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Community Association forecloses on member’s property

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For the first time, the Community Association here has taken title to a residential property as part of ongoing efforts to recover unpaid membership dues.

By MELODY JAMESON

SUN CITY CENTER — For the first time, the Community Association here has taken title to a residential property as part of ongoing efforts to recover unpaid membership dues.

The CA leadership, however, has not made a determination about use or disposition of the home and, from the legal perspective, stands behind a mortgage lender heavily invested in the site.

This first takeover of a SCC house and lot when all other endeavors to collect back dues have failed was set in motion about a year ago when a foreclosure action was initiated by a real estate attorney at the CA Board’s direction, Ed Barnes, president, said this week.

The court-ordered Certificate of Title was received last month, he added.

The property is located on the community’s north side and the two-bedroom, two-bath, concrete block house is among those built during the community’s first decade. Barnes did not specify the property address or name the absentee owner. The house has been vacant for several years, he noted.

The foreclosure was preceded by multiple attempts to bring the owner’s membership dues account current as the CA undertook a community-wide campaign two years ago to collect accumulating unpaid fees, Barnes said. In such cases, notice after notice is provided to a homeowner advising of the unpaid balance due, of options available if financial hardship is a factor and of the eventual possible consequences if a dues matter is not addressed.

If these efforts do not produce a workable response, the CA then files a formal lien against the property, establishing its legal claim for non-payment of past due fees as required by one or more covenants previously made part of the property deed. The last resort is a foreclosure action to satisfy and settle the unpaid dues balance.

In the present instance, the unpaid balance and legal fees total more than $5,600, Barnes added. CA membership dues gradually have increased over the years and now are $263 per member, per year.

Although the CA now holds certain legal rights to the property under its Certificate of Title, that title does not, for example, allow for selling the house and lot to another owner, Barnes noted. Plus, a lender holds a mortgage on the site for substantially more than $100,000, along with the property deed, he added.

Given this situation, Barnes said the CA leadership will contact the lender to suggest it make use of the tax advantages it could capture by donating the property “as is” to the CA, a not-for-profit entity in good standing under section 501(c) 3 of the federal IRS code. Such a choice by the lender would relieve it of further responsibility for maintenance, of mortgage collection efforts or of the added expenses accruing from a foreclosure action on its mortgage, plus give the lender the significant tax advantage of a substantial charitable contribution.

And, if the unencumbered property deed were to be conveyed to the CA, Barnes said the organization well might opt simply to sell the house to an eligible buyer in order to recover the back dues owed and the related collection expenses.

Additional monies resulting from a sale would be applied to the community amenities, the CA’s first responsibility, the president said.

If, however, the lender is unwilling to relinquish its interest in the property at this time, Barnes said the board will look into renting the house to an eligible tenant in the short term. The house is structurally sound and actually would require only cosmetic attention to make it desirable, he estimated. A reasonable rental rate could satisfy the unpaid dues balance and the involved expenses in about a year – the same length of time the lender might need to accomplish its foreclosure.

Asked if the property could be converted to business office use or for badly needed club space, Barnes pointed out it is not contiguous to any existing amenities and is not suited to office use, in part because of location within a long established residential neighborhood.

The property may be the first claimed by the CA for non-payment of dues, but it may not be the last, Barnes indicated. This week the combined total due the CA in unpaid membership fees stood at $126,000, he said, and there is another similar situation among the top 10 defaulting homeowners owing $2,000 or more that could become the next foreclosure.

Sun City Center’s numerous amenities – including more than 100 clubs and various activity venues from swimming pools to performance theaters – are supported by the community’s association dues. This array of amenities surpasses those in any other area retirement center, Barnes asserted, yet are available to residents whose annual membership fee is less than in other communities.

“We take dues paying very seriously,” he added, “and we must enforce the restrictive covenants that our homeowners accepted when they purchased their properties.”

Copyright 2012 Melody Jameson

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