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condominium association failure

condominium association failure

You’re in a crisis, the worst kind of Condominium Association Crisis.  No one’s paying assessments and you are the only one left on the board.  This “collapse” of a condominium association can and does happen with alarming frequency.

So what can you do?  Take control.  Hire a skilled real estate attorney who understands how to get your cash flowing moving and vacant units rents.  Here’s a quick action-to-do list:

1)  Don’t Panic
2)  Determine which units are vacant
3)  Determine which units haven’t paid assessments in over 3 months
4)  File eviction actions against the units that are vacant and units that have over 3 months arrearages.
5)  Get simple possession judgments for the vacant units and possession and money judgments for the arrearage units.
6)  Once you have  possession order, simply rent the units on 13 month leases until all of the back assessments are caught up.
7)  Have your attorney monitor all foreclosure actions find out if the units are in foreclosure, being sold, confirmed sold or bank owned
8)  When the units are sold to the first non-lender in possession buyer, up 6 months of past assessments will be paid out of that transaction
9)  When you combine the rent from the leases and 6 months back assessments from foreclosure sales of the units, the association will eventually be fully caught up.
10)  Take action now – even if only 15% of your units are vacant, the association is in danger and needs to be brought back under control
11)  Look towards the future – don’t just wait for condominium questionnaire from lenders to find out your association problems – fix them now to make your building attractive:

  • Get your building FHA Approved – this is a combination of an inspection and certain financial requirements for your association
  • Improve the financials of your budget by:  Make reserves at least 10% of annual budget; Keep assessment delinquencies under 5% of budget; Make repairs on a regular basis
  • If the building is in need of lots of long term maintenance, always raise budget by 15% per year as this budget increase does not have to be approved by membership – only the board.

 

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