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It’s no secret that foreclosures are crippling the condominium industry. Record numbers of unit owners are in or dangerously close to foreclosure. Many condo associations are struggling to keep occupancy levels up and wondering how to deal with so many vacant units at once. And amid this foreclosure crisis comes yet another – condo owners are delinquent on their condo fees. In some cases, the delinquencies total in the hundreds of thousands.
Such is the case for one Florida-based condo association, whose association board announced recently that its residents are delinquent to the tune of $675,000. That figure represents half of the West Palm Beach-based Palm Beach Grande association’s resident population. With 106 of its 304 units facing or in foreclosure, it’s a crisis situation for the condo association.
Without condo association fees, owners of condos who aren’t delinquent are beginning to experience a shortage of services that they expect and pay for. That leaves condo association boards fighting a larger issue – how to maintain contractual obligations without bankrupting the condo association? Frustration on both sides of the equation are apparent. Condo association owners will wage complaints and possibly litigation over the condo association’s inability to afford basic property maintenance and services. Condo association boards have their hands tied and are openly upset about delinquent owners’ obligations and how their negligence affects all owners. Yet there’s no easy resolution.
A few condo association boards have gone to the authorities to seek solutions. In some cases, boards are asking for the right to rent vacant units, gaining landlord control and applying rental fees to association costs. In some cases, condo association boards are voting to enter bankruptcy proceedings in hopes of reorganizing and erasing some of the bad debt owed.
If your condo association is facing a large delinquency or foreclosure situation, talk with your condo association insurance broker to discuss potential solutions and all risks involved. Anyway you look at it, this is a troubling situation. What is your association doing about foreclosures? How are you maintaining cash flow? How have you adjusted your budgets? Comment and share your solutions or ideas with others facing similar issues.
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