As condo owners default, neighbors left holding bag | Portland Press Herald: "'A quarter of our income has been withdrawn, and it has been now for a long time,' said David Pitt, one of the owners and president of the Rosemont Condominium Association.
Associations rely on those fees to pay insurance and to maintain and repair common property. But under current law, they're hard-pressed to recover that money when an owner stops paying. The remaining owners in the association must pick up the tab.
Associations around the state increasingly are facing that burden as the recession, falling property values and a wave of troubled mortgages generate drawn-out foreclosure procedures.
Now, condo association officials are seeking some relief. They're asking for a change in the law governing condominium rules to allow them to recover some of that lost money from lenders, after the owners bail."
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Portland, Maine. Not a whole lot of condos in Maine, but about half of them are in the Portland area.
3 comments:
While situations like this gives rise to questioning the long term viability of the CID concept, particularly condominiums, at the very least, thought should be given to going back to the idea of individual metering and billing of utilities such as water, electricity and gas.
The insanity of moving into a CID with common utility billing is being vividly demonstrated here, as well as many other CIDs around the country. When you make continuance of utility service contingent on a single entity's (in this case the HOA) ability to pay for a large number of residences, you are open to this risk.
This is all a consequence of developers trying to make the "CID lifestyle" as "carefree" as possible by putting the HOA in charge of utility provision. Unfortunately as demonstrated here, it works like an old fashioned string of Christmas tree lights. When one bulb burns out, the entire string of lights goes dark.
As carefree as possible might be one possibility, however, I think that more often than not it is about creating a perpetual revenue stream from the residents for the benefit of the developer by using the HOA/condo regime to impose "contracts" with specific vendors into perpetuity.
For example, the services contracted for are often economically deregulated services. In such cases, the vendor can charge whatever they want. However, ordinarily they must fear losing customers if they price their product too hight. Not so, however, with homeowners having choice removed by virtue of "mandatory association".
In a mandatory association of this type, the consumer is prohibited under threat of fine and foreclosure from having any alternative. This is how cable has kept such a monopoly - via restrictive covenants that prohibited viable alternatives. We are seeing developers imposing restrictive covenants under the pretext of "aesthetics" that serve primarily to prevent people from having choices as to source of electricity, water, gas, telecom (phone), and telecom (internet). By prohibiting choices, the HOA imposes an economically unregulated monopoly on the homeowners - and the homeowners are definitely not the beneficiaries. It's an open license to economically bilk homeowners. Deregulation must be accompanied by choice.
The other problem with common utilities of this fashion is that the HOA (as advised by its agents) entangles forecloseable assessments with items that are not forecloseable in order to extort other monies from homeowners. (see, e.g., Delgado v. Shaw (Arizona)) By engaging in this racket, the agents extort "late fees", "attorney fees", "dismissal fees", etc. from homeowners. Because the managing agents divert receipts without crediting them to the HOA, the homeowner is presented as a "deadbeat" and the HOA is no wiser.
Yep, I always wonder how many developers are getting kickbacks from those contracts with cable companies, internet providers, and so on.
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