Academic journal article Journal of the International Academy for Case Studies

Homeownership Is Not Always a Blessing

Academic journal article Journal of the International Academy for Case Studies

Homeownership Is Not Always a Blessing

Article excerpt

CASE DESCRIPTION

This case can be used to illustrate problems that arise when homeowners get into financial difficulties and have to make hard choices on which monthly bills to pay and which to ignore. Little known to many homeowners is that failure to pay mandatory Homeowner Association dues can lead to foreclosure on the family home. A cruel reality sets in when the family home is sold at a foreclosure auction. The new deed holder can extract rents from the property and use slow-moving court procedures to forestall a primary lienholder's foreclosure, thus increasing the time rent can be collected on the property. The case is designed for discussion on the topics of financial literacy and basic real estate transactions. These issues can be covered in one class session and requires one hour of preparation time from the students. This case can stand alone, or it may be used in conjunction with a related case--"Taking Advantage of Homeowners Association Foreclosures: Investors or Predators? "--by the same authors.

CASE SYNOPSIS

Fred and Megan Schmidt are a married couple who found themselves in financial straits when their expected and unexpected expenses exceeded the amount of Fred's paycheck. The couple failed to pay mandatory dues to their Homeowners Association (HOA), which allowed the HOA to take a lien against their house. The HOA then foreclosed on the property. Jack Dawes, an attorney, gained a trustee's deed to the property by being the highest bidder at the foreclosure auction. …

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