State and local governments aren't the only ruling bodies feeling the impact of the housing meltdown. So are homeowner associations, the "mini" governments that ride herd over hundreds of thousands of communities from coast to coast.
Associations rely on "property taxes" in the form of monthly, quarterly or annual assessments to pay for such services as utilities, trash pickup, snow removal, landscaping, and road and building maintenance. The fees also fund a wide variety of amenities, including everything from bocce ball to tennis courts.
Nationally, more than 60 million Americans live in an estimated 315,000 homeowners associations, condominium communities and residential cooperatives. But these governing bodies rarely collect assessments on vacant homes. And according to the latest survey by the Community Associations Institute, vacancies brought on by the economic slowdown are putting an ever greater strain on the ability of owner and condominium associations to pay their bills.
Worse, perhaps, is that according to a separate CAI survey, the situation is exacerbated by lenders who are not paying their share of the bills.
About a quarter of the 600 community managers surveyed say more than 5% of their units are empty, with the vacancies attributed largely to foreclosures, the inability of nonresident owners to sell or rent their properties or owners simply walking away from their home and mortgages. Some 30% of the managers report vacancy rates of 3 to 5 percent.
Overall, assessment delinquency rates have almost tripled since 2005. Today, 63% of associations have delinquency rates exceeding 5%, up from 22% six years ago. One in three associations has a delinquency rate exceeding 10%, and for almost one in ten – nearly 30,000 associations nationally – the late rate is more than 20%.
In addition, more than 70% of bank-owned properties are not making timely assessment payments to their associations.
"High delinquency rates place tremendous pressure on associations to meet their obligations to the homeowners who are paying their fair share," says CAI Chief Executive Officer Thomas M. Skiba. "When some owners – including lenders that have foreclosed on homes and now own them – don't pay their share, other homeowners often must make up the difference in higher regular assessments or special assessments. Associations must still pay their bills."
