The headline of Sunday’s edition of the Sarasota Herald-Tribune reads "Condo Groups in Financial Pain". The story accompanying that headline details the severe economic problems many condominium associations face as a result of the ongoing foreclosure crisis. The article is well worth reading and contains examples of how several associations are attempting to survive a substantial decrease in their members and maintenance fees.
Our resident owned communities, for the most part, have not been severely impacted by the foreclosure crisis. One of the reasons for this is that the ROCs we work with truly are resident owned--our ROC members customarily live in their homes for at least part of the year (or have one or more members of their family in the home). In other words, very few of the homes in any of the ROCs we represent can be characterized as "investment properties".
Nonetheless, I’d like to offer a few suggestions that may help ROC managers and board members better deal with problems arising from residents that fail to make timely payments of rents, maintenance fees or assessments:
- Given the current economic climate, it’s important to strongly encourage all residents to make payments when they are due. I suggest a policy that should be developed and consistently and uniformly followed to send written notices to all delinquent members no later than 5 to 10 days after payment is due. Many of the rights given to ROCs by the Florida Statutes to file legal actions or record liens for unpaid assessments and fees are triggered by providing written notice to the homeowner and the sooner this notice can be given the sooner the association can exercise its statutory rights.
- The association should not be shy about getting its attorney involved early in the process to assist in recording liens and the legal actions that may be needed to protect the association’s interests. While there are certainly expenses involved in these legal remedies, it’s quite often necessary to send a message to the members of the community that the ROC board and manager will do whatever it takes within the limits of the law to collect delinquent fees and rents owed to the community.,
- When the association is named as a defendant in a foreclosure action filed against one of its members by an institutional lender, I always advise the association to answer that foreclosure complaint. The association’s filing of that answer ensures that the association will receive copies of all of the important pleadings that will be filed in that law suit, including the certificate of title that is issued to the person or company that purchases the home at the foreclosure sale. It’s very important that the association determine the new owner of the home as quickly as possible as Florida statutes quite often require that new owner to pay at least a portion of the unpaid maintenance fees or assessments to the association. The association may have no way to quickly determine the name of the new owner if it has not filed its response to that foreclosure action.
Let’s hope that 2010 brings us all heath, prosperity and happiness and that the "foreclosure crisis" is just a dim memory by this time next year.