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In Part 4 of this series, I discussed how the Automatic Stay stops collection efforts against Unit Owners. In this entry, I want to go through a typical timeline for a Chapter 13 Bankruptcy case — mostly from the Association’s perspective. I do not intend this to be an exact breakdown of the Bankruptcy Court’s filing deadlines and procedures. Rather, this is more of a general, “what to expect” timeline.

Before I do so, remember that when a Unit Owner files for Bankruptcy, they usually have debts that they cannot pay without that help. In our situation, it usually means that they are far behind on their mortgage and/or assessments. Very often, a Unit Owner files for Bankruptcy to stop a foreclosure by the Bank or the Association. When a Unit Owner files for Bankruptcy, they often owe thousands or tens of thousands of dollars to the Association and hundreds of thousands of dollars to the mortgage company.
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Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: The Lifecycle of a Chapter 13 Bankruptcy

Due to increased property foreclosures, Lancaster County has developed a new Residential Mortgage Foreclosure Diversion Program (RMFD).  The Program gives a separate pathway that residential mortgage foreclosures need to follow.  Hopefully, the RMFD will allow homeowners to work out mortgage defaults without losing their homes through foreclosure.  If so, the RMFD has the added bonus of taking some foreclosure cases out of the Court’s schedule.

Eligibility

A homeowner with a mortgage in default is eligible for the program if the home:

  • is owner-occupied
  • is the owner’s primary residence
  • is part of a building with four or fewer residential units
  • has a remaining balance on the Mortgage of $400,000 or less
  • is not part of any bankruptcy, divorce or estate proceedings

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Continue Reading New Foreclosure Process in Lancaster County

We all know someone with a story like this these days:  You find the house of your dreams.  It is in a good neighborhood with a good school district.  You are preapproved for a mortgage, and you tell your realtor to put in an offer for the full asking price.  The next day, your realtor tells you that there were five all-cash offers all over the asking price.  So you lose out on the home.  For some, this scenario has played out over and over again in the past 18 months.

From the outside, today’s housing market looks a lot like the one in 2006.  Buyers are racing to make offers on existing homes.  Developers are overpaying for vacant land, hoping to sell at a high enough price to cover their debt.  People much, much more qualified than me — like Nobel Prize-winning economists and professors — are trying to figure out why housing prices are increasing so rapidly.  And more importantly, they are trying to figure out what is coming next.

Is this a housing bubble?  Is the market going to crash again like it did in 2008?
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Continue Reading Will Housing Prices Ever Come Down? Comparing the Housing Bubble of the 2000s to Today

In the last installment of the series, I went through some of the terms that Associations need to know when a Unit Owner files for Bankruptcy.  This edition will talk about the “Automatic Stay” and how it affects Creditors like an Association. The first thing to remember is that Bankruptcy is a way to allow people who have debts to get a fresh start.  The Automatic Stay gives Debtors some cooling off time.  It is a period where Debtors do not have to worry about anyone trying to collect against them.

How Does an Automatic Stay Limit Collections?

When someone files for Bankruptcy, they automatically get protected by an Automatic Stay.  Basically, the Automatic Stay stops all actions against the Debtor. The Automatic Stay prohibits anyone from starting or continuing any kind of legal action against a Debtor that does any of the following:
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Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: The Automatic Stay

Has your Board, especially if it has a financial professional on it, ever looked with dismay at the low interest that a Capital Reserve Fund is earning?  They may think that if they could get a better return on that Reserve Fund, then they could do more projects.  Or they could reduce assessments.

This is when they ask about investing the Reserve Funds. Some of the questions that I get the most are:

  • How can an Association invest their capital reserve funds?
  • Does the Association need to keep its money in CDs?
  • Can it invest in the market to get a better return?

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Continue Reading Can an Association Invest Its Capital Reserve Funds?

In the last installment of this series, I explained that Bankruptcy is a federal law designed to help people who owe money get a fresh start.  In this part, I want to explain some terms that are helpful to remember.

These are going to be the way that I think of the terms – in plain English.  If you want to see the definitions in the official United States Bankruptcy Code, you can look here.
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Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: What is an “Automatic Stay” and Other Terms You Need to Know

Now that people who have been vaccinated are allowed to throw away their masks, the question on people’s minds is, “How do we enforce that?” Employers want to know if they can ask their employees for proof of vaccination.

Surprisingly, yes.

Most employers are allowed to ask their employees for proof that they have received vaccines. Asking for proof of a vaccine does not violate HIPAA or the ADA.
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Continue Reading Can Employers Ask Their Employees for Proof of Vaccination?

Bankruptcy helps people who can no longer pay their debts get a fresh start.

This is the statement that comes at the very top of the page for the United States Bankruptcy Courts. Every accountant and attorney who has ever taken a class on Bankruptcy has heard this said in the first five minutes of the first day of class.

Bankruptcy is first and foremost a societal method to help a person who cannot pay their debts (the “Debtor”).  Current Bankruptcy laws also try to make things as fair as possible to the people who are owed money (the “Creditors).

But we always need to remember that Bankruptcy is there to protect the Debtor.
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Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: What is Bankruptcy?

Collection of assessments is one of the biggest headaches for many Community Associations.  Most of the time, collections follow a standard process.  It might be slow and take several steps.  But, since assessments are liens on the unit and since an Association can collect all of its attorneys’ fees and costs, an Association can collect all of its assessments most of the time.

However, when a Unit Owner files for Bankruptcy, the collection process changes.

Collecting Unpaid Assessments during a Bankruptcy

I have worked with a number of Associations who thought that once a Unit Owner filed for Bankruptcy, they had to write off all of their uncollected assessments.

I also have seen plenty of others do nothing while the Bankruptcy process lumbers on.  This just makes the already large delinquency even bigger.

Associations can collect unpaid assessments when a Unit Owner is in Bankruptcy. 
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Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: How Does a Unit Owner Bankruptcy Affect Collections?

Now that the weather is warming, residents are taking to the sidewalks, walking trails and open spaces of their Community Associations.  Here are some reminders for property managers and board members.

Homeowners’ Associations are not required to protect residents from dogs

With everyone out walking their dogs and children soon to be out of school, Associations often ask if they are required to make rules and regulations to control dogs.  Associations are not required to protect residents from other people’s pets.

But, if the Association does create rules and regulations to control dogs, it needs to enforce them.
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Continue Reading Reminders for Condominiums and Homeowners’ Associations: People Coming Out of Their Homes Edition