In these tough economic times, the delinquent payments of homeowners’ special assessment fees, HOA fees, monthly maintenance fees, and/or condo fees have become more and more of an impediment to an Association’s ability to remain self-sustaining and pay its every day expenses to maintain its common elements and address any construction defect claims that may arise. Assessment lien foreclosure is a collection route prevalently used by many condominium and homeowners Associations. Ultimately, the expectation is that the Association will take title to the unit, allowing the Association to rent, or sell, the unit with the hope that the unit’s delinquent balance can be recovered through capital contribution from a tenant.
With the tremendous backlog of foreclosures currently impacting the State, the foreclosure process in New Jersey can take as long as two years before an Association can even conduct a sheriff’s sale and be in a position to take title to the unit. Moreover, if and when title is acquired, the Association’s work is not done.
Unless the property is vacant, the Association must seek the former unit owner’s eviction. Unlike a mortgage foreclosure in which a bank is contractually and automatically entitled to possession upon a debtor’s default on mortgage, Associations must affirmatively seek possession through the courts. This is a lengthy process in itself and can take up to a year before the Association can ultimately take possession of the unit. While the route to possession is a long one, the hope is that once the unit is possessed, the Association can generate a capital contribution towards the property by inserting an income-generating tenant into the Unit.