The Case of the Phantom Garage Sale

A condo owner under foreclosure and association liens ”sells” the garage assigned to his/her unit. Is that OK? Probably not.

Palm Coast, FL – February 5, 2012 – Foreclosed property owners sometimes resort to desperate measures. Strapped for cash, they have been known to strip their property of anything of value; appliances, lighting and plumbing fixtures, kitchen and bath cabinets, even wiring and air conditioning units. By doing so, they are violating the terms of their mortgage. But desperate times beget desperate measures.
I recently discovered a new twist. A condo owner "sold" the garage, assigned to his/her unit to another unit owner. A bill of sale was duly filed and fees paid. The official looking document seems convincing. In it, the seller conveys the following:

"Garage Unit XXX @ XXXX, a condominium according to the declaration of condominium……."
Transfer of property:
"Seller hereby sells and transfers the property described above to buyers."
And here’s the best part –
"Seller warrants and represents to Buyers that Seller is the lawful owner of the property, that transfer of the property is lawful, and that there are no liens, security agreements, encumbrances, claims, demands, or charges of any kind."
How can this be? Well it can’t, for several reasons.
The condominium documents do allow the sale and transfer or lease of the exclusive right to use the Garage to another Unit owner, but not the sale of the Garage itself. The Garage is defined as a special purpose common area, owned by the Association. The Association has prescribed the sole use of the Garage to the Sellers’ Unit. The Seller misrepresented that he/she is the lawful owner of the property.
The Seller’s warranty that the property is free of liens or other encumbrances is in conflict with other documents related to the property found in public records. They include a mortgage (lender’s lien against a promissory note), a lis pendens (foreclosure filing), and three liens by the Association for unpaid assessments totaling more than $12,000. The Garage is an appurtenance to the Unit as reflected in the deed and mortgage. So it is also subject to the foreclosure and Association liens levied against the Unit.
Warning: The Clerk of Court simply records documents. By doing so, the Clerk of Court does not assure the authenticity or correctness of the document.
I’m not an attorney, but the referenced transaction clearly seems improper. Neither the lender nor the Association released the Garage from the liens on the Sellers’ Unit. And the Association would need to be a party to the transfer since recorded condominium documents must be changed to reflect the reassignment to the Buyers’ Unit. The issue goes beyond this incident. Other examples of special purpose common areas (for the sole use of a unit owner) are cabanas, docks and boat lifts. 
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