A unit owner in our building passed away about a year ago, the estate has refused to pay the fees for the unit. We the Board of Directors have put a lien on the unit. There are two mortgages on the condo that exceed the market value of the unit.
Would anyone out there have any suggestions on the best way for the Board to proceed?Should we wait for the bank to foreclose (which may take a very long time) or should we foreclose?
Wednesday, January 30, 2008
Foreclosure
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14 comments:
Hi Pierre,
Today, with all the foreclosures, banks will tend to “stall” instead of acting immediately. Partly because to treat a delinquent as a property “in foreclosure” they must set aside monies that will approximate the Banks' “pending” losses. That requires they “disclose” just how badly they may be “under capitalized “ and accordingly, something they wish desperately to avoid, for as long as possibly. Regulators are scrutinizing this problem and that is the basis for the banks delay. Sometimes waiting will permit values to increase enabling the pending foreclosures listed to minimize the Banks losses, which will reduce bank regulators concerns about their capitalization requirements.
You probably recognize that your Association will:
1. Not bid at foreclosure, since the debts exceed the resale value of the Unit.
2. Are now at the mercy of the Bank, in that they will delay foreclosure proceedings.
3. Understand the Balance of the members of your Association are now making payments to cover the delinquent unit, and will for the foreseeable future.
The test of whether to proceed to foreclosure forcing the Banks “hand” will depend on just how much the “legal costs” compare to the possible 2 more year wait (or more) before this Real Estate downturn begins to turn around.
If continuing to make the delinquent payments reaches or exceeds the costs of your legal proceedings, then I would recommend to my Board to pursue the foreclosure.
After all, once the foreclosure is completed the unit will return to contributing to the expense you are all covering for the unit now. So the “bloodletting” ceases.
This is not presented as a legal opinion. I do recommend that you seek legal opinion in this matter. Condominium Attorneys will give great insight in this area.
Ed Black
Welcome Pierre.
Way to go Ed.
I can contribute the parable of how to cheat the association. We had a resident with one foot and 3 strokes in the grave. His family set him up with a rental car and a big mortgage (bleep bank). When he passed away the family said they would catch up on unpaid fees when the estate cleared probate (they were so poor!). Being frugal, I put a lien on the unit (no lawyer). Being frugal, I had detailed phone discussions with the bank about their plans. The family later refused to pay the fees. We were advised a lawyer would cost more than it was worth. (I wonder now if that was right! The estate only had debts). This bank did move along, foreclosed, cleaned, sold, no $$ left over. We were out about $500, in year 2001.
Welcome aboard Pierre.
Just a comment on this situation of Units "mortgaged to the hilt"
This may raise an issue of "Total Information Awareness"
My theory is that The Association has the right to protect itself against a Unit Owner who extends him/herself into financially risky ground, beyond ability to pay!
All information on mortages is available on the INTERNET, and perhaps when such activity begins, and is detected by Web Search, the
Board could take steps in advance to mitigate potential disaster, such as accelerating payments from the loan proceeds or requireing an escrow reserve to be set up.
I think this is a very good question for UCO House Counsel to be consulted on!
Dave
Thank you again Dave, if you had dollar for every thank you ..
People never mention mortgages (around here) I just searched/ found one with 2 loans, $83K+ argh!
In my Ass'n., I have had 4 units that obtained a mortgage on their unit. I went to them and asked why the Mortgage? Makes no difference what they say ( or lie ). they now know that you are much aware of what is going on in the Ass'n.
Also, if a unit owner is behind 2 payments, I tell them we will foreclose and follow up on it. I had to this twice and we were very lucky, they paid up at which time, I said Thanks and now we need to put 1 years worth of payments in an escrow fund if you are ever even just late in paying....They have been paying on time.....I find that it isn;t a ? of lack of funds but more like so what, I will pay when I am ready.
I have put in a lengthly comment and lost it two times already so this is a test.
I will try this one more time.
In the three associations that I'm active in we automaticalluy send deliquent accounts to Becker and Polilcoff on the 61st day of deliquency.
We let the legal folks do all of the chasing of funds.
We pay a retainer of $125 per year and the balance is collected from those that cause the expense.
It works for us.
Bob can I have more info on Becker and Policoff. I think this is something our assoc. would like to look into.
Please be advised that WPRF will no longer give the President or Officers of an Association delinquency information regarding a unit. Mary Marola (WPRF chief counsel)state to me in phone conversation that it violates financial privacy protections of owner(s). I told her that WPRF collects rec. fees for Associations (which are ultimately responsible for said delinquencies as per each Declaration of Condominium)and Associations should be permitted the information regarding their debt responsibilities. She retorted that WPRF does not charge associations for uncollectible debts as a matter of course. Any thoughts on this matter?
Hi Randall,
Our Management Company, Seacrest Services, provides, upon request, a full monthly set of accounting schedules; this includes a complete "General Ledger Trial Balance" and a schedule of delinquencies and the age of the delinquency by Unit. This allows us to act very quickly. For Seacrest clients, contact Andy Rosen in seacrest Accounting for this service. I would imagine that the other Management companies in CV would also provide this service.
Dave
Hi Randall,
Further to my last Comment;
The monthly accounting schedules are delivered by Email in Adobe PDF (Portable Document Format).
Dave
For Randall: WPRF did not charge us for an uncollectible debt. FPL is less worried about privacy, when you are delinquent they glue a bright pink sign on your door with details. Thx FPL.
For Marilyn: http://www.becker-poliakoff.com/
Becker & Poliakoff looking for business - to Host Free Seminars for Community Associations Statewide
WEST PALM BEACH: Sat. Mar. 1, Kravis Center - Cohen Pavilion, 701 Okeechobee Blvd., West Palm Beach, FL (further info: Brad Fortman, 561.655.5444, 1.800.462.7763, bfortman@becker-poliakoff.com).
Thank you all, the feed back is very much appreciated.
Hi Marilyn
You can call Becker & Poliakoff at 655-5444, ask for Heather and she will answer questions on just how you can arrange for the Firms' representing you.
Bob
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