Community Counselor June 21, 2007

Question:  Can a homeowners’ association foreclose on a member’s home for non-payment of  maintenance assessments if the owner has a mortgage on the property?

Answer:    When an association forecloses on a Claim of Lien, the association forecloses “around” the home’s mortgage. In essence, when the member’s home is being auctioned the winning bidder has to bid an amount that satisfies or releases the home’s mortgages that were recorded prior to the association’s Claim of Lien. If title to the home is transferred without satisfying the mortgages on the property, the new owner may take title to the home but it will be subject to the former owners’ mortgages. These mortgages have to be paid or the mortgage companies will initiate foreclosure proceedings on the new owner.  As you can surmise, either scenario is disastrous for a non-paying owner. A foreclosure sale not only causes the loss of a home, owners also lose all of the equity they have accumulated.

Question:  One of the Directors of our condominium is a ‘snowbird’ that will not be able to attend Board meetings five months out of the year.  For the meetings this Director cannot attend,  he is demanding we allow him to participate by telephone .  Do we need to accommodate this request, our Board meetings last for hours and the telephone calls will be long distance?

Answer: The law does not require a Board of Directors to accommodate such a request. However, you should review your condominium’s Declaration to determine whether the Declaration  contains a provision requiring the Board to make such an accommodation. If so, the Board must comply. Of note, many condominium Declarations  allow the Board to suspend or remove Officers and Directors if they miss a certain number of consecutive meetings.   If the Board does decide to allow a Board member to participate in a meeting by telephone, the association must use a speaker phone that is loud enough for the Board and the members in the audience to hear what is being said.

Question:  I live in a homeowners’ association and our Board of Directors wants to use our association’s funds to contribute to a local charity. Although I support this charity, I feel that using association funds for a charitable contribution is not proper, am I correct?

Answer: Yes, you are correct. Both homeowner and condominium associations are required to spend association funds only on common expenses.  A charitable cause is not common expense and if a lawsuit is filed, the Board members might have to reimburse the association for the funds they contributed to charity.