Delinquent

I don't know if anyone can answer this question. We are a condo association in Illinois.

My building is experiencing severe leakage issues when it rains becasue of construction. We are in the process of going after the developer in court. In the meantime we are trying to fix the building before things get worse. About 300k worth of work needs to be done. It's a five year old building and does not have this sort cash on hand nor do we have the reserves becasue the developer spent that money. We have been trying to get a loan but our delinquency is too high. We are around 17k in delinquent accounts. In order to get a loan they want our delinquents down to about 8k. Many of the past due people are with our attorney or collection agency. Today I was speaking with a bank and he told me to create a collection ledger.

We have two accounts an operating account and a reserve account. The operating account obviosuly refelct the delinquents Can we start a collection ledger and move those accounts which are in collections to the collection ledger and remove the money off of our operating account therefore dropping our delinquent accounts? And if we collect any money from that collection ledger we would then show it as income on the operating account. To me something doesn't sound legal about that, but the bank recomendes we do it.

Any thoughts or ideas.

Doug

I agree with Roger,
Times are hard at best and it sounds like you have been in over your heads about this developer business. When was turn-over? What does your lawyer say and what does he say about how to get money to fix leaks.........critical that this be done. How must cash do you need up front to get money for leak? Have you examined special assessment for those capable to get their leaks fixed?
The leaks loom large on the picture, has your lawyer tried to get a judge to order the developer to get the leaks fixed. he might do this if the evidence was clear the developer was responsible.
Try some political muscle if you can.

I would also get a good management company.

And the community should have insurance to cover such issues, as a single family home does.

The deductible would then come into play.

As far as the delinquencies, I would try to work out a pay plan with the homeowners who are delinquent first.

Then, if you aren't having any luck with payment plans, then file liens against the delinquent homeowners.

Also, not sure about your states rules, but you could essentially foreclose on all of the deliquent homeowners, selling their units for the deliquencies and then they have 90 days to settle up with the buyers.

By foreclosing you get the money you need upfront to satify your deficiency, plus being able to correct the leaking issue.

Homeowners will come up with the money faster than you think.

When faced with losing their home, they will borrow wherever they have to.

I know this sounds harsh, but unless you act fast, you will have a condemed community instead of a livable one.