Some 86 percent of Florida condominium and homeowners associations expect foreclosures and delinquencies to stay the same or increase next year, creating additional revenue shortfalls for their associations.
A survey conducted by the Community Association Leadership Lobby, or CALL, a group that lobbies state legislators on behalf of condominium and homeowners’ associations,
“While economists and Realtors try to read favorable signs into national home sales data, frustrated Florida community association owners foresee 2010 actions ranging from potential community bankruptcies at one extreme, to deferred maintenance, amenity cuts and a lowering of association standards that further threaten property values,” the CALL report said.
Part of the financial strain involves lenders that are taking their time when it comes to foreclosing on homes and condos.
Once lenders formally take over a property, they are responsible for paying the association dues from that point forward. Until they do, however, the dues generally go unpaid for months or even upwards of a year or two, causing shortfalls for association budgets and putting increased pressure on the remaining homeowners.
Under current Florida law, once a bank takes possession through foreclosure, it is responsible for paying a certain amount of back assessments. But that amounts to only six months’ worth for condos, or up to 1 percent of a unit’s value. Lenders have to pick up a year’s worth of back assessments for single-family homes.
But the CALL report found that “bank foreclosure delays of 12 to 24 months” were frequently cited by those surveyed, and that “bank failures to pay maintenance fees and assessments on distressed units continue to draw the ire of many respondents.”
The report found that 6 out of 10 of those surveyed said budgetary gaps created by foreclosures and delinquencies resulted in assessments for everyone in the community being hiked over the past year to plug the shortfall.
Nearly 7 out of 10 of those surveyed said that the percentage of units or homes that were 60 days delinquent or more on their assessments had gone up compared with a year ago.
Sixty percent of condo associations also reported having to “postpone major capital investments in upkeep or repair,” while 46 percent of homeowners’ associations said the same.
“These survey results clearly show the so-called ‘ripple effect’ of the mortgage foreclosure crisis has in too many cases become a tsunami, wrecking havoc on the finances of Florida’s common-interest ownership communities and undermining their ability to deliver services, safety and amenities to the millions of people who reside in condos, HOAs and other community associations statewide,” said Sarasota attorney David Muller, CALL’s co-executive director.