Foreclosures, Unpaid Dues Strain Condo Boards

Thus, one immediate suggestion: Do not let assessment debts get too large.

I believe in zero tolerance when it comes to association assessments. If the owner is delinquent for even one month, depending on the procedures spelled out in the association's legal documents, legal collection action should begin immediately.

Other board members have asked whether the association can cut off the services it provides to delinquent owners. The answer depends on state law, as well as on the association's legal documents. For example, if the association is paying the heating bills, many states will not allow heat to be terminated during the winter.

But other services, such as use of the swimming pool or the health club, can be stopped when an owner is not paying the assessments.

Before the board takes this step, it should advise the owner of the situation and invite him or her to attend a hearing before the board. The owner has the right to have a lawyer present and should be given an opportunity to explain why the services should not be terminated. Some states, including Virginia, require such a board hearing. I recommend it for all community associations.

Another board member writes: "As a board, we have the power to do yard maintenance and trash removal," and the costs "are included as part of our annual assessment. . . . Can we eliminate these services and let the owners work with vendors on a direct billing basis?"

That's an interesting idea, but I cannot recommend it. I have no problem with the board eliminating certain services, but to let owners arrange this work on their own could lead to chaos. You don't want a dozen or more trash trucks coming to the property each week.

More significantly, we all know that not everyone will want to participate -- or can afford it. That means some lawns will become overgrown and some properties will have trash piled outside for a long time. And in a high-rise condominium association, such a plan is completely unworkable.

But defaults and foreclosures strain the community and may require tough cutbacks elsewhere. Examine your expenses carefully; there is fat in almost every association budget. I suspect that the board, working with the property manager, could trim hundreds or thousands of dollars.

Some possibilities for boards to consider:

¿ Increase your insurance deductible. That should lower the annual premium. The downside of this is that you will have to pay more every time you file an insurance claim.