In the tough economic environment that has hit our nation over the past few years, many condo owners have faced job loss, pay cuts or just financial uncertainty. Unfortunately, the signs of the times sometimes leads to an owner not paying their common charges.
“This is the weirdest, craziest market I’ve ever seen and I’ve been working in real estate in South Florida since 1978,” says Margaret Antoon, president of ACM Real Estate Inc. and Property Management in Lighthouse Point. “Generally speaking, everyone is getting hit hard by non-payment right now. The high-end, luxury market is because in most cases they are overpaying, and the lower end market because they can’t pay. Here in Florida it’s getting worse and I don’t think people realize what’s going to happen in the next year. I believe we are going to see a lot more foreclosures in condominiums because people can’t make the payments in the associations. The unemployment rate is high in Florida and the job creation is like zero in South Florida.”
“We are seeing people struggle today more than they have in a long time and we’re not seeing a huge improvement in the economy,” agrees Melissa L. Nash, president of ARI, a full- service collection agency based in West Palm Beach that specializes in homeowner associations. “What we have now is a better attitude toward debt and an obligation to paying off that debt. Before we had people who were like, ‘We are not paying our mortgage so deal with it.' I do see an attitude change toward homeowner association dues. In many cases people want to pay them, but are not in the financial position to do so.”
When unpaid, overdue debt is not collected, it can wreak havoc on a condominium association. In smaller communities, it can quickly cause the association to have trouble meeting operating expenses, while even larger associations will eventually feel the effects of the shortfall if multiple units fall into arrears. “Everyone wants to live in a financially, vibrant community,” says Nash “At the end of the day that is everyone’s goal. Everyone wants to be on track.”
Associations should distribute a written procedure to everyone in the community so that residents know exactly the way things are done—and more importantly, that things are done consistently for all unit owners. It’s vital for boards and managers to take a proactive role in collecting common charge arrearages to ensure that their condominium association remains financially stable.