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Lenders are having difficulty, too

January 9, 2012
By SYLIVA HELDRETH - Real Estate Law , Cape Coral Daily Breeze

Question: We have several unit owners who are delinquent in their condo association fees and, in most cases, their mortgages as well. Our association is hampered in collecting on the liens we have placed on the delinquent owners' properties be-cause the mortgage lenders are not foreclosing. Why won't the bankers move ahead in a timely manner.

Answer: The lenders are in a difficult position also. Most are doing their best to operate efficiently and in the best interests of the parties who are owned money.

The reality is that when a lender forecloses, it generally holds its judgment until it has a buyer ready to close. If the lender takes title it becomes a unit owner and, like all unit owners, is responsible for budgeted maintenance but also special assessments for capital projects and deferred maintenance.

If they foreclose, they are also obligated to pay past due assessments but that is limited to one year's assessment or 1 percent of the original mortgage amount, whichever is the lesser.

A buyer from a first mortgagee who has foreclosed a unit buys it free and clear from past due obligations. On the other hand, the purchaser from a delinquent unit owner is jointly and severally liable for all monies owed. It is better for the bank to participate in the sale of a property that is delinquent rather than already foreclosed.

Another reason that banks are not speeding along in the foreclosure process for those in default is that the courts are clogged with the number of cases pending already. The Supreme Court of Florida recently reported that there were over 600,000 foreclosures pending.

An additional consideration is that the potential buyers who are considering a purchase are savvy. They don't want to take on obligations, known and unknown, that they would not have if they purchased a property that was not involved in legal action.

Prospective purchasers know they need to obtain an estoppel certificate advising of all monies owed. They are trying to find out if there are any proposed capital projects which might necessitate a special assessment, the number of unit owners who are delinquent and if there is any pending litigation. Buyers who want to play it safe, move on to a property that is not delinquent. This adds to the time it takes for the bank to take any action at all.

Attorney Sylvia Heldreth is a certified specialist in real estate law. Her office is located at 1215 Miramar St., in Cape Coral.

This article is not intended to be specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.



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