Defaults Leave Condo Associations in the Lurch
Condo associations are feeling the pain of increased delinquencies and foreclosures, which leaves them with unpaid assessments, additional legal fees and other expenses. Establishing an aggressive collections policy is the first step toward mitigating the problem, says Jim Stoller, president of The Building Group management company in Chicago. He recommends turning over any account that is 60 days late to the association’s attorney. Prompt legal intervention also will permit the association to go to court for temporary possession of the unit. It can be rented out until the debt is paid. The process takes several months and possession ends when the foreclosure occurs. Another option is to wait until the foreclosure and hope there's enough equity after the lender gets paid first. But that's risky. "Today we rarely see any surplus," says attorney David Sugar of Arnstein & Lehr in Chicago. Under certain circumstances, an association can collect up to six months of unpaid assessments from the buyer when the unit is sold for foreclosure, but the law is a new one and the process is complicated, Sugar says.
Source: Chicago Tribune, Pamela Dittmer McKuen (9/13/07)
