Many places like Florida and Arizona are having difficulties with Home Owner Associations. It seems that when people foreclose, they are not paying their assessment fees! These fees do not just go away. Someone has to pay. And as usual, the responsible people are the ones.
Foreclosures cause woes for property associations
STAFF REPORT
Published Friday, April 18, 2008 at 4:30 a.m.
Florida's growing foreclosure problems are wreaking havoc with the budgets of homeowner, condominium and community associations, according to a new survey by an industry trade group.
Two-thirds of associations polled by Community Association Leadership Lobby (CALL) said they would have to raise fees this year to compensate for the losses.
More than 60 percent of the nearly 500 associations surveyed said that banks and mortgage lenders holding title to foreclosed homes or units are not paying regular fees or other assessments.
and
Foreclosures force HOAs to cut corners on upkeep
Homeowners associations strapped by unpaid assessments related to the foreclosure-ridden real-estate market are mustering volunteer work crews, cutting maintenance jobs and scrimping on landscaping to save money.
Phoenix, Chandler and Avondale are among Valley cities fielding calls for help from HOAs that previously turned only to their own boards of directors and management companies.
"We are in new territory and need to find creative ways to work with everyone, whether that's stepping in with volunteerism or offering some training," said Annie Alvarado, deputy director of Phoenix Neighborhood Services.
Municipalities are trying to figure out what, if anything, they can do to help cash-strapped neighborhoods navigate the legal and financial difficulties that plague distressed properties.
Anyone that still thinks Chicago is different is delusional. The coveted Near North Zip Code of 60610 is an eye opener. Look at the building at 345 N. LaSalle. There are 15 condo units in pre-foreclosure, 1 going to auction in May, and 9 that are bank owned. 33 W Ontario Buildings has 11 in pre-foreclosure, 1 auction that has past, and 25 that are bank owned. I am sure that some of these assessments are getting paid, but the ones that are not are adding to burden of the stretched owners that are still surviving. Only time will tell. Expect some bleeding heart Chicago politician will try to pass a bill to make taxpayers front these people.
9 comments:
If any legislation is passed, it should be a law that places responsibility for assessments squarely on the current owner of the unit, in this case, the lender and/or loan servicer. SOMEBODY has to have title to the unit, and that individual or entity should owe.
This is a worse problem than you'd even guess from the buildings you mention. There is an illegal conversion on Granville where the developer, who owns most of the units, was not paying assessments, or the utilities provided by them, and as a result, the few owners were without heat or water for an entire winter a couple of years ago. In Miami, dozens of buildings of 600 units or more,where perhaps 50 units have sold, have hundreds of thousands of dollars in assessments owned- shall the remaining owners, or taxpayers, pay? I don't think so.
A developer may bankrupt leaving hundreds of units in default, but the ownership thereof passes to someone, who should have to pony up.
the developer, who owns most of the units, was not paying assessments, or the utilities provided by them, and as a result, the few owners were without heat or water for an entire winter a couple of years ago
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Wow, that's not too smart. That would be a good lawsuit. Guy could lose the whole building.
When the condo is sold, deliquent assessments, with interest, should get first priority on the receipts.
Do you think the lender will care about paying back the assessments?
There will not be any left overs to go around after a short sale.
That's why we need legislation that mandates that assessments will come out of the proceeds before the seller or any one else is paid.
In the case of the building on Granville, I can't imagine how this mess will shake out. The developer is a sleaze who can just bankrupt and leave the few other owners stuck with about $400,000 worth of unpaid bills- a very big load for moderate income people buying their first homes. Nothing will be left for improvements the place badly needs. The only solution, I imagine, would be for the units belonging to the developer to be sold so cheaply, like for $60K-$90K, that the new owners can pay the back assessment, so that the bills due on the place can be paid.
I love the building, and would love to have a vintage fixer-upper, but would no way consider buying into this place with the kind of legal and financial problems it has.
It would behoove all prospective buyers to do a really, really thorough due diligence on any building they are considering buying into, no matter how glossy or high-end or seemingly stable. That means going many miles beyond the usual title search and cursory pre-purchase inspection, It means treating the purchase as if you were buying the whole building and were going to be personally responsible for every repair in it. Have every single brick and pipe and cable and component in the place inspected, and get the sales and loan history of every unit.
That means going many miles beyond the usual title search and cursory pre-purchase inspection, It means treating the purchase as if you were buying the whole building and were going to be personally responsible for every repair in it.
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GREAT point! Maybe even sit in on a condo board meeting to see how the mgt runs it.
There have to be strict laws that the legal owner of the condo must pay the assessments and there need to be strict penalies for failing to do so.
And if, for some reason, the assessments are not paid, then on the sale, making good the assements, plus interest, has to have the first call on any proceeds.
What's a homeowners solution when a condo board doesn't repair the roof (after they've collected a special assessment of $300 from 35 homeowners). I've been unable to sell my unit do to a caving ceiling from rain damamges (the board is aware and are avoiding my calls)! Do you still pay your assessments when budgeted repairs are not done or completed?
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