Interesting article on how revenues being collected by community associations are being impacted by foreclosures and high unsold inventory -- result being higher fees for fewer owners & special assessments

http://www.sun-sentinel.com/news/loc...home-headlines

Foreclosures put added burden on association-run communities

By Joe Kollin
South Florida Sun-Sentinel
Posted January 24 2007



If you think you're paying more to live in your condo, townhouse or gated community, consider this: It may get worse before it gets better.

Experts fear that with homes selling slowly, owners who can no longer afford payments may soon abandon them. If that happens, those left behind in communities run by associations must make up the missing share of money to maintain roofs, roads, landscaping and pools.

"We're seeing a 100 percent increase in the number of files turned over to us [by associations] for lien and foreclosure," said Gary Poliakoff, whose Fort Lauderdale-based law firm, Becker & Poliakoff, represents 4,200 associations in Florida.

In Broward County, his firm has more than 900 active collection files. The Palm Beach County office has 200 active cases, but those "communities are more upscale so the stresses aren't as great as quickly as they are compared to Broward, with its higher number of retirement communities," Poliakoff said.

Robert Kaye, whose Fort Lauderdale firm represents almost 500 South Florida associations, said the volume of foreclosures his firm is handling is up 20 percent from last year, although he declined to give specific numbers.

An association's expenses are constant, so budgets are based on the community's number of homes and apartments.

"Other owners have to make up the shortfall because service providers aren't going to say, `We feel sorry for you and will reduce the cost,'" said Poliakoff.

He said a similar situation existed in the late 1970s and early 1980s and "it took two or three years for the market to absorb all units."

Another attorney who specializes in community association law, F. Blane Carneal, agrees.

"The instability will last two years and then straighten out," he said. "The strong will survive, the weak will get out and more will come in and settle down.''

Danille R. Carroll, the state's condo ombudsman, said she is concerned the "weak" who might not survive will be older people.

"A $200 special assessment or $2,000 payment for insurance is hard to come by when you're on a fixed income," she said.

Poliakoff estimated 40 to 50 percent of association budgets now go for insurance premiums and most boards are not allowed to skimp on insurance. "Look at the documents: 99 percent say full-cost replacement is required," he said. "This creates a burden.''

It is too soon to know what impact the newly passed insurance reform will have.

Another contributing factor to the foreclosure problem is creative financing.

"A significant number of first-time condo buyers acquired them during the boom of the last decade by financing 90 percent or 100 percent and [using] adjustable-rate mortgages," Poliakoff said.

Carneal explained that as interest rates rise, those buyers are "having to refinance or get rid of their property."

But the downturn in the market has reduced the value of units, so equity isn't what it was one or two years ago. The result is that people are falling behind.

Kaye encourages associations to file foreclosure lawsuits as a way to deter delinquencies.

"If they don't actively pursue through collection procedures and unit owners see no incentive to pay, everything comes tumbling down like a house of cards," he said. "People find a way to come up with the money to save their homes."

Becker & Poliakoff encourages associations to foreclose as a way to beat out lenders. If a bank assumes title to a condo in a foreclosure, the association likely will lose six months of maintenance, money that everyone else will have to make up.

By beating the bank to the punch, associations can at least get some income by renting the unit, collection foreclosure specialist Adrian Marchisio said. Then, when the market corrects itself, the unit can be sold.


Millie Rivera, whose two-bedroom Hawaiian Gardens condo in Lauderdale Lakes was devastated by Hurricane Wilma in 2005, still can't live in it. Yet the 56-year-old loan officer must pay the $303 a month maintenance, insurance and all special assessments. She is living nearby with her daughter.

Although some neighbors sold their units at what she considers wholesale prices just to be rid of them, Rivera doesn't know what she will do.

"That's the question I keep asking myself. That's why I'm so stressed out," she said. "What about all the money I put into the place? No way I'll walk away. I'll fight hand and tooth because all my life savings are in there."

We have one home that is in foreclosure and I was shocked to find out that our homeowners Association had to file a lien before the Bank did for common charges in arrears.

In New York, common charges, like taxes, take priority over a mortgage, so when that property is sold, the Association and delinquent taxes are paid first before the Bank.

It's difficult when the rest of us have to swallow the deadbeats expenses.

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.....and with all the Real Estate Riff-Raff that went on over the past couple years, the "rest of the HOs" better order a Big Gulp to help wash them down.

.

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But hey...Top Ramen tastes a whole lot better when you eat it off of a Granite Countertop. (Mr & Mrs Too Much Homebuyer)

Florida State Flower

This one is even more disheartening article for those living in communities still under construction ...


Residents balk at new developer fees

By PATRICK WHITTLE


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SARASOTA COUNTY -- The stalled real estate market turned Stoneybrook at Venice into a very different community than its residents paid for: a half-built subdivision dotted with slow-moving construction sites and "For Sale" signs.

Many residents of the 560-acre east Venice subdivision said they are willing to weather those inconveniences. But the latest news -- that mega-developer Lennar will dump more than $6 million in costs on homeowners -- has Stoneybrook residents crying foul and preparing a lawsuit.

Residents contend the developer never mentioned the costs when homeowners bought property in Stoneybrook, which in 2004 was hailed as Sarasota County's hottest new family-friendly development. The residents believe Lennar is trying to make up for the fact it has sold less than half of the complex's 998 homes.

Lennar contends it acted properly. But the meltdown between the developer and the homeowners is perhaps the starkest example of how Southwest Florida's burst real estate bubble has bled on to private residents.

"What it boils down to is they didn't sell as many homes as they thought they could sell as quickly as they thought they were going to sell," said resident Gary Natiss, who heads a local homeowners group.

The residents' grief came to a head Tuesday when the County Commission granted Lennar the ability to tax its residents for $6.6 million in infrastructure costs.

Lennar had asked the county for designation as a community development district, a special taxing district that issues bonds to pay for things such as drainage and roads.

The commission's vote was 3-2 in favor of Lennar's request. Commissioner Jon Thaxton, who voted against the decision, chalked up the residents' hand-wringing to the real estate market boom of 2004 and 2005, a time when "we had a lot of anxious purchasers and a lot of anxious sales people that were processing disclosures at light speed."

The tax will add more than $700 a year to some residents' yearly payments.

Several residents said Lennar never told them they would have to pay for the infrastructure, which has already been built. Residents said they were under the impression they would only have to pay for future maintenance through their homeowners dues. But commissioners ruled the developer did everything by the book.

The decision, coupled with Lennar recent increase in some homeowner's dues by $200 a year -- another move residents say wasn't properly announced -- has a group of more than 150 Stoneybrook residents ready to take Lennar to court. Several residents said they are seeking an attorney. They also said they plan to appeal the County Commission's decision.

During Tuesday's meeting, Stoneybrook residents loudly applauded a speech by Natiss, in which Natiss threatened a lawsuit and said the "only thing Lennar could be building in this county are license plates while they are wearing their little orange uniforms."

Resident Jennifer Schmidt cited the "almost unanimous opposition" by Stoneybrook's residents to Lennar's tax. Others cited a petition, with more than 150 signatures, protesting the levy. Many residents held signs with slogans such as "we have been Lennarred."

Lennar attorney Dan Bailey called the residents' claims "reckless allegations." He said Lennar made clear there would be more costs when it started selling homes in Stoneybrook.

"There was significant time for the residents to contemplate the gravity of this," he said. Lennar, a 53-year-old company based in Miami that builds in 20 states, put the first Stoneybrook homes on the market during the boom times of fall 2004. Residents had to win a special lottery to buy the first few homes. Investors bought many of the homes, as the complex was touted as a magnet for young families.

But sales took a dive at Stoneybrook when the real estate market tanked across the region.

Today, the complex is about 43 percent sold, which county staff said is less than two-thirds as far along as Lennar hoped. County staff said Lennar will fall almost $8 million short of its revenue goals for its first two years if the sales trend keeps up.

Indeed, Stoneybrook is only 54 percent built, and at mid-day is nearly as quiet as the nearby Carlton Reserve.

Natiss doesn't mind the quiet. He minds the unexpected costs, and that's why he's taking Lennar to court.

"There's no better place to live in Sarasota," Natiss said. "That's what's so frustrating."

I received a couple of PM's asking for the source of the above article. This is the link ...

http://www.heraldtribune.com/apps/pb...NEWS/701240437