Strata Corporations Take over Lots of Lots

We don’t have it so bad here in StrataLand in Australia on some things when you look at other places in the world.

Take strata fees for instance.

In the USA the mortgage and property crisis has caused serious problems with strata fees for many strata corporations and associations as owners cant pay mortgages and fees.  On top of that many US banks are not foreclosing and so leaving the problem alone without pressure on owners or sales to effect payment. 

So, strata corporations are having to be more proactive and inventive to get the cash-flow they need to operate.

Like in Florida, where Donna Gehrke-White reports that some strata corporations that are strapped for money to pay for property maintenance, many associations are foreclosing on owners who don’t pay fees, then renting the units to bring in cash.

The article in the Miami Herald, includes the following fascinating comments –

• Don Urquhart, a board member at Quadomain Condominium in Hollywood says, no one wants to throw a neighbour out of his home. But that is what Urquhart says he and other community association leaders have been forced to do and “It’s not fair for your neighbour to pick up your share,’’ says Urquhart.
• For years, many community associations rarely foreclosed. But that changed when the real estate crisis swept throughout South Florida more than three years ago and the rate of unpaid maintenance fees grew dramatically.
• Now he and other association leaders routinely start foreclosure proceedings if owners don’t arrange to pay delinquent dues. Urquhart and other association leaders, however, say they will work with owners who try to catch up.
• Association leaders, though, have to remain tough against those who won’t try to pay, he adds. The reason is simple: Someone has to pay to keep the lights on, the grass mowed.
• Now some associations are even trying to beat banks to the courthouse to foreclose first on properties owned by deadbeat owners. The upside: They can get months – if not a year or two – of rent before the banks formally foreclose.
• But he says even if associations don’t rent out the properties, foreclosing helps recoup money, because a threat to take property will get lenders moving to start their own proceedings. Once the banks have foreclosed and take over title, they are legally required to pay association fees.
• A state law that took effect July 1 also requires foreclosing lenders to pay a year’s worth of unpaid maintenance bills or 1 percent of the original mortgage debt – whichever is less.
• Some non-paying homeowners have ended up staying in homes for years – neither paying mortgages, nor association fees, adds attorney Eric Glazer. In some cases, homeowners demanded to see the paperwork, which banks did not have. That further tied up the foreclosure proceedings, Glazer says. Last fall, several banks suspended proceedings because of confusion over paperwork. Now they are back at it again. But foreclosure can still be a slow process.
• “Some condo associations flat out do not have the money to even pay for water,” says Kip Farris, who manages community associations in both Miami-Dade and Broward.
• Leaders in community associations say there’s an added benefit to foreclosing: Many properties are better maintained by renters. Homeowners who can’t afford their mortgages or maintenance fees often don’t keep up their property. They can become angry over their situation and even tear up their homes. Yards become overgrown, condo units run down. That hurts others’ property values.

Although we haven’t reached these situations yet in Australia some of the things that these Florida associations are experiencing are quite similar to the Australian experience.

See you in the strata foreclosure courts.

Francesco …