Community Association Collections…What About Bank Owned Units?

Dear Collections Guy:

After four years a bank has foreclosed on a unit in our association that has not paid maintenance fees all that time.  We thought that when the bank took title the situation would improve, but now we see that the bank is not paying the dues, what can be done?

Signed,

Frustrated in Florida

Dear Frustrated in Florida:

First of all, it’s a good thing when a bank takes title to a unit in your association (condo or HOA), because no matter what, they owe the association all the late fees, late interest, administrative costs, reasonable attorney fees, special assessments, and regular assessments that came due from the time they took title. Keep in mind everything is owed and not just the lesser of 12 months or 1% of the first mortgage because there is NO first mortgage anymore.  You will get all of that money but some banks sit on the unit and don’t pay until such time that they can find a buyer.  Your problem is that your association needs the money now and should not have to wait until the bank is ready to start paying or they sell the unit to a new buyer.  The question is…What do you do ?

Well, you have two choices in this matter.  One, you can engage an attorney and file a money judgment against the bank and once you win that money judgment you can enforce it and the bank will either forfeit the unit or pay what they owe.  That is a legal solution which will work, but like all legal solutions it will take time and you have bills to pay today.

A second solution would be to have a finance and collections company advance the association the money that is owed by the bank every month.  This way the association receives its maintenance fees every month and there is no need to take this case through a litigation process.  This solution would only be viable if said company would not charge the association interest or any fees at all to the community association and place the entire burden of collection costs and fees on the bank.  No cost or risk to the association.  By replicating a perfect cash flow scenario the community association no longer has to worry or even consider the status of this unit until such time that the bank sells it to the next member of your association.  So there you have it:  You can engage a legal solution and obtain a money judgment, which can help you to enforce your association’s rights, or you can engage a financial and collections solution that puts money in the association’s bank account right away and removes this problem from your association’s list of issues.   There are ways to manage this situation but in the end you want your money today.  For more information on Bank Owned funding go to https://snapcollections.com/cap-funding-debt-collection/ and read all about it.

Best Regards,

The Collections Guy