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Condo associations dying as fees dry up

Homeowner associations, the de facto local government in much of Florida, are getting desperate.

Assessment payments are as low as 50 percent in some communities, causing some board members to consider measures that might include publicly shaming those who are delinquent.

"When I tell you it is an unadulterated nightmare out there, I mean it," said Harry Burnard, who owns Qualified Property Management in New Port Richey, plus a side business that fronts the dues and collects the debts.

The problem exists nationwide, most notably in communities built during the boom years.

"I haven't seen bake sales yet or carwashes," said association attorney Robert Tankel of Dunedin. "But I have suggested that people who don't pay need to consider doing that. Sell their flat-screen TVs."

Things are so bad that the Southpointe condominium association in Orlando sent a letter to all of its members, listing units with unpaid dues.

"I thought I'd be getting a lot more rotten eggs," said Malcolm Galvin, an attorney for the association. "I was kind of amazed that most of the feedback was favorable to the association."

The urge to shame

Most area attorneys are advising their boards against any kind of public humiliation. "The nature of communities anymore is that nobody knows their neighbors anyway," Tankel said.

But it's been suggested at a lot of homeowner meetings.

IKare community newsletter publisher Karen Uhlig, when asked if she would have a problem with such a practice, said, "Personally, not at all. But professionally, I'd have to check for legal advice."

One of her clients, the Nassau Pointe townhome section of New Tampa's Heritage Isles, could be among the first to publicize delinquent accounts.

"We've been tossing the idea around," said board member Barbara Adams. "We don't want to do it, but we're just having little choice when they ignore us."

About 30 percent of her neighbors are not paying the $228 monthly fee. "In our community, it covers cable and water," she said. Dues also pay to landscape the grounds and repair the roof.

Uhlig, who serves on two boards in her own Wesley Chapel community, knows associations that are filing liens over very small amounts. Tankel advocates suing quickly instead of waiting for banks to foreclose, essentially beating them to the courthouse steps.

Some boards have members literally knocking on doors, a practice attorneys discourage.

"You never know when you are going to meet Mister Doberman, or Mister 9-millimeter," Tankel said.

There is a case on appeal where an association sued a man who invited the president up to the roof for a frank discussion about issues related to his condo, and was going to throw him off the roof, Tankel added.

Tampa real estate attorney Court Terrell agreed.

"What you tend to be met with is a very angry resident," he said. "People are strapped financially and under a lot of stress."

Not surprisingly, lawyers advise boards to use the legal process, beginning with a series of warning letters. At least half of the time, members pay up when they realize that the association could ultimately seize their home over a debt of $300 or $400.

"You can give up one Starbucks a week and pay that," Tankel said.

But some associations can scarcely afford to pay the attorney.

That's why Burnard says his Forclosure Solutions, which makes its profit from late fees and interest, is in great demand. "I have been approached by association after association after association," he said.

The impact varies

Just what the dues pay for varies among communities, as do the amounts and the impact when they go unpaid.

Uhlig's Barrington neighborhood, in Northwood, uses dues largely for landscaping. She pays $69.96 per month. It used to be $60.96, but the board had to raise the amount to make up for those who didn't pay.

Terrell has heard of lists posted in condominium lobbies.

"There are a lot of boards that have the urge, and rightfully so, quite honestly," he said. "If everybody else is paying and these people are still getting a lot of benefits, there is an urge for folks to say, 'Here are our bad actors.' They are riding the coattails, leeching off everyone else."

Complex 'imploded'

Even small debts can add up.

Southpointe, the Orlando complex, faced a deficit of $90,000 and the prospect of a special assessment when it sent out the list of delinquents, Galvin said.

In New Port Richey, things got so bad at the 32-unit Glen Crest condominiums that pretty soon no one could afford the dues, said Burnard, whose firm managed the place. "It just imploded on itself," he said.

Part of the problem was a block of absentee owners who bailed when housing values fell. One by one, the condos went into foreclosure and the residents moved out. Today the complex stands weed-strewn and empty, with boards on some of the windows.

While the Glen Crest situation is extreme, managers and lawyers worry that basic services in many communities will suffer as owners neglect their obligations.

"The community association operations are really the privatization of local government," Tankel said. "Government is getting out of the business of government."

Stepping into that role, he said, are volunteers who are elected by their neighbors.

"They have no salary and they have to do what's necessary to maintain the financial integrity in their communities," Tankel said. "And no one's bailing them out."

Marlene Sokol can be reached at (813) 269-5307 or sokol@sptimes.com.

Condo associations dying as fees dry up 05/16/09 [Last modified: Saturday, May 16, 2009 9:47pm]
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