Many homeowner associations and condominiums have been hit hard by the foreclosure crisis in South Florida. Associations are in a lot of pain because they are not collecting the fees owed to them when the bank forecloses on a property. Everyone loses in these situations.
Condo associations are having to hit the existing homeowner's with special assessments to make sure vital services are kept in place. These special assessments happen because there is a short-fall in collections. These short-falls happen for a variety of reasons:
1. The current owner falls behind or makes no payments to the association.
2. When the bank forecloses on a property, they are only required to pay 1% or 6 month's worth of past due payments. Major past due amounts are lost by the association.
3. After the bank foreclosures, they do not stay current in their monthly HOA obligations. Non-payment leads to more strain on the budgets.
Another effect that happens is that when a building or association has too many foreclosures or their budgets are not in line, many lenders will not give a mortgage to a new buyer in that particular building.
Some associations will not allow a bank to put a property on the market or allow showings and/or access to the unit until the bank is current with their obligations. At the same time, this hurts the building further by not moving the massive amounts of inventory in the Miami real estate market.
The Miami Herald on Friday, 10/17/08, reported on a town hall meeting and various proposals discussed regarding condo and homeowner associations and their issues with bankiing industry. Stay tuned...this issue will be a hot one!
