Brown v PMKC: Wrongful Foreclosure Claims Rock The Condo World

Class Action

“It’s a gamble. If I’m right, it could bankrupt these law firms and many condominium associations along with them.”


Wrongful Foreclosure Claims Rock The Condo World

A class-action lawsuit alleges at least 160 individuals had their property illegally foreclosed by 72 condominium associations

A class action lawsuit recently filed in federal court accuses two prominent law firms, and more than 70 condominium associations they represent, of “the wrongful and unlawful sale” of condominium units through an improper foreclosure process.

Nonjudicial foreclosures allow real property to be sold to satisfy debts without going to court. Instead, the party initiating the foreclosure, typically a mortgage lender, is simply required to notify the property owner and, if the debt isn’t paid, proceed to auction off the property themselves, selling to the highest bidder.

In the majority of cases, the properties end up being sold to the lender or the condominium association, often with little or no money actually changing hands.

Hawaii law allows nonjudicial foreclosures in certain circumstances, but their use to collect debts owed to condominium associations is controversial.

The suit alleges that these foreclosures are barred unless the condominium declaration contains a specific “power of sale” clause, which acts as a contract giving the condo association the right to foreclose on an owner’s property to collect delinquent maintenance fees or other unpaid assessments. And, according to the suit, none of the defendant associations had the required “power of sale” in their governing documents.

The lawsuit seeks payment of restitution and damages, including punitive damages, along with interest, to those whose properties were allegedly improperly foreclosed.

More here…

Copy of the Class Action below…



Brown v PMKC

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