Now you pay the price when your neighbor doesn’t pay his bills!

Yes, I am learning that this is happening here now.  Just a few months back, one particular large (And upscale...expensive) complex near the beach was fine, only had one short sale at the time, in a complex with hundreds of newer luxury style units. 

NOW, there are so many foreclosures and short sales in the complex that this is happening to even this complex.  The builder stopped construction on the last phase of the community (Foundations in, now just fenced off) and the builder has had signs posted that their newly constructed properties in the complex can be purchased in short sales! 

I've never seen anything like this it all...and can't get over that the pricier properties are being hit even harder than the less expensive properties.  Some units in this building sold for over $1,000,000 a couple of years ago.  Recently there was a REO that went for $342,000 in that complex!  This particular community has large HOA fees that are apparently not being paid by folks that are losing their homes. 

I got a kick out of someone here on Active Rain that wrote a blog about how folks must be forced to keep up with their HOA fees. They are losing their jobs, and can't make their mortgages...but it's expected that they somehow come up with the cash to pay their HOA fees?  Also, part of the problem is the banks; they don't pay the HOA fees during the long months that properties are in foreclosure, thus making the problem even more difficult in communities with a multitude of short sales and foreclosures that linger on months after month because of poor bank management of these properties.  I wonder why the banks are not being held to be more responsible, especially when, in the end, this affects the price of the unit that the bank owns and is trying to sell!   

I never thought I'd see such a mess, although we have not been hit hard with the REO mess here locally; certainly not like in other areas of California.  Some areas have as many short sales and REO's as the worse parts of Florida and Las Vegas have experienced, especially the Sacramento suburban areas.  It's so sad to see so many folks losing their homes.   

You are so correct about this becoming a burden to the other condo owners...and the property management companies who maintain some of the condo communities.  Still...I predict that this current messy climate will clear up and communities that have been brought to thier knees will soon be standing solid on both feet again...I sure hope so!

Carol

www.ActiveSunshine.com

Thank goodness for the folks at Wells Fargo, they have been far more responsible than most other large banks during these difficult times. 

Locally, I have not heard of association boards charging homeowner more (How ridiculous is that?) to conpensate and line their own pockets just because they have a "Collection" problem! 

Perhaps HOA's will be next in line for a Federal Bailout! 

Isn't that a little bit like the banks refusing to lend mortgage money, because of other people...and because the banks made risky loans in the first place.  Now the HOA's are becoming as irresponsible as the banking industry, by placing the onus on homeowners who DO pay?   

I was thinking that THIS particular real estate climate is exactly why condo associations and property management companies are supposed to have an adequate financial reserve.

They charge enough to make a profit (Which is why the associations exist...Profit!) but many don't have adequate reserves, which is irresponsible management in my opinion.  Like a lot of people, some of these management companies don't keep a reserve for a rainy day!

I was wondering the other day that perhaps HOA's should be required to purchase a separate insurance policy that would pay and insure the association fees payments when homeowners can't or don't pay...sort of like the folks that have employment insurance, which is a guarantee of income if their jobs are lost. 

That way, the associations would have funds (From the insurance policy) to continue servicing the buildings, landscaping and pool upkeep, and paying the salaries of those employees that do that work, as well as any property management fees, without placing additional burden on other homeowner in the development being managed. 

Just a thought, buy WHY are they not insured for non collection of dues...I sort of think that would be one problem solved in this case. 

As long as the insurance agency wasn't AIG...for the love of God!

Carol

www.ActiveSunshine.com