La Quinta, Palm Desert and Palm Spring

August 22, 2008 by  
Filed under National, State, Local

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Southern California Real Estate

You don t need to be a California real estate lawyer or homeowner association attorney in California to know there may be homeowner associations in your city that amay have serious financial problems If you live in a homeowner associate development in cities such as Palm Desert, San Diego, Orange County, Palm Spring Viejo, or similar, it is important to take note.

A crisis is brewing for homeowner associations in California, and few are aware of how bad it is about to become. Using the association problems in Florida, this may be the largest problem they will have to face. Since most homeowner boards consist of common individuals and retirees, not many are prepared for the storm of problems headed their way.

Most homeowner associations set aside reserves for long and short term projects. Many reserves, however, are under-funded. Those that are properly funded through homeowner fees as assessments are based on receiving the full amount of fees required from homeowners each month.

Is the problem apparent yet? Six months ago, 15% of homeowners in such associations were in arrears or in foreclosure. That number is surely much higher today, and California mirrors Florida in most trends and statistics, such as foreclosure rates.

Once a homeowner association begins to feel the pinch of not being paid thousands of dollars in homeowner fees each month, problems like they’ve never faced before, become a catastrophe.

As of 2007, 58.8 million Americans were living in association governed communities. Not only do these communities need to break even each month, but also need to set aside monies for yearly and long term projects. If just ten or fifteen percent of homeowners fail to pay their dues, or the banks fail to pay dues on foreclosed homes, trouble erupts.

As a result of late or unpaid dues, these associations have to cut back on projects or assess the remaining homeowners. There is little they can do to reduce fixed costs, such as taxes or contracted services, and they must cut back on landscaping, hold off improvements, maintenance, or any type of repairs.

Homeowner associations can no longer count on loans from banks. It is a worse case for those associations who kept reserves of over $100,000 in a bank that has failed, and which had FDIC insurance on only the first $100,000 before the US government increased the amounts covered by the FDIC Foreclosures of vacant property. Foreclosures take much time, and properties become run down or infested with pests as the process drags on.

Associations have duties to keep to continue setting aside money for future repairs. To do this, they must continue to levy special assessments on the paying homeowners. When homeowners can no longer pay the additional assessments, the problem only compounds itself.

California homeowner associations need to anticipate and prepare for the storm headed their way. They need to live by the creed, “Things can always get worse,” because they almost certainly will.

It is important for California homeowners to prepare for the impending storm. Each must keep in mind, Things can always get worse, because it is likely they will.

If you have a homeowner association, real estate, or mortgage issue, we have the knowledge and resources to be your California Homeowner Association Lawyers, and Orange County and San Diego Real Estate Attorneys. Be sure to hire a California law firm who can represent you from La Quinta to Carlsbad, Anaheim to Irvine and any place in between.