DEAR BENNY: I bought a condo just over a year ago. It was difficult to get a certificate for the sale, because there was no operating HOA. However, when the Realtor finally got it from an interim property manager, everything was clear; there were no encumbrances on the property.

After I bought the property, a more active HOA began making decisions. I then found out that there was a large loan that was taken out for repairs on the property several years before I bought my condo. It was initiated and signed by the property manager at the time (who no longer lives there), and there was no HOA approval in writing. The loan was, in essence, a signature loan between the property manager and the bank.

The property owners have been paying interest only on the loan, and now the principle is due. The HOA is asking each owner to pay his or her portion of the loan.

Am I required to pay my portion of this loan since I was unaware of its existence when I bought the condo? If I am not required to pay my portion, who is? I have considered going back to the seller, but I doubt if she would be willing to pay off a loan on property she no longer owns. The title company is also not responsible because the property was not used as collateral on the loan. –Sylvia

DEAR SYLVIA: Welcome to the wonderful world of community association living. I strongly suggest that you immediately retain counsel to assist and advise you.

There are many parts to my answer. First, does your state require that sellers provide you with certain disclosures about the condition (both financial and physical) of your association? Many states specifically require such disclosures, which would have (should have) disclosed the existence of the loan.

Second, your lawyer — and perhaps the association’s attorney — should carefully review the loan documents. It is possible that the loan was not authorized by the association in the first place, and thus could be challenged in a court of law.

Third, was the loan recorded on the land records in the county where the property is located? If so, then your title company should have alerted you to this.

Finally, your lawyer should look at the loan documents to determine if, in fact, you as a new owner are responsible to make any payment at all. The general rule of community association law is that a new owner is bound by all legitimate obligations of the association. In this case, however, the loan documents may not "run with the land" and may not apply to you.

Incidentally, in the future don’t call a condo a homeowner association (HOA). There is a difference.

DEAR BENNY: Not only is our association suffering foreclosures but here’s the twist: Many unit owners are paying their mortgage but not the dues and a special assessment. Also, we have a published fine schedule for individual unit problems, but one person now refuses to pay her fine.

What is the best way to make sure we collect our dues and fine payments? –Theresa

DEAR THERESA: Your association has a set of legal documents, whether it is a condominium or a homeowner association. Those legal documents should spell out the rights and obligations of the owners to pay their assessments on a timely basis. The documents will also provide you guidance on what legal rights the association has to pursue legal action against any delinquent owner.

I also suspect that your documents provide that if collection efforts are taken, the association can collect reasonable attorney’s fees in addition to the delinquent assessments.

Your association should immediately retain legal counsel who understands community association law. I have often said that if the delinquency is one month late, it’s hard to collect. If it’s two months late, it’s harder to collect. And if it gets to three or more months, it may be impossible to collect.

Associations should adopt a "zero-tolerance" approach to delinquencies. Act quickly. It sends a clear signal to all other owners that the association will not allow delinquencies to mount.

DEAR BENNY: I live in a gated deed-restricted community in Florida. There is a homeowner association, but the developer controls the voting by having two-thirds of the outstanding votes until he sells 90 percent of the lots and then transitions the homeowner association to the property owners. My question is regarding changing the declaration of covenants, conditions and restrictions for the community. Can the developer, because he controls votes of the association, substantially alter the CC&Rs to make them very restrictive as far as existing homeowner rights? I purchased my home with a given set of CC&Rs in place, and it doesn’t seem fair or legal to have the developer place further restrictions on me. Some of these new restrictions are quite arbitrary. Would these new restrictions apply to my existing home? –David

DEAR DAVID: I don’t practice law in Florida so I can provide you only with a general response. You — and other owners in your community — should consider talking with local counsel for specific answers.

The general rule of community associations is that an owner is legally bound to the terms of the existing legal documents and as they are properly amended from time to time.

So, yes, because the developer retains control of your association, he has the right to amend the CC&Rs — so long as he follows the rules relating to amending those documents.

You should organize the 10 percent of owners and retain an attorney to assist you. Perhaps if the developer realizes that you have concerns — and will take all appropriate action to try to stop him from making changes — he will agree to rescind his changes.

The developer wants to sell lots, and as you know, this is a very difficult real estate market. If you mount a publicity campaign to let the world know of your concerns, the developer may be unable to sell more lots. Of course, your attorney should be consulted to make sure that you are not violating any local laws — or the CC&Rs.

DEAR BENNY: I recently bought a home where entire streets consist of houses for sale. The home was bank-owned (in foreclosure) and was priced right. I bid $10K less, thinking that the bank would be happy to get rid of the property. The bank counter-offered at $2K less than the selling price. While I was thinking about responding, my real estate agent told me that the bank had received another bid, and that if I didn’t accept the counteroffer, I’d probably lose the house. What could I do? I accepted the bank’s counter offer.

In the back of my mind, though, I wondered where this second buyer mysteriously came from. With the large number of houses available and the small number of buyers, the odds of two people bidding on the same house (which incidentally had been on the market for six months without a nibble) seemed small. And then I found out the seller’s agent works for the same real estate company as my agent. That increased my suspicion.

I mentioned my concern to my agent, and he said he had seen the second offer, and it was indeed valid. Is there any way to find out if I was deceived? And if I was, do I have any recourse against the Realtor? –George

DEAR GEORGE: You should have asked your agent for a copy of the second bid before you accepted the bank’s counteroffer.

It is not too late, however. Your agent has advised you that he saw the second bid. I would demand from him — or his manager — that he obtain and produce a copy for your review. Although they have the right to delete the name and other personal information from that other offer, you have the right to see what your agent saw.

If your request is rejected, I would file a complaint with your state real estate commission.

You also have the right to file a lawsuit against the agent if he refuses to provide this information to you, but that route can be expensive. The difference between your original bid and your final purchase price was $8,000. A lawsuit may cost you that much — if not more.

DEAR BENNY: I paid off the loan for my house in May of this year. I received a letter from the mortgage company stating the loan has been satisfied and I am now responsible for homeowner insurance. At this time they also returned accumulated escrow funds. Is there anything else I have to do? –Ingrid

DEAR INGRID: You have to make sure that your mortgage (usually called a deed of trust) is formally released from the land records in the county where your house is located. Ask your former lender to confirm that they arranged for this release. Some lenders will do this on their own, while others will not.

You should get your original promissory note and deed of trust returned to you, marked "paid and cancelled."

If you are having trouble determining whether the release was filed, the local recorder of deeds may be of assistance. Otherwise, you should contact a local attorney who should be able to quickly find the answer.

Don’t forget to advise your county real estate tax office to start sending you the real estate tax bills. And one other suggestion for those of you who had automatic bank withdrawals to pay your mortgage: Make sure you stop these payments immediately. You would be surprised at the number of people who forget to do this, and suddenly wake up to learn that the former lender is still receiving the monthly mortgage payment.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to


What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

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