Illinois Condo Associations Nuclear Option???
Thankfully, this didn't happen to one of my clients, but I was assigned an interior bpo for a short sale, and the seller was the contact person. When we spoke, she said, "I can't get into the unit, the association locked me out and re-rented the unit to get their condo fees back." I thought, "Wow, this association must be really crazy, That can't be legal."
Not only did this owner get dispossessed of the property, she probably will lose out on getting a short sale, because I WAS NEVER ABLE TO GET IN TO THE UNIT!!!
No access, no bpo, no short sale.
At avvo.com
Illinois Attorney Barry Benjamin Kreisler writes,
"The most powerful collection option is the right of an Illinois Condominium or electing Town Home Association to evict the owner from the right to possess the unit. The Association can then rent the unit and use the rent to pay the past due as well as current assessments and the Association’s collection costs."
Here is a section of the Illinois Condominium act:
(765 ILCS 605/9.2) (from Ch. 30, par. 309.2)
Sec. 9.2. Other remedies.
(a) In the event of any default by any unit owner, his tenant, invitee or guest in the performance of his obligations under this Act or under the declaration, bylaws, or the rules and regulations of the board of managers, the board of managers or its agents shall have such rights and remedies as provided in the Act or condominium instruments including the right to maintain an action for possession against such defaulting unit owner or his tenant for the benefit of all the other unit owners in the manner prescribed by Article IX of the Code of Civil Procedure.
This is much better for the association than getting the buyer to pay for six months of HOA fees after the foreclosure.
Replies to This Discussion
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Permalink Reply by John A. Zentmyer on
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Jim,
These are my thoughts and questions but some experience as well.
Ask around and seek the info on going short even though its rented. The tenant is catching up the HOA and it makes it easier not having the high fees on the Hud-1 anyway? Even if the seller is behind on the mortgage, a couple of Associations I have had were helpful to make sure showings happened. They want the distressed seller out and a new buyer going so they don't have to be in the middle of this. The short sale timeframe and the Assoc getting monies caught up could make it a good transaction. The HOA rents these month to month so if a short takes time the unit is ok, utilities are on and the HOA should help in allowing the short. Agents relationships with HOA can get you listings as they do buy them at Sheriffs sales. When a short doesn't work for whatever reason? And if the relationship with the tenants is there from showings, you may have another client up the road? Two of my lenders are very good with credit fixing and counceling buyers to improve their credit. Four rentals I ve done are short sales done in 07 and my clients are just about ready to purchase again!
Johnny Z
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Permalink Reply by Jim Schneider on
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John,
those are all good suggestions I would probably use if I was the listing agent. In that particular case, I was just there to take interior photos for a broker price opinion, and frankly the hoa's managment company refused even though I sent her on my work order for the bpo. The association made it more trouble than it was worth, and the listing agent was like, here's the number you work out something.
Didn't affect me, there are plenty of bpo's to do along with my own list of clients, so I learned a valuable issue that affect's Illinois condo short sales, but that was about all.
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