Real Estate & Property Law

COLLECTING ASSESSMENTS, FUNDING BIG PROJECTS

Many associations are having a difficult time trying to fund large projects because of delinquencies. This is not just indicative of California, but is happening in other states as well. Check out the recent posts at blogpost@condoassociation.com. An association wrote in that had 47% delinquencies. Granted, that would make it difficult to fund a large project either through up front assessments or in trying to get a loan.

Here is the answer I gave to the question:

In California, if the HOA has a lien and is pursuing foreclosure and the first mortgage holder forecloses, it generally does wipe out the association's lien (however, note that the lender's interest and recorded docs would have to be reviewed to confirm). HOAs in this state have found some success in things like (1) more assertive collections policies and practices (staying on top of the collections earlier rather than later), (2) pursuing owners without equity in the home, but with jobs, and assets, through personal debt actions including small claims, (3) choosing judicial foreclosure over nonjudicial, (4) and offering more payment plans to help people catch up. Many are budgeting for losses, and also assessing losses and writing some debt off to resolve the issue of the percentage of outstanding delinquencies. It sounds like you could use some professional help to "reposition" efforts.

There are many things an HOA or Condo Association can and should do when the deliquency rate goes that high. Solutions are elusive, but without action, they are not going to happen.

Check out the Assessment Primers available on the Condoguru website- there are Primers on Assessment Collections in Difficult Times (A-5) and on What to Do When Facing A Large Special Assessment (A-4). There is a Forms Assessment Primer as well to assist with policies and practices.

And get to work!

Full post as published by California Condo & HOA Law on September 10, 2009 (boomark / email).