Foreclosures
stalk condo owners like a predator searching for prey. Foreclosures are
at a 20-year high, especially in big cities. They are evenly split
between builders going out of business and buyers who bite off more than
they can chew. This is more common than most would have you believe. Condo
foreclosures occur when the homeowner fails to make his mortgage
payment, and the bank or lending institution is forced to sell the unit
at below-market value. It is a devastating situation if you are in the
position of having a condo repossessed or foreclosed upon. In
some situations, the bank or lender will allow someone else to make the
payments, which gives that person the right to move into the
condo association.
When
too many condo owners lose their units to foreclosure, condo associations
feel the financial pain. That is bad news for homeowners who depend on
condo association fees to take care of building maintenance, condo property
insurance, utilities, landscaping and other shared amenities. Condo
associations do have options, but most of them are not palatable to the
owners. The condo board can borrow money from a bank, borrow money from the
condo association reserve, reduce contributions to reserves, cut back on
amenities, reassess costs, renegotiate service contracts, delay capital
expenditures, increase monthly HOA assessments, and levy special
assessments. They can offer payment plans or loans to the owners. They
can waive late fees or penalties to help owners catch up on
delinquencies.
Some condo associations are assessing anywhere from $10,000 to
$30,000 per unit to make up for the shortfall. But there are also some
actions a condo association cannot take.It
cannot abandon its fiduciary responsibility just because the funds are
inadequate, and it cannot abandon the effort to collect
delinquencies. Once the condo association
forecloses, the owner typically will stop paying the mortgage and the
bank or lender may be willing to accept a deed to the property from the
association in lieu of a bank foreclosure. Obviously, the No. 1 priority is
to get someone in the unit who has the money to pay the
assessments. Times have changed. Foreclosure
stalkers (politely called investors) are not showing up in bunches at
foreclosure auctions to snap up great bargains.
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