Get ready for another ripple of victims from the souring economy and increased home foreclosures: Neighborhood pool parties, flowers at subdivision entrances and lifeguards.

More homeowners are behind on paying neighborhood dues this year, say property managers and lawyers who represent hundreds of homeowner and condominium associations around metro Atlanta. Worse, more associations are learning firsthand how home foreclosures generally nullify liens put in place to get months' or years' worth of unpaid dues.

Renee Hannans Henry/AJC (ENLARGE)

George Nowack, a real estate attorney, holds up something he's seeing a lot of these days: a foreclosure lien for dues.

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The result: More homeowner and condo owner associations worry they won't have enough money to make budget this year. Some have already cut services to make up for the shortfall. The troubles could add pressure to increase dues when neighborhoods plot out next year's budget plans this fall.

"In 26 years we've been in this business, I've never seen the percentage of delinquencies as high as they are today," said Gavin Cobb, the president of Sandy Springs-based Heritage Property Management, which he said represents more than 300 associations. "We have some communities that are in excess of 25 percent" of homeowners past due.

Derek Young, president of the Villages at Lake Ridge in Clayton County, has felt the impact.

"It's been a rippling effect through the community," he said.

At a recent meeting, Young learned that more than half the owners of the neighborhood's 700 houses and condominiums were delinquent on the $250 annual dues, all of which were due no later than early April. With less money coming in, "we've had to prioritize what we can and can't do."

They axed plans for neighborhood social functions, including a spring festival with hamburgers, face painting and entertainment. They also opted to shorten the neighborhood pool's daily schedule by three hours to save money on paying attendants.

He and other leaders are spending more time rounding up volunteers to handle more tasks that previously contractors would have been paid to do, such as clearing underbrush around the community's lake and cutting grass around foreclosed homes.

The budgetary pain started last year, Young said. "We've seen a lot more foreclosures, a lot more homes going back to the banks."

Brian Wheeler, the president of the homeowners association for Oak Green Park, a neighborhood with nearly 150 homes in the Lawrenceville area, said he's noticed a sharp increase in delinquencies in the past year and a half.

The community has held off on some repairs, he said, but generally it has kept up with services. What it hasn't been able to do is set aside funds for reserves as planned, he said.

"It's not fair to everybody else," Wheeler said.

Steve Weibel, the owner of property management firm Community One Associates in Alpharetta, estimates that as many as one in every five neighborhoods this year has had to reduce expenses, such as shortening pool hours with lifeguards and cutting back on landscaping, to deal with the slowing economy.

One silver lining: Many Georgia communities already had scaled back on planting new flowers and shrubs this year because of the drought.

Some situations are tougher. Weibel said that with the budget crunch at one association he dealt with, "the problem with foreclosures got so severe that they would not pay the water bill."

Liens lose effectiveness

Metro Atlanta doesn't lack for neighborhood associations that police for covenant violations and maintain community extras such as pools, tennis courts and, of course, the subdivision's manicured front entrance.

Condo associations tend to have more costly and crucial demands: from property insurance to communal utility bills and security contracts. Several property representatives say they've seen limited financial strain on condo associations so far, though that may change given a housing market that has undercut many Atlanta condo owners.

Both subdivision and condo associations rely on dues — some paid annually or monthly — that often range from a couple of hundred to thousands of dollars a year.

Often, neighborhood representatives say, home-owners' dues are the last bill paid.

Volunteer association leaders find themselves juggling community bills, squeezing delinquent neighbors for money and hunting for ways to get by. They typically slap liens on the homes of delinquent owners.

But lately that strategy has fizzled. The rise in foreclosures is sending more homes back to banks for less than what is owed, leaving the associations' liens worthless. Neighborhood leaders still can go after the previous homeowners personally, such as trying to garnishee wages, but many communities simply cut their losses and write off the debt.

It's an increasingly common dilemma.

"Foreclosures are now affecting every community association out there," said George Nowack, managing partner of Atlanta-based Weissman Nowack Curry & Wilco, which represents about 850 associations. "Some had never seen them before. Some had always had a lot and now are seeing even more."

Compared with last year, Nowack's firm has sent out about 20 percent more warning letters for past-due debts of at least $300.

At Country Club of the South, an upscale, gated community in north Fulton, leaders saw worrying signs while trying to collect on dues of $1,405, payable every six months. The fees pay for everything from security to pool upkeep and a recreation center.

The neighborhood hasn't reduced services, but leaders have had to be more aggressive this year in pressuring neighbors to pay up, said Carol Doerfler, director for the community's homeowners association. They sent out additional warning letters and made personal phone calls.

"We've been hitting them hard and heavy," Doerfler said.

Extra collection efforts tend to add extra costs at a time that some associations can ill afford it.

"They are getting hit on all sides right now," said David Grace, whose Grace Management is a Stockbridge-based company that helps associations collect funds and prepare financial statements. To make up for continued shortfalls, homeowner associations can try to increase dues for next year, but it's likely to be an unpleasant and unpopular strategy.

If the troubles continue, association leaders may have little choice, Grace said. "There is going to be a lot of soul-searching at the end of 2008."