In the Sunday, May 8, 2011 edition, the Palm Beach Post ran a story dealing with the increase in HOA foreclosures on delinquent homeowners. OK, I can see where they are going so far, but with a title like “HOA foreclosures climbing as associations seek ‘revenge’ on delinquent homeowners,” it seems like the author may have a bit of a slant to the piece, don’t you think?
Well, this author thought so, and decided to do some additional research to try and figure out why a few of the issues mentioned in the article seemed suspect. First off, anyone who attended the “Board Member Boot Camp” will recall that banks in the state of Florida, and probably around the rest of the civilized world as well, have no interest in abiding by HOA rules. The law does not require them to pay the HOA fees that an association may pile upon a home, and even if it did, the banks would simply pack those fees onto the cost of the home in the future, or write them off completely as a cost of doing business. Apparently, the banks that the CitySide HOA deals with are ignorant of the law, or perhaps the president of that particular HOA has nothing better to do with his time than to harass bank officers into finally paying his $100 here, $100 there fines.
If you read the Post article, you will also notice that one of the contributors to the piece was a longtime contributor to this column, Ms. Donna Berger. For those of you who don’t remember, she is the Managing Partner of the statewide community association law firm of Katzman Garfinkel & Berger (www.kgblawfirm.com) and the Executive Director of the Firm’s not-for-profit Community Advocacy Network (CAN) (www.canfl.com). The Palm Beach Post interviewed her for 45 minutes for the article, and also sent related questions by email. After all the, she ended up with a grand total of three sentences in the story! Being a fan of Ms. Berger and her work in the HOA field, this author took the time to contact her and ask if there was anything else about foreclosures she wished to share with the reader’s of the West Palm Beach HOA examiner.
“I explained to her that the notion of associations retaliating by foreclosing seems unlikely. I have seen more associations fail to foreclose for years to their members’ detriment as opposed to those plunging ahead because they want to punitive,” stated Ms.Berger.
“I also told her that more associations are finally waking up and realizing that waiting around for the banks to move their foreclosures is not going to happen. If the property is in rentable condition then an association moving forward to take title and rent out the property until the bank takes it back probably makes the most sense.
In addition, I told her where I have seen abuse is in the area of suspending use rights in “gray areas” like cable and guest parking. No idea where she came up with the idea that pool access is such a gray area. Pool and clubhouse are quite clear-cut.” Berger continued.
“The last thing I stressed to her was that it is MUCH easier for an association to foreclose on a delinquent property as opposed to a bank. Banks must contend with lost promissory notes, Truth In Lending, RESPA and other documentary violations. The only defense to an association foreclosure is that the debt was paid. However, to far too many association members, they believe that when the banks impose moratoriums on foreclosures (like they did recently with the robo signing scandal and the other documentary issues they had) that associations are similarly stymied from foreclosing. Nothing could be further from the truth and that is why associations and their counsel must educate association members that it makes no sense to fight your mortgage foreclosure or attempt a mortgage modification only to lose your home to an association foreclosure.
Association maintenance must be treated as a priority to avoid this dilemma,” she concluded.
This column is dedicated to providing a voice of reason in these hard times. The new economy has led to many opportunities for deceit on both sides of the HOA debate. Owners and associations must both be wary of the fact that we all live under the same umbrella, and that in the end; the negative actions on one part will harm both sides.
Be sure to subscribe to this column, and stay abreast of issues involving you, the homeowners of Palm Beach County! If you’ve had any issues with your HOA that you’d like me to try and delve into, and possibly write about later, please let me know.