The following is the summary of the ASSOC. assistance program being put in place by the Association Assistance Corporation, LLC (AAC). The basic idea is to assist ASSOC.’s in collecting past due ASSOC. fee’s that, up until this point, have proven to be troublesome to management and burdensome to other fee paying association members. The approach is an attempt to put the ASSOC. in a position to possibly collect 100% of past due amounts while remaining up to date on current dues without costing the ASSOC. a lot of upfront legal fees or burden the ASSOC. with additional management burdens that the ASSOC. is set up to handle.
The idea would involve a professional team that is assembled including, attorneys, real estate agents, and various management companies working together to provide the expertise necessary to foreclose and depose of the property of past due home owners.
Below is an outline of the activities that would take place:
- ASSOC. makes a determination regarding units within the association that are extremely past due and most other avenues for collection have been exhausted.
- The ASSOC. will put together a spreadsheet of all the units being considered which will outline all outstanding fees, including late charges, and submit to AAC for review. The ASSOC. and AAC will come to an agreement on the exact amount of the past due balance and that will become the baseline for the amounts recovered by the ASSOC. per the contract signed with AAC. Additional discussions will take place regarding each unit and any special circumstances that need to be addressed.
- A contract will then be executed between the ASSOC. and AAC that governs the actions of both parties and explains in detail the division of the cash flow created by the services performed by AAC. There are some fundamental aspects to the contract that will not be breached by AAC including; the ASSOC. will not have to cash flow any of the collection efforts, each unit in question will provide a way to pay the ongoing ASSOC. fees that become due, and the agreement will provide for incentives that maximize the amount of collections received by the ASSOC.
- AAC will then work with its legal council to begin the foreclosure process. The current home owner will be notified of the foreclosure along with any other existing lien holders. It is possible that some fees might be collected at this point prior to the foreclosure but it is unlikely.
- After the successful foreclosure the ASSOC. will sign over the unit to AAC to begin the process of creating the cash flow that will fund the past due amounts and the current ASSOC. fees. This process might be short term or long term rentals (as discussed with each ASSOC. board), negotiation of short sales with existing mortgage holders, and reselling units.
- As cash flow is created the ASSOC. and AAC will divide the proceeds per the contract. The basic formula that will be in the contract will allow first for the reimbursement of all out of pocket expenses that have been spent on behalf of the ASSOC. by the AAC team plus a 20% management fee and then a 50/50 split of remaining cash flow until the ASSOC. has received 100% of the outstanding balance due.
- Great care will be taken to maintain an open line of communication between the ASSOC. and AAC as the process moves forward, including but not limited to, detailed monthly reports that show the current status of each unit. AAC will be responsible for making sure the communication is flowing smoothly and will work through the existing ASSOC. management company.
Above was a brief synopsis of the transaction that attempts to address the major points of the potential transaction. A more detailed explanation will need to made, in person, with each ASSOC. and their advisors. It is anticipated that modifications to this idea will need to be made to allow for the nuances of each ASSOC. and their CCR’s