Cohousing-L Mailing List: How do communities deal with members who can't pay their condo fees or assessments?

[Fred-List manager (fholson]

Fran Schultz <fschultz [at] optonline.net>
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Fred, the Cohousing-L list manager <fholson [at] cohousing.org>
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> How do communities deal with members who can't pay their condo fees
or assessments?

The COHO take on this question seems to be very different then the
regular condo association take on this questions.  As president of a
condo board with 323 units we are wresting with this issue on a
variety of levels.  I say in advance this is not a cohousing point of
view.  It simply represents the issues and decisions our board has
been wresting with.

First - We have ended  up with people essentially squatting in their
units because they donʼt have the money and canʼt afford to move.
While this is a tragic situation no association can stay afloat if you
tolerate this for long.  If there is a way to help the person get on
their feet then great.  But loaning such a person money is throwing
good money after bad. So excuse me for stating the cold cruel
approach. We have been exploring evicting that person, taking
possession of the unit and then renting it to provide income to pay
for the back fees to the association. Yes, there are a lot of issues
associated with this.  But at least in my state there are ways.  Even
if there is a mortgage on the property that hasnʼt been satisfied,
you may be able to rent it for an extended period before the bank
forecloses and sells the property for what they can get.  In which
case not the unit becomes market rate and the bigger problem goes
away.  You get an owner, you get your fees at least going forward, and
the unit becomes market rate.

Second - We look at whether or not the person has money they arenʼt
using to pay what they owe.  I would imagine this isnʼt the case
ever in a COHO but trust me in the outside world it is.  One of the
tools we use to encourage people not to do this is to exclude them
from any of the common area privileges - eg common house, pool,
parking etc.

Third - We have had to take a somewhat mercenary view regarding
assessments and fees.  Granted this is the non-COHO world I currently,
but hopefully not for long, live in.  Our complex is highly desirable.
Regardless of the economic downturns our units have held their value
within 90% of original purchase price, regardless of time purchased.
Our units usually stay on the market less than 3 weeks unless they are
incorrectly priced.  So filling or selling a unit with a renter or
purchaser isnʼt a problem.  So if someone truly feels that they have
been priced out of the complex we encourage them to move.  I know it
sounds heartless.  I feel that way when it comes up, it hasnʼt
happened yet.  But, in a non-consensus non-COHO world, the association
board has a fiduciary duty to the association.  We really donʼt have
a choice to either not raise the rates or issue an assessment if there
are necessary repairs, maintenance or upgrades needed.

Fourth- while its not an association option, this person could
consider bankruptcy and a short sale which brings the unit back to
market price.  If the association or one of its members can afford to
by the unit at short sale, then they can rent it, potentially back to
the original owner so they can reestablish their credit, who can then
potentially buy it back.  This worked well for a people I know who
lived through recession in Las Vegas where condo prices fell by over
60%.

Fran Schultz
fschultz [at] optonline.net