butt heads over fees
By DICK HOGAN • firstname.lastname@example.org • March 23, 2009
Homeowners' and condominium associations in Southwest Florida are reacting to the economic downturn with tight budgets, delayed maintenance and sometimes angry confrontations between boards and residents, experts say.
First and foremost is the issue of owners who are unwilling or unable to pay their association dues, often because they're in foreclosure or headed that way, said Paul Kaplan, a partner with KW Property Management, an association management firm that works in Southwest Florida and the east coast.
"The biggest issue we're seeing now is collections," he said. "It's causing tremendous amounts of heartache for the associations."
To make matters worse, Kaplan said, when a condominium unit goes into foreclosure the lender trying to get it back is liable for only the first six months of assessments or 1 percent of the original mortgage, whichever is less. For homeowners' associations, it's 1 percent or 12 months.
Condominiums with high foreclosure rates could benefit from some legislation that might be passed by the Florida Legislature this year, said Joe Adams, managing shareholder of real estate law firm Becker & Poliakoff.
One proposed change would increase the lender's obligation to 24 months' worth of dues or 20 percent of the original mortgage and another would put the lender on the hook for the entire amount if a foreclosure went on for more than a year, he said.
For the time being, however, what's a financially strapped association to do?
Above all, keep your cool and make sure everyone's in the loop when a lot of money's being spent, advises Marcy Kravit with KW.
"I think the owners have to understand that though they may not be on the board, they've selected the board," she said. "They still have the opportunity to go to the meetings and give input. They may not read their newsletters and go to the meetings, and then when they get a letter saying there's a special assessment, that's when they get hostile."
In some cases, it's more of a struggle to survive.
Bill Davis, 64, of Marietta, Ga., has a second home in the 112-unit Renaissance condominium on Winkler Avenue in Fort Myers, which was converted from rental to condominium four years ago.
He watched that community deteriorate after many of the investors who bought the majority of the units walked away from them when values dropped.
A total of 24 owners have either lost their units in foreclosure or are going through foreclosure now, according to Lee County clerk's records.
But there's light at the end of the tunnel, Davis said: recently, lenders sold two foreclosed units for $9,000 apiece and a third went for $14,000. That means new owners are in place and hopefully will be paying their dues.
Older, more stable condos and homeowners' associations typically have fewer foreclosure problems than more recently created ones, Adams said.
Still, those older communities shouldn't get complacent, say two people with homeowners' associations that won awards last week.
Point Royale condominium won the Community of the Year award at this year's Florida Communities of Excellence Awards, sponsored by Becker & Poliakoff and the Florida Community Association Journal.
John Stefani, president of Point Royale's condominium association, said his 141-unit community has been proactive in keeping up with infrastructure and security needs - spending $4 million on renovations and $50,000 on a camera system that watches entrances, the guard gate and the parking garage.
He credits Point Royale's success to the high degree of civic involvement by his membership, 70 percent of whom live there full time.
Sheryl Hilburn is general manager for Shadow Wood Community Association in Estero, which won an award for its disaster preparedness program.
She also said her community does what it can to foster involvement by residents.
For example, she said, there's also a storm preparedness program featuring a system to notify each resident about an approaching storm.
Stefani said that though there's a lot that a community association can do, a high foreclosure rate is probably the most intractable problem.
"It's a very difficult situation and I don't have a magic answer to it, I don't think anyone does," he said. "I think it's wait it out and hope for the best."