Article Courtesy of The Sun Sentinel

By Daniel Vasquez

Published January 14, 2011

Mark Michaelson has learned the hard way that a community association may take away your home for not paying maintenance fees. Florida foreclosure laws and court-ordered auctions give homeowner and condo associations the opportunity to strip titles of delinquent owners and take possession of their properties.

Because of personal financial problems, Michaelson said he stopped paying maintenance fees and the mortgage on his three-bedroom home with a lake view in Boca Raton in 2006, racking up more than $18,000 in overdue assessments and attorneys' fees. Late in 2009, the Boca Greens Homeowners Association, which operates the 500-plus home community Michaelson lives in, filed for foreclosure against the home. Florida law allows associations to file for foreclosure against an owner when they reach delinquency of 90 days. Eventually a Palm Beach County Court ordered the home to be auctioned on Dec. 20, 2010, and Boca Greens was the winning bidder.

"It happened to me, it could happen to you," Michaelson said. "In the end, I think it's better for an association to work something out with owners like me who are behind in payments rather than take over the property for themselves."

Public records show Michaelson purchased his home in 1999 for about $167,000 and he said it was worth as much as $460,000 four years ago. It was auctioned and bought by the association for $1,900. "Now I am just waiting to be evicted," he said.

Taking possession of Michaelson's property was the last thing the association wanted to do, said Karen Gagliano, the attorney representing Boca Greens.

"Mr. Michaelson has been delinquent since April 2006. He hasn't paid a single penny since then," Gagliano said. "The bottom line is the community has been carrying him for five years and they can't carry him anymore."

Boca Greens now is in the process of figuring out whether it will rent or sell the property, a decision Gagliano said depends partly on how much money it will cost to get the property in shape for a tenant or potential buyer.

Both Michaelson and Gagliano say the courts ordered both parties to mediation in July 2010. But they could not reach an agreement.

"At mediation I found out that I owed about $12,000 in assessments and fines and fees," Michaelson said. "I asked them to take away the fines and they agreed and that left me with a $11,000 debt with the association. "I was willing to pay that until I found out I owed another $8,000 — on top of the $11,000 we agreed upon — in legal fees. That amount was overwhelming, I couldn't pay it."

Gagliano's response: "None of this would have happened if he would have paid his assessments or stuck to a payment plan we had tried to work out. He did neither."

Michaelson said what happened to him can happen to anyone who is not familiar with state foreclosure laws and that the result may not only be harmful to owners who loses their property, but to the communities and associations that must face the financial burden of maintaining properties they have taken possession of.

Experts say more associations may take the extraordinary steps of forcing foreclosure upon owners and consider buying back those properties through public auctions to deal with large numbers of owners who are chronically delinquent in maintenance payments.

Nobody knows how many condo and homeowners associations face financial problems because of owners who do not pay maintenance fees, but the numbers are likely high. A relatively recent survey by the Condominium Associations Institute — a national advocacy and lobbying group with chapters throughout Florida — showed that about 13 percent of unit owners in each condo community are in delinquency with their association and about 15 percent of homeowners. CAI estimates, based on the results, that about 450,000 shared community unit and homeowners across the state out of a total of about 3 million are in some state of delinquency.

"It was rare prior to the economic downturn for associations to take over units and rent them," said Matthew Zifrony, an attorney with Tripp Scott, a Fort Lauderdale-based firm that represents more than 70 condo and homeowner associations across the state. That's because, Zifrony said, when associations take title through foreclosure they often still have to deal with banks and either pay off the original mortgage debt if they want to sell the home — or make the investment to get properties back in shape for renting.

Still, Zifrony says, "It is become more common now for associations to take over the units ... because there could be a significant [financial] windfall to the association if it's able to take title to a unit that is in good condition and receive rent payments up until the bank completes its own foreclosure."

But there are down sides too. "Many unit owners will harm the property as they're moving out. The association will then have to spend the money need to rehabilitate the property ... then hope that it can find a renter and collect enough rent to cover rehabilitation costs and its foreclosure costs. Hence the risk."

Michaeslon said he is left with only one decision: What to do when sheriff's deputies knock on his door to evict him, which could be any day.

"I know this was personal, the association wanted my property," he said. "And you can believe this is happening elsewhere and will happen again and again."

Gagliano insists the association action was not personal but only an attempt to protect the interests of the other owners in the community. "Other associations I represent may consider doing this more because at some point you have to stop the bleeding," Gagliano said. "Too many people are taking advantage of the long foreclosure process and living on the back of their neighbors. We had to stop the bleeding."