HOAleader.com - Tip of the Week - June 29, 2012
Published: Fri, 06/29/12
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Check Your Anger Before You Vote to Foreclose
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In this week's tip, we explain why it's a really bad idea to
pursue "vengeance" foreclosures. It may seem satisfying to
decide to pursue foreclosures against delinquent owners if
you're frustrated or angry. But Frank Silcox, CEO of LM Funding,
a Tampa-based specialty financial services company that manages
the receivables of more than 130 condominium associations in
Florida, calls that a "vengeance foreclosure" and advises
against it.
"While it may make some board members and residents
happy, this action usually just deepens the financial
crisis most condominium associations in Florida are
experiencing," he argues. "Unless a unit has substantial
equity or a rich but recalcitrant owner, it's always
best to allow banks to foreclose and assume the related
financial obligations."
Silcox argues that Florida associations shouldn't
make rash decisions to foreclose, in part because
of the Florida law that allows banks that have
foreclosed on condos to pay to the association the
lesser of 12 months' delinquent assessments or 1
percent of the mortgage amount. He asserts banks can
limit their payments to those amounts only if they've
done everything right in a foreclosure-and his
company often finds that's not the case. Because of
that, he claims a 92 percent recovery rate of all
unpaid assessments on behalf of his association clients.
Silcox also contends there are other factors that
weigh against foreclosing:
o Attorneys' fees for foreclosures typically
range from $1,500-$2,500.
o Foreclosed units often require renovations,
at the association's cost, to become rentable.
o Associations become landlords of foreclosed units
and are responsible for paying taxes on income
received-reducing their recovery from the foreclosure-
along with insurance and property taxes.
o The association will incur marketing costs,
typically about 10 percent of the monthly rent,
to fill rentals.
Other experts agree that boards shouldn't foreclose
on owners' units rashly. But they caution that
Silcox's strategy may not work in all states.
Learn more in our new article,
http://www.hoaleader.com/members/734.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Reader Argues HOA Shouldn't Make Unit Owner Repairs. Is He Right?
In this week's tip, we answer a reader's question about whether
his board is wasting money on repairs to owners' units.
Click here to read full article:
http://www.hoaleader.com/public/Reader-Argues-HOA-Shouldnt-Make-Unit-Owner-Repairs-Is-He-Right.cfm
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How to Differentiate Between HOA Repairs and Home Owner Repairs
An HOAleader.com reader writes, "What policies can a board implement to
ensure the association is paying for common element maintenance only? Our
association has a lot of exterior leaks, which hopefully for the most part
has been resolved. Unit owners claim the damage is from an exterior leak. The
HOA pays for the repairs, but there seem to be additional repairs performed
that are unrelated to the exterior leak. This has been going on for years and
has become a great expense to the association." Here we provide guidance on
policies and procedures you should implement to determine which repairs
your HOA should cover and which home owners must pay.
Click here to read full article:
http://www.hoaleader.com/members/How-to-Differentiate-Between-HOA-Repairs-and-Home-Owner-Repairs.cfm
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Should HOA or Owner Pay for These Sidewalk Repairs?
An HOAleader.com reader writes, "One of our owners planted a tree several
years ago, and it just recently caused damage to a sidewalk in our common
area. Our CC&Rs define the sidewalk as part of the major components and
therefore the HOA's responsibility to repair. But I'm wondering if the fact
that the owner planted the tree that caused the damage means the owner's
responsible for the repair cost?" Here, our experts offer opinions on
whether this is an obvious problem for the owner to cover.
Click here to read full article:
http://www.hoaleader.com/members/Should-HOA-or-Owner-Pay-for-These-Sidewalk-Repairs.cfm
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Time for Your Annual D&O Insurance Policy Checkup
This week's tip reminds you that it's wise to review your directors and
officers insurance every once in a while to be sure you're not exposing
yourself to unnecessary risk.
Click here to read full article:
http://www.hoaleader.com/public/Time-for-Your-Annual-DO-Insurance-Policy-Checkup.cfm
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Lawsuits Against HOA Board Members: Do You Have the Right Level
of D&O Insurance?
As condominium and home owner association management becomes more
complex--and more and more board members are sued--it's critical to
monitor your directors and officers coverage to ensure you're fully
protected for your actions as a member of your condominium or homeowners
association board of directors.
Click here to read full article:
http://www.hoaleader.com/members/Lawsuits-Against-HOA-Board-Members-Do-You-Have-the-Right-Level-of-DO-Insurance.cfm
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