Paying it Forward Collecting Arrears

 The ongoing recession has changed the financial picture drastically for many  residents, and their buildings are feeling the effects of late and missing  assessment payments, owners unable to pay special assessments, and even owners  who withhold maintenance payments for the same reasons rental tenants withhold  rent: They may feel that nonpayment punishes the board or management for some  shortcoming—real or perceived. A building’s assessments are used to pay for routine cleaning of common areas, door  personnel, amenities and unexpected issues such as roof damage, balcony repairs  and other problems, but if someone doesn’t pay their share, it can quickly lead to some very serious problems.  

 Unexpected Events

 There are many reasons residents cite for nonpayment of their monthly dues and  assessments: unemployment, other unexpected expenses or sheer forgetfulness.  But the most common reason cited is that someone in the family isn’t working because they’re sick, says Marshall Dickler, an attorney with the law firm of Dickler, Kahn,  Slowikowski & Zavell, Ltd. in Arlington Heights. Another common reason for arrears is a  divorce or separation that leaves a resident short of cash. In the case of  elderly residents, isolation and forgetfulness may play a role. In the worst case scenario, a resident may have died without a person appointed (or  willing) to handle their estate.  

 “After that, it usually is something like money management, where the owner has  built up debt and can’t juggle or make all of their payments,” Dickler says. “Believe it or not, we see a tremendous amount of this in January and February,  after Christmas purchases that can’t be paid for with savings or cash flow.”  

 In Illinois, there are no figures that have been publicly compiled for the  number of co-op and condo buildings that are dealing with delinquent owners.  But Angela Falzone, a consultant with Association Advocates, Inc. in Chicago,  says that out of the 42-unit townhome complex that she manages, there are three  foreclosures and three serious delinquencies—and the number of problem residents is growing. According to national real  estate research firm RealtyTrac, Illinois had 33,092 total foreclosure filings  in the first quarter of 2011 to rank it among the top ten active states.  

 Duty vs. Do-Gooding

 For condo boards and management agencies, the key is to figure out how long they  should wait before initiating collection procedures—and determining if a grace period should be made for special circumstances such  as illness or unemployment. The general consensus is to refer the delinquent  unit owner to the association attorney when the delinquency hits 60 days.  

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