Condo owners don't pay HOA dues and/or assessments. (mortgages, condos, landlords)
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OMG I can't even imagine being a volunteer and having to deal with all this.
That's why you have a good property manager. They report back to you whatever is going on, but they are sending the string of letters to the owners to document everything and then turning it over to the lawyer (a percentage of the condo fee goes toward legal fees). The volunteer board doesn't have to do this.
Addressing the OP's original question, the laws relating to this are state specific, not federal laws, so there is a different answer for each state. Unfortunately, a lot of these laws favor the debtor over the creditor.
Quote:
Originally Posted by Banbuk77
Is it possible to know how many apartments in the building are not paying?
This should be public information because if the delinquency rate is above a certain threshold, FHA and VA financing will not be available to buyers in that complex until delinquency rates come down. That means buyers will have fewer financing options, which has a tendency to depress sale prices in the complex. The first question a loan officer usually asks when obtaining financing for a prospective condo buyer is what is the condo fee delinquency rate of the complex.
I see there are a few discouraging words in this thread for those who don't pay their condo fees, but not a word about the incompetent and unethical property managers who should not be in the business, while a few should be in jail. Some condo associations should have a lawsuit against the management companies for mismanagement.
Addressing the OP's original question, the laws relating to this are state specific, not federal laws, so there is a different answer for each state. Unfortunately, a lot of these laws favor the debtor over the creditor.
This should be public information because if the delinquency rate is above a certain threshold, FHA and VA financing will not be available to buyers in that complex until delinquency rates come down. That means buyers will have fewer financing options, which has a tendency to depress sale prices in the complex. The first question a loan officer usually asks when obtaining financing for a prospective condo buyer is what is the condo fee delinquency rate of the complex.
I see there are a few discouraging words in this thread for those who don't pay their condo fees, but not a word about the incompetent and unethical property managers who should not be in the business, while a few should be in jail. Some condo associations should have a lawsuit against the management companies for mismanagement.
Probably because that's not the topic of the thread.
We have an excellent property manager. They've been our property manager for at least 25 years.
I did not buy a townhouse I liked in another condo because I'd heard rumors that they had financial issues. I didn't really know whether to trust the source of those rumors, because they were real estate financing people who were pushing me to buy a larger and pricier townhouse than I needed in another complex. Then, by chance, I ended up talking to someone who actually lived in the one I was looking at. He warned me not to buy there, that they'd gone through five property managers in the past ten years and that the place had been badly mismanaged. They were paying a chunky assessment to correct drainage issues because they didn't have sufficient reserves.
It's another thing to learn about when assessing a condo, though.
I am on our BOD for our TH HOA, but I am also a loan officer that works with PUDs (any fee simple home with a mandatory HOA), condos and coops. My HOA is not professionally managed.
As a lender, we will not finance in any condominium without a condo questionnaire. The loan to value determines the amount of information, but most loans require the delinquency rate. No delinquency rate, no loan. I have seen one subdivision lose well over 50% of its market value due to a delinquency to the master association. The homes, once at 400K were lucky to get 150K, because FHA, VA, Fannie and Freddie would not purchase loans in that community. Sellers had two options, cash or hold the Note is some fashion (wrap contract). And the development at the time was less than 10 years old and in suburban Washington, DC.
As for having the option to not provide that information, our State spells out what must be shared with all potential buyers. It's now several pages. If someone in my community wants financing and if we asked for delinquency rates, we have no problem providing total unit count and # of units 30 days or more past due. The lender can calculate the rate.
Most HOA docs have a subordination of lien clause that requires the Note Holder (lender) to pay a certain amount of dues in the event a foreclosure. Typically, the limit is 12 months dues, but 6 months is also common. Communities without a subordination of lien clause may find difficulty securing financing once it is brought to light. A few years ago, this was a real problem and lenders started requiring full HOA docs to look for this clause (all because one lender got caught holding 5 years worth of dues).
Know your HOA stats, your home's value may depend upon it.
I was town government liason to a couple townhouse associations for several years. One had from Day 1 neglected to enforce dues collections because the original officers "didn't want to hurt their neighbors feelings". That attitude carried over to enforcing parking rules, appearance standards, etc.
End result was that after twelve or so years the Association was carrying over a quarter million dollars of non-payments, had massive parking issues and the appearance of many units (primarily rentals) was on the edge of looking like abandoned buildings.
The Town finally got involved in what it could, primarily building and appearance code issues that were enforced in the entire Town and started to get that squared away. What really got the ball rolling was a couple new Board members who came in and demanded that the CCRs be enforced instead of everyone sitting around complaining.
Now, ten years after that started the overdues are almost zero (they even got the one original owner who never, not once in twenty years, paid dues caught up although it took taking her, as well as many others, to Court to enforce judgements).
The other HOA started several years after the first and started down the same "don't want to make our neighbors upset" path. I had a Come to Jesus meeting with the officers and they started enforcing their rules almost from the start.
This is a great question! Already people are not paying RENT... What if the HOA dues stopped coming in? I had just about talked myself into it, and now I'm afraid to buy a condo again...
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One more thing that I forgot to mention. In many states, condo or townhome owners who fail to pay their dues can lose their right to vote as a member in community affairs, such as in a board meeting. They can attend and offer their opinions but not cast a vote if written so in the community rules/regulations.
One more thing that I forgot to mention. In many states, condo or townhome owners who fail to pay their dues can lose their right to vote as a member in community affairs, such as in a board meeting. They can attend and offer their opinions but not cast a vote if written so in the community rules/regulations.
That's true, but the types of owners who don't think they have to pay their share aren't the type who show up at meetings and vote anyway.
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.
That would be one of the main things I would want to see before getting serious about buying a unit in any condo association. An annual statement showing line items for all expenses along with the income and the reserves available would be at the top of the list.
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