Condo groups facing unpaid dues push for foreclosures

Solomon and his law firm presented two alternatives to the court. First, they asked to court to remove Citibank's mortgage from the records. Alternatively, they asked the court to force Citibank to foreclose, and in fact the association agreed to waive any and all defenses that could normally be raised against that foreclosure action.

Citi capitulated. It released its mortgage, which allowed the condo association to sell the property for whatever price it could get on the open market. Once a new buyer took title, that new owner would be responsible for paying condo fees and real estate taxes, instead of the association.

Solomon also filed a similar action against HSBC bank on behalf of another association client.

On Jan. 12, a judge in the Eleventh Judicial Circuit of Florida, which covers Miami-Dade County, ordered that title to a condominium unit be turned over to the bank. In effect, this shortcut the foreclosure process, and the bank did not have to comply with the procedural steps normally required under Florida law.

Why is this significant? In the District of Columbia, if a lender forecloses, it has to pay the condominium association up to six months of condo fees that went unpaid before the foreclosure. But if the unit owner has not paid fees for more than six months, the condo will lose a significant amount of money. In Maryland and Virginia, lenders do not have to pay the association any unpaid condo fees.

Accordingly, the Solomon approach forces a lender to "put up or shut up." Start the foreclosure now, or lose your mortgage. "Although this particular legal strategy is for extreme cases," Solomon said, "it demonstrates there is more associations can be doing to collect past-due maintenance assessments from owners and lenders. Associations need to be more aggressive than ever during these difficult economic times, even when traditional collections methods have failed."

This approach worked successfully in Florida, a state plagued with an unbelievable number of condominium foreclosures. If you are on the board of directors of your association, you should confer with your legal counsel to determine its validity in the Washington metropolitan area.

Benny L. Kass is a Washington lawyer. This column is not legal advice and should not be acted upon without obtaining your own legal counsel. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036.