An Opinion By Jan Bergemann 
President, Cyber Citizens For Justice, Inc. 

Published June 9, 2008

Even if many service providers seem to think that homeowners' associations are created to make them rich, homeowners are often better off ignoring their advice! 

The bad economy and the dead real-estate market should have association boards -- I'm talking about homeowners' associations regulated by FS 720 -- rethink their policy. So-called professionals are in business to make money -- lots of it, if possible. They are not in business to help associations in need or to avoid financial struggles; they are in business to fill their bank accounts!

Please don't believe otherwise!

It is time that boards again take control of the financial business of the associations they are supposed to serve in order to avoid bigger financial losses than necessary. Owners not paying their association fees are only too common in our associations -- so are vacant houses! But that doesn't mean that boards should now send their association attorneys "in a race to the courthouse steps to file for foreclosure," as attorney Robert Tankel was recently quoted in an article published by the Tampa Tribune headlined "Neighbors Kick Family Out Of Home".

Times have changed. Foreclosure vultures (politely called investors) are not showing up in bunches at foreclosure auctions to snap up great bargains, and it happens often enough that the association attorney is the only bidder to bid on the property -- and the association is the unlucky owner of the unwanted property.

I don't want to discuss the financial liability that the association assumes with the possession of the property -- there is a lot more to it than can be seen on first sight!

We always hear from the great times when these properties were sold with profit to interested buyers and the associations recovered all their money -- plus making a profit that financed the new landscaping at the gate! These times are gone -- just left in the memory of some folks who haven't realized that times have changed! My granddad always reminded me of the good old times when Germany had an emperor! That was as well long ago!

People, times have seriously changed!

Many associations struggle financially and foreclosures often only add to the financial misery. Nowadays foreclosures are often bad business and associations lose more money to legal fees than they recover. And that is plainly bad business -- no matter what some professionals are trying to tell you! They get their money no matter what -- but the association loses money! 

Let's make one thing very clear: There is nothing wrong with just filing a lien to secure the debt, according to FS 720.3085.

[Note: Board members or association employees can file the liens in the court house at small cost.]

But then board member shouldn't believe the fairy tales that some professionals are spreading:

• There is no legal requirement to file for foreclosure.

• It is not selective enforcement if a board decides to proceed with filing for foreclosure in some cases and not in others.

• If there are no bidders at the foreclosure sale, the association attorney is not required to make a bid in the name of the association -- and buy the property.

It is within the board's discretion to make decisions case by case. A simple title search will reveal if the property has sufficient equity. Don't throw good money after bad if you know at the very beginning of the procedure that the association will never recover the legal fees. If the mortgage is higher than the actual resale value, let the mortgage holder spend the money on the legal foreclosure proceedings. 

And don't ever get the idea to purchase the property at foreclosure sale by allowing your attorney to bid on the property. If the bargain hunters at foreclosure sales don't bid $100, it's very obvious that there is no bargain. And speculating in real estate is pretty bad business in Florida in the moment -- and associations are not in the real estate business in the first place.

Please never forget: Attorneys and community association managers are hired by the association to do certain jobs, but are acting on the direction of the board. Don't give them carte blanche and give them decision-making power, especially not in a time where association finances are in dire straits.

On the other hand it is bad business:

• If a board decides to proceed with foreclosure action when it's clear that the legal fees are not recoverable.

• To foreclose if the property is abandoned by an investor and the mortgage is higher than the whole property is worth.

• To foreclose if the house is a dump and not marketable. 

Board members have a fiduciary duty on behalf of the association members. Wasting money on legal fees for useless foreclose is a clear violation of this duty.

It's always easy for the board to raise the association fees, but how long will your neighbors be able to pay the increased fees, before they fall behind in their dues?

Times have changed in Florida -- and methods have to change accordingly!

DON'T THROW GOOD MONEY AFTER BAD MONEY --

IT'S COMMONLY CONSIDERED BAD BUSINESS!