Firm shareholder Roberto C. Blanch was quoted extensively in an article today by The Real Deal South Florida on the looming financial strains for community associations due to the spike in unemployment caused by the COVID-19 economic standstill. The article, which is titled “South Florida HOAs and Condo Associations Prepare for a Drop in Collections,” discusses the options that associations are considering in response to the expected delinquencies. It reads:
. . . Attempting foreclosure is also an expensive process that some associations will want to avoid, and the temporary freeze on foreclosures and evictions until mid-May is expected to create a backlog of cases.
Plus, “the end game – foreclosure – may not necessarily be in the best interest of the condo [association],” said Siegfried Rivera attorney Roberto Blanch.
A number of associations he represents have been proactive about reducing operating expenses wherever possible. Blanch said associations are “anticipating they are going to have difficulty collecting payments from owners who have lost their jobs, who have been furloughed, or been laid off.”
Some are offering payment plans or waiving late fees to owners who have requested that, similar to what happened in 2008 and 2009. But the true impact has yet to be seen, he said. Payment plans could consist of lowering the portion of fees an owner has to pay for the first three months, and then spreading the rest out over the remaining set period of time.
Down the line, to continue operating, associations may have to vote to use their reserves or may have to impose special assessments. And they operate on tight budgets already, Blanch said. Using reserves to cover basic operations should be viewed as a last resort, he said.
“April may not be the first month we start feeling the strain. It may happen in May, June, July,” he added. “It’s almost like you can see the tide, right? The effects are going to be somewhat delayed.”
The more expensive, Class A communities will likely feel the impact later on, experts say. Paul Kaplan, managing partner of KW Property Management & Consulting, said that for the 90,000 condo and homeowners associations that his company manages in Florida, collections have fallen just 3 percent so far in May, compared to the same period last year.
Blanch and others predict the damage won’t be as severe as in the last crash.
“You’re going to have a lot more people that they may fight a little harder to keep their homes,” Blanch said. “Before, people were more willing to walk away from an investment.”
Our firm salutes Roberto for sharing his insights into the financial fallout for community associations caused by the coronavirus pandemic with the readers of The Real Deal. Click here to read the complete article from the real estate news site.