I live in a condo in Phoenix AZ. The association is in pretty deep finacial problems. This is due because a number of owners are in foreclosure or have abandoned their unit. In either case the HOA dues are NOT being paid. The most serious problem is that the water is paid with the community HOA fund and the insurance. We prioritize the money we do collect to pay water and insurance however, we have had to let the landscaping and pool matanance go. If worse came to worse we could do the grounds ourselves but not as well as a professional. My question is primarally about the water and insurance. II imagine that we are not the only ones in this financial crunch. What happens if we can’t afford to pay the water and the insurance? I would think that the water was the main priority but I know our mortgage holders require insurance on the building. What happens if there is no money to pay? I also believe things will get better once the foreclosures go though and the properties are either sold or the bank starts paying the assessments. But nobody wants to buy a condo with the place looking shabby and the water and or insurance in danger. Is anyone ever been in my shoes? What did you do (selling is not the answer, I am upsidedown in my mortgage, I am stuck here and I dont want to ruin my credit) When and how will things get better? I would like to hear personal stories or someone who understands our situation and has some expertise. Thank you for reading…if you have questions or need more detail please email me rick85032@yahoo.com
Unfortunately, your situation is becoming increasingly common among condo or Homeowner Associations. You did not mention if you were a Board of Director member, but ultimately, it is up to them to manage their way through this financial hardship. The short answer to your water question on water is that if you don’t pay your water bill, it eventually will be shut off. If you don’t pay your obligated insurance, the BoD could be sued for not meeting their fiduciary responsibility. You would also be exposing yourself to yet a more severe financial risk that could make your current financial problem look pale in comparison.
There is no easy answer to this problem, as it will take lots of hard work and making unpopular choices. But, something has to give. Just sitting back and ringing one hands does little to solve the problem. I commend you getting involved and exploring options for your condo association to consider.
My first suggestion is that expand your scope of cost reduction possibilities beyond water and insurance. There are lots of budget line items that could be contributing to your financial problem. Each one of these should be thoroughly examined and taken apart for savings opportunity. You must find these savings quickly, as it sounds like you are experiencing considerable “bleeding” of your association financial resources. The following 10 Quick Hitters will offer you the most potential for savings in a minimum amount of time.
- Arrears payment collection
- Management Company services
- Administration
- Utilities
- Insurance
- Purchased materials and services
- Litigation
- Preventative maintenance
- Reserve funding
- Taxes
If you wish to find more information on this topic, including a “how to” approach, visit www.condopresident.com.
Good luck
JoeK
May 10th, 2010 at 7:52 pm
Y’all have the right Idea, get off your butts and clean the place up yourselves or you’ll never get the Vacant Units sold and your property values will decline further!
Your HOA is going to have to charge the remaining owners a Supplemental Fee to cover the Water and Insurance. Use your individual owner’s "grey" water to keep the Landscaping from dying as a last resort!
Dont forget, Fannie, Freddie and FHA have owner occupancy level requirements; if your development ends up with more Tenants than owners no one will want to nor will they be able to, by statute, lend in your project!! So call a meeting of the Politboro and make sure everyone understands the gravity of your situation! Make it a collective effort because "It takes a Village" and you could lose even more if everyone doesn’t pitch in!!
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May 10th, 2010 at 8:24 pm
There is a legal entity that owns condo should be dealing with these legalities. Units in foreclosure should have the HOA dues paid by the bank. The HOA is responsible for collecting the money.
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May 10th, 2010 at 9:06 pm
Your problems are shared all over the country and there is no good solution. The market should stabilize within two years so, if you and the other owners that are still alive can hang on, things will get better.
Pay the water and insurance, even if you have to pass a special assessment to do so, and the specials will attach to the units that are not currently paying so there is some hope of recovery in the future when the foreclosures are sold.
Do the best you can with the grounds, even if you have to maintain the property yourselves. Again, there is the potential to "hire yourselves" as the grounds keepers and fund that work through special assessments so that you will have some claim against the defaulted units when they are sold.
You can also speak with an attorney about pressuring the banks who have the foreclosed units into paying something – some states (Florida, for example) have just passed new laws to cover that issue. Even if there is no immediate legal remedy, you can try personal contact and other means – if the foreclosure was a single family home the bank would be maintaining the property to sell it. But be careful about using the local newspaper or TV station "help" lines as you do not wish your community to be featured as the place that is going downhill because of all the foreclosures.
While it is admirable for you to wish to maintain your good credit rating, you need to be realistic about the future of your investment in that community.
References :
May 10th, 2010 at 9:39 pm
Unfortunately, your situation is becoming increasingly common among condo or Homeowner Associations. You did not mention if you were a Board of Director member, but ultimately, it is up to them to manage their way through this financial hardship. The short answer to your water question on water is that if you don’t pay your water bill, it eventually will be shut off. If you don’t pay your obligated insurance, the BoD could be sued for not meeting their fiduciary responsibility. You would also be exposing yourself to yet a more severe financial risk that could make your current financial problem look pale in comparison.
There is no easy answer to this problem, as it will take lots of hard work and making unpopular choices. But, something has to give. Just sitting back and ringing one hands does little to solve the problem. I commend you getting involved and exploring options for your condo association to consider.
My first suggestion is that expand your scope of cost reduction possibilities beyond water and insurance. There are lots of budget line items that could be contributing to your financial problem. Each one of these should be thoroughly examined and taken apart for savings opportunity. You must find these savings quickly, as it sounds like you are experiencing considerable “bleeding” of your association financial resources. The following 10 Quick Hitters will offer you the most potential for savings in a minimum amount of time.
- Arrears payment collection
- Management Company services
- Administration
- Utilities
- Insurance
- Purchased materials and services
- Litigation
- Preventative maintenance
- Reserve funding
- Taxes
If you wish to find more information on this topic, including a “how to” approach, visit http://www.condopresident.com.
Good luck
JoeK
References :