Article Courtesy of The Miami
Herald
By Monica Hatcher
Published June 22, 2009
It's
a mad, mad world in condo land, where those who pay their maintenance fees
and those who don't live cheek to jowl, harboring bitter resentment.
Rosa Mendoza's upstairs neighbor quit
making his condo association payments almost a year ago. He bought another
home and let his unit slide into foreclosure.
What irks Mendoza -- no, infuriates her --
is that, as the foreclosure process drags on, the neighbor continues using
the Miami Beach condo as a weekend getaway, even keeping his sailboat tied
to the dock.
''What I would love to do is untie that
boat of his and let it float away,'' Mendoza said. "I would never do
it, but I fantasize about it.''
Well into the second year of South
Florida's foreclosure crisis, deadbeat condo owners are taking a heavy
toll on associations like Mendoza's. Owners in or facing foreclosure often
stop paying their condo fees that are needed to pay for essential
utilities and services. That leaves other residents on the hook to pay the
difference.
Some can't cover the shortfall. As a
result, the water has been shut off. And the lights. Trash is piling up
and lawns are ragged. Many are going without property insurance in the
depths of hurricane season.
In condos, those who pay their bills and
those who don't live cheek to jowl, fraying nerves throughout the
building.
Some condo owners are acting out. It's
getting ugly.
The frustration is fed by a legal system
that affords considerable protections to delinquent owners -- too many
protections, in the eyes of some of those who are current with their
payments.
And so, some associations are meting out
their own punishment. Public humiliation is in vogue. At least two
condominiums -- The Collins in Miami Beach and Island Place in North Bay
Village -- and probably far more, post lists bearing the names of owners
who are behind on fees.
''I don't see it as a bad practice,
myself,'' said Jenny Huertas, a resident of The Collins who hopes it will
keep her assessments from going up. "I guess it's a way to embarrass
them and get their attention that they need to take action.''
After appealing to nonpayers' sense of
fairness failed, Eduard Sotolongo, a board member at Island Shores condo,
said he started aggressively calling the towing service to haul away their
cars when parked in guest spots or other unauthorized spaces. About 16 of
81 units are in foreclosure at the North Miami Beach condo.
Towing the car of one offending resident,
however, resulted in a threat on his life, Sotolongo said. "You feel
like buying a shotgun because it feels like the Wild West.''
Bill Raphan, the state's assistant condo
ombudsman in Fort Lauderdale, said the situation in some condos is,
indeed, getting dangerous. "The frustration people have, it leads to
terrible animosity.''
"Associations are asking about trying
everything -- limiting their access to the clubhouse, pool, cutting the
water off, cable off. We've heard all of this stuff. But in condo law, you
can't do that . . . as long as they own their unit.''
That said, it certainly doesn't stop people
from trying.
GrandView Palace, a 500-unit building in
North Bay Village, in February found a way to turn up the heat on
nonpaying landlords by installing a new electronic key system. Tenants of
these units were denied fobs and were technically locked out of the
premises. Renters like Yvonne Eyking, who occupies a unit in arrears, have
resorted to ''piggy-backing'' with other residents to get into the parking
lots, buildings and pool area.
It's inconvenient, admits Eyking, a
real-estate agent. But she said she understands -- even supports -- the
hard-line policy because it gets tenants to hassle their landlords to
settle up with the association.
''You are using the facility, and you are
victimizing your neighbors. Anybody can pay $500 a month [in fees],'' said
Eyking, who is moving out next month to buy her own place.
Some owners, out of a sense of duty, have
kept paying the fees despite abandoning their mortgage payments. Justin
Miller is one of them.
''I don't deserve to live for free, but
that's just me. If I don't pay my fees, then someone has to pick them up
for me,'' Miller said.
Others, however, have no qualms about
stiffing the condo association.
At the Island Shores condo in North Miami
Beach, the security system malfunction not long ago, presenting the
association with an opportunity to put the squeeze on delinquent
residents. Or so they thought.
'We fixed some, but some [others'] we did
not because they owed us money,'' said Jenny Ledesma, the association's
president. "We thought it might get some of them to come to the
office.''
Alas, all of the key fobs were reactivated
after board members learned from their attorney that limiting building
access is illegal.
Rolando Tato, president of the Lancaster in
Hialeah, where 44 of 96 units are in foreclosure, decided to shut down the
pool -- for everyone. At first, he said, it was to save money. Then he
confessed the real reason: "I don't want the people who don't pay the
bills to have that enjoyment.''
The reprisals underscore a more serious
sense of injustice, fear and powerlessness on the part of homeowners
struggling to pull their buildings from the jaws of the condo death
spiral.
When unit owners fall behind, other owners
are assessed higher payments, putting them under increased financial
pressure. Some of them, in turn, may be unable to bear the higher costs,
leading to still more delinquencies and foreclosures.
Banks recognize the risks of a financial
meltdown. Most refuse to finance condo purchases in complexes where more
than 15 percent of the unit owners are behind. Borrowers can even be
denied loan modifications if a building suffers from high delinquencies.
The irony is that those same banks may be
contributing to the problem. Associations and their lawyers claim banks
deliberately stall the foreclosure process -- to avoid taking ownership
and having to shoulder the fees. As a consequence, nonpayers are allowed
to remain in the property for months and sometimes years for free.
But even when lenders foreclose, the
problems don't end. Most wait until they sell a unit to settle up
maintenance accounts. That's also when they typically pay their share of
the prior owner's delinquencies. Florida law says they owe the association
the lesser of six months of payments or 1 percent of the original mortgage
note.
Also working against associations are
popular foreclosure defense strategies that allow borrowers, with an
attorney's help, to postpone proceedings indefinitely. Loan modifications
can also take time.
''Unit 204 has been in foreclosure for two
and half years,'' said Ledesma, the association president at Island
Shores. "It's totally unfair. I don't think anybody is looking out
for us.''
The law is of minimal help, associations
say, even though it gives them the power to place a lien and foreclose on
nonpaying units. That's because lenders, as primary lien holders, get
first dibs on the proceeds from a foreclosure sale. There is usually
nothing left for the association.
Robert Kaye, a Fort Lauderdale-based condo
association attorney, said that besides a foreclosure action, there is
little else associations can or should try to do.
He even advises against posting the names
of delinquent owners, saying that can lead to defamation suits.
That angers Sotolongo of Island Shores:
"We can't do it because it violates their human rights. What about my
human rights? Why doesn't FPL care about human rights? They will cut off
my electricity because somebody else doesn't pay.''
Meantime, Sotolongo and others do what they
can to prevent the worst from occurring -- losing their hard-earned homes
because someone else won't pay their fair share. The threat is real.
For residents of the Mirassou Condo in
Northwest Miami-Dade, where 124 of 310 units are in foreclosure, financial
problems reached a crisis in April, when the county water and sewer
department cut off water to the complex because it owed more than
$100,000.
'People were screaming. Children were
crying. It was pandemonium. People were yelling, 'We want water! We want
water!' '' said Katherine Rivera, who bought a unit there last year.
She had no idea the condo association was
so far behind. The water was restored after the association scraped
together several thousand dollars and agreed to a final repayment plan. If
they fall behind again, that's it, Rivera said.
''If they shut down the water, within 72
hours we could be out on the street,'' Rivera said. "People that live
here have had to work their entire lives to save up for a home to call
their own. If at any point we are considered uninhabitable, those people
are left in the street.''
For nonpaying condo owners like Rudy
Martin, the guilt can be pretty intense. Martin, who quit paying the fees
on his Deerfield Beach condo more than a year ago, avoids his neighbors or
endures "chilly stares.''
He had hoped loan modification would take
care of his financial problems, and he felt compelled to explain himself
when he ran into neighbors: "I felt like I had to talk to them and
justify it, so they didn't think I was scumbagging them.''
The loan modification didn't come through,
though, and he finally moved out of the 36-unit condo last week.
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