Condo Association Management Blog

what your by-laws state will govern your abilities to collect, which might mean it goes to court or ou place a lean on their property and collect when it sells... but they could be there for yrs! Besides that always look for other options (as there are always at least 3) than assessments. Nobody likes assessments, but if you communicate to those 9 as to why and maybe give them a payment options, you get the needed funds w/o pain. Assessments are like congress raising taxes, just tastes bad. But maybe if you frame it right, the 9 will see it the board's way. The other part of this is you don't want 20% of your association in foreclosure. If it's mortgages, that's one thing, but if it's the association fee, you might want to work out some options so you can elude more in the future. Budget, budget, budget. Hope this helps. Thx

I am always amused by people on a board who describe the work done by the previous boards as "a mess." Pointing fingers, blaming those who came before is a time honored political kink, but it really has no place in a condo. Just do what needs to be done without complaining about what came before. Don't worry: You'll make mistakes too.

This issue brings up another problem I can forsee - regarding foreclosure units not paying the maintenance fees - and the responsibility falling on the rest of the unit owners (to make up the difference). Now that some states have allowed the recapture of the delinquent maintenance fees (due to foreclosures), then some law should also be in place to repay the burdened unit owners who had to pay increases to make up the difference (to keep the Association running). When these delinquent monies are eventually recaptured (by the Associations attorneys).... They should go directly back to repay the 'paying' Unit Owners (imo). To my knowledge, no one has ever mentioned this part of the problem but it needs to be addressed.

Your State Condominium Act should be read for pertinent portions.A threat to shut off common utilities to non paying units could get their attention. 
 
I agree with the comment about use of money recaptured from foreclosure.

Our declarations allow us to file a lein on the unit for any outstanding assessment. If you are able to do this you could collect when a property is sold whether in forclosure or not because it can't be sold without clear title. We are also looking into charging a transfer fee when a property is sold. Our declarations state that we can charge 1/10 percent for administrative costs.

If a unit is foreclosed by a bank there is no incentive for the bank to sell for more than it is owed. Everyone behind the bank often remains unpaid..

That's true about the banks and the only real lein that won't get wipped off is tax but it doesn't hurt to have the lein on there anyway, you never know. A mortgagee should be made aware in any event. If the bank now ownes the property should they be subject to the fees and special assessments?

In Maryland, a foreclosure wipes off previous lien by the association. It must be written off as a bad debt by the association. 
 
In Virginia, the assessment "runs with the land" (as explained to me by FHA when we were handled coordination of properties for them in the 90s) and therefore FHA would pay the owner's lien at time of resale.  
 
As a condo is a legal entity, it should have legal counsel. Whoever handled the delinquent accounts for the condo should explain this to the board.  
 
During this financial crisis, the mortgage holder may not transfer title and the owner is still technically responsible for assessments. Filing a lien and obtaining a judgement may provide future collection of fees owed. Once the bank takes title, assessments are their obligation and are collectible usually at settlement. Some banks are paying their assessments once they "own" the unit. 
 
UTILITIES 
 
Condos located in cold weather locations generally have resolutions requiring a minimum temperature (55) be maintained when the unit is vacant for vacation or for long-term vacancy. This is to prevent possible freezing of pipes in the walls causing damage to other units.  
 
Water more often has a shut-off switch within the unit and the mortgage company servicer should be contacted to ensure that this is properly handled (and the heat not shut off).  
 
Condo documents usually provide access and most courts uphold forced entry when a unit is vacant and not being handled properly by the mortgage holder.  
 
ASSESSMENTs 
 
When a condo increases assessments, even due to uncollected assessments, there should not be an expectation of a refund at a later date. The increase is just that - an increase in assessments. It is not a loan to the condo to be repaid. Further, the refund would be lowering the rate of assessments - on all units. This would require an across the board adjustment.  
 
The on-paying units should be treated in the manner required by the documents. However, communication to all owners including the non-paying but presently occupying members should include a time at the next board meeting to answer questions regarding the financial situation the condo is in AND the problem of non-paying resident owners will cause for loan approval of all members whether "owners" or financial institutions because the purchaser's mortgage company will require the condo to be financially solvent. Overdue utility accounts result in bankruptcy filing for condos and jepordizes the well-being of all members. This meeting would be an ideal time to request the attorney handling collections to attend and answer questions. 
 
Good luck in these most trying times.  
 
 

First, contact your lawyer, not the property management company or you next door neighbors, your lawyers "Letter of Demand" will carry more weight. Have him write a demand letter demanding payment of the assessment with the threat of filing a lien should payment not be forthcoming. If payment is not made, file the lien. A lien will stop anyone from getting a loan on the property and force the owner to satisfy the lien before a sale can be made. This isn't instant coffee as you will be waiting for your money. I'd try my lawyer first. 
Never, NEVER shut of anyone's utilities. This may open you or the Board up for a civil suit personally. People with disabilities, young children, and the like can be injured or suffer needlessly if you do. 
Another option you have as a Board is to work with your Owners, maybe you could reach a viable option by allowing those who have funding problems (fixed incomes) to pay their fair share over a given period of time. 
Exhaust all options you may have in a kind and understanding way. You may have to slowly increase your operating & reserve budgets over time to build your accounts. 
About Foreclosures: I'm about to explore an option regarding foreclosures. I recently attend a seminar where a panel of lawyers suggested foreclosing on your lien that you filed for your back assessments and fees. You would be a subordinate lien holder but may be granted a favorable judgement. You can bet that the primary lien-holder will be there to protect their interests. Once granted your foreclosure subject to the primary lien-holder, you can offer to relinquish your interests , before the judge, to the primary lien-holder. They won't refuse or you'll own the place for very little money! They will most likely accept your offer thus becoming the primary property owner and must then begin paying any fees plus any back fees you may get according to your State Laws.

I read recently that 30 percent of reverse mortgages are in default due to nonpayment of assessments, or taxes.

Your Question is : 
"I live in Illinois and am on the board for our condo association, we took over a mess from the previous people, we owe several thousand dollars the heat and hot water are common in the assessments. We voted to have a special assessment to bring things up to date. We have 30 units 5 in foreclosure 16 people have paid or are making the arrangements, 9 have not responded we spoke to some of them who basically said they are not going to pay. What action can we take or who should we contact in our state? " 
My answer: 
It seems that you are missing a lot of information when you say, 'we spoke to some of them who basically said they are not going to pay'  
What you are missing the most is that you have said nothing about the REASONS they give for not paying? You just want us to ASSUME THE REASONS THAT THEY THEY HAVE NO MONEY. I am afraid, if I just assume that I am very ill prepared to answer such a question. You must give the details of the reasons for their refusal. Do any of the board members omit their duty to account for funds, or omit duty to have secret ballot fair election?

Unless you live in a voluntary association, owners are required to pay assessments. The board has a fiduciary duty to use good business judgement to collect these funds. Your documents should be followed. Should you choose some other collections alternative, it should be approved at a duly called board meeting, included in the minutes and followed consistently. One more thing - when you budget - remember to share to costs of not only the collections but the unpaid assessments of those in foreclosure and bankruptcy. You will want to divide the total of these costs among those who are likely to continue to pay.