Scott, Other/Just Looking in West Rogers Park, Ch...

We have two units out of four going into forclosure and we are going to have a special asst. How do we?

Asked by Scott, West Rogers Park, Chicago, IL Wed Aug 26, 2009

collect from the owners that are going into forclosure and bankruptcy?

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Scott,

I am going to include an attorney's link here which addresses your question. I would suggest you read this and its comments. I would also recommend the association consider consulting an attorney to clarify your position to determine what steps, if any, the association should take. Alternatively, if you have a management company they might be able to help you.

The following is from Naheed Amdani's (attorney) blog:

"The new buyer is only responsible for up to six months of unpaid assessments. Unfortunately, if more than that accrues before the bank forecloses and takes over, associations often end up eating the loss. It is my understanding that before the six-month rule was instituted, associations were not entitled to any past due assessments at all."

"Special assessments that are unpaid by unit owners when the unit is foreclosed usually end up being the responsibility of the bank who owns the property after the foreclosure is complete. Whether or not it gets passed on to the new owner of the unit depends on what the new owner and the bank negotiate prior to the new owner's closing. That doesn't mean, of course, that the condominium association won't go after you for the funds!"

Be careful with the language in the previous paragraph. In Illinois there are several months when a property is in pre-foreclosure. The bank does not own the property during this time and as I understand it they would not be responsible for the special assessment when they foreclose. Again, I suggest speaking with an attorney regarding your specific issue.
0 votes Thank Flag Link Thu Aug 27, 2009
You don't, unless they volunteer to pay it....which they will not. This is happening in many buildings in the city, especially a few of the high rise buildings like 10 E Ontario & 440 Wabash. Management can barely afford to pay operating expenses with all the foreclosures.
You may need to postpone the special or at least declare it, but do not actually do the work until those foreclosed units sell. The association always gives a 'paid assessment' letter to the attorney representing the seller, (bank) in these 2 cases before a closing can take place. That number should include normal assessments that are past due, penalty fees for being late and special assessments that are due. The unit CANNOT CLOSE unless the association gets paid!!! They cannot argue or negotiate this $$ with you. EIther they (someone) pays it or no closing! You will get your money eventually.
It does not matter to you whether the new owner or the bank actually pays the money as long as you get it from the closing proceeds. I have seen paid assessment letters of more than 10K because of 1-3 years late assessments plus penaltys & special assessments. That is partly why some of the final prices on some of these foreclosures are dirt cheap.
In the meantime, your small association must save your nickels until those units sell.

philip
0 votes Thank Flag Link Thu Aug 27, 2009
Scott,

Generally, if units are going into foreclosure they are behind in their assessments. The remaining owners will have to cover all expenses. If the property goes into foreclosure, it is possible that the new owners will be responsible for a maximum of 6 months assessments. This is something you should cover with the bank that is foreclosing.
0 votes Thank Flag Link Wed Aug 26, 2009
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