Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Condo fees
Old 12-30-2010, 03:31 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,971
Condo fees

I live in a very low-end condo. Two buildings with 24 units total. There are 5 units in arrear. One of them is X3. At $115/mo each. On top of that they just told us there will be a special assessment of $1000/unit due by May 1st. I can only assume that those who can't or won't come up with $115 won't pay the extra $1000. Anyone know what happens in that case? Lets say 18 units pay and 6 don't, do the 18 have to pay extra to make up for those who can't pay? Would it be worth using limited reserve money to pay for a lawyer to force the others to pay?

I understand fees and assessments are necessary to maintain the buildings and grounds. I just want to make sure everyone pays their share so i'm not paying more than needed. Any advice?
__________________

__________________
aaronc879 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-30-2010, 03:32 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,017
What do the condo bylaws say?
__________________

__________________
Meadbh is offline   Reply With Quote
Old 12-30-2010, 03:34 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,971
Quote:
Originally Posted by Meadbh View Post
What do the condo bylaws say?
I'm looking for them right now. When(if) I find them i'll let you know.
__________________
aaronc879 is offline   Reply With Quote
Old 12-30-2010, 03:36 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Sounds like the best way to approach Condo living is to rent!
__________________
chinaco is offline   Reply With Quote
Old 12-30-2010, 03:49 PM   #5
gone traveling
 
Join Date: May 2008
Posts: 3,864
Quote:
Originally Posted by aaronc879 View Post
I live in a very low-end condo. Two buildings with 24 units total. There are 5 units in arrear. One of them is X3. At $115/mo each. On top of that they just told us there will be a special assessment of $1000/unit due by May 1st. I can only assume that those who can't or won't come up with $115 won't pay the extra $1000. Anyone know what happens in that case? Lets say 18 units pay and 6 don't, do the 18 have to pay extra to make up for those who can't pay? Would it be worth using limited reserve money to pay for a lawyer to force the others to pay?

I understand fees and assessments are necessary to maintain the buildings and grounds. I just want to make sure everyone pays their share so i'm not paying more than needed. Any advice?
I'm not a RE lawyer, but here is what I can tell you, based on my experience:

Your HOA needs to file liens on the delinquent units and turn the assessments over to a collection agency to protect the financial interests of the other owners, if they haven't already done so. USUALLY, if the units fall into foreclosure, the bank won't pay back-due HOA dues, just those accrued from the day they foreclosed until they sell the unit off. A collection agency can pursue back dues, unless the owners file for bankruptcy- in which case, yes, you'll be stuck with higher fees to make up for the inevitable budget shortfall. I am on an HOA board that is struggling with this right now. It's an area of mostly second homes and our dues-in-arrears have crept up to ~15% of our annual budget- so we are faced with the prospect of raising dues on the owners who are paying their dues in accordance with our by-laws to cover the shortfall posed by those who aren't- unless we can recover the unpaid dues through collections. What you are seeing is a microcosm of what is going on in the US housing market; where a small % of folks quit paying their obligations and expect the rest to pick up their tab.
__________________
Westernskies is offline   Reply With Quote
Old 12-30-2010, 04:12 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,971
Thanks Westernskies, that was very helpful.

I found the bylaws. It appears they were made using a typewriter in 1982 and never updated so it's difficult to read. However, it mentions several of the things Westerskies mentioned. It also says that if the fees are not paid within 30 days then 12% annual interest can be charged for the fees along with any cost (including attorney's) incurred in the attempt to collect the fees.

It looks like what needs to be done is the Board needs to file a lien on the delinquent units because then they can't sell their units until they pay their fees. Then the Board needs to go to a collection agency to collect the fees. Hopefully they'll do so so that the responsible owners don't have to pay for the others. Thanks for the help.
__________________
aaronc879 is offline   Reply With Quote
Old 12-30-2010, 09:13 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by aaronc879 View Post
Thanks Westernskies, that was very helpful.

I found the bylaws. It appears they were made using a typewriter in 1982 and never updated so it's difficult to read. However, it mentions several of the things Westerskies mentioned. It also says that if the fees are not paid within 30 days then 12% annual interest can be charged for the fees along with any cost (including attorney's) incurred in the attempt to collect the fees.

It looks like what needs to be done is the Board needs to file a lien on the delinquent units because then they can't sell their units until they pay their fees. Then the Board needs to go to a collection agency to collect the fees. Hopefully they'll do so so that the responsible owners don't have to pay for the others. Thanks for the help.
I think you may have the old blood out of turnips problem. If people are delinquent on low end condo fees, they likely have no money. And if the condo is underwater, what good is the lien?

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-30-2010, 09:29 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,971
Quote:
Originally Posted by haha View Post
I think you may have the old blood out of turnips problem. If people are delinquent on low end condo fees, they likely have no money. And if the condo is underwater, what good is the lien?

Ha
Your right, I may just be screwed no matter what. Things are going to end up costing me more than they should but selling and re-buying something else would likely costs even more so i'm kind off stuck.
__________________
aaronc879 is offline   Reply With Quote
Old 12-30-2010, 09:36 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,971
Quote:
Originally Posted by haha View Post
If people are delinquent on low end condo fees, they likely have no money.
In at least 2 of the cases it's not because they have NO money. In one unit i've noticed both people smoke like chimney's and they're constantly coming and going. They could pay their $115/mo by not smoking and driving less often. Unfortunetly they're 20 year olds who don't give a $h!t. The other unit constantly has a party going almost every night of the week. Lots on alcohol plus I smell marijuana in the hall often. If they spent the money on necessities instead then they could afford it. I'll have to ask what's up with the unit that is in arrear X3 because something badly need to be done about that.
__________________
aaronc879 is offline   Reply With Quote
Old 12-30-2010, 10:08 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by aaronc879 View Post
In at least 2 of the cases it's not because they have NO money. In one unit i've noticed both people smoke like chimney's and they're constantly coming and going. They could pay their $115/mo by not smoking and driving less often. Unfortunetly they're 20 year olds who don't give a $h!t. The other unit constantly has a party going almost every night of the week. Lots on alcohol plus I smell marijuana in the hall often. If they spent the money on necessities instead then they could afford it. I'll have to ask what's up with the unit that is in arrear X3 because something badly need to be done about that.
Good luck with it; it isn't really fair that the responsible owners should foot the bill for the others.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-31-2010, 11:53 AM   #11
Thinks s/he gets paid by the post
Gotadimple's Avatar
 
Join Date: Feb 2007
Posts: 1,760
Quote:
Originally Posted by chinaco View Post
Sounds like the best way to approach Condo living is to rent!
Actually, the best way to approach condo living is to understand what you're getting into before you sign the earnest money agreement. That means:

* walking the entire property with your real estate agent, looking at how well it is maintained
* asking to see the latest budget results and minutes from the last annual meeting
* asking to see the CCR's (codes,covenants, and restrictions)
* asking if the association (or their management) has done a reserve analysis and what it tells them
* asking if there is a special assessment currently being collected or a future assessment (in the next 2-3 years) planned. The board/management co should know this

Then, if you like the answers sign the earnest money agreement and proceed to closing.

-- Rita
(Treasurer, small condominium association)
__________________
Only got A dimple, would have preferred 2!
Gotadimple is offline   Reply With Quote
Old 12-31-2010, 12:06 PM   #12
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
The only twist that I would put on this is that in some states unpaid condo fees that are liened do in fact take priority over a mortgage. So, I would check to see if this is the case in your state. Anyone who owns a condo in a building with unpaid assessments should find out the law in their state regarding priority. I am very disinclined to buy a condo these days unless HOA liens are super liens.

If the mortgage has priority, then I would push the collection hard to get the condo into foreclosure by the bank. Once the bank owns the condo they are at least responsible for fees from that date forward.

No matter what, in this climate condo associations need to be very aggressive with unpaid HOA fees. Do not let up on your association.

Collection agencies are not created equal. I would suggest getting a lawyer to start foreclosing on units that did not pay fees. It will cost now but might prevent more serious problems later.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 12-31-2010, 12:10 PM   #13
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,412
In Florida the law allows HOAs to foreclose on the homes - and they are doing so, more quickly than the banks.

Your HOA needs to see what state law allows. This is a problem that only gets worse, as many banks will not lend for properties where association delinquencies are greater than 15%.
__________________
MichaelB is offline   Reply With Quote
Old 12-31-2010, 03:20 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by Gotadimple View Post
Actually, the best way to approach condo living is to understand what you're getting into before you sign the earnest money agreement. That means:

* walking the entire property with your real estate agent, looking at how well it is maintained
* asking to see the latest budget results and minutes from the last annual meeting
* asking to see the CCR's (codes,covenants, and restrictions)
* asking if the association (or their management) has done a reserve analysis and what it tells them
* asking if there is a special assessment currently being collected or a future assessment (in the next 2-3 years) planned. The board/management co should know this

Then, if you like the answers sign the earnest money agreement and proceed to closing.

-- Rita
(Treasurer, small condominium association)
Ooh do many agents ever hate to hear this request!( All of them that I have encountered.) They want you to part with your $5000, then start reading, and reading fast at that. I can't really blame them, but it makes shopping a trial. From their POV a dissatisfied buyer seems to look better than no buyer at all.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-31-2010, 06:28 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,913
In this market the buyer should be able to take the time they want to review the documents. The buyer's job isn't to make the seller/Realtors happy. They will say things like usual and customary, yatta yatta. I don't think it is inappropriate to ask for some earnest money that is totally refundable with the return of the requested documentation within the agreed time frame but getting all that paperwork together isn't a small task.

A good seller's realtor should have requested that info from the seller and have it ready to go.

One possible concern of the Realtor is that s/he may be required to enter the unit 'pending' in their database within a few days. To have a unit show pending, then when you don't proceed it to change it, might scare off other potential buyers. The way to avoid that is to ask the Realtor to make the info available at his/her office for your preliminary review before extending an offer.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 01-01-2011, 12:03 PM   #16
Thinks s/he gets paid by the post
Gotadimple's Avatar
 
Join Date: Feb 2007
Posts: 1,760
Quote:
Originally Posted by haha View Post
Ooh do many agents ever hate to hear this request!( All of them that I have encountered.) They want you to part with your $5000, then start reading, and reading fast at that. I can't really blame them, but it makes shopping a trial. From their POV a dissatisfied buyer seems to look better than no buyer at all.

Ha
True, if they are a seller's agent. But, if you have established a relationship with a real estate agent, in Washington, they become your "buyer's agent" -- assuming you have signed an agreement naming them as a buyer's agent. At that point, they can press for all the details you require.

A motivated seller would generally be willing to loan you their documents for review, before the earnest money agreement is signed. And, as Brat suggests, inspecting the documents at the Realtor's office is a good idea.

-- Rita
__________________
Only got A dimple, would have preferred 2!
Gotadimple is offline   Reply With Quote
Old 01-01-2011, 12:13 PM   #17
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,372
I'm pretty sure that DD's offer for a condo and later a townhouse was made contingent on her and her DH's review and acceptance of the HOA documents. In reality they bought the properties after reviewing the docs, and I don't know how easy it would have been to get their earnest money refunded, but the wording re the review of the docs was that they could have backed out based on their review for any reason ("You allow pets? We're backing out!" or "You don't allow pets? We're backing out!").
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 01-01-2011, 01:06 PM   #18
Thinks s/he gets paid by the post
packrat44's Avatar
 
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
2010 was the first year I tracked all spending for the full year. I spent $11,974. I know i've had some years that were less and don't think i've ever topped $15,000.Quote)

Percentage wise, this is going to be a major (negative) impact on your annual expenditures.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
packrat44 is offline   Reply With Quote
Old 01-01-2011, 01:17 PM   #19
Thinks s/he gets paid by the post
packrat44's Avatar
 
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
Quote:
Originally Posted by haha View Post
Good luck with it; it isn't really fair that the responsible owners should foot the bill for the others.

Ha
Similarly, a responsible house owner who would like to sell their house should not suffer because of those who default on their loans. Life is not fair. Never has been, never will be.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
packrat44 is offline   Reply With Quote
Old 01-01-2011, 07:31 PM   #20
Recycles dryer sheets
Scrapr's Avatar
 
Join Date: May 2005
Location: Bend
Posts: 264
You could post the delinquent owners name in the lobby. Like this guy did in Fla.

Housing Distress Pits Neighbor Against Neighbor - WSJ.com

They had some facilities they could lock out the past due HOs
__________________

__________________
Scrapr is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
55+ housing: condo or other? cj Life after FIRE 28 10-20-2007 02:29 PM
Condo Purchase ferco Life after FIRE 37 01-31-2007 10:26 AM
Condo conundrum MRGALT2U Life after FIRE 4 02-04-2006 10:19 AM
condo hotels Martha FIRE and Money 42 06-22-2005 01:34 PM
condo conversions Martha FIRE and Money 0 02-10-2005 09:19 AM

 

 
All times are GMT -6. The time now is 02:38 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.