Money Matters

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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?

Late last week, StockMarketsReview.com posted a story entitled “Revenge Foreclosure Is a Tool in the Hands of HOAs.” The story begins by asserting that a new term “revenge foreclosures” has been coined in the HOA world. “It refers to the increasing number of foreclosures being initiated by homeowners associations against house owners for unpaid association fees. It is easier for the associations to foreclose than the banks because here the question of proof of ownership does not arise.” 

The story goes on to describe the following scenario: “The associations engage debt collectors to do their work. LM Funding grants loans to the associations and then brings their books up to date. The firm shares a proportion of the collected fees. Frank Silcox, CEO of the firm said about the associations foreclosing on the unit owners, “They are angry, and they make a short-term decision. They’re thinking they just want to get back at them.”Continue Reading Revenge Foreclosures: Are you kidding me?

There has been much debate surrounding the super lien in light of House Bill 11-1197 which was derailed this past legislative session.

CR.S. 38-33.3-316(2)(b) provides that the association is entitled to a super lien for assessments which would have come due during the six months immediately preceding the filing of a foreclosure action by an association or a party holding the first Deed of Trust.Continue Reading Super Lien Clarification and Suggestions

Bad checks, also known as bounced checks, non sufficient funds, insufficient checks, and dishonored checks, can be a big problem for an Association.  In Colorado, the law allows the recovery of damages for those who receive checks that are subsequently returned for non sufficient funds. Under Colorado Revised Statute 13-21-109, the “maker” of a check (i.e., the person who wrote the check) can be liable to the “holder” (i.e., the Association) of the check if that check is not paid upon its presentment to the bank or other depository.Continue Reading Recovery of Treble Damages for “Bad Checks”

Bank of America, JP Morgan Chase and other lenders have recently called for a halt on foreclosures amidst allegations that they submitted improper and, in some cases, fraudulent paperwork to push through their foreclosures.

 

It is a well known fact that homeowners delinquent in the payment of their mortgage are more likely than not also delinquent in the payment of their assessment fees. Therefore, the delay in the filing and conclusion of public trustee foreclosures in Colorado will inevitably result in greater delinquencies for associations.Continue Reading The Association’s Response to the Halt on Foreclosures

Commonly Asked Questions and Answers:

Below you will find a list of some commonly asked questions and answers regarding an Association’s rights in the collection of unpaid assessments.  Please clink the link below each question to continue reading the previously posted article that discusses each answer in depth.

 What are some of the options an Association has to enforce its covenants to collect unpaid assessments?

When considering the various options available to an Association, the first thing a Board should do is consult their governing documents. Typically the Association’s Declaration will specifically stateContinue Reading Commonly Asked Questions and Answers

You will remember from a recent posting that we discussed the new Fannie Mae guidelines, and the anticipated HUD regulations. As noted,  HUD did in fact adopt new temporary regulations that went into effect on December 7, 2009, and remain effective until December 31, 2010, at which time the new permanent HUD regulations will become effective. The new HUD temporary regulations are found in HUD Mortgagee Letter 2009-46 A, and can be found  here. The new HUD permanent regulations are found in HUD Mortgagee Letter 2009-46 B, and can be found here. It is important to note that condominium projects under developer control and under construction or being converted have different standards. This posting does not address those standards.Continue Reading New Lending Rules Continued – HUD Requirements