Condos and HOAs can recover their money after bank foreclosure


The real estate meltdown has so confounded everyone in the community association industry that opportunities are being missed and money squandered.

Consider this scenario: At your condo’s board meeting your community association manager is sharing some good news and some bad news. The good news is that after 3 years the bank has finally foreclosed and taken title to a particular unit and since the mortgage was $150,000 the association has recovered $1,500 in assessments (the lesser of 12 months or one percent, frequently referred to as the statutory cap).

The bad news is that the unit owed $10,400 including $1,500 in attorney fees. After paying the attorney, the total net recovery for the association was zero, and the shortfall to the association was $8,900. The treasurer asks “what now?” and the manager responds with “our lawyer says that we have to take a write-off.” Is this really the end of this receivable?

Few ask why there is a writeoff, and if they do, they are quickly told that the money is lost forever and becomes another budget entry for the bad debt line item. Time is short and the meeting agenda must continue onward to other pressing matters.

Can an association get back any of the money it is owed after a bank forecloses and sails into the “safe harbor” of the statutory cap? The answer is yes, but only if the association knows it can and then makes the effort to collect it.

What boards need to know is that when a bank forecloses, takes title and leaves the association with an unpaid debt, the money is still owed to the association and may be recovered. The recovery is not always easy. It may not always be fruitful. However, my father always told me that “if you don’t ask, you will never get.” Boards of directors need to ask this simple question: “is there any way that we can go after the former owner and get back the money that is owed to us?”

So now that we know that this money can be recovered, how do we go about reclaiming it? Engaging a collection agency is the best option. Most collection agencies will collect debts for a percentage of the total amount owed. So if you are collecting zero, any percentage recovered looks pretty good.

In Florida there are debt collection agencies that have focused on the community association industry and are actively working to collect community association debt owed on a contingency basis exclusively. If you are a member of a board of directors, it’s time that you considered what is owed, and how you can get it back. If you don’t ask, you won’t get.

Mitch Drimmer is a licensed CAM and is the Vice President of Association Financial Services, a specialty finance, business process outsourcing, and accredited collection agency specializing in community associations. For more information, visit Or email Mitch

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