SARASOTA — John Rankin remembers the day the owner at 2214 Sonoma Drive skipped town.

That was nearly a year ago.

As weeks and then months went by, the property fell into disrepair -- with the pool turning green and grass growing wildly. Rankin said the homeowners association eventually took matters into its own hands, as its residents took pride in their neighborhood and did not want one house out of 93 negatively affecting the image, and property values, of the larger community.

"We just went over there with lawnmowers and the like and took care of it ourselves," he said. "Something had to be done."

What the association also did was try to track down not only the former owner, but also the mortgage lender. Neither attempt proved very successful. It turned out that the mortgage had been sold off to another lender, and Rankin said he left messages for that company and wrote letters for weeks with no response.

Then one day, about six months ago, a bright orange sticker appeared on the door of 2214 Sonoma.

"It basically said, if you own this place, call us, we need to talk to you," he said.

At least Rankin and his colleagues at the homeowners association now had a contact number. It turned out the lender had hired a third-party company, Fidelity Asset Protection, to deal with the property as it pursued foreclosure proceedings. From that point on, the company took over maintenance and the homeowners association could instead focus on another problem: trying to collect its unpaid assessments, not to mention getting reimbursed for the maintenance costs it had already incurred.

After press time last week, nearly a year after the property was first abandoned, the foreclosure case finally went to court. While Rankin said he is hopeful the association will receive its back assessments, there is no guarantee these days that that will happen.

Meanwhile, the Mission Estates treasury is down more than $1,000 in assessments because of the delinquency, not to mention the maintenance costs that were put out over the last year.

In Mission Estates' case, they only have one other property that has faced foreclosure. But other homeowners associations are not as lucky, and as the number of foreclosures rise in the Sarasota-Bradenton area, some association budgets are increasingly being strained.

When the owner skips out, he or she is not likely to keep paying the monthly or yearly assessments. The banks engaged in foreclosure proceedings may start paying those fees once they finally take title, but what about all the missed payments in between?

Growing problem statewide

As more and more properties sit vacant, association budgets are feeling the loss.

A new survey commissioned by the Community Association Leadership Lobby, which represents community associations throughout Florida, attempted to take the pulse of board members and others active in homeowners and condo associations.

Nearly 60 percent of respondents said the number of mortgage foreclosures against units or homes in their association has increased in the past 12 months.

The survey also revealed that the majority of respondents had units presently sitting vacant as a result of mortgage foreclosure proceedings.

Statewide, 13 percent of respondents said units had been sitting for at least six months, 10 percent said more than nine months, and 21 percent said the longest unit had been sitting vacant for more than a year.

In Southwest Florida, the numbers are even more striking -- 30 percent said they had vacancies that had continued for more than one year.

"If you get enough of these vacant units, those monies from assessments aren't coming in, and what do you do when you get a shortfall?" said CALL director David Muller. "You still have to pay the management and the maintenance crews. We're very concerned about the ramifications."

What about getting a mortgage lender to pay those lapsed assessments?

Most statewide respondents reported "difficulties in securing payment of monthly maintenance fees and other assessments from mortgage lenders who have foreclosed" on properties in their association.

As a result, the vast majority reported they were concerned about the "impact that foreclosures will have on the financial health" of their associations. In Southwest Florida, 88 percent of respondents expressed some degree of concern, with nearly 28 percent saying they were "extremely concerned."

Getting paid

When it comes to collecting those unpaid assessments, the associations generally have to be active -- and that can mean going to court.

When a lender begins foreclosure proceedings against an owner, it will generally name the condo or homeowners association in the foreclosure suit.

Why?

Because the bank generally wants to take title free and clear of any liens or other claims on the property. The association usually has such a claim -- but the judge in the foreclosure case has no power to extinguish that claim unless the bank names the association itself as a defendant.

"You can't affect the rights of a party that's not party to the litigation," said Dan Lobeck, an attorney with Lobeck & Hanson. "So the associations need to defend themselves to preserve all or portions of their assessment claim."

Lobeck said he has seen an exponential increase in the number of such defenses his firm has been providing. He said one year ago, the firm had perhaps a dozen cases pending -- now they have 150.

"We've been getting so many of them, we started doing a flat fee," he said.

Lobeck said most of the cases have involved homeowners associations, rather than condo associations. That is because under Florida law, the rights of condo associations have been more clearly spelled out since the early 1990s.

When a bank takes over a condo, it is liable for up to six months of back assessments, or 1 percent of the mortgage value, whichever is less.

"The statute is so explicit that the mortgage lender usually agrees to accommodate our rights," Lobeck said. "They're not really arguing anymore."

It is a different story when it comes to homeowners associations. That is because until just last year there was no specific law governing what was to happen to a homeowners association in such a predicament. In October, a new law went into effect. It states that lenders are to be responsible for all back assessments when they take over a home.

The law applies to associations that have mandatory membership and assess mandatory fees.

But, Lobeck said, the banks are contesting the new statute, saying it is unconstitutional because it interferes with their contractual rights. So in the meantime, homeowners associations looking to claim those back assessments have to take an aggressive stance toward foreclosure proceedings, or they risk winding up empty-handed.

"We found that when the association fights for the assessments, many times they can obtain them," Lobeck said. "But if the association doesn't assert its claim and a foreclosure judgment is entered which removes their interest, then they can be entitled to nothing."

A bill currently pending in Tallahassee aims to conform the laws governing homes and condos -- namely to require banks to pay six months worth of assessments or 1 percent of the mortgage to a homeowners association the same way they are due to a condo association.

Lobeck said if the bill were to become law, the homeowners associations would likely have a much easier time collecting the money, even though the amount of assessments they could claim would be limited.

Meanwhile, according to the CALL survey, of those Southwest Florida associations that did take steps to make up for the revenue being lost, many did engage in legal action to force a mortgage lender to pay (40 percent). But just as popular was increasing the monthly maintenance fees for all other residents (32 percent), and increasing special assessment fees for everyone (38 percent).

In other words, it seems the likely scenario for most residents is that their own fees will be raised to make up for the delinquency of others who have gone into foreclosure.

Muller said those extra fees can wind up creating a cascading effect, where not only do you have pressure on the association budgets, but owners who are current on their mortgage and assessment payments could fall behind as well, potentially causing more of them to go under.

"Especially the folks there on a fixed income, they might not be able to make ends meet," he said. "Those folks who are already struggling to make their payments now face increases, and they might not make it and wind up in foreclosure themselves. And so it snowballs from there."

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