Spokane Condo Feels Financial Squeeze As Abandoned Units, Foreclosing Lenders Dodging Maintenance Fee Payments Boost Burden On Remaining Residents

In Spokane, Washington, The Seattle Times reports:

• Pipes freezing. Strangers changing the locks. These are difficult times at Wingate Place on the South Hill in Spokane. Two of 10 units at the condominium have been vacated by owners who could no longer make payments. The remaining residents are paying the heating bills to prevent more water damage. Maintenance fees, now split eight ways instead of 10, are also becoming burdensome, especially to the three owners on fixed incomes.

• Meanwhile, Wingate owners' association president Brian Pangrle says he has been playing hide-and-seek with banks holding mortgages on the abandoned units. He wants them to pay the fees. He suspects a lender was behind the change of locks on one empty unit. It took several phone calls to obtain a key from the property-preservation company that did the work. He threatened a second group of intruders with trespass charges and called the police.

• "It's like layers of the onion," he says, with mortgage servicers reluctant to unmask banks that do not want the units. If the banks foreclose, not only do fees become their responsibility, but they also must take substantial losses on balance sheets already running red with bad debt. When they do foreclose, they can dodge fees for some time by simply not informing the owners' association. [...] Pangrle warns of a potential "snowball" effect if ever-higher assessments push more owners out, increasing the burden on those who stay behind.(1)

For the story, see Remaining condo owners fighting to keep building going (If banks foreclose on condos, not only do fees become their responsibility, but they also must take substantial losses on balance sheets already running red with bad debt. When they do foreclose, they can dodge fees for some time by simply not informing the owners' association).

(1) No one wants to raise monthly maintenance fees, 2010 president of the Washington State Chapter of the Community Associations Institute Brian McLean said, but exhausted reserves are a big red flag to any buyer who takes the time to examine the resale certificate required of sellers. Too few buyers pay the certificate the attention it deserves, he adds.