Q&A: Condo Receivers; Collecting Rent from Tenants
Subscribers recently posed interesting questions concerning the information in Condo Receivers Help Collect Assessments such as the following:
Does the Blank receivership work for HOA's as well?
How would the association/manager/board find out if tenants live in a specific unit and the association docs does not include the screening approval procedure for renters?
The Condominium Act specifically permits the Association to ask the Court to appoint a receiver to collect rental income when the unit owner fails to pay assessments. Section 718.116, Florida Statutes, provides, in relevant part, as follows:
If the unit owner remains in possession of the unit after a foreclosure judgment has been entered, the court, in its discretion, may require the unit owner to pay a reasonable rental for the unit. If the unit is rented or leased during the pendency of the foreclosure action, the association is entitled to the appointment of a receiver to collect the rent. The expenses of the receiver shall be paid by the party which does not prevail in the foreclosure action.
The Homeowners' Act and specifically Section 720.3085, Florida Statutes contains language identical to the above. Thus, an Association with several tenant-occupied homes in foreclosure may petition the court for similar relief.
The receiver appointed in the cases mentioned, Seth Heller, advises he uses a number of different tactics to determine whether units/homes are occupied by tenants, including knocking on doors and requesting information at the guard gate. Surprisingly, many tenants are willing to share information, especially if they have a better chance of avoiding being displaced from the foreclosure.
Another reader posted the following question & comment:
I'm not clear on whether the ruling allows associations
which are not in receivership (lacking a properly elected
BOD) to collect rents directly. Or am I misinterpreting
the term 'receiver'?
Thanks again for providing important information to
those of us who are interested enough to want to learn...
now if we could only find a way to educate those who don't.
The receivership explained in the previous post is not a full receivership contemplated by the Statutes in the event there not enough people willing to volunteer for the board. This program is referred to as a 'mini-receivership' where the Order is specifically tailored to apply to units occupied by tenants, when the owners are facing foreclosure. Thus, the Board of Directors retains complete control of Association operations and the receiver (often along with the help of management, staff or independent contractors) administers rental payments that would be paid to owners if the Order were not in place. A 'blanket' order saves the Association thousands of dollars in attorneys fees, since the Association only has to file the Motion/Petition and attend the hearing once, instead of in every foreclosure case filed. A Court Order is required, but the role of the receiver is limited.
Please let us know about your experiences (good or bad) with this program or other efforts employed to collect assessments.
Assume the following:
- A bank has commenced foreclosure proceedings against a unit Owner but not taken possession of the unit
- The Condo association has liened the Owner for past due assessments
-The condo Owner has declared bankruptcy
-The Condo Owner has a renter in the unit & is collecting rent
Can the Condo asssociation appoint a receiver to collect the rent to pay the association assessment?
Is there any way that the condo association can attach the rental proceeds of an owner who is delinquent in paying assessment fees? The owner is renting through the property management company.