Money Matters

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Bloomberg.com has just reported on a story where some homeowners’ associations (“HOAs”) in Florida have taken action to force banks to proceed with foreclosing on seriously delinquent mortgages or risk losing their interest in the property. In one case, JPMorgan lost its claim to a mortgage when a court found the mortgage was more than four years delinquent.

Unfortunately, it is not uncommon for some banks to proceed slowly with foreclosures in Colorado. Interestingly, major national banks seem to be particularly adept at putting off foreclosure sales and even withdrawing the foreclosure action only to re-file at a later date.   Continue Reading HOAs Forcing Banks to Pursue Foreclosures

A receivership can be a useful tool for associations to collect delinquent assessments and fees against homeowners whose property is tenant-occupied or vacant. Assuming there are paying tenants, the process is typically smooth and the association recovers its delinquents assessments together with the costs of the receivership. In some cases, however, the tenants refuse to pay their rent or pay reduced rent to their landlords if they are Section 8 qualified. The former situation allows the receiver to evict them for non-payment, but the later presents a problem.

An article in the SunSentinel reported that the Willoughby Estates Homeowners Association in Lake Worth, Florida was presented with such a dilemna when it filed a receivership lawsuit and was faced with collecting rental income from a Section 8 tenant. The tenant was only paying $275.00 of the $1,784.00 in rent owed each month with the remainder subsidized by the county Housing Authority. Not a bad deal if you ask me! The association, however, had other plans and demanded that the Housing Authority forward the rent that it sent to the landlord each month. Interestingly, the Court agreed and required the Housing Authority to forward all future payments to the association until it was paid in full.Continue Reading Another Victory for Receiverships

Ultimate Katy has reported on a homeowners’ association (“HOA”) in Katy, Texas that has been hard hit by the association’s treasurer who allegedly misappropriated over $78,000 of association funds. Making matters worse, it is alleged that Anthony Geffert used the funds to pay Advantage Lifeguard Services (a company Geffert owns) for services that were never rendered to the Association. 

Other than the obvious conflict of interest that Geffert had relative to Advantage Lifeguard Services, which was hopefully disclosed and handled appropriately, this theft of funds could have been prevented by the Association taking the following steps:Continue Reading Protecting Your HOA from Theft of Funds

As a result of increasing numbers of foreclosures, associations now have to deal with collecting delinquent balances against not only its individual homeowners but also against the foreclosing lenders/banks. With the sheer number of foreclosures that any given bank must deal with, a depressed economy and a saturated and slow moving real estate market, it is currently not uncommon for banks to retain ownership of a property following a foreclosure sale for up to a year or more. I am not aware of many associations that can carry that kind of debt for such an extended period of time.Continue Reading Place An End To Bank Owed Debt!

It’s important that associations follow their governing documents and understand the procedures they should follow when dealing with collection of assessments, fines and other fees. The easiest way to do this is to review the association’s governing documents and the relevant provisions having to do with collections of delinquent accounts. This is especially important should the file proceed to court as a judge will review the case to determine whether the association followed its own rules before finding against a homeowner who did not. Continue Reading Collections: Are you following the rules?

The Courthouse News Service reported on a story that really caught my attention. Evidently, the City of Atlanta Watershed (“Atlanta Watershed”) has threatened to shut off water to the 125-unit Villages of Cascade Homeowners Association (“Association”) as early as today if the Association does not pay 25% of an outstanding balance due for water supplied by the Atlanta Watershed. 

 

The Association utilizes income from assessments to pay water fees for all of the units which are linked to a single water meter. Obviously, assessment income is also used to pay for all of the common expenses of the community. But get this – the Association reportedly has an assessment delinquency rate of 63%! While this economy has certainly taken a toll on the ability of some homeowners to pay their assessments in a timely manner, a 63% delinquency rate is astounding even for this economy. Continue Reading Failure to Budget Appropriately and Collect Delinquencies Has Major Consequences for HOA

I know you are all enjoying summer and thinking about taking time off to spend with family and friends. As board members, I also know the last thing on your mind is thinking about the 2012 budget for your association. However, if your fiscal year begins on January 1, 2012, toward the end of the summer and through the fall you will be working with your manager on preparation of the budget for your association. If your association is self-managed, that task can be even more daunting.

Please do not misunderstand me; I’m not suggesting that you begin preparing your budgets now. Frankly, you don’t have all of the data you need to make good decisions and you shouldn’t be spending your summer crunching numbers. Instead, as the policy makers of your communities, I would like to suggest that you begin thinking about whether the current assessment levels are meeting your association’s fiscal needs.

 

Here are a couple of areas to contemplate and related questions to ask yourselves:Continue Reading Contemplating Budget Preparation Season . . .

The Wall Street Journal is reporting on a new Florida law that allows condominium associations to essentially garnish the rent paid by tenants of a delinquent owner, without going through the process of obtaining a judgment against the owner and a writ of garnishment for the tenant.  The Florida law only permits the association to demand money from the tenant – it does not allow the association to evict a delinquent owner and find tenants of its own.

When an owner fails to pay assessments, the burden falls on his neighbors who often have to pay higher assessments to make up the difference.  Unlike Florida, Colorado associations are not permitted to demand money from a tenant, absent a court order and a writ of garnishment. Continue Reading Tenant Garnishment Without a Judgment? Really?

CTV News in Ontario, Canada – reported on a story entitled Faulty towers: The hidden dangers of low condo maintenance fees. This story could have been written anywhere in the United States and even Colorado. While the circumstances facing the condominium association in the article are extreme, the story outlines the inevitable results of artificially low assessments, deferring maintenance and failing to fund reserves.

In these tough economic times, no board or resident of a homeowners’ association (“HOA”) wants an assessment increase. Heck – even in good times nobody wants an increase! However, the responsibility of an association to maintain, repair and replace common elements does not magically go away. You need only look at the declaration of covenants, conditions and restrictions for your HOA to determine the responsibilities of your association. For condominium associations – this is particularly important since your association likely has significant and potentially costly responsibilities. 

Continue Reading Is your HOA prepared to handle the maintenance, repair and replacement of common elements?