Focus Management Group

The Lender and the Dockominium

By Juanita Schwartzkopf and Jay Kelley

Prior to the dockominium craze, lenders would be able to foreclose on a marina and sell an operating entity. However, since the mid-2000’s, marinas increasingly have been owned by developers who incorporated dockominium projects with nearby land-based condominium projects or converted marinas to dockominium development projects.

Therefore, lenders involved in such marina projects now face the same issues with unsold projects on the water that they face with unsold projects on land. These workout problems include fragmented ownership and owners’ associations and related association rules (often referred to as “HOA” or “COA”).Marinas that have converted to dockominiums face the same owners’ association issues that exist for any commercial condominium project and are governed by laws related to these specific types of operating entities. Condominium laws are different in each state and regulations regarding proper management of an owners’ association often require a professional third party manager to ensure compliance.

The dockominium lender today therefore has the complication of the ownership structure of a condominium coupled with the added issues surrounding marina management.Marinas fall in to a specialized commercial real estate product class. Operators face unique management challenges, listed below.

Why is a Marina Unique?

Marinas fall in to a specialized commercial real estate product class. Operators face unique management challenges, listed below. This list of unique marina issues provides only a sampling of the industry specific problems requiring a specialized set of management and operating skills.

As a lender, decisions need to be made to improve project management. The project will require a combination of a professional owners’ association manager and a professional marina operator. The skill sets of these two managers do not typically overlap. A separate set of laws and concerns would be confronted by the owners’ association manager and by the marina operator. A separate set of operating management decisions is required for owners’ association management versus marina project management.

Steps to Consider from an Owners’ Association Management Perspective:

  • The owners’ association manager will need to determine who is delinquent in their association dues, property taxes, etc.
  • The people on this list should be approached to sign a First Right of Refusal to provide the lender an opportunity to further consolidate ownership.
  • The owners’ association manager should influence the operating rules of the association in order to protect the cost structures, maintenance and other related operations.
  • The Board of Directors for the owners’ association needs to be formed and brought up to compliance with the Condominium’s Declarations.
  • Legal counsel skilled in condominium law may need to review the current status of issues facing the owners’ association.

Steps to Consider from a Marina Operator’s Perspective:

  • If maintenance and repairs are deferred, public safety risks may require additional funding.
  • If permits and licenses have not been maintained, there may be legal issues to deal with.If insurance premiums have been unpaid or coverage has been reduced, there may be financial risks.
  • Maintenance and operation of heavy equipment needs to be assessed for necessary repairs.
  • Onsite operating personnel need to be managed.
  • Tenants and owners need communication.
  • Marinas with high levels of operating leverage and low usage may be unable to reduce costs to a level covered by current revenue streams, while maintaining safety and regulatory minimums.

As a result of these types of issues, lenders may be requested to provide funding for operations.If a lender has a marina project in its portfolio, the lender will need to determine the current ownership structure and make decisions regarding foreclosure, receivership and bankruptcy. To assist in this decision-making, lenders would be well advised to seek the input of both skilled owners’ association managers and skilled marina managers to help assess risk and next steps. If a lender already has a marina project in foreclosure, receivership or bankruptcy, the lender needs to ensure that the proper management skills are actively being employed — for both the owners association and the operating skill sets. To conclude, marina projects are not just condos on the water and they are not just boater service providers. Marinas that are condominiumized are both and have the inherent problems of both. To adequately protect collateral value, a lender needs to reach out to skilled managers in both areas of expertise.

For more information regarding our experience in the marina arena, contact one of our experienced Managing Directors listed below: Marc Harris (, Jay Kelley ( or Keith Hyatt ( or call 813-281-0062.

This entry was posted on and is filed under White Papers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

View All White Papers →


Agriculture’s Reaction to the Trade Discussions

The recent discussions surrounding tariffs on corn, soybeans, cotton, beef and pork are increasing turmoil in...

Read Full Story


Focus Management Group Completes Its Role as Receiver for Campus Book Rentals

Chicago, IL, August 3, 2017 – Focus Management Group (FMG) was appointed receiver of Campus Book Rentals on...

Read Full Story