Friday, September 21, 2012

Getting receiver for homeowners association typically is bad idea -

Getting receiver for homeowners association typically is bad idea - The association must pay the receiver for those services and fees that are court approved. Such fees are in addition to the association's assessed operating costs and can easily exceed thousands of dollars each month, depending on the size of the common interest development and the complexity of the problems to be solved.
Five years of a lousy economy have pinched local governments to the point some have filed or are the verge of bankruptcy.  But receivership really isn't a good option for HOAs as Donie Vanitzian and the late Stephen Glassman explain in their L.A. Times column.  It essentially amounts to management fees on steroids with the receiver legally calling the shots to a far greater extent than even the most over-reaching HOA manager.


Tyler Berding said...

The expense of a Receiver will most certainly break the back of an already broken budget. But a corporation cannot legally function without a board to authorize a manager to act on behalf of the association. So if the manager cannot act, who pays for fire insurance, the water bill, or necessary repairs? With attached housing especially, members cannot write their own checks to these vendors and a project will be condemned if it can't pay the water bill and service to the owners is cut off. If no one will serve as director and there are no funds for a court-appointed alternate, then no one can pay the bills and it is likely the association cannot function and has reached obsolescence. If that's the case the best option for the owners may be to sell the entire project to the highest bidder. If the owners cannot agree on that option, then it is inevitable that either the City will condemn the property and force everyone out or a court will step in and appoint someone to take over the operation and bill the owners accordingly. There are very few alternatives.

HOAbolitionist said...

Another reason why HOAs should be abolished.

Evan McKenzie said...

I think that sometimes there is no choice except to appoint a receiver. It can be prohibitively expensive in other situations. But here in Chicago receivers have been necessary to de-convert condo buildings and turn them back into apartments. There were over 100 blighted buildings, mostly the result of condominium conversion fraud, and they were full of squatters and drug dealers. The City of Chicago asked for a receiver under the Distressed Condominium Property Act, and in the end this procedure was successful. Now there are hundreds more units of affordable rental housing where before there was a failed condo project. The receivers fees come out of the sale to the eventual purchaser.