Tools Available to Collect Delinquent Association Dues

Posted by David L. Cook on April 01, 2013

past due small.jpgWith the real estate market crash, condominium, cooperative, and homeowner associations have been facing increasing delinquencies. In some cases, owners who quit paying their mortgage usually stop paying their association dues. Some owners even rent out their homes or condominiums and collect rent, but still fail to pay their dues.

In 2010, the Florida legislature gave condominium, cooperative, and homeowner associations a new tool to use to collect delinquent dues directly from tenants. Effective July 1, 2010, the association can demand payment directly from the tenant, up to the full amount owed to an association for delinquent assessments, interest, costs, and attorneys' fees. The association can also evict the tenant if they continue to pay the landlord instead of the association, once the tenant receives the demand from the association. Click here to download sample demand letter.

The law protects the tenant by preventing the landlord from evicting a tenant who complies with a demand by the association to make rent payments to them. So there is nothing for the tenant to lose by paying rent to the association, and the threat of being evicted by the association if they don't. If you serve on the Board of an association and have not been using this tool, ask your property manager or attorney who handles your collections for more information. It may help in decreasing the delinquencies owed.

Required Disclosures to Buyers of Resale Condominium Units in Florida

Posted by Amanda K. Barritt on April 11, 2012

Closer Look at contract.jpgMy colleague, Sharon Zuccaro, previously blogged about Tips to Avoid Common Mistakes on Florida Homeowner Association ("HOA") Disclosures. As Sharon pointed out, sellers of homes within HOAs are not required to deliver copies of the HOA's governing documents to purchasers, but are required to provide a Disclosure form. The Condominium Act provides different disclosure requirements for non-developer sellers of condominium units.

Disclosure Required

The buyer of a condominium unit from an individual is entitled to receive copies of certain governing documents at the seller's expense, if the buyer so requests in writing.  If such request is made, the buyer may cancel the contract for the sale of a condominium unit within 3 days, excluding Saturdays, Sundays and legal holidays after the contract was executed by the buyer and the buyer has received a current copy of the declaration of condominium, articles of incorporation, bylaws, and rules of the association, a copy of the most recent year-end financial report and frequently asked questions and answers document, and a copy of the condominium governance form prepared by the Division of Florida Condominiums, Timeshares and Mobile Homes.

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Top Five Questions About HOA/Condominium Associations

Posted by Amanda K. Barritt on October 14, 2011

iStock_000015122897XSmall.jpgOften the 6 o'clock news highlights the plight of a homeowner fighting his or her homeowners' association (HOA) because the association is enforcing a rule that the owner doesn't like and claims to have been unaware existed. The rule was probably there all along had the homeowner read their association documents. Also in the course of everyday conversations in this economy, homeowners who have fallen behind on their assessments are asking, "Can my condo/homeowners' association really evict me for just a few thousand dollars I owe?" Following are answers to five common questions owners ask, often when it's too late, about purchasing and living in a community association:

1.  Can my association really "evict" me for unpaid assessments?

Yes, although it is not an eviction, but a foreclosure. In Florida, condominium associations, by law, and HOAs, if provided in their recorded documents, do have a lien to secure the payment of assessments, late fees, interest and attorneys’ fees and costs of collection.

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Florida Supreme Court to Hear Developer and HOA Battle Over Common Area Warranties

Posted by Amanda K. Barritt on September 19, 2011

120px-FlaSupremeCrtBldgFeb08.JPGIn Maronda Homes, Inc. of Florida, et al, v. Lakeview Reserve Homeowners Association, Inc., the Supreme Court of Florida will soon determine whether common law implied warranties extend to the construction of common areas and facilities of a residential subdivision.

The Facts
After the turnover of control by the developer, Maronda Homes, the Lakeview Reserve community experienced drainage problems. Upon hiring an engineer to conduct an inspection, the Lakeview Reserve Association determined defects exist as to the paved streets, retention ponds, underground drainage pipes and grading of the site and lots. As a result of such defects, multiple lot owners allegedly experienced stagnant water, sinkholes, loss of grass, and erosion on their lots. 

The Association filed a complaint against Maronda Homes for breach of implied warranties of fitness for a particular purpose, merchantability, and habitability arising out of the alleged defective construction of the common area improvements. The Association claimed that the developer failed to construct the common areas properly to support a residential subdivision and the homes within it. The trial awarded a summary judgment to the developer. 

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Tips to Avoid Common Mistakes on Florida HOA Disclosures

Posted by Sharon M. Zuccaro on August 05, 2011

Contracts.jpgNon-compliance with Florida Statute §720.401 can be fatal to the closing of a purchase and sale contract. Given the current real estate climate, sellers of residential property cannot afford to lose a sale, or become involved in a lawsuit due to mistakes associated with the required homeowner's association disclosure ("Disclosure") specified in such statute. By understanding the law and being aware of the mistakes, a seller and his/her agent can increase the odds of closing a sale without an adverse surprise.

The Law

Florida Statute Section 720.401, requires owners of real property subject to a homeowner's association(s), to deliver to a potential purchaser the Disclosure prior to contract execution. The form of the Disclosure must be substantially in the same form as identified in the statute.

Non-Compliance

As a practical matter, the Disclosure is seldom signed before contract execution because the selling agent does not typically know of all the required assessment information to be included in 

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Community Association Ability to Suspend Use and Voting Rights Clarified

Posted by Amanda K. Barritt on July 22, 2011

Fort Myers Condominiums.JPGIn 2010, the chapters of the Florida Statutes governing condominiums and homeowners associations were amended with the intention of providing community associations significantly more "teeth" to enforce collection of assessments from delinquent owners. Unfortunately, the new provisions contained several glitches which resulted in confusion for associations, owners, and community association practitioners. House Bill 1195 became effective July 1, 2011, with intent to remove such glitches and clarify provisions passed in 2010.

Prior to 2010, a homeowners' association was permitted under Chapter 720 of the Florida Statutes to suspend an owners' right to use common areas and facilities for the violation of provisions of the association's governing documents. The statue did not provide such a remedy for past due assessments. One of the glitches of the 2010 legislation unintentionally resulted in the removal of the ability of a homeowners' association to suspend an owner's rights to use common areas and facilities for violations of the governing documents. However, the right to suspend common area use rights was added as a potential remedy for nonpayment of monetary obligations owed to the Association which are more than 90 days delinquent.

For condominium associations, prior to the 2010 legislation, suspension of common element use rights was not provided as a remedy in the statutes at all. The 2010 legislation provided for suspension of common elements and facilities as a potential remedy only for 90 day delinquencies, not for other violations of the governing documents. However, the statutory provisions providing for the hearing procedures required for suspending use rights, did reference the availability of common element use suspension as a remedy for other violations. These procedural provisions raised questions as to whether the right to suspend use of common elements and facilities was available for violations other than monetary delinquencies.

Homeowners' Associations Right to Suspend

With the passing of House Bill 1195, a homeowners' association may suspend the right of a member, or the member's tenant, guest, or invitee, to use common areas and facilities both for failure to comply with any provision of the governing documents and for nonpayment of

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Recent Developments in Condominium Cooperative and Homeowner Association Law

Posted by David L. Cook on January 10, 2011

Each year, the legislature makes changes to the laws regulating condominium, cooperative, and homeowner associations.  This year, many of the legislative changes were intended to address the unique problems which arose as a result of the severely depressed housing market and the effect it has had on these associations. This article summarizes some of legislative changes that took effect on July 1.

Protection for Bulk Purchasers
There are many recently constructed condominium projects with large amounts of unsold and vacant units.  Many of these have been foreclosed or are facing foreclosure.  Developers and banks who own these units are trying to sell them at bulk discounted prices.  A new law, called the "Distressed Condominium Relief Act", was enacted to protect bulk purchasers of condominiums from liability for actions of the original developer.  Previously, a purchaser of more than 7 units in a condominium was subject to the same laws affecting the original developer if they offered the units for re-sale or lease.  The new law establishes two new categories called "bulk assignees" and "bulk buyers."  Bulk assignees are purchasers who purchase more than 7 units and receive, as part of the purchase, an assignment of some or all of the original developer's rights.  These purchasers will still be subject to some of the laws affecting the original developer but those are now limited and clearly listed.  Bulk buyers are purchasers who purchase more than 7 units but, with a few exceptions, do not receive an assignment of the original developer's rights.  These purchasers are subject to even less laws affecting the original developer or a bulk assignee and those are also clearly listed.  The intent of this new law is to enhance the ability of banks and developers to sell their units to investors, who will ultimately sell or lease the units.  This enables the associations in these troubled projects to generate assessment income and should help reduce the large inventory of vacant units which now exists.  The law will only apply to bulk purchasers who purchase units before July 1, 2012.  If the market has not adequately recovered when the 2012 legislature meets, there will likely be efforts to extend this deadline.
Fire Sprinklers
Another significant legislative change involves installation of fire sprinklers.  Previously, condominiums and cooperatives were facing a deadline of December 31, 2014, to retrofit the units and common areas with fire sprinklers.  This created a major expense for some condominium and cooperative owners.  Prior law allowed non "high rise" condominiums to exempt themselves from this requirement if two thirds of the owners voted to be exempt.  Owners in high rise condominiums, defined as buildings over 75 feet high, could only exempt themselves from installing fire sprinklers in the units but were still facing the deadline to install sprinklers in the common areas.  The new law now allows both high rise and non high rise condominiums to be totally exempt upon a majority vote instead of a two thirds vote.  It also extends the deadline for retrofitting to December 31, 2019 for those owners who do not vote to exempt themselves.
Payment of Past Due Assessments
The law which obligates banks that acquire title to condominium units through foreclosure to pay past due assessments was also amended.  The prior laws affecting condominium and homeowner associations were different.  Banks which foreclosed on condominium units were only responsible for paying six months of past due condominium assessments or an amount equal to one percent of the original mortgage amount, whichever was less, whereas, banks which foreclosed on homes were responsible for paying one year of past due homeowner association assessments or an amount equal to one percent of the original mortgage amount, whichever was less.  The one year time period now applies to both condominium and homeowner association assessments.  Again, this change is in recognition of the large number of condominium foreclosures.  Since foreclosures often take much longer than six months to complete, condominium associations were losing significant revenue when an owner's unit went into foreclosure.
Another legislative change will help condominium, cooperative, and homeowner associations collect their assessments from leased units and homes.  If an owner is leasing a unit or home but not paying their condominium, cooperative, or homeowner assessments, an association now may collect the assessment directly from the tenant.  Upon written demand from the association, the tenant must pay the assessment directly to the association, up to the amount of rent, and in turn the tenant may deduct the amount paid to the association from the amount of rent due to the owner.  Under this new law, associations were also given the authority to evict tenants if they fail to pay assessments after written demand.
This Article only summarizes some of the 2010 legislative changes and should not be relied upon as a complete description of those changes.  Some of these changes are much more detailed than can be addressed in this newsletter and there are additional changes to the laws affecting condominium, cooperative, and homeowner associations which are not discussed.  Please consult with an attorney for a complete explanation of the legislative changes made by the 2010 legislature.

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