Condominium and Homeowners Associations

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It has been about half a year since the terrible collapse of Champlain Tower South in Surfside, Florida.  Because of this tragedy, condominium and homeowners’ association boards and owners have been concerned about the structural safety of their buildings. And now Associations are facing hard questions from mortgage companies concerning both maintenance and capital reserve balances.

Role of Fannie and Freddie in Mortgage Lending

Fannie Mae and Freddie Mac are two governmental entities that guarantee mortgage loans for residential properties, like condominiums and homeowners’ associations.  They put out guidelines – requirements for association budgets, documents and practices – that a community needs to meet for Freddie Mac or Fannie Mae to back a mortgage.
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Continue Reading Surfside Towers Collapse Causes Tighter Maintenance and Capital Reserve Requirements for Associations

This post was originally published on December 3, 2020 and updated on December 6, 2021.

This time of the year, our thoughts turn to family and friends.  Maybe we reflect on the past year or look forward to the next.  For association boards and property managers, these happy thoughts are interrupted by questions about snow removal. When do we call snowplows? What kinds of deicers should we use? And does our association have any liability for slips and falls?
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Continue Reading HOA Snow Removal: Your Questions Answered

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

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

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