If a unit owner is 25 days or more late in paying his or her share of common expenses, the condo association may collect rent due the unit owner from any tenant renting the unit and apply it against the amount owed by the unit owner. This right is subject to any existing rights of a first mortgage holder.
The procedures for a condo association collecting rent from a tenant in the unit are as follows:
(a) First, the condo association must send a written notice to the delinquent condo owner. The notice must be sent by any form of mail or delivery which provides a signed receipt. It must set forth the exact amount the condo association claims is due and state that the association intends to collect the amount from rent, along with any amounts which become due in the future in the current fiscal year and remain unpaid for 25 days after they become due.
(b) The unit owner has 10 days after receiving the notice to file a written response with the condo association signed under pains and penalties of perjury. For any dispute over a monthly installment, the response must include proof, in the form of a cancelled check, receipt, or other document showing that the installment was paid.
(c) If the unit owner fails to file a timely response which complies with these requirements, or if the unit owner admits that any amount is owed, the condo association may immediately notify each tenant renting the unit to pay rent and the condo fees to the association.
(d) If the unit owner filed a response which was timely and complied with these requirements, the tenant pays to the condo association no more than the amount the unit owner admitted was due in the response.
(e) The unit owner may bring suit seeking injunctive relief or a judicial determination of the amount owed. The association may also bring suit to enforce its lien, to establish the amount owed, or to obtain a court order requiring tenants in the same unit, or in other units in the condominium owned by the same owner, to pay rent to the condo association.
(f) A unit owner is prohibited from taking any retaliatory action against a tenant who pays rent to the association. The laws which protect tenants from reprisals by landlords apply to any reprisal taken by a unit owner against a tenant who paid the condo association or expressed an intention to do so. Any waiver of these provisions in any rental agreement is void as against public policy.
These days, clients are finding they must give up their homes.
Frequently, they live in a condo or in a home where there is a
homeowners’ association. These cases pose a hidden trap with condo bankruptcy.
Generally, bankruptcy leads to a discharge of all condo fees. However,
there is a cut-off date. Bankruptcy only discharges debts which are
incurred up to the date of the petition. If you decide to leave your
condominium after you file the bankruptcy, you will be relieved
of any debt to your mortgage lender. That will be discharged. But you
won’t be relieved of any future debt to the condo association or
the homeowners’ association.
Let’s say you file a bankruptcy on March 30. You decide you are
going to give up your condo and move instead of facing eviction. Seems reasonable but condo
associations and homeowner associations need cash. The mortgage
company is not liable for the special HOA assessments until the foreclosure sale is
done and until they actually receive the deed to the property. So if
you don’t pay these items after bankruptcy, the association can and
often will sue you, especially in Illinois.
So it may benefit you to stay in the condominium after your
bankruptcy. Pay your condo insurance and pay your condo or homeowner’s
association assessments. Think of these expenses as rent. You’ll
avoid being sued for these items and you can take your time in
preparing to move on in your life.
Learn More About HOA Loans and Condo Association Insurance
The condo
association, which is comprised of the homeowners, is responsible for
maintenance, operation, and finances of the complex. A well-run
condo association can offer considerable convenience and benefits for
owners. On the contrary, a poorly run condo association can create
headaches, hassles, and hardships. You can expect to pay monthly
condo association fees or dues that cover operating costs of the complex.
Those fees can be steep depending on the amenities offered. You can
also expect the association to make and enforce condo rules and enforcements that are designed
to maintain a harmonious look and feel of the complex. Some
condo associations have lots of rules. Others have few rules. Some rules
are reasonable, and still others can be intrusive. Rules govern
everything from your number of parking spaces to restrictions on
visitors. As an owner, you are required to abide by all of the rules
whether you like them or not.
Before You Buy
A few general rules of thumb when considering a condo purchase are:
-
Meet the folks who would be your new neighbors. Find
out what they like or do not like about the complex and the condo association.
-
Check
out the financial solvency of the condo association. You do not want
to find out about financial difficulties and be presented with an
unexpected significant fee after you move in.
-
Get the facts on owner-occupied versus rental units. A predominance of rental units can present challenges of its own.
-
Learn
about the rules. Read the condo bylaws to gain a clear understanding of how
the association is organized and what the rules govern.
-
Read the master deed or have an attorney review it.
Learn More About
HOA Loans and
Condo Association Insurance
Homeowners' associations (HOAs) have the right to impose special assessments and HOA fees
on each member of the association to pay for the HOA's operations and
maintenance expenses. Assessments can be regular or special, depending
on the purpose for which they are made. Assessments are calculated,
collected and enforced in the manner required by law and as provided by
the HOA's governing documents.
Regular assessments are made to defray expenses related to
the ownership, operation, or furnishing of common interests or to the
enjoyment of mutual and reciprocal rights of use. For instance, the
revenue generated by regular assessments can be used for the repair and
maintenance of common property, such as lobbies, community centers,
common roofs, parking lots and garages.
Special assessments are made for capital improvements or for
other purposes, such as replenishing a reserve condo fund that was spent on
unexpected maintenance projects.
The governing documents of the development, such as the declaration of
covenants, conditions and restrictions (declaration or CC&Rs) and the condo bylaws, should describe the assessment process, including how much the assessments can be increased a
Regular assessments against the units in a common interest
development typically must start on the date of the first transfer of a
unit from the property's developer or on the first day of the month
following the first conveyance of a unit.
Assessments are made according to the schedule indicated in the HOA's bylaws or CC&Rs. The HOA must send or deliver notices of each homeowner's assessment amount to the homeowner. The homeowner then has a specified number of days in which to pay the assessment amount.
Learn About Condo Association Insurance, HOA Loans, or Property Managers
Regular and special HOA assessments are delinquent a specified number of
days after they become due. If an assessment is delinquent, the
condo association may recover all of the following:
- Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorneys' fees
- A late charge
- Interest on all sums due
If a homeowner fails to pay the assessment, the HOA has several options:
- File a civil action in small claims court (if the amount due meets the court's requirements)
- Record a lien on the homeowner's unit or separate interest
and delay foreclosure until the amount due equals a pre-determined
amount or the HOA assessments are more than 12 months delinquent
- Record a lien on the homeowner's separate interest and foreclose on the lien
- Any other manner provided by law
If the HOA is going to file a lien on the homeowner's unit, at least
30 days before filing the lien, it should send the owner of record a
notice including, among other things:
- A general description of the HOA's collection and lien enforcement procedures
- The method of calculation of the condo fees due
- A statement that if the homeowner's separate interest is placed in
foreclosure because the homeowner is behind in his or her HOA assessments,
it may be sold without court action
- An itemized statement of the charges owed by the homeowner
- The right to dispute the assessment debt by submitting a written request for dispute resolution to the HOA
- The right to request alternative dispute resolution with a neutral third party before the HOA may initiate foreclosure
To establish the lien, the HOA must record a notice of delinquent
assessment in the county where the owner's unit is located. The notice
must comply with the requirements of state law. Thirty days after the
lien is recorded, it may be enforced in any manner permitted by law,
including sale by the court, sale by the trustee named in the notice of
delinquent assessment, or sale by a properly substituted trustee.
Learn More About HOA Loans and Condo Association Insurance
So, you are a first-time homebuyer or maybe an investor thinking that
now is a great time to take the plunge and buy that condo you’ve been
reading so much about…and, the price is so low and you just don’t think
you’ll ever get a better deal. Should you do it?
When someone buys into a
condo association, a large part of the appeal is
feeling that the monthly
condo fees that they pay will cover the
majority of maintenance issues and responsibilities that come with home
ownership. Many people feel as if the condo fee is in
effect “budgeting” for these items, so instead of all of a sudden
having to pay for a large expense, such as a roof replacement or a
siding repair, these things are accounted for in the monthly condo fee.
Most condo fees will cover exterior maintenance and common area
maintenance, lawn mowing and even some even cover utilities and taxes.
For harried homeowners balancing full-time jobs, family and travel, the
promise of easy living and a predictable condo budget is a huge draw. What
happens though when the market starts to turn downward and your fellow
condo owners can no longer pay their monthly fees or you move into a
new building and the rest of building doesn’t fill up as expected? “The
New York Times” writer, Christine Haughney also reports “Bargain
hunters say that they are reluctant to buy into a building even when
the upfront cost seems low because they might have to pay unexpected
fees as distressed neighbors default on their mortgages or just stop financing for condo association fees that cover everything from taxes to pool
maintenance to air conditioning repair.”.
So, what should you do, is it time to put away your
dreams for a maintenance-free existence? With a little
bit of research and fully taking advantage of the condo bylaws that are in place for buyers, you can get
enough information to know if purchasing a condo is the right decision
for you.
Consider the following situation: What if an HOA or condo board hears about a possible rapist in the
area but does nothing to add security to the parking area and a
resident is raped. Is that HOA or condo association or board liable? What if that same HOA or condo board hears about a possible rapist
in the area and adds security cameras in an effort to deter or catch a
rapist and neither happen, yet there is a rape, is that HOA or condo
board or association liable? The condo board hears about the rapist in the area, and hires drive
through security guards to patrol the areas, and the condo security guard
shoots someone he or she thinks is the rapist. Is the HOA or condo
board liable?
You can bet that in any of the above cases, the HOA or condo board
or association may be sued, in fact, will likely be sued, as people
love to point fingers, even for acts that are far outside the realm of
reason. That is the reason to have good condo insurance coverage. But does that mean give up on security for fear measures will backfire? No, it does not. What it means is choose what seems to be the right means for any situation where there are indications that security is needed.
You might poll the owners to see what they favor, or not. Be sure you have a good contract with a security company that
shields the HOA or condo association from liability for the bad or
negligent acts of the personnel.
In other words, although it sounds simple to say take reasonable
measures in light of the problems you are trying to address, it helps
to keep the members informed, and understand that in most if not all
cases that have been filed against HOAs and condo boards, the HOA or
Condo Association often becomes a "target" because it is a possible
source of cash (yes, lawyers think that way). The cases are probably
about even in terms of arguing the condo board did too much that went wrong
or did not do enough. Condo associations continue to be considered a "deep
pocket" in assessing possible defendants, and that the entity is
probably always going to be included in any lawsuit where there is an
accident or crime on premises, no matter what it does. However, being
able to show it acted reasonably under the circumstances, and took
reasonable action in light of the situation, may provide a partial or
full defense to any such action.
Find A Property Manager
Condo associations have certain condo documents on file when a condo development
is established. First, the Declaration is the document that establishes
the condominium complex as a legal entity. It calls for the
establishment of a condominium association made up of all the owners of
the condominiums in that complex.
Second, there are condo by-laws, rules
for the administration of the condominium property. It is important to
understand the by-laws of the development in which you will be
purchasing a unit. Some by-laws prohibit pets while others have
restrictions on noise, visitor parking, and so forth. The original
by-laws can be amended by a vote of the condoassociation
members. Some of these documents can be quite lengthy and hard to read.
However, a realtor who is a condo specialist is familiar with these
documents and can explain them to you. Ask your real estate agent to
obtain the latest information on recent condo budgets and changes to the by-laws so that you can choose the best complex for you.
The budget will indicate how much is being spent on each item covered
by the condo fee. The size of the reserves gives you insight regarding
how secure the condo association is. Reading the minutes of the most recent
meeting will tell you if there are any special HOA assessments, condo fee
increases or major changes being considered by the condo board.
Find Property Managers Near You
When
you own a condo it's typically, but not necessarily, in a building with
other units. With condo ownership everyone shares in the ownership of
the common areas equally or based on some predefined formula. The
common areas, for example, include the structure (floors, walls,
ceiling...etc) of your particular unit/building, club house and pool if
any, and any other structures like a boardwalk over the dunes to the
beach!All owners of a condo are members of the condo association and pay a condo fee. The fee typically includes monies for repair and maintenance,
reserves for major capital expenditures, structural insurances, and
liability insurance for the common areas. It is easier to define the
common areas by defining what is not - the interior walls of each
individual unit and everything within, in general.
The
condo owner will need to buy a condo insurance policy. This is
very similar, but exactly the same, as apartment renter's policies. The
cost for these is typically very low especially when comopared to a
homeowner's policy. When comparing monthly costs be sure include the
cost for insurance plus the condo fee. The primary reason for
the lower cost is that the building structure insurance is part of the
condo fee as it is common property.
Homeowner's Association (HOA) is a corporation formed to manage a group of single family homes. HOA fees
are levied to run the corporation and pay for items like common area
maintenance, capital maintenance (e.g. club house or pool), capital
replacement items (e.g. new roof), new capital projects, and insurance.
These feescan include the exterior maintenance of lawns and landscaped areas.
HOA fees typically are lower than condo fees but be sure to include the cost of insurance when determining your monthly cash flow.
Learn More About HOA Insurance
Whether you’re evaluating your current master
condo insurance policy or
looking for a new one, here are the most important points of the policy
that should be reviewed annually.
- Each building’s replacement cost. Make sure you factor in type of
construction, year built, square footage, number of stories, and other
features of your building. Building in an inflation factor to your
master policy can help mitigate some of this, but the condo association should still review each building’s value every few years.
- Directors & officers coverage. Not all condo associations have
this coverage. Considering its minimal cost, it is a wise investment to
protect the interests of the condo board.
- Employee dishonesty limit. This limit is usually equal to the amount of money the condo association has in the bank, including condo funding. This value should be regularly reviewed.
- Sewer or drain back-up. Sewer and drain back-up actually happens
quite frequently with condo associations, and this coverage would pay
for the ensuing damages/repairs. Typically, this coverage must be added
to the master policy and has limits of $25,000, $50,000, and $100,000.
- Flood coverage. If you are in a flood zone, make sure you work with your insurance agent to get adequate flood coverage.
- Earthquake coverage and wind coverage. This coverage might be included in your master
policy, depending on where your condo or HOA is located. For buildings
in Florida, Texas, the East Coast, or West Coast, you will probably
have to purchase this separately. The price for this coverage is
usually considerable because it pays for all wind-related damage,
including hurricanes.
- Wind deductible. If you have a wind deductible, it’s important to find out if it is a per season or per occurrence deductible.
- Premium. Are you paying too much for your master insurance policy? If so, don’t be afraid to look elsewhere for better deals.
- Property deductible. Examine your deductible to see if it’s too
high or too low. You might be able to raise your deductible up to
$1,000-$2,500 to substantially reduce your premiums.