Eric Frizzell in Board Operations on November 1, 2012
One solution that our clients are successfully pursuing is to have the sheriff levy on the unit and sell it at public auction, with the association buying it back at a nominal amount (e.g., $100) and renting it until the lender's foreclosure action is completed. While an association must review with its attorney whether it makes sense for the association to take these steps with regard to a specific unit, doing so may be the association's best chance to recoup its losses and stop the bleeding.
Desperate times demand desperate measures. The initial reaction of almost all associations' boards is understandably the same: They've never bought a delinquent owner's unit at a sheriff's sale before and they are concerned that doing so may entangle them in ownership responsibilities. Who pays the taxes and mortgage? What about insurance? What if the tenant is a problem?
With sound guidance from the board's attorneys, however, these concerns can often be allayed, making the purchase of the unit at a sheriff's sale the best option available. A condo board should carefully review with its legal counsel whether it makes sense to send any given unit to a sheriff's sale.
Eric Frizzell is a partner at Buckalew, Frizzell & Crevina.
Photo by Jennifer Wu
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