Foreclosures Hitting Condo Owners Hard

September 30th, 2008 | Tags: Foreclosed Homes

Foreclosures are hitting all condo owners hard – whether in or out of it. It sounds strange but true but even those condo owners who are current in their mortgage payments are being seriously affected by the housing crisis.

According to Orange County Register innumerable condo complexes are riddled with vacant units that have been foreclosed upon. Now the cost of maintaining the complex has to be shared between those that remain. This means the less the number the more the share of responsibilities – financial or otherwise. Special fees are being levied on the remaining occupants to fund extra repair due to damages done by termites and rodents in vacant units.

Things have gone so far that volunteers of House Owner’s Association are having a trying time dealing with human squatters and encroachers sent by Mother Nature to colonize empty foreclosed units. Coming across a hundred pound beehive is not an uncommon experience. Some of the condos that are worth over $1 million have been abandoned. The onus is now on the owners to mow and water the gardens and yards.

Nearly 60% of the house owners are covered by the mandatory rules of HOA. The associations having many hundreds of units are witnessing dozens of units sporting signs of bank owned sales. A house owner in distress usually discontinues payments being made to the association many months before actually shifting. Andrew Schlegel of Merit Property Management said that at the time of the bank foreclosing on the unit, it has to realize all that is due to the associations but if the previous foreclosed owner vanishes the matter hangs in midair.

Faced with the impossibility of collecting past dues the HOAs face a difficult situation. Left with no other alternative they have had to raise the monthly fees. Sometimes the increase is from $10 to a whopping $240 per month! Karen Conion of California Association of Community Managers bemoaned, “When some homeowners aren’t paying their fair share, it puts a burden on the other homeowners.”

In Lake Forest one condo complex is riddled with 60 foreclosed units and has no money for urgent tackling of the termite problem. Another complex with 33 foreclosed units is charging extra $1,000 as a special fee from house owners who are current on their mortgage dues. Liens are being filed by HOA for past dues but who will bell the cat?