One of the several problems affecting properties like Miami Beach condos is more than not being able to pay the mortgage. Many condominium associations must also deal with a lack of funds in order to maintain the building, a problem that is oftentimes due to residents who fail to pay their association dues. What’s the solution when associations are ultimately powerless?
Enter reverse foreclosures. Unlike a traditional foreclosure where banks take ownership of a property, a reverse foreclosure would allow an association to file its own foreclosure notice and claim ownership should a resident fail to pay his or her dues. Since the property would have a bank lien, the association obviously cannot sell it…but it can relinquish ownership in court. In such a scenario, the Miami Beach condos essentially become property of the bank which then becomes responsible for taking care of those pesky dues.
The tactic may seem a bit harsh for banks who are already managing foreclosed Miami Beach condos but it’s designed to prevent associations from having to charge extra fees to residents who are in good standing. Does this seem like a good idea?