Federal bankruptcy laws are intended to provide debtors with a fresh start. When a property owner files bankruptcy, federal bankruptcy law imposes an automatic stay on all collection activities, including foreclosure. All “pre-petition” debts (the amount owed at the time of the bankruptcy filing) are handled through the bankruptcy proceeding. While associations often feel that bankruptcies create huge burdens to the collection procedure, in fact, many times bankruptcies are mutually beneficial to both the association and the owner. In a Chapter 13 bankruptcy, the owner must adhere to a repayment plan (typically over a period of five years) where the owner pays back the assessment arrearage owed to the association. The owner is also required to keep the “post-petition” account (i.e. assessments that come due after the bankruptcy is filed) current. Finally, keeping the owner in the home benefits not only the owner, but also the community.Sometimes, however, an owner files for bankruptcy protect...
Protections for an Association Against Bad Faith Bankruptcy Filings
Associations Left Empty-Handed After Foreclosure
This past weekend, the Cleveland Plain Dealer ran a front page story on condominium sales in Ohio. Stagnant condo sales often have a negative impact on the association and the surrounding condominium community. In response, Ohio's community association boards have been working tirelessly to preserve their community's property values and community spirit. Reporting on these actions, the paper published another story about how Ohio's condominium associations are asking legislatures for help by joining 13 other states and enacting a condominium "super lien." According to the story by Michelle Jarboe:CLEVELAND, Ohio -- Condo associations in Ohio want legislators to put them first in line for money when homes in their buildings are foreclosed upon.The recession, the housing slump and job losses have meant more foreclosures and delinquent monthly fees for condos. Owners pay these fees - ranging from a few hundred dollars to more than $1,000 a month - to cover landscaping, building maintenanc...
Super Lien Status Update
Many of Ohio's condominium and homeowner association board members and residents have been inquiring as to the status of the "Super Lien" legislation. Thanks to everyone for your interest, help and support! We are happy to report that the process is moving forward, and we hope to have the bill introduced into the Ohio legislature soon.Over 30 individuals came forward and presented the Super Lien Information Packet to legislators all around the State of Ohio. Many of these legislators expressed a strong interest in sponsoring and introducing the proposed law. Now that the Ohio General Assembly has returned from its late summer recess and finishes up the state's operating budget, we are very optimistic that the "Super Lien" will be introduced soon. When this happens, we will post an update on this website.Once the legislation is introduced, we will contact all of the volunteers who signed up to be part of the "Super Lien" team. At that time, we will need as many letters, phone call...
Foreclosures Lead to Rise in Homeowners' Association Fees
Recently, WKYC Cleveland ran a "focus" story entitled "Foreclosures Lead to Rise in Homeowners' Association Fees" featuring Kaman & Cusimano, LLC Attorney David Kaman. The story details the plight of Ohio's associations in the event of a foreclosure and highlights the grassroots effort to pass a "Super Lien" in Ohio.When a unit goes into foreclosure and an owner stops paying the association's fees, the other members of the community often have to "foot the bill" to ensure that all necessary services of the neighborhood are carried out. According to Attorney Kaman, "[Ohio's] associations are bleeding bad debt, with no bank bailout to help them and so they have to act aggressively in foreclosures." A "Super Lien" would ease this burden on community associations by giving the association's lien six months priority over a bank's first mortgage. Joining the fifteen other states that have similar legislation, a "Super Lien" would not only pre...
Collection Action Pays Off!
16 Feb 2010
16 Feb 2010
In 2009, Kaman & Cusimano, LLC collected over Three Million, One-Hundred Thousand Dollars ($3,100,000.00) in 2009 for its community association clients! This figure represents all money collected as a result of bankruptcies, foreclosures, and liens for which we handle the payoffs. It does NOT include the money recovered by the associations directly for countless other liens and collection letters.As part of the effort to weather and manage the economic crisis, Kaman & Cusimano, LLC has consistently recommended that community associations be aggressive with delinquencies. Collection action is a process. A key part of the process is a foreclosure action. A foreclosure sometimes takes time, but it ultimately yields the best financial result of Ohio's condominium and homeowner association. By taking prompt collections action, associations stop the bleeding of bad debt and give delinquent owners a strong reason to pay. After a foreclosure, related actions such as wage garnishments and bank attachments also...
Impact of Chase Foreclosure Freeze
02 Oct 2010
02 Oct 2010
Recently, JP Morgan Chase, the third largest home loan servicer in the United States, announced that it has frozen all of its pending foreclosure cases, so that it may review the accuracy of documents filed with the courts. In response to this news, many association board members and property managers have contacted our office questioning the impact on their associations’ pending foreclosure cases. To be clear, this freeze will not affect association foreclosures, provided the board followed Kaman & Cusimano’s recommendation to either file a foreclosure complaint or an answer and cross-claim.Kaman & Cusimano has strongly encouraged its service option client community associations to be aggressive in pursuing delinquencies. To do so, the firm has always recommended that an association either 1) file a complaint to initiate foreclosure proceedings when a balance become high, or 2) join the bank’s foreclosure by filing and answer and a cross-claim.Filing a complaint or an answer/cross-claim enables the a...
Impact of “Robo-Signing” on Association Foreclosures
Recently, there has been significant media attention regarding banks’ “robo-signing” procedures and the impact on pending foreclosure cases. In response, many Ohio judges have imposed strict new guidelines for banks and their attorneys to follow in an effort to ensure accuracy of loan documents. On Monday, the Columbus Dispatch reported that multiple Franklin County Court of Common Pleas judges have joined with other judges from across Ohio to require banks and/or their attorneys to file certifications that their documents are accurate, or the case will be dismissed.In response to this news, many association board members and property managers have contacted our office questioning the impact on their associations’ pending foreclosure cases. To be clear, these requirements and the banks’ errors will not affect association foreclosures, provided the board followed Kaman & Cusimano’s recommendation to either file a foreclosure complaint or an answer and cross-claim.Kaman & Cusimano has strongly encourage...
Condo Associations Get Tough on Fees
27 May 2011
27 May 2011
The increasingly large, grassroots push for community association rights to delinquent fees is beginning to receive national attention. The May 25, 2011 edition of the Wall Street Journal features a story entitled “Condo Associations Get Tough on Fees.” The story features communities in Nevada and Florida that have taken proactive steps to collect delinquent fees as a result of new legislation in both states. According to the Wall Street Journal:Condo associations, which have been struggling as troubled homeowners stop paying their condo assessments, are becoming increasingly aggressive about finding ways to recoup unpaid fees. And they have lawmakers on their side.Closer to home, we are optimistic that Ohio lawmakers will similarly respond as a result of increased national attention and greater pressure from community association constituents. Legislators are still being sought to reintroduce the updated Ohio Community Association Preservation Act (formerly called the “Super Lien”).In the meantime, Ohio ...
Successfully recovered, through the foreclosure process, funds in excess of $15,000.00 owed to an association by a delinquent owner.
Facts: An owner failed to make required payments for maintenance fees. After the owner’s account became increasingly delinquent, the association filed a lien, and, when it received no response, a foreclosure complaint was filed. A little less than one year after filing the foreclosure complaint, the unit was sold at sheriff’s sale. The proceeds were then distributed to the association, in the form of a check for $15,367.35 representing an amount that covered the entire outstanding balance, including attorney fees, filing fees, and court costs.
K&C obtained judgment against an owner who disputing the association’s right to impose special assessments
An owner within a condominium unit filed a counterclaim in a foreclosure lawsuit alleging that the board acted without authority when imposing special assessments for a multi-million dollar repair project.Kaman & Cusimano successfully argued that the board acted within its rights to impose the special assessments and obtained judgment against the owner for foreclosure on past due maintenance fees and legal fees in the amount of $49,000.
Successfully negotiated a settlement in a foreclosure case with an owner who combined two lots but claimed he owed for only one lot.
An owner within a homeowners association purchased two lots with the original agreement to pay assessments for both lots. For tax purposes, the owner combined both lots but then refused to pay assessments for each lot.Kaman & Cusimano successfully negotiated back payments for both lots and legal fees in the amount of $15,000, with the owners agreeing to the ongoing obligation to pay assessments on the two lots originally designated in the association’s development plat.
Darcy Mehling Good Accepted Into College of Community Association Lawyers
With tremendous excitement, Kaman & Cusimano, LLC is pleased and honored to announce that attorney and Kaman & Cusimano, LLC partner DARCY MEHLING GOOD has been accepted into CAI’s College of Community Association Lawyers!!!This is a rare and special honor that fewer than 150 attorneys in the country have been granted since the CCAL was started in 1993. Darcy becomes just the 4th CCAL member from Ohio, joining attorneys David Kaman and Jay Cusimano. The requirements and application process for selection into the CCAL are rigorous and difficult to obtain.Darcy has dedicated her career to assisting and advising Ohio's community associations, and exemplifies the highest standards of knowledge and professionalism. Kaman & Cusimano, LLC has always known Darcy was among the best of the best and now the entire, national community association industry recognizes and knows that too!CONGRATULATIONS, DARCY!!To learn more about Darcy, please view her biography.
Over $20,000 Collected for Association Through Chapter 7 Bankruptcy
A unit owner was discharged from a condominium's association's monthly fees in a Chapter 7 Bankruptcy, meaning the owner was no longer personally liable for the amount due at the time of bankruptcy filing. The Chapter 7 Trustee subsequently discovered, however, that the owner had recently received an inheritance after the passing of a relative. The bankruptcy case was reopened and Kaman & Cusimano filed a Proof of Claim for the amount due to the Association at the time of bankruptcy filing, and subsequently received payment of over $20,000 to the Association, approximately 100% of what the owner owed. Even when an owner files Bankruptcy, it is important that the association be aggressive and assert its interest in the case to maximize the possibility of recovering delinquent funds.
Kaman & Cusimano Successfully Preserves Sheriff's Sale Results
Due to the increased delinquency of maintenance fees and assessments at a condominium association, Kaman & Cusimano received authorization to proceed with the filing of a foreclosure action. Kaman & Cusimano successfully obtained a judgment and a decree of foreclosure against the delinquent owners and ordered a sheriff’s sale. However, the property was offered for sale with a requirement it be sold “subject to” the first mortgage. A third-party purchaser with a long history of buying properties at sheriff’s sale, purchased the property for over $113,000.00 and subject to the first mortgage.Following the Sheriff's sale, the successful third-party purchaser attempted to set aside the sheriff’s sale and requested a return of its deposit arguing the company was not aware it would assume the first mortgage when it purchased the property. In response, Kaman & Cusimano filed a Brief in Opposition on behalf of the Association and successfully argued the third-party purchaser failed ...
Over $11,000 Collected for Association From A Tenant in a Foreclosure Case
Kaman & Cusimano recently collected over $11,000.00 for an association in a foreclosure action. To prevent the delinquent owner from collecting the rental payments from the tenant, the Court appointed a receiver to collect the payments directly from the tenant. For two years, the tenant remitted monthly rental payments totaling over $11,000.00 to the receiver until the delinquent account was paid in full. If your association has a delinquency and the home is occupied by a tenant, be sure to inform Kaman & Cusimano so that we may seek to have a receiver appointed to collect rents during the foreclosure process.
K&C Partner Kate Bushey Presents at National CAI Law Seminar
Kaman & Cusimano partner Kate Bushey presented at the national CAI College of Community Association Lawyers' Law Seminar in New Orleans today on "Wouldn't Debtors' Prisons Be More Effective." Kate's presentation discussed the interplay between the FDCPA, bankruptcy, and assessment collections for community associations. Great job, Kate!
Can a Delinquent Owner Rent the Unit while in Foreclosure?
A question Kaman & Cusimano is often asked is whether there is anything an association can do if a unit is being rented while it is pursuing a Complaint for Foreclosure against a delinquent owner. The answer to that question is “Yes.” Ohio statutory law allows an association to have a receiver appointed to collect rent from the tenant of a delinquent owner. The receiver would then provide this rental income to the association to apply to the delinquent owner’s account.Specifically, both Ohio Revised Code Sections 5311.18(B)(2) and 5312.12(C)(1), state that the community association is entitled to the appointment of a receiver to collect the rental income in a foreclosure action. Additionally, many associations have governing documents with specific provisions that maintain that the association has the right to have a receiver appointed to collect rent while the foreclosure case is pending.The courts have recognized that it is inequitable for a delinquent owner to receive rental inc...
Short Sales and Community Associations
A short sale is a common alternative to foreclosure when a delinquent owner owes lien holders on the property more money than the property is actually worth. A short sale can occur prior to the filing of a foreclosure action, but it is still a frequently used alternative to a sheriff’s sale in a pending foreclosure. In a short sale, each lien holder must agree to accept less than what the seller owes and agree to release all liens on the property in order to allow the sale. Typically short sales are facilitated by the first mortgage holder, but because all lien holders must approve the sale, boards are also involved if the seller owes the association money. Because each lien holder will most likely be accepting a lesser amount than is owed, several offers could be made through negotiation. Of course, there is no requirement that any party accept a settlement offer; this simply means that particular short sale will not go through.There are several factors for a board to consider w...