There are many condo owners in FL that are having to pay lots of extra fees due to the amount of units that are unsold or in foreclosure. I don't think Maui has had the increase in units that FL had though, so I'm sure you won't experience anything like that. I have a brother that has lived in Maui for aout 20 years. It is one of those places that gets hit hard during recessions.

If some condo owners stop paying their fees, then the costs of operating the building still have to be paid, but by a fewer number of homeowners. The building's condo association should send reminder letters to those who are late with their fees and, eventually, if they still don't pay, the association could get a lien on their property for the amts due. That's if the association decides to go this route. But the bottom line is that those who do pay are going to have to foot a larger share of the bill.

Recession or not, there will ALWAYS be people who take vacations. And as long as the US $ is garbage on the world scene, I think you will continue to see a greater percentage of foreign renters. Americans aren't the only ones in this world who have money and take vacations. Focus on getting the word out about your place in foreign venues.

Have you tried posting in the Hawaii section of citydata?

larger HOA are experiencing just what you describe..And even if the HOA places liens on those who don't pay their fees, the bills still need to be paid, and those that are left usually get an added assessment to cover the shortfall..
And i don't see this problem getting any better anytime soon, likley to get much worse...
That said, larger HOA are better off financially then smaller ones who have owners not paying

Thanks, all! I've emailed the Finance Committee chair of our condo associatiion, asking status of fee payments, if they are seeing foreclosures, and what is the plan of action for past-due fees. Anything else I should ask?

Ask how realistic it is that they actually ENFORCE the past due plan. We lived in a homeowner's assn where 12 properties share the cost of lawn maintenance, snow removal and trash removal. We had 1 homeowner who paid his quarterly fees about once every 3 yrs. We sent dunning letters, but when it came to actually talking about going for the lien, our other homeowners couldn't do it because "didn't want to be mean".

I lived in an association property for 20 years, including the market most like this one, the early 1980s when prices soared and fell. Some of the homeowners who bought at the top of the market and who had astronomical interest rates on their mortgages were underwater for years. The association hired a collections agent and in some cases had to secure liens for late fees and water bills. At that time, we always got paid when a property went back to the bank. It might not be the same nowadays. We learned to have reserves from that fiasco.

In the 1991 recession we had to foreclose on two homeowners who each owed more than $5,000 for water bills alone.

Make sure that your association gets liens for the unpaid dues and fees. First time around (1980s) there was a sympathy factor until the overdue amounts began to drain reserves and push up dues. At that point most people understood that, much as we might like our neighbors, the homeowners association can not be a welfare agency. We amended our documents to require that amounts owing in excess of $X also would go to collection and be reported to the credit rating agencies so dead beats would have a harder time obtaining credit to buy more stuff for themselves while stiffing their neighbors for property maintenance, water and sewer, and insurance.

Hawaii has its own set of challenges and opportunities that are not commonly found in the mainland US. Among the opportunities are better access to buyers and investors from Asia, especially Japan and China. Are the real estate and rental agencies using that to their best advantage?

Typically, the condo has raise enough in fees to cover fixed expenses; if 20% of the owners don't pay their fees, everyone else has to either cough up an extra 20% or dip into a reserve (that eventually has to be rebuilt by everyone else that pays what they are supposed to anyway). Its going to be tough to give a more precise answer than that without know what the association's fixed and variable expenses are, or the size of their reserves.

All this is very helpful. Thank you all.

I thought that our association had good reserves, but they may not have allowed for THIS mess. I'll ask.

Liens would *eventually* help, but it could take more than a year or two to collect on them. Hmm, is there insurrance against such losses?

I'm interested in the situation where the owner avoided *quite* stiffing the association by paying now and then. Looks like you would need to set the 'deadbeat' scale to a dollar figure lower than what he was contributing to stave off a lien. The 'bad credit report' is also an excellent incentive!

The Japanese buyer market is still dead in Hawaii, from what I hear. The rate of Asian visitors to the islands has continued to slow. However, the tourism 'sell' may have been TOO good. Now it is perceived that there are not enough lodgings, water, services -- at least on Maui. The government push is to keep growing by eliminating the more affordable lodgings. Our condo is 'middle bracket', but not on a scale with Four Seasons' $1000 per night rooms!

FYI we own a one of the smaller 1 BR 2 bath condos at Maui Kamaole (in South Kihei, near the border with Wailea).

I don't think we'd have the same 'sympathy' factor as a small residential complex. While our condo is our vacation home as well as a vacation rental, the units are strictly vacation rental investments for many owners; several own a whole string of condos, both at MK and in other complexes. OH! Gosh! There's another whole potential can of worms!

I suggest you keep targeting Canadians if you want to continue renting out your condo. The reason being is the Canadian Dollar is pretty much on par now with the USD, making trips to the US more affordable for Canadians. Even with airfares higher, Cdns look at the exchange rate and it's very favourable now.

If you want non-US tourists, you also should try to get politicians elected who will try to improve the country's image in the world. Just last week, der Spiegel, a German magazine showed that the USA's reputation is the worst it has ever been. http://www.spiegel.de/politik/ausland/0,1518,544948-2,00.html (red bar=percentage who have an unfavorable opinion of the USA, by country).

Here is a link that might be useful: USA reputation

There is a type of insurance for co-op owners that would cover sudden increases in maintenance fees. (I'm not sure I'd want to write that insurance, bcs usu. the maintenance fees increase because of bad maintenance decisions by the building's owners, the insurance buyers)

I don't remember now what it's called.

But the reserve is important, so that if people don't sell, the condo assn won't go bankrupt.

in our co-op, if people don't pay the maintenance, we start adding on interest. An elderly lady died, and her estate hasn't been settled yet--it's probably been 2 years. She had a large estate, money-wise (well, $750k in deposits, plus the property itself), but that'll be whittled away if they don't settle soon. At $600/month, it's not that much money, but we'll get a big check when it finally it all settled.

talley_sue -- It's that 'WHEN it's finally settled' part that worries me! Especially when we read tales like Tricia's ownerless house, where nobody knows 'nuttin', and then you have to trhy to wring what's due out of whoever finally admits to being owner.

The association insurance probably ends up costing more than is collected. Wonder if there's insurance for the individual owner...

These darn association fees can be a real PITA. We own a dockominium. A couple years ago, a Nor'easter from H@ll blew through & when the foam was gone from the water...so was our bulkhead. No choice. It had to be repaired & quickly. We weren't the only ones with damage to bulkheads, seawalls, etc. so contractors were hard to get & charging outlandish prices. The repair costs were, of course, put through the association as special assessments. Yikes!

We also have a few owners who don't pay their dues. Fortunantly, they are few in number. At our annual meeting, we always discuss the possibility of using legal action but nobody will ever stick their hand in the air to actually vote to go after somebody since we're all friends & boating partners. Tough situation.

Insurance of all types has gotten soooo expensive in the past 3-5 years. I imagine you're right, chisue, that the insurance would cost more than you could collect. Being a marina, we have EPA issues to insure. Wow, insuring against the possibility of an oil spill has become almost prohibitive for the smaller associations.

Insurance for individual owners? Sure, some insurance company will write a policy for darn near anything. The catch is finding the one that will & at what cost?

You should have what your association is holding in reserves. It'll be with the papers you received at your annual meeting. The entire association budget & cash flow statement will be included in the package. Check out each line item.

I have to agree with your thinking that nonpayment of condo fees is going to become a problem in 2008-2009. Even if eventually payment resumes there's that 'never never land' between when an owner defaults & the lender forecloses. That can take many months during which time no association fees are paid. After foreclosure, most lenders will bring the fees current but, again, it could take awhile.

I'll keep my eyes open for info filtering in on this issue. It's one I hadn't given much thought to before this thread....

/tricia

The condo association WILL get their money when the property is sold. My DH is president of our condo assn in Florida and title does NOT change hands without an estoppel letter from the association that says just how much money is owed to the association in order to pass a clear title. We currently have a couple of liens we're just holding onto until the units sell. I'm sure other condos have the same procedure in their governing documents. No pay, no sell.......

"If you want non-US tourists, you also should try to get politicians elected who will try to improve the country's image in the world."

Wow jrldh, thanks so much for sharing that, lol. Maybe the problem is with their politicians, and jounalists, not ours.

Redcurls, that's true if the owner sells, but if they are not paying HOA fees, what else aren't they paying? In the event of a foreclosure, the HOA's lien is wiped out, being recorded after the loan. The lender will pick up the payments after the foreclosure, but to collect the amount of back fees owed (the amount of the lien), the association would have to pursue its judgement against the former owner. I was an HOA treasurer, and we had to do exactly that. It was time consuming and not as easy as it sounds, but eventually we received most of what was owed.

kelpmermaid -- How much did you have to spend to recover the losses? Gosh, this sounds like trying to fire a tenured teacher with a relative who is a member of the bar!

kelpmermaid is correct. In every state I've ever worked association liens were subordinate to the first mortgage & as thus wiped out in a foreclosure leaving only judgement as recourse to the association. I've never experienced what redcurls describes. Florida does have some out of the ordinary real estate statutes & that 'may' be one of them?

/tricia

Chisue, I don't remember the exact cost, but we went to a firm that specialized in condo collections - their compensation was a % of any amount collected. At that point, we were just pleased to see anything.

Tricia, I think that maybe redcurls' situation doesn't involve a foreclosure (yet)- just unpaid fees or a special assessment.

kelpermaid is correct....our situation has not (yet) involved any foreclosures. Just non-paying owners. Makes me wonder what headaches are ahead if we're already dealing with people who aren't able to pay their monthly maintenance. This is a 78 unit condo with NO reserves. NOT a comfortable place to be right now.