S P E C I A l F E AT U R E
By David Mack
Stop the Bleeding… Short Sales, Foreclosures & Delinquencies In their combined appearance at the ACTHA winter conference Attorney Chuck vandervennett of the law offices of Charles T. vandervennett, P.C. and Salvatore Sciacca of Chicago Property Services presented a seminar on the subjects of Short Sales, Foreclosures & Delinquencies, subtitled, “Stop the Bleeding.” Collection Cases Sciacca presented first, giving advice on how his management company deals with the problem of unpaid assessments. As he so emphatically put it, the financial health of an association starts with collections and in this area things have been taking a turn for the worse at the associations his company manages. “We’ve seen pretty much a doubling of collection cases with associations,” he lamented, adding, though, that conditions in this area have been getting better recently. “lately, however, we’ve seen somewhat of an improvement.” This earlier diminution of collections is probably not unlike the trend that other associations have been experiencing due to the implications of the financial crisis manifested in higher unemployment.
Clear Policy Important Sciacca noted that despite the recent pickup in collections at the company’s associations, there
exists in these and other communities a lot of deferred maintenance, which will only increase until associations really dig in and go diligently after the money they are owed. “The most important thing is to have a very clear collection policy,” he said, but beyond that associations must see that the policy is enforced. This is not always happening even with professionals in charge. “I’m sorry to say, even if you have a management company, that doesn’t mean your collection policy is being enforced,”, and, “it must be enforced consistently,” with all owners. vandervennett added at that point, “I heartily endorse the idea of having the collection policy in writing, board approved and made a part of the rules and regulations.”
Consistency Counts Sciacca stepped away briefly from collections to comment on late fees in terms of the idea of consistency. Boards often ask his concurrence in
waiving late fees. “I discourage that but if they must do it, it should be done consistently too,” he said. A collection policy should discuss payment plan options in terms of percentage down, amount per month, term length and default consequences. What happens if the owner fails to adhere to a payment plan? The property manager should know what to do when a default occurs and should not require board approval at each step in the process. Usually, “about 5% of the time eviction will result,” said Sciacca.
When Eviction is Required When it comes time for eviction, an association or its management will have to arrange for movers to show up. In Cook County, the sheriff’s office no longer is involved in the heavy lifting or in directing it. Sometimes delinquent residents magically come up with the dough at the last minute. “There have been times when we’ve had movers show up and the resident paid the debt,” said Sciacca.
Lender Foreclosure lender foreclosure is another issue facing boards more frequently now. “They have really spiked over the last couple of years,” said Sciacca. To keep up with their occurrence an association should have a registered agent, who could be
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