Condo associations, like developers and lenders, are facing significant issues due to the foreclosure crisis. Increasing foreclosures leads to less income from condo assessments as owners cannot pay their condo fees. The lower assessment income means insufficient operating funds to cover expenses such as insurance and maintenance.
To stave off financial disaster, condo associations are having to get creative. For example, some condo associations are using reserves to buy foreclosed units, and then renting them out until the sale climate improves and the unit can be sold at a decent market value. This action provides 2 advantages: the unit is prevented from being sold too far below market and the association is able to recoup some additional funds.
Some courts have ordered receivers in bankruptcy to collect rents where owners have rented the unit out but weren't paying the condo assessments and use the rental income to pay overdue condo assessments.
Some condo association that had banned owners from renting their units are relaxing those rules, or creating hardship exceptions, to allow owners to avoid foreclosures.
These are extraordinary times and it calls for creative action.
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