Yet another fallout from the mortgage and housing crisis is non-payment of condo association fees by property owners. Logically, this would follow. When a borrower is unemployed or underemployed, many creditors will be affected. For the homeowers who are severely underwater, the non-payment could be intentional.
Condo associations are now seeking legal action against homeowners. They want the courts to help force owners behind on their fees to pay up. Courts have responded by holding owners in contempt of court if they do not pay. Some homeowners could face arrest.
In Florida where condo values have fallen through the floor, the problem of non-payment is felt much more. In the Orlando area, the median price of a condo has fallen about 70 percent over the last two years. A condo that was priced at $156,500 in August 2007 is now $49,800 - (data from the Orlando Regional Realtor® Association).
What a dilemma for everyone. It can wreck havoc in entire communities with a snowball effect that might not stop until the development is essentially abandoned. Associations are likely to go under without some type of enforcement. The remaining owners would have few options other than abandoning their properties.
Using the courts is a questionable solution to the problem. This would only work for those people who actually have the money to pay the fees but choose not to – for whatever reason. But trying to get hundreds of dollars from people who have pennies will be next to impossible. This additional burden may force them out of the property and simply add to the problem of abandoned homes (more rapidly).
When homeowners abandon their properties, the condo fees for the remaining homeowners will increase. They have to. Associations need a specified amount to meet their budget. This amount varies little with the number of “occupied” homes. So if 100 condo owners were paying $200.00 per month for a total of $20,000, then 50 condo owners might have to pay $400.00 per month. It would come as no surprise that these 50 condo owners would not be happy campers.
It is a problem that won’t get better in the near future.
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