Neighbor’s Foreclosure Costs Every Condo Owner!

B.G. from New Haven County writes:

Dear Mister Condo,

Why am I being forced to pay increased common fees because of foreclosures that are taking too long at my condo? I have always paid my condo fees on time and as far as I know so have most of my neighbors. Now, two units have been foreclosed upon after almost two years of the owner’s not paying their common fees and I get a notice from the Board saying common fees will be raised at this year’s annual meeting because the two owners paid NOTHING to the Association last year causing a budget shortfall of 10% in our 20-unit complex. This is so unfair! Is this legal?

Mister Condo replies:

B.G., I feel your pain. Yes, it is perfectly legal. In fact, the law currently protects unit owners and the companies that hold their mortgages from paying common fees to the association for as long as it takes for the foreclosure action to be completed. Your association will not see any money from these units until such time as the units are sold at auction. Then, your association will receive 6 months of back common fees and reasonable attorney fees. That is a pittance compared to the moneys that are owed to the association. That budget shortfall must be made up by the remaining dues-paying members to prevent the association from defaulting on its own financial burdens which are the common expenses like insurance, utilities, snow and trash removal, landscaping, etc.. The units that have been in foreclosure effectively ride along for free during this process creating a huge burden for associations like yours. The mortgage holders are also protected under the current laws and can take as long as they wish to foreclose on a unit. Combine that with a lengthy process through the courts and you have a formula for financial ruin for homeowner associations like yours.

There is legislation before the Connecticut General Assembly as I write this (House Bill 6662) that would protect you and associations like yours from further financial hardship brought on by delinquent common fees and delayed foreclosure actions by banks or the courts. I urge you and your fellow condo residents to join me and the folks at CAI-CT to contact your State Senators and Representatives to support House Bill 6662 that would extend the association’s lien on foreclosed units that are delinquent in their common fees from the current six months to a renewable or evergreen lien. Again, the bill under consideration and that most needs your support is HB6662.

That won’t help you recover all of the lost money you’ve already lost but it would certainly help moving forward. Good luck to you and all of us who live in Connecticut’s condominiums!