HOA Condo Reserves

[StartingOver10]

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@Anonymous wrote:
Im in south florida and can't find any condo development with an association that have its finances together and meet Freddie and Fannie's guidelines. I'm not going to put down 20%-25% to get financing with portfolio lenders and pay higher rates just to get financing. I'll just continue to rent. I think I'll be much happier.

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Which county are you in? I know we have condo's here in Palm Beach county that meet their requirements. Look for the term "warrantable condo" when you are searching online, many agents will use that term.  If they don't use that term, it doesn't meet that they don't meet the requirements. it means that the agent didn't use the term in their marketing.

Also, Fannie Mae has a list of exceptions, but I would be wary if you are perusing that list.

[Anonymous]

I live in Miami-Dade

[Anonymous]

Does anyone know if I would need an attorney to get my $250 application fee and $250 questionnaire fee back from HOA ? They're not responding to my emails after learning they caused the deal to fail.

[Revelate]

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@StartingOver10 wrote:

Yes both HOA associations and condo associations go after the owners for past due fees.  Most are quick to add late fees and then fines, then file a suit and then get a lien.

The next step they often persue is foreclosure of the lien. Condo associations and HOA's can easily and quickly foreclose on their liens. However, then they own the property with whatever mortgage and other liens that are on the property.

They can sell the property to clear their lien but they are selling it without clear title - because they need the cooperation of the seller to clear the mortgage even if the new buyer has enough money to pay off the mortgage the previous owner has to cooperate. That is difficult when the previous owner is most likely PO'ed because they were f/c'ed upon by the condo or HOA association.

If the property is vacant, the HOA can rent it out until their fees are collected. Same issue though with having an encumbered title.

During the height of the 'great recession' there were many condo associations in S Fl that had a large percentage of unpaid condo maintenance fees. We still see to this day condo's/HOA's that "own" the units with encumbered titles. 

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Out of curiosity then, what's my recourse as another condo owner under the same association that subsequently levies a special assessment as a result of the deadbeats?

Association getting paid both ways even if the legal proceedings probably come back at some fraction of true cost.

[StartingOver10]

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@Revelate wrote:

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@StartingOver10 wrote:

Yes both HOA associations and condo associations go after the owners for past due fees.  Most are quick to add late fees and then fines, then file a suit and then get a lien.

The next step they often persue is foreclosure of the lien. Condo associations and HOA's can easily and quickly foreclose on their liens. However, then they own the property with whatever mortgage and other liens that are on the property.

They can sell the property to clear their lien but they are selling it without clear title - because they need the cooperation of the seller to clear the mortgage even if the new buyer has enough money to pay off the mortgage the previous owner has to cooperate. That is difficult when the previous owner is most likely PO'ed because they were f/c'ed upon by the condo or HOA association.

If the property is vacant, the HOA can rent it out until their fees are collected. Same issue though with having an encumbered title.

During the height of the 'great recession' there were many condo associations in S Fl that had a large percentage of unpaid condo maintenance fees. We still see to this day condo's/HOA's that "own" the units with encumbered titles. 

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Out of curiosity then, what's my recourse as another condo owner under the same association that subsequently levies a special assessment as a result of the deadbeats?

Association getting paid both ways even if the legal proceedings probably come back at some fraction of true cost.

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I don't know the recourse another unit owner may have if the condo association has collected from both the rental of the unit and through special assessments. I suspect that the associations don't collect both ways or they would have a 'mutiney' of sorts on their hands.

For the properties that are "owned" and subsequently rented by the condo association - that is a short term solution as the other lien holders (the mortgage co) is busy foreclosing on their now defaulted mortgage so the condo ownership is limited to the time period in which they own it. Their rental collection process can only last until the lender completes their foreclosure. The lender is then responsible for the fees, but is limited to 1 year (by Florida statute) IIRC. This is one of the reasons condo's have had to resort to these tactics IMO. So many lenders f/c'ing on units and not paying the maintenance fees until they sell the property and then only paying a max of 1 year, even if the lender took several years to foreclose (I have seen them take years).

For the condo associations that are operating in the red and passing special operating assessments, these associations  are having massive issues. One that jumps to mind immediately showed in excess of $250,000 per year in expenses over collected income. They have at least two large special assessments per year to all the until owners. This has been going on for 3 or 4 years that I know of and what do you do with a budget that has such a large shortfall? What is really odd though, getting that information from the condo association is extremely difficult to do. Getting the budget was very, very difficult as the management co was not cooperative.  I know it because I have seen the financials and had my buyer cancel as a result. (Naturally mutual discussion and agreement to cancel.). This particular condo is not the only one in this situation by any means. It just came to mind first because of the sheer difficulty in getting cooperation from the management co.

[Anonymous]

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@StartingOver10 wrote:

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@Revelate wrote:

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@StartingOver10 wrote:

Yes both HOA associations and condo associations go after the owners for past due fees.  Most are quick to add late fees and then fines, then file a suit and then get a lien.

The next step they often persue is foreclosure of the lien. Condo associations and HOA's can easily and quickly foreclose on their liens. However, then they own the property with whatever mortgage and other liens that are on the property.

They can sell the property to clear their lien but they are selling it without clear title - because they need the cooperation of the seller to clear the mortgage even if the new buyer has enough money to pay off the mortgage the previous owner has to cooperate. That is difficult when the previous owner is most likely PO'ed because they were f/c'ed upon by the condo or HOA association.

If the property is vacant, the HOA can rent it out until their fees are collected. Same issue though with having an encumbered title.

During the height of the 'great recession' there were many condo associations in S Fl that had a large percentage of unpaid condo maintenance fees. We still see to this day condo's/HOA's that "own" the units with encumbered titles. 

---

Out of curiosity then, what's my recourse as another condo owner under the same association that subsequently levies a special assessment as a result of the deadbeats?

Association getting paid both ways even if the legal proceedings probably come back at some fraction of true cost.

---

I don't know the recourse another unit owner may have if the condo association has collected from both the rental of the unit and through special assessments. I suspect that the associations don't collect both ways or they would have a 'mutiney' of sorts on their hands.

For the properties that are "owned" and subsequently rented by the condo association - that is a short term solution as the other lien holders (the mortgage co) is busy foreclosing on their now defaulted mortgage so the condo ownership is limited to the time period in which they own it. Their rental collection process can only last until the lender completes their foreclosure. The lender is then responsible for the fees, but is limited to 1 year (by Florida statute) IIRC. This is one of the reasons condo's have had to resort to these tactics IMO. So many lenders f/c'ing on units and not paying the maintenance fees until they sell the property and then only paying a max of 1 year, even if the lender took several years to foreclose (I have seen them take years).

For the condo associations that are operating in the red and passing special operating assessments, these associations  are having massive issues. One that jumps to mind immediately showed in excess of $250,000 per year in expenses over collected income. They have at least two large special assessments per year to all the until owners. This has been going on for 3 or 4 years that I know of and what do you do with a budget that has such a large shortfall? What is really odd though, getting that information from the condo association is extremely difficult to do. Getting the budget was very, very difficult as the management co was not cooperative.  I know it because I have seen the financials and had my buyer cancel as a result. (Naturally mutual discussion and agreement to cancel.). This particular condo is not the only one in this situation by any means. It just came to mind first because of the sheer difficulty in getting cooperation from the management co.

You are spot on about the lenders not paying any of the maintenace fees until they sell the property.  When we got the estoppel update there was a $1k plus balance.  Also, we had a very difficult time  getting the budget information. I kept having to send numerous emails.   It actually caused the closing date to be extended.   It seems that the property manager had to create a budget just to give to my lender.  It took 15 days to receive it.   You'd think they'd have this information readily available..     

I'm also blaming listing agents who lists condos for not taking the time to find out if the HOA of the property can meet Freddie and Fannie's guidelines before even posting the listing.   If it has to be a cash only  deal they need to include it in the listing.  The mortgage industry is filled with alot of incompetent people starting with real estate agents to lenders.    

[StartingOver10]

I have to agree with you about some listing agents not doing their job when it comes to providing the information needed. It is the bane of our business (I'm a Realtor) and is exacerbated by new agents or uncaring agents that don't bother to collect the condo docs and budget upfront with the signing of the listing. It is very frustrating from my POV, the buyers and the lenders to get into a purchase agreement that can not close due to no information or mis-information by the seller and/or the seller's agent. This is especially apparent in REO type listings where the bank won't allow the listing agent to disclose anything about the property!

As to the condo writing the budget last minute for you - that is incredible. The board and managment co need to be reported to the proper agency because they are mandated by Fl law to disclose their financials to the unit owners annually. This is a board responsiblity. Florida statute here: http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0718/Sections/0...

I found a good presentation that summizes the responsibilities of the board members of a condo association and the budget requirements (it is older but a still good)http://www.slideshare.net/dalop/condominium-budgets-and-reserves

Here is a good blog that explains reserve funding for condo's as mandated by Fl statute: http://www.flcondoassociationadvisor.com/reserving-funding-requirements-procedures-waiving-reserves-...