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posted: 2/10/2013 5:00 AM

Townhouse owner takes insurance money, fails to make repairs

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Q. Our association has a situation that the board is having trouble resolving. Two years ago one of our owners had major inside damage done to his townhouse, the result of a broken water pipe that was left running for an entire weekend.

I'm told the estimated repairs were $70,000 and that the owner's insurance company wanted to settle for $50,000. Six months went by and our association figured that the owner was negotiating a settlement and that the needed repairs would be made. This was not the case. He has simply disappeared.

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We figure he received some form of settlement from the insurance company and, with property values way down, just walked away from the property. That was almost two years now and we thought at some point last year his mortgage company would start foreclosure proceedings but this hasn't happened.

His clothes are still there as well as other personal effects, furniture, tools and appliances. I have checked with the post office and there's no forwarding address. Apparently he didn't pay the cleanup company so they have placed a lien on the property. I've contacted what I think is his mortgage company but they won't give out any information.

We're somewhat at a loss as to how to proceed. Your advice would be appreciated.

A. I am presuming your problem is that no monthly assessments are being paid. The usual course of action in this situation is filing a forcible entry and detainer (eviction) lawsuit against the owner, asking the court to award the association possession of the property. Once possession is obtained, the association can rent the property and use the rent proceeds to satisfy the assessment arrearage.

Unfortunately, it does not appear this will work for you. If I understand your situation correctly, the unit cannot be rented in its current condition. Absent the ability to generate rent, obtaining possession of the unit serves no purpose.

It would appear at this point your only remedy is to file a lien against the property for unpaid assessments. At some point, the lender will foreclose and you can then negotiate your lien with the lender. As the property appears abandoned, it is possible the foreclosure process may be shortened, resulting in the property being occupied and assessments flowing again sooner than usual.

Q. My husband and I are in our mid 60s. We are both on Social Security and have a mortgage on our home. We have one daughter and two granddaughters. We have a will and if one of us passes the other gets the home and all assets. If the other passes, our daughter will get our home and assets.

A friend of mine was talking about a Declaration of Trust she and her husband have set up. They are the trustees. I'm wondering if we need this as well. My concern is that if we end up in a nursing home, will all our assets go to the nursing home? We don't have enough money to be in a private nursing home. I know money doesn't go far in any home and hate to see all we have go to the state or home.

Thank you for taking the time to read this.

A. This is a common question among seniors. Your concerns are legitimate. In the event you and/or your husband require state aid for your residential needs, the state will require that you sell your real estate. The proceeds will be deposited in an escrow account and be used to pay for your needs until that money runs out. The fact that the property is in a trust with you and your husband as trustees will change nothing.

There are, however, steps you can take today to potentially avoid the situation you describe. Run, don't walk to an attorney experienced in elder law. For a referral, you can contact your county bar association as most bar associations offer referral services in the various areas of law.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.

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