Fiduciary Foreclosure. Does your HOA Practice this?

Started by FrancescaM • 11 replies • 1189 views

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FrancescaM (Washington)
Posts: 264

Posted:

Curious how other HOA's collection policies work?

After havinh the same deliquent homeowner's not pay for the entire time i have lived here.. we have inacted a collection policy that has clear steps. This policy was sent out at the time of election of it.

Homeowner's who are greater than 90 days due in back fees are started in this proceedure. Grant it, it takes months to obtain ficuciary foreclosure ( actually it really starts on the month that $1800 is due in back dues )

DOes anyone else's hoa do this?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Francesca,

Many, many, many do. In Florida, it's even in our Statutes for allowence.

DanaB1 (Connecticut)
Posts: 319

Posted:

We are a condo association and after 90 days it automatically goes to the attorney.

Dana

FrancescaM (Washington)
Posts: 264

Posted:

Quote:

Posted By DanaB1 on 10/19/2008 11:06 AM
We are a condo association and after 90 days it automatically goes to the attorney.

Dana

We are condos too. For all the years I served on our board this wasn't always the norm. It seems harsh looking at it but our dues are behind 20K and most of these "dead beats" are going in or already in foreclosure or BK... it's a sign of the times.

DanaB1 (Connecticut)
Posts: 319

Posted:

How many units total and how many in forclosure?

D

FrancescaM (Washington)
Posts: 264

Posted:

65 units.. 5.5% are in foreclosure( as stated, most are from BK's also.. it's a mess) Most HO's have lost their jobs, or over expanded themselves with poor financial planning....

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

I am curious if anyone has actually done an analysis (that can be shared) to determine the true cost/benefit to the association from completed foreclosures.

When the legal (attorney and court) costs, the lost assessments during the foreclosure period and other related expenses are considered, could the association be losing the equivalent of a year or more of assessments on the foreclosed units? I would like to see some actual numbers.

Also, what recourse does an association have if the owner dies with a will or intestate and does not have adequate assets in the estate to pay assessments during settlement?

The other issue that is troubling me, is the impact of foreclosure on the market value of other units in the development. If market value is determined, in part, by previous sales in the community, a highly discounted sale, it seems, could reduce property values by a measurable amount. Of course, property taxes may also decline as well.

My instincts suggest that working with a willing owner in default is preferable than the oft attorney recommended immediate foreclosure. (In such cases, it may be that only the attorney benefits.)

SusanW1 (Michigan)
Posts: 5,202

Posted:

Francesca says there is a collection policy that has "clear steps".

The Board is bound to take each of the steps, no matter the outcome (financial benefit or not).

Owners can sue the board for not holding up its own documents!

If the steps are wrong, then they need to be "re-thunk"

FrancescaM (Washington)
Posts: 264

Posted:

Quote:

Posted By GeorgerwilliamsW on 10/20/2008 3:36 AM
I am curious if anyone has actually done an analysis (that can be shared) to determine the true cost/benefit to the association from completed foreclosures.

When the legal (attorney and court) costs, the lost assessments during the foreclosure period and other related expenses are considered, could the association be losing the equivalent of a year or more of assessments on the foreclosed units? I would like to see some actual numbers.

Also, what recourse does an association have if the owner dies with a will or intestate and does not have adequate assets in the estate to pay assessments during settlement?

The other issue that is troubling me, is the impact of foreclosure on the market value of other units in the development. If market value is determined, in part, by previous sales in the community, a highly discounted sale, it seems, could reduce property values by a measurable amount. Of course, property taxes may also decline as well.

My instincts suggest that working with a willing owner in default is preferable than the oft attorney recommended immediate foreclosure. (In such cases, it may be that only the attorney benefits.)

FYI... all legal fees for back dues are passed of and paid for by the HO's who is in default.

Susan is correct.... We can't pick and choose enforcement.... everyone even one of our board members is in collections via lawyer... it's a tough time, but none the less it is a financial obligatoin that many feel can go wayside..

( example??? my neighbors next door who are in the middle of a divorce......... of course thier mortgage is being paid by the now missing husband because the property is in his name. He had NOT paid one month of dues since he moved out... he said it's not big deal, let my wife pay them. I hope his attitude was worth it... he now owes us over $2500 and now owes a lawyer and additional $850 in fees on top of that... he is going to be going to have to pay vs. letting his pride get stomped on.. _)

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

I think I did not make myself clear in my post. Often, equity in a unit is not sufficient to cover the first mortgage and additional liens when a foreclosed property is sold. And once a foreclosure judgment is issued and the owner vacates the property, it is my understanding that ongoing fees cannot be assessed against the former owner. Yet, the property may sit in foreclosure several months before sale.

While a personal judgment for unpaid assessments and fees may be sought against the former owner, it only extends the situation. I am looking for some hard data here, rather than anecdotal information. At some point, it seems to me, foreclosure becomes a losing proposition for all sides.

DwightT (Idaho)
Posts: 664

Posted:

Quote:

Posted By GeorgerwilliamsW on 10/20/2008 3:36 AM

The other issue that is troubling me, is the impact of foreclosure on the market value of other units in the development. If market value is determined, in part, by previous sales in the community, a highly discounted sale, it seems, could reduce property values by a measurable amount. Of course, property taxes may also decline as well.

Our current Treasurer is an appraiser by profession. I asked him about this not to long ago. He said that in general foreclosures have almost no impact on the value of other homes. Appraisers are aware of which homes are in foreclosure and those homes are not used as comparables unless nothing else can be found, and even then the fact that it was not a normal sale is taken into consideration.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Thanks, Dwight. That is good to know.

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