Article Courtesy of The Orlando Sentinel
By Mary Shanklin
Published November 24, 2009
Homeowners associations in Florida see no immediate end in sight to the foreclosures, delinquencies and revenue shortfalls that have beleaguered them in recent years, a new survey shows.
More than 90 percent of the 777 Florida property owners surveyed expected the financial troubles to continue or even to deepen next year, according to findings by the Community Association Leadership Lobby. Most respondents were board members of associations.
"We're really having a second wave of foreclosures," said Hobie Fisher, past president of two homeowners associations in east Orange's Avalon community, which has been particularly hard-hit by auctions and mortgage defaults.
With about 40 percent of property owners there late paying fees and assessments, his association has foreclosed on six townhomes. The owners of one of those units, Fisher said, owed $14,000 in fees.
Though Fisher's associations have not increased fees in the past year, most have, the survey reported.
Sixty percent of survey respondents said they increased assessments to compensate for budgetary gaps caused by delinquent owners. And two-thirds of survey respondents noted an increase in the number of property owners who are more than 60 days late paying fees and special assessments.
The plight of associations was highlighted during the summer when Miami-Dade County briefly turned off the water at more than 300 units in the cash-strapped Mirassou condominiums.
'Dire straits'
The squeeze on association revenues comes at a particularly bad time — especially for condominium buildings — as the state has called for upgrades to elevators, sprinklers and other equipment, experts say.
"I would say that they are in dire straits because the mortgage-foreclosure crisis and new safety-upgrade requirements are being called for at the same time they are having trouble collecting assessments from owners," said Yeline Goin, a co-executive director of the lobby, which was created in 2003 by Sarasota law firm Becker and Poliakoff.
Without any kind of remedy, Goin added, "I think we are going to continue to see owners walking away from their units because they can't afford their assessment, and the problems are just going to snowball."
The survey findings are expected to bolster legislative calls for laws that would for allow associations to collect more late fees on investor-owned properties and collect payments directly from tenants renting homes, condos and townhomes.
Sen. Evelyn Lynn, R-Daytona Beach, is among a few legislators proposing measures to shore up the sinking financials of homeowners associations. One of her bills calls for banks to pay late homeowners fees as soon as they begin foreclosure proceedings, rather than waiting for what can be a year or more until the foreclosure is final.
"It's clear that the fear, anxiety and frustration are still out there in very large quantities," said Alan Penchansky, a spokesman for the lobby. "They're looking for some kind of relief."
The financial stresses are taking a toll. At Phillips Bay in south Orlando for instance, property owners are trying to recall board members for issues including failing to administer service contracts, obligating community funds without a vote, and ignoring roof and window leaks.
Phillips Bay homeowner Ed Snyder said the frustrations have been compounded because a contractor placed liens on all the properties for work he thought he was owed and then association reserves have been exhausted, largely because of mismanagement of contracts. Teams of lawyers, he added, have just added more bills onto the pile.
"It's a financial nightmare, really," Snyder said. "Everybody is sort of uptight about the whole thing because they can see no way out."
Financial troubles have led other associations, such as those at Avalon, to turn increasingly to foreclosures. Once the back fees pile up, the association files a lien of foreclosure against the delinquent property owner and a judge hands the title of the house to the association, Fisher said.
Building reserves
The banks are still owed their mortgage but, so far, have not bid on these properties at auction and have not come to the association to collect the mortgage, Fisher added. The properties are typically empty, although the association has evicted several owners. The association cleans up the house, rents it and applies the rental income to delinquent fees.
By taking steps that included foreclosing on some properties and then renting them to responsible tenants, the association went from financial struggles to the point where it now has $700,000 in reserves.
Fisher said he doesn't feel too bad about foreclosing on owners who disregard all communications from associations and then expect their neighbors to subsidize their lawn maintenance, painting and garbage pickup.
"The people who need help, we bend over backwards for them," Fisher said. "One man broke his collarbone, and we told him to stop paying and come back next year. We go to mitigation; we don't go straight to foreclosure."
COMMENT:
CALL (LOBBYING GROUP OF LAW FIRM OF BECKER&POLIAKOFF) IS BLOWING SMOKE AGAIN, GETTING EVERYBODY ALL EXCITED.
WHEN IT COMES DOWN TO PUSHING THESE BILLS THE CALL LOBBYISTS ARE NOWHERE TO BE SEEN -- SEE THE 2009 SPRING SESSION!
SEE: WHERE WAS "CALL" WHEN WE OWNERS NEEDED IT?
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