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Association Bankruptcy?

Started by GeorgerwilliamsW • 7 replies • 1877 views

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GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
What do you do in a situation like this?
    Diela Narrabe may be forced to leave her Deerfield Beach condo next month, even though she's done everything right.

    Narrabe is one of 28 unit owners — out of 168 — in the Deerfield Palms condo association who still pay their monthly maintenance fees, which are used to pay the community's water bill.

    Residents owe the city $90,000. If they don't pay $12,929 by the first week of March, the city is threatening to turn off the water. Because the community has master meters rather than individual unit gauges, the city can't separate owners who are current on their bills from delinquent customers.

    Armando Fana, director of the Miami office of the U.S. Department of Housing and Urban Development, estimated more than 80 units in Deerfield Palms are in some form of foreclosure.

    The community cannot afford a lawyer to chase maintenance fees, said condo board president David Brenelus; nor could the association purchase foreclosed units and pay those monthly fees.

    In the fall, Deerfield Beach officials began discussing the water bill delinquency with Deerfield Palms, a community of seven yellow, two-story buildings and 600 residents just west of Dixie Highway. After the units were converted to condos in 2006, residents paid $119,000 to $201,000 for them.
Check out the full news story with additional examples here:

http://www.sun-sentinel.com/community/news/deerfield_beach/sfl-flbdeerfieldwater0203sbfeb03,0,3664325.story

DonnaS (Tennessee)
Posts: 5,671
Posted:

George,
I know this condo and it's area. It is in the high rent district of Delray, even tho the building is not one of the new mega structures down there. Many of the unit owners are seasonal and probably live in New York and New Jersey, which is where almost all of South Florida comes from. This may be a matter of pure owner rebellion or basically, refusal to pay their bills. It's too bad that the good honest people like the lady who is stuck with all of the worries, including the loss of her home have to deal with this Slackers.
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
I think it shows the downside of association/condo living. All owners are in it together, in good times and bad times. And, it looks like even though you may be completely up to date on your payments, and follow the rules, you can be forced to suffer the consequences not of your own doing.

I guess bankruptcy--chapter 11 may be the only solution for the association.

GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
By the way, I know of only one case in Hoosierland of a homeowners association going into liquidation. An investment company bought out the association's interest from bankruptcy in the common areas and the right to assess fees. The not-for-profit association became a profit-making corporation. Residents lost the ability to set their own fees and control management.

The end result has been that fees increased by a factor of 4, maintenance declined, unit market prices declined 40-70 percent and vacancies are now about 35 percent with few sales. A number of owners have walked away from their units, giving their condos to the new association owner just to get out of paying the ongoing monthly fees. With a 35 percent vacancy rate, the corporation can't be making any money right now, and they don't seem to be interested or able to rent the units. The current word in the street is that the new owner/manager is going to go belly up soon. It is not clear under the law if unit owners can be forced to vacate their units, except if they become uninhabitable.
SheliaH (Indiana)
Posts: 6,964
Posted:
Which HOA is that - our annual meeting is in two weeks and it would be quite eye-opening for our homeowners to see what the worst case scenerio could be if we don't get our finances in order. On the other hand, it would help some keep things in prespective (things could easily be a lot worse).

I feel awful for the people in that news story, and you're right - the downside of HOA living is that your fate is tied in part to everyone else, and if there are a number of people who don't hold up their end...

For the Florida folks, I wonder what sort of HOA board they had - it seems to me someone or several people weren't paying as much attention to the finances as they should have been. It would be nice if they could reconfigure the meters so that the folks who haven't paid fees can suffer the consequences as opposed to everyone else. However, I think they may have to go chapter 11.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
SusanW1 (Michigan)
Posts: 5,202
Posted:
This lady is ONE of the 28 out of 168 still paying?

I would be willing to bet that the water bill is NOT the only thing outstanding, here.

GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
It looks like it is happening in Arizona as well:
    PHOENIX – A meeting with the city turned into a shouting match on Wednesday.

    Hundreds of people who live at a condo complex in west Phoenix will be without water on Monday even though they have paid their bills.

    City officials said they have never seen a situation like this. This is what makes it so unique and so difficult.

    The condos and townhouses are owned by individual people, however the meter that controls the water goes to multiple units, not just that one person's home.

    Nevertheless, according to the city, for the last six months the water bill has not been paid and now the complex owes around $70,000.


http://www.azfamily.com/news/local/stories/Phoenix-local-news-020409_no-water-complex-shut-of.1d6de1b1.html
KirkW1 (Texas)
Posts: 1,665
Posted:
One more reason why I love my single family home. I pay my water, electric, and gas bills and not under a problem should the neighbor fail to do so. I think every unit should have a meter and a cut off.

In the meantime, if the association were to cut off the water of every unit that hadn't paid, they would get a huge influx of cash.

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