A foreclosure complaint begins when the bank files a complaint to foreclose a mortgage, which generally occurs around six months after the owner stops paying. The complaint has to be served on everyone that has a claim on the property, including the association. Every defendant, including the association, has the opportunity to file an Answer to the complaint.

Prior to the “Great Recession,” it was common for associations to file an Answer and Appearance in foreclosure cases. However, since 2008, fewer and fewer associations have been filing Answers and Appearances because the likelihood of a surplus was minimal. A surplus is the amount, if any, by which the winning bid at the foreclosure sale exceeds the outstanding balance owed to the bank holding the mortgage. By filing an Answer and Appearance, the association protects its ability to monitor the status of the foreclosure case and, most importantly, share in the proceeds of any surplus.

Recently, with the uptick in the economy, there are more foreclosure sales that result in a surplus. Is it time for your association to start filing Answers and Appearances in foreclosure cases again?