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Richard White: Members will have to pay extra for losses

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Q. I am an owner in a relatively small condominium association. Our past president recently moved leaving behind a management company with some very bad news. The last association meeting, not attended by our departed president, left our management company to attend and stated that many of the units are in foreclosure or pending foreclosure and, separate from that, a handful of current owners are not paying much needed association fees that fund our amenities. Our pool is now closed and property maintenance is limited. While I understand there is legal recourse we can pursue, the association is no longer able to financially pursue such action. I have done research, but the statutes are a bit confusing. What happens to a condominium association when they are no longer able to sustain themselves? Are unit owners required to bare full burden of non-compliant owners? I am sure there are legal options to pursue, however, I purchased a condominium and pay dues so these items should be funded without me totally personally funding such action. Lastly, can the board members and/or management companies be held personally liable for mismanagement under Florida law? — J.M., Naples

A. This is the question of the day, no, the month. It is the single most significant difficulty that associations will face in today’s real estate recession. The short answer is that the members in good standing will have to pay extra fees to make up the losses. Suing the board and management is not the answer as that will only increase your expenses and it is like suing yourself. As to filing bankruptcy or similar action, that, too, is out of the question as the answer is that all the association needs to do is increase its fees. It is a vicious circle. You are caught in a declining market and the value of your home is steadily decreasing. This dark cloud has one bright light in that your property taxes may be reduced. There is one other factor in that you are not alone in that almost all associations have the same problem. The answer is that you and your neighbors must band together in working things out to keep the association properly working. This may mean that you will need to volunteer (a word I have in the past warned of liability problems) to save operational funds. Maybe, getting a landscape committee of volunteers to clean up the vacant homes or even do the front gate or the swimming pool area. While it is best to have a licensed certified pool company to treat the pool and chemicals, properly trained volunteers can perform this function. In other words, for a couple of years, or until the market turns, expect to pay higher fees and anticipate that you and your neighbors will have to do extra work for the association. Once the market has changed and the community has learned to work together, your neighborhood will be stronger and more desirable place to live and your homes will increase much faster and higher in value.

Q. I do not know of any adult association that has ever taken a census that is required every two years with signed affidavits from the owners certifying their ages. Does this nullify standing as being a 55 and over community? And if it does not, what is the purpose of the law? Seems to me, if the associations do not follow federal law, then they should not be able to enforce age regulations. — K.L., Weston

A. You are correct. It is a matter of age enforcement and not function. If the adult community, the 55 and older community, does not follow the Federal Housing for Older Persons Act of 1995, they cannot enforce the adult restrictions for the community. While the day-to-day operations can be performed, any single underage person who applies to become a resident and is refused can sue for age discrimination. Then it will be up to the association to prove that they comply with the federal requirements. Owners and members need to demand that the board comply with the adult community laws to insure that they do not lose the right to limit age.

Q. Our HOA has a few investor properties that have been abandoned with electricity and water cut off. The need to bring in water tanks and hand-watering is costly. Legal action has been filed in a timely way; however, due to 100-percent financing, we will not be able to collect anything from these properties. We have already lost thousands of dollars in accounts receivables due to unpaid quarterly dues. The board is not maintaining these properties. Is it the board’s responsibility to maintain these properties and assess the good homeowners for all the costs associated with these properties? — J.F., Ft. Lauderdale

A. This is becoming a major problem for many associations. Sometimes a letter to the mortgage holder asking them to clean up will solve the problem. Failing action by the bank, the board should take some action to make the property presentable in order to preserve the community. It is called self help. If you check your documents, most say that the association has a right to enter on the property and perform maintenance. The problem is that since it is private property, you will need legal notice even if your documents allow such maintenance. I recommend that you have your attorney send a letter to the owner and the mortgage holder telling them of the problems and that the board will enter and perform the necessary maintenance. Include in the letters that any cost will be assessed to the unit’s account. While you stand little chance of collecting the expenses, you only do the minimum work. While I rarely recommend volunteers, this is one situation where neighbors can cut the grass and pick up trash to save association funds, but a cost can still be added to the unit’s account for the self help. This is a situation where the board should take action and expense to keep the appearances for the community and neighbors.

Q. Is there anything that legally prohibits someone who does not own a condominium from attending a condominium board meeting? — J.S., St. Petersburg

A. This answer is valid for both condominiums and HOAs. There is nothing in the statutes that limits meeting for members only. Your documents may restrict meetings to members only or the board may establish policies to limit visitors or non-members attending meetings. The board can restrict visitors from addressing the board at a board meeting and visitors can never vote unless they have a proxy.

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Richard White is a licensed community association manager in Florida. Questions: mailed: 6039 Cypress Gardens Blvd. # 201, Winter Haven, Fl. 33884-4415; e-mail CAMquestion@cfl.rr.com.

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The joys of condo life and HOA's.

#1 Posted by savethewhalz on July 5, 2008 at 4:05 p.m. (Suggest removal)

Back in the halcyon days of 03-06, I rec'd constant questions from Borrowers re: interest rates being slightly higher for condo's. I assume that question may now be put to rest.

#2 Posted by naplesregular on July 5, 2008 at 4:55 p.m. (Suggest removal)

forclosed properties maintenance dues are the responsibilities of the lender

#3 Posted by welcome02 on July 6, 2008 at 9:38 a.m. (Suggest removal)

I think the Banks that are foreclosing on condo units are sandbagging crying back log at court. As long as they don't complete the foreclosure, they don't have to pay the maintenance dues like "naplesreqular" noted. A unit in our condo has been "in foreclosure" for almost 8 months with no relief in site for the other unit owners who are paying the maintenance fee on that unit. If I were the bank, I would hold off as long as possible to avoid paying the dues.

#4 Posted by islandscoot on July 13, 2008 at 6:30 p.m. (Suggest removal)



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