A recent New York Court dealt with an issue on leasing (Olszewski v. Cannon Point Association, Inc., 148 A.D.3d 1306 (2017)).  The Board adopted rules and regulations that placed restrictions on leasing that contradicted relevant portions of the Association’s Bylaws.  The Association then fined the owner for violating these restrictions and the owner sued.  The owner won at the circuit court level and the Association appealed.  On appeal, the Court again ruled in favor of the owner, upholding the trial court’s decision.  Why?
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In Illinois, a Court recently ruled on a Condominium Association’s attempt to charge back an insurance deductible to one of its members (Gelinas v. Barry Quadrangle Condominium Association, 74 N.E.3d 49 (2017)). This particular association had a fire originate in an owner’s unit resulting in damage to not only the specific unit, but the entire building. The Association made a claim with its insurance company and received reimbursement for the necessary repairs to be made. The Association then held a hearing and levied an assessment against the Unit Owner in whose unit the fire originated.
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Our long-time client, a condominium association in Milwaukee that historically faced heavy delinquency issues, was unable to fund its expenses due to very heavy delinquency rates. Among the expenses the association could not fund were its legal expenses. The association owed more than $30,000 in legal fees and costs, but had twice that in collections. The association was unable to make regular payments on their expenses due to a lack of cash flow.
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A condominium association in Milwaukee has historically faced heavy delinquency issues. Through The Husch Blackwell Condominium & HOA Law Team’s assertive collection methods, the firm collected more than $290,000 in assessments, interest and legal fees for the association since 2013. A substantial portion of the $290,000 resulted from the sale and/or rental of 10 units that became owned by the association.
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A condominium association in the Milwaukee area was owed more than $2,000 in fines by one unit owner. For more than a year, the unit owner had been fined numerous times due to the same violations of the bylaws which the unit owner refused to correct.  While the unit owner paid assessments monthly, the unit owner ignored the fines and the association’s attempts to demand that the unit owner correct the violations.
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A condominium association had an owner that was uncooperative, didn’t like following rules and paid assessments on her own timeframe for more than 10 years. In the spring of 2009, another law firm started collection against the unit owner for unpaid assessments by filing a lien on the property.  During the next year and a half, the lien was foreclosed and judgment entered.  In November 2011, the property went to sheriff’s sale. At the sheriff’s sale the attorney for the association opened the bidding at $1 and the property was purchased by a third party for $2.  When the third party spoke with the unit owner, he felt sorry for her and sold the property back to her. Although the association’s attorney sought and was granted a deficiency judgment, the judgment was not collectible because the unit owner was retired and had no assets.  As a result, the association’s debt had increased to more than $22,000, which the association lost due to the purchase of the unit by the third party for $2. 
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A Wisconsin condominium association had a unit owner who was habitually delinquent in the payment of assessments. Neither the association or the property manager had ever spoken to the unit owner.  The association hired an attorney who filed one small claims action after another against the unit owner every time she became delinquent.  The association was awarded judgment each time, and was paid on the judgment debt each time through numerous garnishments  However, the attorney fees were awarded at the time of judgment, so the association was not able to recover the additional attorney fees it incurred for each garnishment.  After each garnishment the debt would again accumulate and the collection process would start over.  The unit owner was not paying assessments outside of garnishment.
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First mortgage holders continue to be the largest impediment to Association collections, once unit owners fail to pay. This arises because the bank’s lien is superior to the association’s and therefore most associations decide not to proceed with a foreclosure if the bank has begun its foreclosure.  This is true even though banks frequently file foreclosures and then don’t proceed to the sheriff sale, adjourn the case indefinitely or very SLOWLY, or never seek to confirm the sale.  Accordingly, Associations must have a strategy to combat these issues. 
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