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As single-family homes have gone out of my price range, I'm considering (with some trepidation) owning a condo again. There are a few things I'm wondering about.
First, does anyone happen to know if it's usual or not for condo docs to say directors/officers can be paid? I'm coming across this as I look at condo docs online, and it's new to me because I'm pretty sure on both of the condos I've owned in the past the docs said these are unpaid positions. (The board could hire a management company and pay them, but board members themselves served without pay.)
I've come across both a statement (in one set of docs) that a majority of voters could approve a salary (and could set the amount) and in another case that directors (or board members, not sure if these are interchangeable terms) determine this.
I know good board members are almost too generous with their time, but this provision for boards to vote themselves salaries could be a nightmare if the wrong crowd gets on the board, particularly as no upper dollar limit is specified--it is apparently whatever the directors (board?) agree is reasonable to pay. (Even in the other case I came across, where the approval vote is by members, it could lead to a bad scenario as so many condo owners never get involved--in some associations it's mainly the board that shows up for meetings, such that a vote of the members present at a meeting would be almost synonymous with a vote of the board.)
Is this type of provision in the docs something to steer clear of, or is it pretty common?
Another thing I'm wondering is about buying a foreclosure. Are associations generally requiring new owners to pay any bills left over due to previous nonpayment on the unit?
And one last question. Has anyone had experience with very small associations (12 to 24 units)? Although in general I'd hope to be in a larger association, I have come across a few condos that seem very nice that are in this small-number-of-units range.
I'm in Florida. My understanding (and I'm not a lawyer or real estate professional, so my understanding may be wrong and is not intended as legal advice) is that Florida has guidelines for the amount the association can obtain from the lender in a foreclosure situation such that in some cases the lender may not always be paying the full amount outstanding (especially given how long the foreclosure process can take here in Florida); I'm less clear on whether Florida law either prevents or allows an association to charge the new owner (the individual who buys the REO condo from the bank) for whatever balance remains after the bank has paid the amount it is obligated to pay.
Mostly I have avoided looking at foreclosures just because of this uncertainty (and also possible uncertainty with respect to clear title and condition of property), but I just saw an online foreclosure listing at a good price in a condo complex that I'm already familiar with and was curious.
By the way, I do think it's a bad thing when associations are unable to collect what they're owed (because when they can't collect a unit's fair share, the other unit owners wind up paying more than their fair share). I just would not want the surprise, as a buyer, of learning after the fact that I owe more than I expected. Of course, would get an attorney if I got to the point of deciding to buy a unit like this.
Anyone have any thoughts on the condo docs' allowing the board to be paid? My eyebrows went up when I read this, but maybe only because it's contrary to what I've come across in my limited past experience?
In Florida, if it's a foreclosure and the HOA has not filed it's own foreclosure prior to the mortgage holder, the foreclosing lender is only liable for the lesser of 12 months of HOA assessments or 1% of the original mortgage amount. If an Association takes title prior to the bank taking title, the bank owes zero toward the previous owner’s delinquency. The new owner is not responsible for any of the previous owner's past dues at least not in my experience in dozens of condo foreclosure closings.
Please check with your own attorney before making a decision based on my opinion (formulated with a faulty memory) which could be stale and/or incorrect. It certainly has been in the past.
And I do understand that if I want legal advice, I'd need to get it from an attorney, but opinion and personal experience such as this that helps me understand the lay of the land is very useful at this stage--I appreciate your taking the time to post it.
......Florida has guidelines for the amount the association can obtain from the lender in a foreclosure situation such that in some cases the lender may not always be paying the full amount outstanding .....
In Florida, the rule is that with an HOA or Condo association the lender (in a foreclosure) is only on the hook for 1% of the loan amount or 12 months of unpaid dues, whichever is less.
Quote:
Anyone have any thoughts on the condo docs' allowing the board to be paid? My eyebrows went up when I read this, but maybe only because it's contrary to what I've come across in my limited past experience?
In Florida the rules are that only a licensed Community Association Manager (CAM) can earn a salary. Unless the board member was a licensed professional (attorney for example) and is providing a professional service, they could not earn a salary. There might be an exception if specifically written in the association covenants, but I cannot say with certainty.
This information is based on my experience as a licensed realtor, HOA board member and as a licensed CAM in Florida. I am not an attorney and I cannot offer legal advice. I hope this does help.
Last edited by dontaskwhy; 01-03-2014 at 09:48 AM..
Reason: correction of percentage owed in foreclosure
In Florida, the rule is that with an HOA or Condo association the lender (in a foreclosure) is only on the hook for 3% of the loan amount or 12 months of unpaid dues, whichever is less.
I think you made a typo there. It's 1% of the original loan amount not 3%.
From Florida statute 718.116:
(b)1. The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee’s acquisition of title is limited to the lesser of:a. The unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or
b. One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.
My error. Sorry about that. I did correct my original statement.
That section was added in Jan 2013 and was not in the prior state statute.
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