Foreclosure Properties Hurting Condo Associations in Florida

The continued rise in repossessed properties has been hurting condo associations throughout Florida, according to Fort Lauderdale-based Becker and Poliakoff, a law firm helping homeowner associations.

Condo complexes are now being forced to cut amenities and to impose higher fees on condo owners as the rising number of foreclosed condo units has been creating severe deficits for condo associations. Banks and mortgage firms are also contributing to the problem as they delay final foreclosure procedures to avoid paying condo association dues.

Banks have also been tightening their lending policies on condo purchases. They now refuse to lend when over 50 percent of units in a condo complex are being rented, when condo owners do not have adequate reserve funds, when many condo owners are delinquent on their association dues or loans and when many units are owned by a few investors.

Real estate brokers specializing in condo units complain that banks are worsening the foreclosure situation involving condos. But Anthony DeMarco, government relations vice president for the Florida Bankers Association, explained that banks have been losing money too and that banking regulators have required them to be strict in their lending activities. Additionally, bankers said that the foreclosure process in the courts takes too long they cannot legally take back their foreclosure properties at the expected time frame.

According to Rich DiBello, rental manager for Villagio Condominiums, banks have been using all strategies to avoid assuming their responsibilities as owners of foreclosed units.

Most of the condo complexes currently suffering from foreclosures are those that were built or converted into condos from 2004 through 2007. These complexes were products of heavy speculative buying, according to analysts.

At the 42-unit Waterside Condominiums in Charlotte County, 74 percent of buyers abandoned their units, leaving only 6 owners to pay monthly expenses totaling $8,000 and a yearly insurance bill of $16,000. The six owners had to increase their monthly fees to $500 each and to pay an assessment of $1,800 each.

At the 320-unit Villagio condo complex in Sarasota, over 40 buyers abandoned their loans and their units when the housing market plunged. These buyers were able to purchase units as lender Countrywide Mortgage allowed them to buy with zero or minimal down payments.

Among Florida condos suffering from foreclosure properties are the Las Palmas in Sarasota with 105 foreclosures, the Town Park Village at Lakewood Ranch with 143 foreclosures and the Cortez Palms at Bradenton with 97 foreclosures.

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