If there are foreclosures in a given condo complex and the bank repossesses the units, who is responsible for paying the monthly condo fees? Do the remaining owners in the complex have to pony up the difference or do the banks have to pay the fees?
No, the bank pays it. The bank is now the legal owner. just like it has to pay to mow the grass on a house it reposesses
Raw raw got one right
Just want to make you proud pops
Techinically raw raw is right. I’ve heard though that in some foreclosure ridden complexes in Florida the banks are failing to pay the fees which other owners paid up a bit more just to keep the common areas functioning. I think there was a WSJ article about it.
^ That’s the reason I asked the question. I saw a clip mentioning the same thing in Florida.
Yeah but think about it, you’ve got an HOA or condo association vs. BOA/Citi/etc. Who can push who around more?
I worked with a guy once who used to work for Citi and he told me when dealing with vendors it was their way or the highway as far as payment terms. He said they’d do like net 180 payment terms in their department because they could get away with it.
I guess the other owners thought it better to just pay the bit extra to try to keep the place presentable in the hopes of selling the properties and getting people back in them vs. bank ownership.
What’s the alternative for the HOA? It’s placing a lien against the property I guess. The banks probably want them to take the condos off their hands lol
But doesn’t that hurt the banks when comes time to sell? Condo fees go skyhigh for the remaining owners, people now want to sell as they can’t afford a major hike in the fees, more units are on the market, values go down for all owners.
The banks in these situations have more issues to worry about than the condo. Other real estate owned is never wanted on the books and it is generally the result of poor asset quality decisions. So in Florida for example, they are trying to prevent the bank from failing today and not worrying as much about the sale of a condo 2 years from now.
My knowledge only relates to British Columbia, Canada, but I imagine it’s similar elsewhere.
If the banks don’t pay their accounts just build up. They have to pay eventually.
Once a buyer has entered into a Contract of Purchase and Sale, before the sale completes, the buyer is also entitled to request Form F (http://www.wpcn.ca/resources/canada/pdfs/form6.pdf). If your account is not up to date you can’t get a Form F and the sale falls apart.
^ But in the meantime, the others must pony up the difference.
If in the meantime there is a cashflow issue for the strata they would institute a special levy that would hit every unit based on their unit entitlement. So yes, if you are in a complex where a bunch of other owners don’t pay their fees it can definitely effect you.
However, on top of not being able to sell the place you will be getting hit every month with late fees. Just off the top of my head on one of our stratas we charge $50 a month for balances not paid, monthly fees for that place are ~$400 so ~12.5% per month, every month if you’re not paying. And we will charge your account for every single penny we spend on lawyers to collect from you.
It is actually state specific. We bought a foreclosure in NJ a few years ago and the number of months of back HOA fees the bank was required to pay was limited. I don’t recall the number, but the HOA ended up getting a lot less than they were due and obviously the other owners in the development had to suck up the difference.
^ That’s why people shouldn’t feel sorry for banks when individuals strategically default. The banks do their own version.