WILL IT BE THE FORECLOSURE CRISIS ALL OVER AGAIN?
Eric Glazer, Esq.
Published March 30 , 2020
We all remember just how bad our communities suffered about a
dozen years ago during the great recession. Our firm
represented condominiums where nearly half of all units went
into foreclosure. It was terrible for community associations.
The paying owners were often times forced to pay double to make
up for the monies not being collected from all the delinquent
So, here we are during this Corona Virus crisis and the same
questions are being asked again. How bad will this get for
community associations if the unemployment numbers continue to
spike? Can we simply tell everyone they donít have to pay
assessments for a while? Can we move reserve funds? Can we
borrow money? Can we change our collection policy to show some
I donít think that this time is going to be as bad as last
time. No way. Iím optimistic that the economy will be bouncing
back shortly. This virus will go away sooner than later, and
the government is throwing massive amounts of money at the
problem. In addition, it was a different kind of problem a
dozen years ago, where people who couldnít afford to buy a home,
over extended themselves. It was a time where everyone was
upside down on their homes and you didnít lose much by simply
walking away, other than that 5% down payment you made.
Sometimes it was even less. Now, more people have more equity
in their homes so I donít see them walking away from their
Associations obviously cannot tell the owners not to pay
assessments. The association has bills that need to be paid
each and every month for employees, insurance, landscaping,
repairs, supplies, etc. These bills can only be paid if owners
pay their assessments. ButÖ. If things get tough, there is no
doubt that many owners wonít be able to pay each month. So what
is an association to do?
Some associations have reserve funds. If the unit owners vote
to move these reserve funds into operating, the board can amend
the budget and reduce the monthly assessment amounts. Perhaps
an even better idea would be to simply have access to a line of
credit that is simply there is the association needs it. Money
is very cheap right not. This is actually the right time to
borrow. I would strongly suggest applying for that line of
credit now, before delinquencies kick in, because once
delinquencies are high, the bank is likely to say no.
Some attorneys may be telling associations that now is the time
to be tough and make sure to vigorously go after all owners who
are delinquent. I donít buy into that. If someone canít afford
to pay the $500.00 they owe you now, why should I send them
immediately to collections and inflate that number to
$5,000.00? Are they now suddenly able to pay it? Did they
magically get their job back? Of course not. Always try to
enter into a reasonable payment plan. If they are a few months
delinquent, perhaps agree that they pay the full amount each
month going forward but the delinquencies to be brought current
within six months. Whatever is reasonable.
Boards have to balance the need to pay the bills with the
ability to show some compassion and common sense. If an owner
ignores all demands for payment, there may be no choice but to
proceed legally. But, if an owner is truly in dire straits for
the time being, is not ignoring the board and simply needs some
time, then give them that time. Sometimes you canít get blood
from a stone, but you can extend a reasonable payment plan to an
owner fallen on hard times.
These are tough times everyone. Hopefully we will never see
anything like it again in our lifetimes or our childrenís or
grand-childrenís lifetimes. History will record how we treated
each other during these times. I hope those history pages show
that we did all we could to help each other.
HOA & Condo Blog
Eric Glazer graduated from
the University of Miami School of Law in 1992 after
receiving a B.A. from NYU. He has practiced community
association law for more than 2
decades and is the owner of Glazer
and Sachs, P.A. a seven attorney law firm with offices in
Fort Lauderdale and Orlando and satellite offices in Naples,
Fort Myers and Tampa.
Since 2009, Eric has been the host
of Condo Craze and HOAs, a weekly one hour radio show that airs
at noon each Sunday on 850 WFTL.
He is the first attorney in the
State of Florida that designed a course that certifies
condominium residents as eligible to serve on a condominium
Board of Directors and has now certified more than 10,000
Floridians all across the state. He is certified as a Circuit
Court Mediator by The Florida Supreme Court and has mediated
dozens of disputes between associations and unit owners. Eric
also devotes significant time to advancing legislation in the
best interest of Florida community association members.