In today’s market, foreclosures are a common situation for any Association to deal with.
What are some of the big issues that an Association faces when homes are foreclosing within their community?
The most obvious issue is typically the maintenance of the property. When a home goes into foreclosure and the previous owner moves out, that property is typically left as-is until the bank and/or real estate agent visits the property to inspect it. Another, sometimes less obvious, issue with foreclosed homes are unpaid Association Assessments. Once a bank forecloses on an owner, they do not always reach out to the Association in a timely manner. Many times, the Board of Directors and/or the Management Company are not aware that the home went into foreclosure and that there is a new owner unless the banks notify them promptly. Without any knowledge of the current property owner, the Association may still continue to bill the last known owner for assessments as well as fining them for violations on the property. The most unfortunate part about a foreclosed home within an Association is that once a homeowner loses their property to foreclosure, he/she is no longer responsible for the assessments or fines associated with the home as well as not being responsible for taking care of the violations on the property from the foreclosure date forward.
So, how does a Board of Directors or Management Company handle foreclosure situations?
The good news here is that there are things that can be done to take care of the previously mentioned issues. Although sometimes it can be a good amount of work, it is important to the Association to keep the property kept up and to collect the assessments that the Association needs to function financially. The first thing is to know what signs to look out for to determine if a foreclosure is a possibility. Some signs include the home appearing vacant, signs being placed on the front door or windows, a homeowner who suddenly stops paying assessments or a home that was once kept up beginning to show signs of no upkeep. If you suspect that a property may be a foreclosure and you can no longer get in touch with the homeowner, it is usually a good idea to begin your search looking into the tax records. Most counties offer a website where you can search the tax records which will show the current owner of the property. Unfortunately, these are not always updated as quickly as we would like. Another way of looking into a possible foreclosure may be as easy as calling a number on a for sale sign. These properties are often times assigned to a real estate agent to sell. These agents will place their signs in the yard of the home and all you have to do is call them. They should be able to provide you with the contact information for the current owner of the property.
Once you have established the correct owner of the property, you will be able to send any applicable violation and assessment notices to them. Often times, banks will not provide extensive maintenance or improvements on the property. The best thing to do is to send the violation notices to their attention, then follow your covenants’ guidelines as to what the Association can do to remedy the violation. Whether it is assessing fines or hiring a contractor to remedy the violation and billing the owner- the banks are just as responsible for following the covenants as the owner who previously occupied the property. Assessments on a foreclosed property work the same as any other property that is not a foreclosure. From the date of the foreclosure forward, banks are responsible to pay the Association Assessments. It is important to locate the foreclosure date on a Deed so you can calculate the correct amounts that will be owed by the bank. As with the violation notices, some banks do not choose to pay the assessments until the property goes to closing. If they choose not to follow the covenants written for the community, they may be held accountable for any Assessments from the date of the foreclosure forward including applicable delinquent fees, interest or necessary collection costs. You should consult with your association’s attorney for legal advice.
Although dealing with a foreclosed home within your community can be frustrating; knowing the rights that the Association has, doing your research and keeping good records often times can help ease the situation and keep the Association running as smoothly as possible.
Tolley Community Management is a full service Community Management Division specializing in Residential and Commercial Association Management. We offer full service management options as well as accounting only packages. We take pride in assisting all of our associations and homeowners with their management needs in the Metro Atlanta area! For more information on our services, request a proposal for your association!
Tolley Community Management ° Backyard Realty Group LLC ° 8295 Highway 92 Woodstock, GA 30189°
(770) 517-1761 ° www.TolleyCM.com
