Whether it’s by personal experience, through articles, or just knowing about it from other communities, we’ve all heard about the nightmares of underwater homes where foreclosure cases are not happening in a timely manner. Yet while the economy is getting better, there are still outstanding balances and communities in need of assistance.
Realty Track is reporting that pre-foreclosure filings were up 4.6% in July of 2013 over the previous month and an average of 853 days to complete the Foreclosure process in Florida. These statistics remind us that time is not on the associations side. And at our agency, we’ve seen just about everything you can imagine.
So, let’s review a real account. The home is underwater. The Bank files foreclosure on a $425k note and names the association as a party. After 2 ½ years, the Bank gets Judgment. The Clerk sets the case for sale and the bank bids $222k. Along comes your new owner and an Institutional Investor bids $223k and the Certificate of Title is issued.
The investor is not entitled to the statutory adjustment offered to banks (or at least not in my non-legal opinion). It has become such a habit to make the statutory adjustment in the case of Foreclosures, so at ARI, we’re cautioning our clients to look closely at the Certificate of Title. The association is entitled to be PAID IN FULL when any party other than the BANK is named on the Certificate of Title. Some investors are willing to challenge the liability claiming they too are eligible for the adjustment. And trust me; I’ve been on the receiving end of some pretty intimidating demands for reductions. And you don’t have to settle, or do you?
What if there is a loophole? How do your documents handle new owners, balance transfers etc? Are your docs potentially going to keep you from getting paid in full? I’d encourage you to look at your receivables and if there is a probability of future foreclosures in your community, it might be worth a quick review with your attorney to assure yourselves when you get to the negotiating table, can you stand firm and demand to be paid in full?
To date, we’ve been able to recover the entire receivables for accounts placed with our office with an investor purchasing the unit at Foreclosure sale.
Additionally, we’ve seen singular Institutional Investors purchase multiple units/homes in one community. So I’d encourage you to welcome the investor, but also be educated. What are the rights of corporate owners? Who can vote? Can they a representative serve on the board? Do your docs limit, restrict or even address Corporate or multi unit owners. These are great questions to know the answers to.
Melissa Nash is the Founder of ARI, a full-service collection agency in West Palm Beach, Florida and author of How To Get Paid On-Time Every Time. For more information on ARI please call (561) 697-4911.