In a Wall St. Journal article Dec. 31st, reporter Dan Fitzpatrick writes about an aspect of the housing crisis that hasn’t gotten a lot of attention – condos. Residents, mostly retirees, at a 1970s built condo village in Florida are at each other’s throats because of delinquencies in homeowner (HOA) fees.
Some residents have lost jobs and have stopped making both mortgage payments and the HOA fees as well, making it difficult for the HOA to provide adequate security and common area maintenance of the grounds, pool and clubhouse. Some residents who have the ability to pay the mortgage and fees have simply stopped doing so. Some non-paying owners continue to get rental income from their tenants, pocketing the money while they wait for the bank to foreclose, a process that has been delayed in some cases for two years.
Stepping out in front of the banks, the HOA has sometimes started their own bankruptcy proceeding for late fees, an agressive tactic that has prompted accusations that HOA board members were pressing bankruptcy so they could buy the condos as a bargain rental property.
A neighbor selling a house at a loss a year ago told me, “You’re not supposed to lose money in real estate” as though there was a law protecting all real estate investments. If only it were so.