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NO
RESERVE FUNDS? YOU MAY LOSE YOUR HOME!
By
Jan Bergemann
Published
May 1, 2015
In
recent weeks we hear more and more horror stories about owners
unable to pay huge special assessments – caused by the total
lack of reserve funds.
Before
Wilma there was a serious trend – especially in condos down in
South Florida – to vote down reserve funds. There were lengthy
discussions about the funding of reserves in town-hall meetings.
Especially the elderly owners voted against establishing and
funding reserves, claiming that they (for example) would be long
dead before the building needed a new roof or new balconies.
The
result after Wilma (and other hurricanes in 2005): Many families
lost their homes because they were unable to pay the special
assessments that had to be levied in order to pay for the high
insurance deductibles after hurricane damage.
Associations with well-funded reserves didn’t have to levy
special assessments. They paid the deductibles from the reserve
funds. But the folks who voted down the funding of reserves saw
their short-sightedness come back to haunt them. Many of them
were unable to pay the special assessments and lost their homes
to foreclosure.
With
banks no longer making loans as easy as before the real-estate
crisis, many families were just unable to find the money to pay
for these special assessments and defaulted on the payments –-
leading to liens and foreclosures and the loss of their homes.
Did
many owners learn from these horror-stories and changed their
attitude towards reserve funds? Obviously not! In recent times
reports about special assessments for maintenance and repairs of
buildings are piling up and more families are facing the horror
of foreclosure.
Make
no mistake: Many families would be at a total loss if they would
suddenly face a special assessment like the folks in the Embassy
Tower 2 building in Fort Lauderdale Beach.
Fort
Lauderdale Beach condo residents hit with $60,000 assessment
Let’s
face it: It’s definitely much easier to pay $50 a month than
$50,000 on short notice. The legislature knew what they were
doing when they added the reserve fund provisions to the
community association statutes.
We
always hear that community associations increase the property
values. That’s plainly a fairy tale invented by the industry.
They needed to find some excuse to make the purchase of homes in
community associations palatable.
But
what really increases property values are well funded reserves.
Any potential buyer – especially when looking to buy a condo
in an older building – will get scared and look elsewhere when
finding out that there are no reserve funds – or the existing
reserve funds are totally underfunded. Who wants to buy a condo
if a special assessment for maintenance and repairs is already
looming on the horizon?
Admittedly:
Not everything that comes from Tallahassee makes sense, but in
this case the owners should really pay heed!
FUND
THE RESERVES!
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Jan Bergemann is president of Cyber Citizens For Justice,
Florida
's largest state-wide property owners' advocacy group.
CCFJ works on legislation to help owners living in
community
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associations. He moved to
Florida
in 1995 - hoping to retire. He moved into a HOA, where the
developer cheated the homeowners and used the association dues
for his own purposes. End of retirement!
CCFJ was born in the year 2000, when some owners met in
Tallahassee
- finding out that power is only in numbers. Bergemann was a
member of Governor Jeb Bush's HOA Task force in 2003/2004.
The organization has two websites to inform interested
Florida
homeowners and condo owners:
News Website: http://www.ccfj.net/.
Educational Website: http://www.ccfjfoundation.net/.
We think that only owners can really represent owners, since all
service providers surely have a different interest! We are
trying to create owner-friendly laws, but the best laws are
useless without enforcement. And enforcement is totally lacking
in
Florida
!
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