It has been a long, tough few years. The boom time of the early 2000s was replaced by the second greatest economic downturn in the history of the United States. The Great recession left millions of people unemployed, and even more underemployed, and turned many neighborhoods into virtual ghost towns.
The resilient people who remained weren't without issues, either. Most were faced with homes that were worth less than what the occupant owed on the mortgage. Still others were faced with juggling bills to make payments, and try to stave off bankruptcy.
Unfortunately, they weren't always successful, which leads to this weeks question.
Q: The economy has been especially rough on our association. We are suffering from a glut of empty, foreclosed homes, and the real estate market has made nearly every resident in our association the "proud" owner of an upside down mortgage. Recently, I too have come upon hard times. I was forced to file for bankruptcy, and am curious as to whether or not I will still be allowed to serve on the board of my HOA?
I am trying to keep up with my monthly maintenance, but am now one month behind on payments.
-Bankrupt in Boynton
A: Dear Bankrupt in Boynton,
While all indications point to the fact that the real estate market is recovering at a more rapid pace these days, the reality is that there are still folks such as yourself who are struggling financially through no fault of their own.
There is nothing in the statutes which would prevent an owner who has filed for bankruptcy protection from serving on his or her HOA board. However, there is a prohibition against owners who are 90 or more days delinquent from serving on the board, You have indicated that you are only one month behind so you are still eligible to continue serving on your board. If you do let your delinquency get to the 90-day mark, you will be automatically suspended from the board and the remaining directors can appoint someone to fill your vacated seat.
To the extent that you can prioritize which of your financial obligation to pay, I would urge you to put the HOA assessments at the top of this list. A small debt to the HOA can quickly balloon if your account is sent to a lawyer or collection company. Moreover, unlike bank foreclosures, association foreclosures can be completed much more swiftly as there are very few legitimate defenses to nonpayment of assessments whereas bank foreclosures usually have a number of potential affirmative defenses and counterclaims.
Not being eligible to serve on your HOA board is not the worst penalty; losing your home to an HOA foreclosure would be.
The West Palm Beach HOA Examiner wishes to thank Donna Berger and the staff of Katzman, Garfinkel, and Berger for their continuing willingness to help answer some of the important questions that this column has brought to light.
What we all must remember is that we all live in a community. What happens to one member of the community has an effect on all the others. It may not be immediate, or even understood, but it will have an impact.
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