C&S wishes everyone a very happy, healthy, and prosperous new year. Recent trends show a stabilization forming regarding community association delinquency and bad debt. While we certainly have not turned the corner, the delinquent amount of member fees for community associations, is leveling out so we are hopeful that 2011 will be seen as a better year than past few. This is significantly due to the large increase in "short sales" that are occurring in the Tampa Bay area.
From the association’s point of view, short sales are a very positive alternative to foreclosure by either the bank or the association. Two main reasons are: first, the association controls how much if any will be written off the outstanding balance for the short sale to proceed. In a bank foreclosure, per Florida Statute, it is usually only 1% of the original mortgage which is generally much less than what is owed. Second, short sale homes are much better kept up than those homes that are in foreclosure or have been completely abandoned. The homeowner wants to sell the home so they are trying to keep everything up and attractive. With foreclosed properties, the association is usually left with the choice of letting the appearance continue to decline which can affect the neighboring homes or units, or the association at its expense (your expense) will try to keep the property maintained. The association can try to collect on its costs but since the home is likely to continue through to foreclosure, there is very little hope of collection, and remember per Florida Statute, when the bank takes title, the association receives the lesser of 12 months back member fees or 1% of the original mortgage, which will generally not even cover the back member fees. There is no provision in the Statute to recoup maintenance and upkeep costs.
Since we are at the start of our new year we can certainly be optimistic at this point and hope that 2011 ends the year showing that the bottom has been reached and we can look forward to improvement in the years to come.