Foreclosures Affecting Condo Owners

May 28th, 2008 | Tags: Foreclosure Victims

There are many instances of foreclosures indirectly affection condo owners – people who had never failed in their mortgages. It is the slump in the real estate market that is affecting them.

Four years ago Barbara Sanz had bought her condo in a shining Miami Tower. At that time there had been a scramble for ownership. Today about one out of six occupants of this 43-storey building is being sucked under by foreclosures. With number of occupants dwindling, the contribution of those residing to the building association is proportionately increasing. Each of those remaining had to cough up extra $1,000 towards assessment and $50 more each month for cable and Internet services. This is in addition to the usual $450 maintenance charges paid per month. But increase in payment has not improved matters. The washers are broken, dryers unusable and the hallway dotted with mould. Barbara briefs up her reaction by saying “It’s not fair.” For the first two years she had enjoyed all the benefits of living in a condo. But today the feel and looks have gone.

People buy condos on the expectation that the monthly bills will embrace many responsibilities that they would have otherwise have had to bear if they had been owners of single family units. The items include trimming the grass and meeting water bills, among others. Today it is leading to friction amongst the remaining condo owners. Some are chalking out strategies like sharing the mowing of the lawn. They are all united in their loss of benefiting from community living. Adjustments are being made in Miami, Chicago and Sand Diego but in each instance the purse is becoming thinner.

The motivating force that had attracted people to condos was the expectation that the responsibility of general maintenance would be less, said chief economist Sam Chandan of Reis, a real estate research firm. The negative side is that the fate of a single owner is tied to the fate of 50 or even 100 others. As soon as one stops paying maintenance the burden has to be shared by the others. The amount goes on increasing as one by one the apartments surrender to foreclosures.

The statistics collected usually fail to take note of the condos although these are accounting for 1/8th of the residential units across the nation. The missing data means that the full extent of the housing crisis has not been exposed – so far it has remained masked.