Nothing remained in the New Jersey townhome after the owner, exasperated and struggling, financially picked up and left. And took everything with him. “Not only did he walk away, but he gutted his house,” says Joseph J. Balzamo, a president at Alliance Property Management LLC in Morristown. “He took the appliances, he took the electric, took the counter top, took the wiring, took the plumbing, took everything. It was a townhome, so nobody saw this from the outside. He took everything out of his house so it was just a box.”
Associations may also have to deal with residents not being able to pay their association fees, families staying longer in condos that are not being able to accommodate their needs in addition to the abandoned or foreclosed properties. “These situations are becoming more prevalent, when they used to be something that happened once in a while, limited to one area or one building, they are now more frequent,” says Nancy Hastings, CEO of MAMCO Property Management in Mount Laurel.
An August article in the New York Times said that New Jersey has the 15th highest rate of foreclosure in the country, with 3,576 houses either in the foreclosure process or already owned by the banks at the end of June 2012. One in every 106 housing units faces foreclosure in the Garden State which also has the second-longest time frame for completing the foreclosure process, behind New York, taking an average of 940 days, versus a national average of 378 days.
Throughout New Jersey, as foreclosures continue to increase, condo and homeowners association boards of directors must grapple with a variety of related problems.
Difficulty in Collecting
Faced with foreclosed or abandoned units can put a great financial burden on an association. “You have no way to collect them,” says Balzamo. “Banks have insured themselves from a situation where they don't have to sell the unit, they don't have to pay the maintenance fee on the unit, and then when they decide to sell the unit, they're only obligated to pay you six months' worth of maintenance fee, which is very detrimental to the building.”