Real Estate & Property Law

SHOULD HOA BOARDS LET OWNERS KNOW WHO IS BEING FORECLOSED?

I have written a lot about foreclosures, bankruptcies and delinquencies and know they have put a lot of strain on homeowner associations and everyone associated including the "dues-paying" owners and all HOA vendors. I have received an email that I believe deserves answering, although you may not agree with my answer - and you are certainly entitled to your own opinion. Here goes (the email question):

"Love your site...it is very helpful... I have a question I thought you may be able to help with...I understand if you cannot answer... What are your feeling in regards to a Board's responsibility in terms of letting owners know about foreclosures within our complex...some members feel it is our fiduciary duty to notify all residents regarding foreclosures, while others feel we shouldn't say anything, especially if the resident in foreclosure is current on their monthly HOA dues...the same question has been posed for both foreclosures discovered doing "Google" searches, as well as foreclosures recorded in our county documents.... Thanks for any feedback..."

Here is my response (and I have answered the question similarly in an earlier blog about the idea of publishing the names of persons who are in collections):

To what end???!!!

Is the purpose to

Let everyone know what units are vacant or will be soon so the burglars and thieves can step in in the dark of night? (Because that could happen.)

Let everyone know the value of the places are going down because of foreclosures leading to a mentality of "that place is going to the dogs" or "sell and get out quick"???!!! (Because that could happen.)

Let the "vigilantes" loose on those who owe money so that they can hassle them, threaten them, or worse (setting the Association up for a lawsuit if the action taken is offensive enough)???!!! (Again, could happen...)

Or

Try and shame the owners who cannot pay or have decided to walk away into paying???!!! (That does not work, people either pay, do not have the money to pay, or have made an economic decision that in better times might not have been made.)

I have to say ... if you are in it for the shame game... then shame on you.

I have said before, collections should be done in "all reasonable manner", business-like and professionally, and a board does have a fidiuciary duty to be diligent in its attempts to collect outstanding delinquencies as those negatively impact the HOA's bottom line, but "laying shame on those whose homes are being foreclosed?????". That is not a tool that is included in my "tool kit".

If you want to know what is included, visit the guru at http://www.californiacondoguru.com and check out the very affordable Primers in the webstore. There are 6 on assessments alone, 3 of which deal specifically with collections processes.

Full post as published by California Condo & HOA Law on June 10, 2009 (boomark / email).