Cohousing-L Mailing List: Re: protecting your HOA from homeowner bankruptcy

[Raines Cohen (rc2-coho-L]

On 5/26/04 11:51 PM, Charles McLean <channeled by Raines> wrote:

>What have you found effective in protecting your cohousing community from:
>
>-       Loss of owed condo fees and assessments due to owners filing
>personal bankruptcy?

I don't know of any communities that have experienced this problem. At a 
seminar last year put on by ECHO -- The Executive Council of [California] 
Homeowner's Associations, I saw basic advice about documenting nonpayment 
and moving rapidly to filing liens and then triggering sales, to minimize 
the potential loss to the association. i.e. don't let people coast, 
impose late fees and apply them consistently across the board, and stay 
on top of it.

>-       Loss of same from owners failing to pay their mortgages and being
>foreclosed with subsequent bank ownership of cohousing units?

But isn't the bank obligated to pay dues... and wouldn't they normally do 
so as a matter of course? Given that the association can lien against 
their property and extract the funds when they sell it.

>Does your community require financial statements from potential buyers?

I've never heard of any community doing this... if they can buy it 
outright or get a mortgage, that's considered sufficient proof of ability 
to pay.

>We are updating our policies and procedures in these areas.
>
>What protections can you suggest

Active management and engagement.

>Sample policies and court rulings would be very helpful.

Try the website http://www.echo-ca.org/ and do searches based on standard 
best practices for homeowner associations in this regard.

>What proactive initiatives can we take to prevent losses or reduce their
>magnitude?

Don't let unpaid dues accumulate, take action.

Raines

P.S. It sounds like I'm not the only one here sensing that you're doing 
more than contingency planning here. Care to share some info about the 
context for your questions?

Raines Cohen <my initials,2,dash,coho,dash,L at my first name .com>

  Member, Swan's Market Coho [Oakland, CA] <http://www.swansway.com/>
Wishing a member a rapid recovery from surgery.

  Secretary, Berkeley [CA] Cohousing
Where we're excited to be organizing a 4th of July political fundraiser 
party.

  Supporter, East Bay Cohousing <http://www.ebcoho.org/>
Doing a workshop with katie McCamant on June 5th.

  Boardmember, Coho/US <http://www.cohousing.org/>
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Cohousing of Delray Beach, Florida, developed by Symphony Builders