The owner has not paid assessments in years. Perhaps the owner has a gambling problem and flushed all their money away at the casino. The only significant asset other than their residence is a car with a lien on title, which can’t be seized for a sheriff’s sale. The only income is social security, which can’t be garnished.
In fact, we recently addressed such a collection matter for one of our association clients. When we compared what the owner paid for the property with a rough estimate of its current value from various online sources, we could estimate that there was a significant amount of equity in the property because we also knew the outstanding balance on the mortgage. This led us to advise the board that we should proceed with foreclosure, because even if there were no third-party bidders at the sale and the association ended up owning the property, there could be a significant windfall realized due to the equity in the property. (Indeed, our firm has been able to foreclose on units for clients where a substantial windfall was garnered – in one case, the unit obtained is now the association’s office.) The association might then fix it up a bit and market it for sale, or even decide to rent it out in the meantime. Also, it was simply time to “stop the bleeding” and take action that would result in a new owner that was able to pay assessments.
Shortly after the association’s sale was noticed, the bank holding the mortgage decided to foreclose, as the bank likely also realized there was enough equity in the property to pay off the first mortgage. So, it made sense for us to cancel the association’s sale. After the bank’s foreclosure sale, at which several parties competitively bid up the price, we checked with the court clerk and found there was more than enough money to pay over $24,000 that was owed to our association client.
While it may seem like your association has little to no chance of recovering delinquent assessments from an owner, you may be surprised what happens when your community association attorney is sure to ask the right questions and provide the appropriate guidance during the process. With patience, persistence, and determination, you can be successful in your efforts, even if it may seem to the untrained eye that all hope is lost.