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New HOA and Condo Association Trend Alert!

By
Real Estate Broker/Owner with Green Realty Properties® - 954-667-7253 BK3175566

Delinquent HOA and Condo Association fees are a huge problem down here in sunny South Florida, as I'm sure they are in all parts of the country. I think it's safe to say that a large percentage of homeowners who stop paying their maintenance fees assume that they have another 3-6 months before the Association puts a lien on the property and starts foreclosure proceedings. Up to now, I would have said that this was a safe assumption.

A few days ago, all homeowners in my very own HOA received a letter giving us notice of a new maintenance fee payment policy. The new policy is that if full payment isn't received by the 10th of the month, the homeowner will receive a notice. If the full payment is not received by the 20th of the month, then the account will be sent for collections and the homeowner will be responsible for all fees and costs associated with the lien and foreclosure. This is serious. They are moving lightning quick. What used to take at least 3 months is now taking 20 days.

I suppose that the Associations are tired of taking such massive hits with delinquent fees, and so they're now doing something about it. The management company that our HOA works with is a big one down here, so it's just a matter of time before other HOA and Condo Associations start doing the same. All it take is for a few attorneys, board members, and management companies to talk to each other, and the trend will take off.

From here on out, I'll be warning all homeowners who are delinquent on their maintenance fees or think they may be in the future that they don't have nearly as much time as we've all been used to. I'm certain that this will come as a huge surprise to many. Is there a delinquency issue in your part of the country? If so, how long does the homeowner usually have before the Association starts foreclosure proceedings?

 

 

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Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS, TRC, RSPS

BROKER - REALTOR® Serving South Florida ::: 954. 667. SALE (7253) ::: Green Realty Properties®

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Legal Stuff: This article (Contents) reflects the opinion of the author and it is not to be considered legal advice. The author is not an attorney or a CPA. If you are in need of legal or tax advice, it is recommended that you to contact a trusted professional advisor.

Comments (16)

Marianna Athanasiadis
Green Realty Properties® - Davie, FL

Ouch that is quick. Good information to know. People are going to be super surprised when this becomes the norm and is being enforced.

Aug 06, 2012 08:37 AM
Erv Fleishman
Realty Associates - Boca Raton, FL
Luxury Prop Specialist Realty Associates

Very interesting. But is it legal?

Go back and look at the condo documents and see where this falls in.

How was this change in policy passed?

Did they post this as an agenda item on the HOA meeting? 

Was it posted with proper advanced notice?

Remember, condo HOAs can run amuck also.

Aug 06, 2012 09:19 AM
Christopher Green
Green Realty Properties, Inc - Davie, FL
Cooper City :: Davie Top REALTOR

Delinquent HOA and Condo Association fees are a huge problem down here in sunny South Florida for sure!

Aug 06, 2012 09:20 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Patty,

We live in interesting times, and I have heard that some people are not paying HOA dues in CA also.  A

Aug 06, 2012 10:17 AM
Carl Winters
Canyon Lake, TX

I would not want to live in an area where the HOA folks can make those decisions without more notice. The time spanned you quoted is not sufficient in my opinion.  I'm in Texas and I understand there are areas that have problems with HOA's with trying to enforce new rules.

Aug 06, 2012 10:20 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Patty

I understand the issues with delinquent condo and HOA fees from both sides point of view. This one is out of the box and we had a issue in Palm Beach County that went from $75,00 to $33,000.00 because of fees and how the payments where applied.

Homeowner property right are the issue here and starting legal actions in 20 days is a big time issue.

Good luck and success.

Lou Ludwig

Aug 06, 2012 11:23 AM
John Mosier
Realty ONE Group Mountain Desert - Prescott, AZ
Prescott's Patriot Agent 928 533-8142

We have seen ABUSE by Home Owner's Associations here in Arizona. You are right, once the word gets around, the management companies will not miss anything they can do to speed up the process. The HOAs and the Association Management Companies are directly connected to the lawyers. The legal expenses are simply added on to the HOA fees and the financially challenged homeowners are further challenged in order to build the power of the lawyers, HOAs and the management companies.

Another problem that I see is that even in self-managed or self-governed HOAs, the people who are attracted to seek positions of leadership in the HOAs are control freaks rather than people who appreciate our freedom and value property rights.

Aug 06, 2012 08:18 PM
Broker Patty Da Silva Da Silva
Green Realty Properties® - 954-667-7253 - Cooper City, FL
Top Listing Broker

Marianna, everyone will have notice, but you know sometime people ignore their mail.

Erv, I know they can, but this was legally passed by the Board.

Chris, they sure are.

Alexandra, a good part of people in FL aren't paying theirs. Huge problem.

Carl and Ceil, I emphathize with the homeowners. That's a super short time span. I'm sure that they put notices of the meeting to vote on this, but no one ever shows up. It's going to be interesting to see how this plays out.

Lou, it'll give attorneys more work I suppose.

John, in defense of some HOA Board members, I used to be one for years and I'm not thaaaat much of a control freak ;o) But you're right, definitely some rough personalities to deal with in these Boards.

Aug 07, 2012 12:33 AM
Anonymous
Kaye

As an HOA Manager myself, as well as a Board Member at the Condo Association where I live.  I see both sides of the issue.  Is 20 days a quick turn around? YES.  Some months are tight for me too.  However, the HOA's still have the same bills to pay, and the owners still want the same high standards of living they bought into.  How is an HOA suppose to do that, if 5%, 10% or even 40% (not unheard of) are not paying their dues on time?  Should we cancel the pool service? Stop fixing routine maintenance around the place?  Cancel evelator service if it needs repair?  Where does the HOA draw the line when homeowners stop paying their dues?  Good luck with your HOA and pay those bills on time, whenever possible! 

Aug 08, 2012 02:19 AM
#9
Broker Patty Da Silva Da Silva
Green Realty Properties® - 954-667-7253 - Cooper City, FL
Top Listing Broker

Kaye, thank you so much for commenting with your perspective. I know it's a fine balance. I've served on Boards too, and it's so difficult to deal with.

Aug 08, 2012 03:32 AM
Anonymous
Tina Calci
Does the new collection policy comply with FL laws? If not, the association can try and pass this collection procedure, but if it violates the state law the owners then can sue the association.
Aug 08, 2012 03:34 AM
#11
Anonymous
Just Saying

I'm just wondering… Strictly from a financial not to mention practical point of view, I'm not quite certain I understand the logic / benefit to the HOA. I think my confusion is based on ignorance of the law.

But here’s how I see it,

I'm just going to assume that anyone who has equity or at least is at par with their mortgage and can no longer make his/her monthly payment, would sell the property.  Now that leaves the folks that are upside down. If the HOA moves and files a lien, (I don’t care how fast or how slow) and ultimately takes the property to foreclosure (incurring all the fees associated), now what? They have just incurred the borrower’s full loan(s) debt and can't do anything with it. They can't negotiate a modification. They can't request a short sale. They now have to wait for the lender to foreclose them. Again, they have incurred attorney fees, Foreclosure fees and eviction costs. So now the property sits empty waiting for the lender to foreclose, exposing the complex to the possibility of someone finding out about the empty unit and vandalize it.

All this for what??? To spite the owners? We’ll show them, they can’t get away with this?  We’ll go after them in court and collect.  In some states they can’t and in the states that allow this, how much blood can you get out of the rock.  They have no money… if they did they would have continued to make their payments on time

So then who benefits? Not the owners, not the HOAs, Not the lenders and certainly not the economy.  Ah yes the attorneys, foreclosure trustees and collection companies… The same people that assured the HOAs that this is the most cost effective and proactive thing to do.

At this point my boss (wife) would ask “so what’s the answer”???  I can only come up with one.  How about we take that same energy, all those connections that the HOAs have, i.e. attorneys and federal assistance entities and if the owner is 20 days late, you give them an option to seek professional help from a professional entity (not just another paper processor but actual Professional help) who will properly asses the financial situation and HELP the owner to a mutually beneficial outcome.  Most people fail at getting the assistance they need for sheer ignorance of the process and the fact that most entities that would help want to charge exorbitant fees, fees that the owner doesn’t have.  So let the HOA negotiate a flat rate for all home owners they refer to the attorney who is willing to actually help the home owner.  The owner gets a modification or gets a short sale or whatever but the point is, you are proactive but in a logical, mutually beneficial and not destructive way.

Aug 08, 2012 04:52 AM
#12
Broker Patty Da Silva Da Silva
Green Realty Properties® - 954-667-7253 - Cooper City, FL
Top Listing Broker

Tina, it's a large HOA and they have at least one attorney on staff that does this full time. I'm certain that they wouldn't risk that liability without checking if it complies with FL laws.

Just Saying, the way it works when an Association forecloses on the property is that they take title and possession, but not the note; the note is still the obligation of the borrower who took out the debt. The Association then rents the property out until the lender forecloses on the mortgage to take the title and possession from of the property. The lender (once they foreclose) then has to foreclose on the Association to take title. In the meantime, the Association fee does get paid by the renter that is in there while the lender goes through their foreclosure proceedings, so they are making up that money and helping pay the bills so the rest of the residents who are paying aren't carrying all the costs on their shoulders.

Regarding getting blood out of a rock, it's been my experience in Florida that the lenders do look at the defaulted borrower's ability to pay and make a determination off of that on whether they'll go after them. Of course that's just what I've seen, and I'm sure that sometimes they go after people who really have nothing to give.

I do agree with you that most people don't get help because of ignorance or just being overwhelmed and scared. We do try to reach out to as many people as possible to do short sales or advise them to call their lender for a modification (most people have already tried this and were denied prior to coming to us). The modifications rarely work because most borrowers don't qualify. Even if they do, it's a temporary solution because the vast majority modifications are trial modifications and not permanent. There have also been multiple reports where the lender approves a borrower for a trial modification, and then when that period is up, it shows that the borrower made late payments due to the whole amount not being paid...even though the lender themselves ok'd the modification. It's a real mess. We do not charge homeowners anything for our services to process their short sale, although I know that some people do charge. Whether a Seller can get a modification or short sale isn't up to an attorney's help or the HOAs or the Agents...whether they qualify is up to the lenders alone, so unfortunately the only solutions borrowers have is to attemp a modification, do a short sale, or let the home foreclose.

Aug 08, 2012 07:50 AM
Anonymous
Just Saying

Got it!! I see now why the urgency to take possession. And to be honest, I’ve got to give credit to the attorneys for coming up with this strategy. Although I'm sure they’ve looked into the legality of taking the property away for the sole purpose of renting and potentially profiting (and yes I do realize that the owner owes the money to the HOA and thus the foreclosure), the realization that the attorneys have turned the legislative tables to their advantage in the sense that all the latest legislative measures that have passed to try to protect the borrower and thus making the foreclosure presses more lengthy, have worked to the benefit of the HOAs who will now stand to gain from the lengthy process originally developed to protect the borrowers (sorry for repeating myself, just trying to wrap my small brain around this concept) hmmm.  Very shrewd

Good Luck and hope no sympathetic judge sees this in the wrong light

 

Aug 08, 2012 01:09 PM
#14
Anonymous
clay

This an example of people with too much power.  Here in Florida my Association wanted me plant Jasmine in front area for $550.  Of course the law seems to be on their side, if theri willing to pay an attorney to pursue it. 

Aug 09, 2012 02:07 PM
#15
Broker Patty Da Silva Da Silva
Green Realty Properties® - 954-667-7253 - Cooper City, FL
Top Listing Broker

Just saying, I understand what you're saying, but we have to keep in mind that the attorney's client is the Association and they have to do their due diligence for them.

Clay, now that's just silly. What happened with that?

Aug 10, 2012 12:58 AM