A proposed state law would make banks fork over maintenance fees for vacant but not-yet-foreclosed condo units.

Condo owners generally must pay a monthly fee to a condo association, which covers the cost of maintaining common areas including landscaping, roofing and amenities such as swimming pools or tennis courts.

But a growing number of local owners walked away and stopped paying the mortgage and maintenance fees after the real estate bust caused the property value to fall below what they owed on the units.

For now, lenders who foreclose on those condos don’t have to pay monthly maintenance fees owed on those units until the foreclosure process is completed. Even then, they only have to pay 1 percent or six months worth of fees.

But some lenders are delaying the process because they don’t want a lot of foreclosed properties on their books.

Lenders typically cannot even begin the process until the owner is 90 days late on mortgage payments. And with foreclosures taking another 12-18 months after that to complete, there aren’t enough fees being paid to maintain the condo complexes. In some cases, the remaining tenants now must make up the shortfall caused by others.

“Everything is bordering on disaster at the moment,” said Jim Hart, president of Longwood-based association management firm Sentry Management Inc., which manages about 600 Central Florida residential communities, including condos. “We have one community with 322 units, and only 32 are paying their association fees. Many associations had reserves built up for maintenance, but they’re using those to pay normal operating expenses. Now, the money is gone.”

To help relieve those associations and reverse the trend in declining maintenance that has resulted in even lower property values, state Rep. Julio Robaina, R-Miami, introduced HB 329. It would, in part, require the lenders to negotiate with associations on a fee even before the title is repossessed.

No companion bill has been filed in the Senate yet, but is expected to be filed by state Sen. Rudy Garcia, R-Hialeah. Garcia was unavailable for comment.

The bill is being revised to remove a provision that would have required banks to pay the entire amount overdue to associations. The revised bill, which would allow for a negotiated amount to be paid, should be reintroduced later this month to the Civil Justice & Courts Policy Committee, Robaina said.

But Van Bogan, chairman of the Florida Bank of Commerce, said the bill sounds like an unfair burden on lenders. Negotiating before the foreclosure process doesn’t make sense, since banks aren’t owners until they take title, he said. “We shouldn’t be responsible [for association fees] until we own the property.”

Orlando attorney Karen Wonsetler, who represents condo and homeowner associations, expects banks to “fight like hell” against this proposed law. But it’s needed, she said, because the slow foreclosure process is being delayed even more by new mandatory mediation required between lenders and homesteaded owners.

Another plus: The bill may make it easier for potential buyers to get condo mortgage loans at more complexes, said Doug Prince, a property manager and residential real estate agent with Olde Town Brokers in Orlando.

Government-backed Fannie Mae won’t issue mortgages for condos in a complex with more than 15 percent in delinquent association fees. But if the banks pay the fees on abandoned units, potential condo buyers would have a better shot at getting loans, he said.

Sentry Management’s Hart agreed. “Banks are going to have to start paying some fees back to these associations so they eventually will be able to sell these condos. If not, they’re just prolonging the problem.”

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