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In Florida, as written in the statutes, if a bank repossesses a condo then the condo association or the HOA can only collect up to 12 months of unpaid dues. Anything additional would have to litigated in court against the former owner, is very costly and not likely to be found in their favor.
My HOA dealt with a situation where a townhome was repossessed by the bank about 2 years ago. It sucked that we could only collect 12 months of unpaid dues in the resale of the home but still better than nothing.
I guess all the more reason to start the process before 12 months has passed
I've been involved in some condos where we have been forced to go through a lien process for unpaid dues. One problem in that arena is with the bank, since they are standing first in line ... and may be forced into a foreclosure they aren't ready to pursue yet.
Another option we resorted to was to ensure that all leases had a provision to allow the HOA to collect HOA fees from the renter, before the money went to the owner. I forget the name of the process ('sub-lien' or something).
When the housing market crashed in the 2008 time-frame, we found that if an HOA had more than 15-percent in delinquencies, the condos could no longer be financed under Fannie-Mae or other?
I read in a financial blog that investing in condo has a risk that if economy collapses some of the owners might stop paying their HOA fees and the condo has to either hike the fees for the rest who are paying or cut services or get into a debt. I don't remember all the details but if I am not mistaken such situation would cause other apartments to lose value.
Can this really happen? What would happen if an owner of a condo in an apartment building stops paying the fees? Can the management sue him and force him to sell the condo to pay what he owes?
Most condo associations and HOAs have an attorney on retainer. They can put liens on the house, but depending on the state--such as homesteaded Florida--cannot exercise the lien until the house is sold or wants a refi. At that point, the seller has to pay the lien or not sell.
I don't think it affects the fees of the rest of the association unless everyone is refusing to pay, and I don't remember this becoming an issue in the 2007 RE crash. If I were buying a condo--I would be more concerned about the percentage of renters, which does affect the value.
But if the bank repossesses the condo, shouldn't it be responsible for paying down the debt the condo accumulated?
I am more interested in FL laws.
So is it possible to declare a bankruptcy and keep the condo that might be worth millions? Doesn't make sense.
I don't really know all the legal ins and outs. I think, but I'm not sure, that we did/will get some money when the bank sells the foreclosed property. This is in New Jersey, by the way.
Quote:
Originally Posted by Banbuk77
Is it possible to know how many apartments in the building are not paying?
Hmm. I am on my condo board, (different type of structure from the "apartments" you're talking about--we have 122 units of townhouses or one-story "ranches" in 13 or 14 buildings) but that information is confidential and not something we share with prospective buyers or other residents. However, I wonder if just getting the number and not necessarily details would be OK to release. Good question.
I can speak from an HOA with single family dwellings that it's not difficult to collect, just item consuming.
First of all, we never used liens. It's highly unlikely you'll collect, and in some states they expire after a period of time, so if your property manager isn't on top of them you'll lose out.
We typically went into collection with our attorney, and if that didn't work, filed for foreclosure on the property. Now granted, there's no way legally we can get in front of the lender, but if the owner isn't a total deadbeat and in foreclosure on the property, lenders aren't keen to know that someone is nipping at their heels with a foreclosure action. We found that when a lender discovered we were attaching the property they would get on the owner to settle up.
I would say this worked about half the time, which is far better than a lien. Not to mention the property owner has to pay our legal fees, too...
I'm on the board of my townhouse condo complex, and it's actually very difficult to collect the money from those few who refuse to pay. It can be done, but there is a lengthy legal process, and often there are other creditors in line ahead. A lot of times they don't pay their mortgage, either, and the bank gets there first. Or they declare bankruptcy.
We had one woman that we finally got out after YEARS. She had the nerve to write an online book about how to get over, not just on the condo fees but on paying for just about anything. People KNEW she had a job in a local supermarket, but because she was working under either a fake Social Security number or someone else's number and not the one we had, the lawyer couldn't get a garnishment on her paycheck. Eventually her home was foreclosed by the bank, and she is gone.
Some of them know how to declare bankruptcy so that they can stay in their home but the accumulated fees go away. One family we had owed over $30K in fees but declared bankruptcy three times. They finally must have pushed themselves to the edge because the bank foreclosed on their unit and they are gone.
We had another who owed more than $10K, and we had the lien, and she won some kind of lawsuit and we collected the money. That was great, but it was a year ago, and she hasn't paid since.
The majority of the residents pay, and if they have a bad time due to job loss or something, the property manager will work out a payment plan. Most of them catch up.
We've got another one now who hasn't paid in years, and we have the lien and it's to the point where soon the HOA will own her unit. We know the woman is a hoarder and has gone to live with her daughter. If we do end up owning her townhouse, it will cost a lot of money to clean it out and get it in shape to sell.
Some people just suck, and unfortunately, some of them live in condo complexes. But yes, if you look at your annual condo budget, there's a likely a line item for the losses due to these types.
OMG I can't even imagine being a volunteer and having to deal with all this.
But if the bank repossesses the condo, shouldn't it be responsible for paying down the debt the condo accumulated?
I am more interested in FL laws.
So is it possible to declare a bankruptcy and keep the condo that might be worth millions? Doesn't make sense.
Is it possible to know how many apartments in the building are not paying?
Can't speak for FL laws, but the condo minutes from my association (Hawaii) lists the # of units that are in arrears. Prospective buyers get access to the minutes from the past however many so months. Since I bought, there has only been one unit with a problem, and it was temporary.
I'm on the board of my townhouse condo complex, and it's actually very difficult to collect the money from those few who refuse to pay. It can be done, but there is a lengthy legal process, and often there are other creditors in line ahead. A lot of times they don't pay their mortgage, either, and the bank gets there first. Or they declare bankruptcy.
We had one woman that we finally got out after YEARS. She had the nerve to write an online book about how to get over, not just on the condo fees but on paying for just about anything. People KNEW she had a job in a local supermarket, but because she was working under either a fake Social Security number or someone else's number and not the one we had, the lawyer couldn't get a garnishment on her paycheck. Eventually her home was foreclosed by the bank, and she is gone.
Some of them know how to declare bankruptcy so that they can stay in their home but the accumulated fees go away. One family we had owed over $30K in fees but declared bankruptcy three times. They finally must have pushed themselves to the edge because the bank foreclosed on their unit and they are gone.
We had another who owed more than $10K, and we had the lien, and she won some kind of lawsuit and we collected the money. That was great, but it was a year ago, and she hasn't paid since.
The majority of the residents pay, and if they have a bad time due to job loss or something, the property manager will work out a payment plan. Most of them catch up.
We've got another one now who hasn't paid in years, and we have the lien and it's to the point where soon the HOA will own her unit. We know the woman is a hoarder and has gone to live with her daughter. If we do end up owning her townhouse, it will cost a lot of money to clean it out and get it in shape to sell.
Some people just suck, and unfortunately, some of them live in condo complexes. But yes, if you look at your annual condo budget, there's a likely a line item for the losses due to these types.
In my HOA owned properties the HOA makes the new owner pay the unpaid HOA fees/dues. We had a few people who ran arrears. They eventuslly paid. One guy just took off. When the house eventuslly sold the new owner had to pay the fees that were due on the property.
But yes I agree. Lots of crappy people out there
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