding on the first house ultimately reached $10,750. But on Nov. 14, the foreclosure petition was withdrawn — apparently because the owner paid her debt to the HOA.

As of Dec. 6, bidding on the second home had reached $24,500.

Once a sale closes, the high bidder can resell the house for full market value. And in this case, that could translate into a tidy profit. The home’s tax value: $308,000.