Condos, Assessments, Associations Fees and Foreclosure?
Question:
So they slapped assessments on all the owners. She has one bedroom so hers was a little cheaper. The first round was $12,000 I believe. Then a year later they wanted $6,000 more. Her association fees are incredibly high on top of that.
Yesterday she got another letter saying she will have to give them $17,000 more and pay yet again increased association fees.
She is not going to pay it. She has great credit, outstanding really. She can't pay them anymore. She is thinking about getting a new house a new car and letting that one go to foreclosure or filing bankruptcy. Is there any other option? What is better, foreclosure or bankruptcy? I know both are awful and it will ruin her credit.
Help your sister find a law firm in the area that specializes in condominium construction defects. Have an attorney review the entire file. The disclosures that were, or were not, given at the time of sale will be very important. The may have been fraud in the inducement of the sale and ongoing fraud after that. I'm surprised that there is not litigation already. Hurry, because the statute of limitations might expire, if it has not already, but claims for fraud usually have a longer time period and sometimes start to run from the date the fraud was discovered. This is not something she can walk away from. With a $12,000 assessment pending she cannot even give it away.
It happens. The condos where I am got hit big time when the hurricane's came through, some got charged $40k each unit. That's a new mortgage almost. Why won't she pay it? Just because; the principle of it? That's not really a good reason. If she wants to help the situation, maybe she should get a small loan to pay for it and then sell after they are rehabbed & she might get some money back out of it.
Apartments are occupied by tenants who have no "pride in ownership" because they don't own & don't care. Converting to condos means that you have to fix everything that's falling apart from tenant neglect. It probably sounded like a good investment at first because they were probably cheap, but to rehab the whole thing is a big job.
If she doesn't pay it, the Home Owners Association could put a lien on her unit until she pays. She will not be able to sell with a lien on the property.
If she has outstanding credit, why would she want to foreclose or file for bankruptcy? She'll have a hard time buying again.
First of all she is dishing out to much money. Second of all her and any other owners of these so called condos/apartments should look into forming their own corporation., Then they should file court papers against having any more fees asses them because of the value of those buildings. As a corporation they would have more power to fight and be able to hire a lawyer to broker a deal with the association assessing these fees. They could also look into renting the properties they own and possibly recover losses and this would also help her/ their credit. Legal advise would be the best way to continue from this point. Remember, there is strength in numbers.
She can't just buy a house and let this one be foreclosed on. They'll sell the condo at a loss, then slap a lein on her new house & force foreclosure on that to get their money.
If she wants out of the condo, she might suggest renting it out so at least the mortgage payment is covered in full. She could also consider a lease option - the people give her 2 or 3 months rent as a deposit, then lease the place for a year or two while their credit is getting better - then they buy it.
Foreclosure isn't the right option.
It sounds like she didn't have an inspection done when she bought the house or she'd have known the place was a piece of junk. Buying a house is a huge thing and she didn't do the research she needed to make sure she got what she thought she was buying. I'm really sorry about the crappy situation. I'd suggest having her take out a second mortgage, then just have all the repairs made so the condo is up to code & she stops getting fined.
Maybe have her seek advice of a real estate lawyer, but the last thing she wants to do is let this place go.
We are going through such a minor version of your sisters' plight in the midwest area that I am from. A lawyer that specializes in real estate seems the best direction for your sister. There is always a possibility of a class action suit. The only one who benefits is attorneys usually, but getting the matter before a judge may stop the robbery. If your sister is as persuasive as you, she should have no problem gathering a following! It seems as though the people who are the real muscle behind the "Association" know that they are going down, and are doing a bit of pirating before they blow town.
Unfortunately, if you don't pay the assessments and association fees, the homeowner's association can seize your condo and auction or sell it to obtain the outstanding money. My association fee goes up every single year and last year, there was an assessment of $7,500 for new roofs.
Out of curiosity, how can your sister entertain the idea of buying a new house and car, but cannot pay the assessment?
Bankruptcy is better than foreclosure, but your sister needs to speak to a bankruptcy attorney first to get all the specifics. I think it would not look good to buy a new house, a new car, etc., and then file bankruptcy. Thanks to the previous Republican-led Congress, the bankruptcy laws were tightened a few years ago and not in a way that benefits the consumer.
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