Making Adjustments in Changing Times

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robb baerI wrote last quarter that we all needed to have compassion when working with delinquent homeowners who cannot pay. And that sentiment still holds true. For those delinquent homeowners who will not pay, the association Board must act. As we all know, assessments are an association’s lifeline. If more and more owners withhold payment, the association cannot keep its commitments to the other members of the association that are keeping pace with their obligations.

Across the country, associations are experiencing cash flow problems because owners are falling behind in their assessments. This cash flow problem has lead to increased enforcement activity and that has led to an increased number of properties entering the foreclosure process. Thus and, increasing the uproar over whether associations should be able to foreclosure. The cries have caught the attention of the House Select Committee on Homeowner Associations as well as the press.

The House Select Committees official adopted report states “… the Planned Community Act authorizes the use of foreclosure proceedings to satisfy homeowner association liens; the foreclosure statute was never intended for this purpose … Several individuals suggested that the statute should be amended to prohibit or limit the use of foreclosure in all or some cases.”

This statement has left many boards and professionals asking how do community associations endure if the definitive method, after all other tactics of collecting funds have been exhausted, is abolished? Areaonable correlation can be drawn between a municipalitie’smunicipality’s right to foreclose to collect a property tax lein and an HOA ‘s right to do the same . They both are obligated to deliver vital services, and neither can meet that obligation without funding.

The overwhelming majority answer is that the associations’ only decisive method of enforcement should not be removed without replacing it with a reasonable alternative to ensure the associations survival. The statutes must provide solutions which guarantee that no one unfairly shifts their responsibilities to others. The Supreme Court has stated “that property which a man has honestly acquired he retains full control of, subject to these limitations: First, that he shall not use it to his neighbor’s injury …” surely this concept applies when a homeowner chooses to shift his or her responsibilities their neighbors by refusing to honor a financial obligation that they signed on for when purchasing their home.

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