Homeowners Associations: Villians Or Victims in Foreclosure Crisis? [Housing Tracker]

Quote of the Day

"We're always in a race to the courthouse steps." Florida Lawyer Bob Tankel, who represents hundreds of homeowner associations. Homeowner associations can impose liens and foreclose on properties that don’t pay dues. So Tankel says he urges homeowner associations to quickly foreclosure on homes before lenders can because the homeowner association’s liens are subordinate to the lender claims. (Tampa Bay Online, June 2nd)

Foreclosures and Homeowners Associations

Neighbors Kick Family Out of Home. “Foreclosures that end with the sale of a debtor's home have become surprisingly common in the Bay area and throughout Florida… according to Bob Tankel of Dunedin and Ron Cotterill of Tampa… two lawyers representing hundreds of homeowners and condo associations. Tankel estimates such cases have increased tenfold in the past four years, based on his firm's caseload. [Often] homeowners lose their properties over a few hundred dollars in delinquent homeowners assessments… Tankel, who said he represents as many as 600 homeowners and condo associations in Florida, has watched his collections business increase by 500% over the past four years.” (Tampa Bay Online, June 2nd)

Dangers Hidden In Homeowner Groups. California: “As of 2006, there were 906 homeowners associations in San Mateo County that maintain the common spaces of approximately 73,000 units in condominiums or single-family homes built in a neighborhood development. Some 59% of these units are more than 20 years old, according to a survey by industry CPA firm Levy, Erlanger and Co... As the units continue to age, more residents may find themselves facing pricey assessments if their complexes haven’t been managed well — or if the management has fallen into the wrong hands, experts say.” (Examiner.com, June 2nd)

Everybody Thought There Would Be No End To The Demand. Denver Post, Colorado: “Owners with units for sale in the Beauvallon building at East 10th Avenue and Lincoln Street are struggling to sell their units because a lawsuit against the developer is dissuading potential buyers and hanging up financing for anyone still interested. Of the 26 properties listed for sale in the 210-unit Beauvallon, 12 are either in foreclosure or listed for less than the seller owes on the mortgage.” “HOA dues for the penthouse units are more than $1,300/month, and fees for an 800-square-foot unit are nearly $400/month. Listing agent Emmett Carr: ‘People can’t afford the mortgage and the HOA.’” (Housing Bubble Blog, June 2nd)

Foreclosures Haunt Homeowners Groups In Lee County. Florida: “Foreclosures are [also] rocking… homeowners associations… Financially strapped residents or, in many cases, the lack of residents because of the growing foreclosures, simply aren’t paying their bills… Community Associations Institute: More than 60 million Americans live in an estimated 300,000 homeowner associations, condominium communities, cooperatives and other planned developments, up from 45 million residents in 223,000 communities in 2000… Joe Adams, News Press condo law columnist: In Southwest Florida, non-payment of fees is a problem mainly for newer projects that were built or converted from rentals in the real estate boom that reached its height in December 2005.” (News Press, June 1st)

Homeowners Associations Feel Pinch Of Foreclosures. “Over the past 18 months, Ted Whittington, a Bakersfield attorney who represents about 40 local homeowners associations, [has] seen an uptick in delinquent payments… Brighton Estates Homeowners Association and Seven Oaks at Grand Island Homeowners Association both filed lawsuits this year to collect delinquent dues… Andrew Schlegel, VP Finance for Merit Property Management Inc.: Some pinched California homeowners associations are considering shutting down clubhouses or decreasing the frequency of services… Others raised dues. One association, in Stockton, contemplated filing for bankruptcy protection. Schlegel estimates assessment delinquency rates have increased from a pre-housing bust figure of .25% to 5% today.” (Bakersfield Californian, May 31st)

GVR Board Rejects Fee. “Arizona: Green Valley Recreation's board of directors rejected a plan to charge homeowners’ associations $10 to rent a meeting room. Currently, GVR charges non-member organizations a rental fee, and the $10 for members was to help cover administrative scheduling costs… Leon Lies, who introduced the motion for the Fiscal Affairs Committee, said before the vote he was against the idea. He said it would “nickel and dime” the members.” (Green Valley News, May 31st)

Dear Readers: Read anything you liked on this subject and didn't see it here? Why not post a link or a quote from the article in our comments section. Share the wealth! - Ed.

Get Seeking Alpha's housing market coverage by email -- it's free and takes only seconds to sign up.

Comments

[mke039:]

Homeowners associations are one of the greatest frauds thrust upon American citizens...ever.

Developers walk away from these communities after the money is made; municipalities add to their tax base but provide little to no services...and the homeowner is left holding the bag.

An entire industry has been created to cash in on the estitmated 40 billion dollars under management in associations nationwide,and the almost complete absence of State oversight of these amatuer run organizations.

The Florida attorney Bob Tankel, who 'races to the courthouse steps' to forclose on homeowners for just a few dollars, has had his license to practice law suspended for lying to the court. He was also caught red handed attempting to rig an election in a Florida homeowners associations.

www.ccfj.net/HOAFLLind...

St. Petersburg Times, dated December 11, 2003: "Robert Leon Tankel of Dunedin was suspended for 15 days and given 18 months' probation. Tankel, 47, made a false statement while representing a client, the Bar found. "

There are thousands of Americans who have sought help from their state legislators, only to find a large lobbying organization, the Community Associations Institiute, an organization representing lawyers and property managers, barring the door to ANY legislation that would provide creation and/or enforcement of existing laws that would protect homeowners from this rapacious industry.

2008 Jun 03 08:49 AM

[notsosmart:]

cmon-what else is new. the current situation will breed only more greed & less ethics. dont ever get into a home assoc. situation. buy a house. forget the meeting room,pool,etc. as you will be at the mercy of the ever political,agenda prone assoc.

2008 Jun 03 10:56 AM

[Malkiel:]

As a former condo owner and long-term condo board member I can tell you that mke039's misguided attitude is typical but unhelpful--once the developer is out of the picture, which is the case with most older condo's, there's nobody to blame but yourself if things aren't managed the way you like--attorneys and management companies work for the board. If you want to know the enemy, look in the mirror--have you ever served on your board? If not, shame for ever blaming anyone else for how things are managed.

I agree, however, that condominiums are a form of ownership fraught with danger because they are truly run by amateurs, the owners, and have all the problems of a small town, including paralyzing policy disagreements, with few of the powers needed to correct big problems. Condominiums should be viewed as an investment much more so than a house, and buyers should be prepared to take a turn serving on the board and taking part in meetings. If you're not prepared to do these things, you'll find your investment at the mercy of the judgement of others. I bought a house and left the condo partly because as a board member I understood the nature of the beast and didn't want to continue with it. I have to think these types of ownership will lose favor over time as the precarious nature of their organization causes failures and hardships...

2008 Jun 03 12:31 PM

[Joyce :]

Unless the property has no other mortgages and liens, why would anyone want to buy at the foreclosure of homeowner's liens? Unlike municipal real estate taxes, local statutes don't usually deem homeowners' dues as superior liens. When someone buys at the foreclosure of a homeowner's association dues, the property is still subject to all liens superior to the homeowner's association - including any mortgage.

2008 Jun 03 01:50 PM

[unimpressed...:]

Homeowners' associations can serve a useful purpose in ensuring that properties are maintained and do not devalue neighborhoods. However, they have a real danger to devolve into little cliques of frustrated housewives and clerks who, for the first time in their lives, have a little power. There lack of managerial knowledge and experience does not deter them from imposing horrendous rules and fines to satisfy their misplaced sense of omnipotence. In the long run, most communities are better off without them.

2008 Jun 03 02:45 PM

[jackooo:]

Malkiel
Your comment on getting on the board is neat. I tryed to get on the board and was not elected twice. Instead the full time soccer mom and grocery clerk were elected.
What I brought to the table was 35 years of experience as a mechanic and handyman. I knew the cost of items that needed repair and beause I was retired I also had the time. My main point to get elected is "I am cheap". In other words I will not waste you HOA dues.

2008 Jun 03 04:34 PM

[mke039:]

Get on the board , what a joke!
The folks who get on the board and try to open the political process, make the association finances visable and transparent, and disperse power to prevent tyrany (see Madison's Federalist #47...yea you know....the principle of our Amercian Constitution..) are quickly alienated by the board, who are almost always power-hungry idiots.
The truth is since 2000, 4 out of 5 homes built are in HOAs. This is due to municipalities insisting upon them as they provide little to no services to them, and save a bundle while adding to the tax base.
60 million Americans are living in communities where lawyers and property managers rip them off as a matter of course, and the same lawyers and property managers give money to our state level politicians (see Community Associations Institute) to keep the laws from protecting homeowners (and INCREASING OUR PROPERTY VALUES!).
Losing your home for a few hundred dollars, and scum like Bob Tankel 'racing to the courthouse' to foreclose?
Boy, that really makes your house more valuable and HOAs more desirable to live in!!!

2008 Jun 03 07:05 PM

[mke039:]

Oh and Joyce...your are right. HOA forclosures are a joke...why do them...FOR THE FEES THEY GENERATE...THATS ALL!
The HOA lawyers just rack up the fees for a worthless 'win'.
Bob Tankel is racing to the courthouse before the board, rank amatuers, figure it out.
It is all a sordid joke.

2008 Jun 03 07:18 PM

[Kiisu:]

I've had an admittedly difference experience... after a wee bit of a revolution where we removed the entire previous board, fired the attorney who obviously represented the management company, and fired as well as the management company... (we had a number of good financial and legal reasons for such drastic action)

We went self-managed. Our finances are now in very good shape (per our last annual audit, instead of at the brink of bankruptcy), our annual fees have remained unchanged in years and the property looks better and is better managed... needed repairs are being completed... at a reasonable cost... no more triple billing, contractors are held to their contracts (instead of hiring a 2nd contractor to fix the first's errors, and a 3rd contractor to fix the second's).

Not saying our approach works for everyone, nor that it is perfect, but it is dramatically than before and is definitely working for us...

And it is nice to no longer be held hostage to and act as a cash cow for a management company.

2008 Jun 04 12:01 AM

[Directoy:]

Judy:-
Have been reading your articles for a while,
Very Interesting & creative!

2008 Dec 31 09:57 AM

[SA Editor J...:]

Thanks!

Happy new year,

Judy

2008 Dec 31 10:33 AM