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How does a Home Owners Association Deal with Possible "Viking Ship" Owners

Fayeoctober

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I don't know where else to put this but since it involves a timeshare in North Carolina, thought this was an okay place, but if it more appropriately belongs somewhere else, please move. One of the three weeks we own at BIS Duck is a Week 37 and while we love the September weather, our current unit for that week has a lot of steps that are becoming a problem as we get older. There is another Week 37 which is perfect for our needs, and in which we have stayed a few times. The owner of this particular week and unit is a LLC which has not paid the maintenance fees for the past four years nor have they paid a special assessment, consequently the unit can be rented to recoup some of these fees. One of the goals of the Home Owners Association is to get more maintenance fee paying owners, and it seems like a win/win if we were able to buy this unit, but the LLC is no where to be found. I suspect they are a "Viking Ship" type company to which the prior owner paid a fee to sell, the LLC might have paid the fees for one or two years, but hasn't paid anything since. My understanding is that all correspondence has come back "address unknown." I have tried to contact them by phone and it just rings and rings. Wondering if there is any way short of a foreclosure (which I think costs thousands of dollars) that the HOA can get the unit back and I can buy it - I am willing to pay what I think is a reasonable market rate and then I would sell or give away our unit with all the steps? By the way, my husband was elected to the Board just last year, so we both are wondering about this. Thanks for any help.
 

ronparise

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at this point, a foreclosure is probably the only way to get ownership cleaned up, Im surprised the board doesnt know how to make this happen or what it costs

another possibility, if the condo docs allow it would be for the board to rent the interval to you. perhaps a long term lease with payments equal to the maintenance fee.
 

TUGBrian

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Isnt north carolina a non-judicial foreclosure state?

it should be a relatively painless process to get these weeks back....does the HOA have a real estate atty on it (or perhaps someone close to the resort)?
 

Fayeoctober

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Up until last year, the President of the Board (who had been connected to the original developer and was President for more than 25 years) basically controlled almost everything and since she was a Realtor knew how to deal with these issues. My husband was able to defeat her in the last election but no one on the current Board is a realtor. Thank you for your comments and to the moderator who moved my original post to a more appropriate place. We think the cost of foreclosing could be $3,500 which is far more than the week is worth. The long-term rental option sounds nice but I suspect it will be too pricey for us.

Brian I just saw your reply. What is a "non-judicial foreclosure"? The President of the HOA is an attorney but not a real estate attorney. We do have one working for the HOA on a separate matter so will need to check with him on this.
 
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TUGBrian

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glmyers

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Do check with an attorney, but I highly doubt the foreclosure process will be as expensive as you think assuming the governing documents are typical. It is merely a case of filing the appropriate documents, allowing the appropriate time to pass, and holding the sale.
 

dioxide45

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I think one of the problems with the foreclosure process with these Viking Ships is the notification process. How do they notify them when the mail is getting returned? Even with a non judicial foreclosure process, these Viking Ships can make things harder, slow them down and increase the cost to foreclose.
 

glmyers

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There might be a bit more time required, but once a good faith effort is made to deliver notice it is sufficient to post a notice on the property for roughly three weeks. Since there is nobody who is going to contest any part of the process it is merely a matter of allowing the time to pass as the steps are followed.

Note, the cost of foreclosure on a timeshare being worthwhile for the association typically is not based on the value of the unit, rather it is based on the value of the revenue from fees paid. Dead units cost every unit owner money.
 

dioxide45

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I don't think simply sending notice to the last known address would constitute a good faith effort. With Non judicial foreclosures, the notification requirements are actually more stringent than through a judicial foreclosure process. I don't know all the ins and outs of NC law, but if you can't contact the owner, it might perhaps revert to a judicial foreclosure?
 

ronparise

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Up until last year, the President of the Board (who had been connected to the original developer and was President for more than 25 years) basically controlled almost everything and since she was a Realtor knew how to deal with these issues. My husband was able to defeat her in the last election but no one on the current Board is a realtor. Thank you for your comments and to the moderator who moved my original post to a more appropriate place. We think the cost of foreclosing could be $3,500 which is far more than the week is worth. The long-term rental option sounds nice but I suspect it will be too pricey for us.

Brian I just saw your reply. What is a "non-judicial foreclosure"? The President of the HOA is an attorney but not a real estate attorney. We do have one working for the HOA on a separate matter so will need to check with him on this.
The value to a buyer is not an issue
The value to the hoa is the maintenance fees. Let's assume $700 a year. In ten years the "cost" to the hoa will be $7000
I think it makes sense for the hoa to spend the money to get this back and into the hands of a paying owner as soon as possible
 

tschwa2

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I don't think simply sending notice to the last known address would constitute a good faith effort. With Non judicial foreclosures, the notification requirements are actually more stringent than through a judicial foreclosure process. I don't know all the ins and outs of NC law, but if you can't contact the owner, it might perhaps revert to a judicial foreclosure?

I know in Ocean City, Maryland quarterly there are foreclosure notifications for property including mostly off season timeshares published in one of the local papers with instructions on who to notify if you are the named owner and the date for the intended foreclosure. I am sure this is after numerous attempts to contact and collect outstanding debts.
 

Talent312

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Service on an LLC, like any corporation, is usually be obtained by serving the person designated by it as the "registered agent" with the state-agency which regulates incorporation where the lawsuit is filed. In Florida, the Dept. of State / Div. of Corporations maintains a list of registered agents, searchable on it's website.

In cases in which there is no registered agent or the corporation is no longer active, often, there is likely to be a statutory provision for substitute service, including ultimately, simply serving the state-agency.

Example: The Florida Division of Corporations (http://sunbiz.org/) says:
"Substitute Service of Process is accepted pursuant to F.S. Chapter 48. The Division of Corporations merely accepts Substituted Service of Process and is not responsible for serving any designated individual. It is the responsibility of the plaintiff's attorney, not the Secretary of State, to notify the defendant of the acceptance of Substitute Service of Process."

Any lawyer worth his salt should be able to figure out how to do this.
.
 
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theo

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My $0.02 worth...

Up until last year, the President of the Board (who had been connected to the original developer and was President for more than 25 years) basically controlled almost everything and since she was a Realtor knew how to deal with these issues. My husband was able to defeat her in the last election but no one on the current Board is a realtor. Thank you for your comments and to the moderator who moved my original post to a more appropriate place. We think the cost of foreclosing could be $3,500 which is far more than the week is worth. The long-term rental option sounds nice but I suspect it will be too pricey for us.

Brian I just saw your reply. What is a "non-judicial foreclosure"? The President of the HOA is an attorney but not a real estate attorney. We do have one working for the HOA on a separate matter so will need to check with him on this.

1. Foreclosure definitely should not cost $3,500. Where did you obtain that figure? Are there any attorneys on your BoD? Foreclosure should be able to be done for less; even utilizing outside counsel would likely cost considerably less than $3,500, unless there are some very strange and highly unusual oddities in NC law.

2. Your former BoD President didn't necessarily know much about the legal details of foreclosure proceedings by mere virtue of being a "realtor".
I'm sure that she was well versed on "listing" and "showing" properties (and, of course, all details concerning sales commission), but not necessarily much else.
Foreclosure is a legal process and procedure in the purview of attorneys --- not clueless realtors. You need a competent attorney, not another clueless realtor.
 
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glmyers

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More is needed

I don't think simply sending notice to the last known address would constitute a good faith effort. With Non judicial foreclosures, the notification requirements are actually more stringent than through a judicial foreclosure process. I don't know all the ins and outs of NC law, but if you can't contact the owner, it might perhaps revert to a judicial foreclosure?
It does take more than simply mailing to the last known address, but that is the first step. It does not revert to judicial foreclosure. Once a reasonable effort is made to contact the owner posting on the door of the property is considered sufficient notice. The only way a problem could possibly arise regarding the notice is for the owner to claim they want to pay what they owe in delinquent dues, reclaim the unit, and were unable to do so due to the lack of sufficient notice. Just how likely do you think that is in the case of a Viking Ship owner?

Odds are it would merely be a case of mailing to the last known address, documenting the defunct nature of ownership entity, and posting on the door.
 

TUGBrian

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just think how popular your husband is going to be after showing the others on the board how they can get these intervals back far cheaper than expected!
 

Fayeoctober

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Thanks for all those who responded. My husband definitely was incorrect in the cost of the foreclosure. However, I don't think the "posting on the door" would work since the LLC only owns one particular week of this unit - not all the weeks.
 

Passepartout

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Thanks for all those who responded. My husband definitely was incorrect in the cost of the foreclosure. However, I don't think the "posting on the door" would work since the LLC only owns one particular week of this unit - not all the weeks.

A deed is a deed, whether it's for a complete unit and permanent ownership or for a 1/50th or 1/52nd (1 week) ownership. Post notification to the deadbeat's door.

Jim
 

Fayeoctober

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Passepartout - I am a little confused regarding the "door." Do you mean the door of the unit or the door where the LLC is supposed to be located? Sorry to sound "stupid."
 

Passepartout

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Passepartout - I am a little confused regarding the "door." Do you mean the door of the unit or the door where the LLC is supposed to be located? Sorry to sound "stupid."

Post on the door where the LLC purports to be located. That would constitute 'service' of the notice as well as publishing in a local newspaper and by mail. The HOA could then say that all reasonable means to notify the LLC had been exhausted and move forward with foreclosure.

Jim
 

theo

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Post on the door where the LLC purports to be located. That would constitute 'service' of the notice as well as publishing in a local newspaper and by mail. The HOA could then say that all reasonable means to notify the LLC had been exhausted and move forward with foreclosure.

Jim

With all due respect Jim, there might be process and / or procedure in NC unknown to us here (certainly including me) who are not members of the NC bar.
This matter needs the perspective and insight of a NC licensed attorney, plainly and simply stated. :shrug:
 

Passepartout

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With all due respect Jim, there might be process and / or procedure in NC unknown to us here (certainly including me) who are not members of the NC bar.
This matter needs the perspective and insight of a NC licensed attorney, plainly and simply stated. :shrug:

You're right (of course) Local legal counsel should be consulted for the particulars. Different states have different processes. My bad. :eek:
 

Fayeoctober

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Again, thanks for all the responses. I have written to the Management Company and they will recommend that the Board foreclose. One other thing that I found interesting regarding the posting on the door, is that upon doing further research, this company never had an office. The address that was provided was a mail box in a UPS Store. I contacted the UPS store (Google is wonderful here) and the box hasn't been paid for in several years and everything is being returned undeliverable. In my mind this is a classic example of a "Viking Ship." My question now and maybe this is in another thread is how HOA can keep sales to these type of companies from happening?
 

csxjohn

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... One other thing that I found interesting regarding the posting on the door, is that upon doing further research, this company never had an office. The address that was provided was a mail box in a UPS Store. I contacted the UPS store (Google is wonderful here) and the box hasn't been paid for in several years and everything is being returned undeliverable. In my mind this is a classic example of a "Viking Ship." My question now and maybe this is in another thread is how HOA can keep sales to these type of companies from happening?

Many resorts now require positive identification of prospective owners. It should have not been too hard to ascertain that the address was not the place of business.

If that further research had been done in the beginning this may not have happened.
 

theo

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Many resorts now require positive identification of prospective owners. It should have not been too hard to ascertain that the address was not the place of business.

If that further research had been done in the beginning this may not have happened.

Correct and relevant, but many HOA's have been (many still are) "less than diligent" in their screening of "grantees" on new deeds provided to them after recording.

In all fairness, the orchestrated sailings of Viking Ships are a relatively recent phenomenon and some HOA's are just now waking up and smelling the coffee. :shrug:
 

TUGBrian

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also a great time to suggest the board implement a policy that does some very basic background checks on transfers...as clearly one doesnt exist at the moment!

as well as implement a policy for accepting weeks back voluntarily from owners who qualify and just want out (thus saving you even more money)
 
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