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Florida Condo & HOA Legal Blog News & Updates on Condo & HOA Laws & Legislation in the State of Florida

Collection Efforts After Bank Foreclosures – The New Association Paradigm

Posted in Assessment Collection, Foreclosures, Mortgages

Is your Association Leaving Money on the Table?


Bank foreclosures continue to be an impediment to collection of unpaid assessments in many communities.  Sure, after the 2010 legislation became effective, community associations are entitled to collect either 1% of the original mortgage debt or 12 months worth of assessments from the mortgagee (whichever is less), but what about the rest of the balance?  Does it disappear into thin air?


Because a bank foreclosure will usually directly impact the ability to successfully lien and foreclose, communities must be aware of other alternatives to collect unpaid assessments.


Strategic Defaults – According to Wikipedia:

A strategic default is the decision by a borrower to stop making payments (i.e. default) on a debt despite having the financial ability to make the payments.

While many owners who lose their units in foreclosure cannot pay, it is important to remember that a unit owner is personally liable for all unpaid assessments that are left when a bank forecloses.  The Association may seek to collect the balance on the account from the former owner.  More and more, people who do have assets make choices to abandon properties because there is no equity.  If there is a possibility that an owner has assets to satisfy a judgment, a community should consider taking action against a former member to collect those unpaid assessments.

Many associations are thinking short-term instead of long-term when they decide to forgo pursuing a money judgment for the balance between what a lender pays if it takes title as a result of foreclosure and the outstanding obligations on the account. Yes, there are costs involved. If the association doesn’t have a lawsuit pending, it needs to file a lawsuit. There are attorneys fees, filing fees, costs associated with service of process, etc. If the association already has its lawsuit pending, most of those costs have already been absorbed – so why not wait for the bank to foreclose (and pay its statutory obligation), then continue to pursue the balance against the former owner? A judgment is recorded in the county and with the State’s registry; it is initially valid for 10 years and can be renewed for another 10 years. During that time if the debtor desires to buy another property, obtain financing for purchase of a vehicle, college, etc., the judgment will appear.

While the debtor/former owner may not have sufficient cash-flow right now, who knows what the future will bring? If the debtor has significant assets in another state, the association can even take the extra step of domesticating the judgment in another state and pursue collection efforts there.

Asset Searches Can Be Helpful in the Decision Making Process

An asset search may help discover assets. It is more difficult (sometimes almost impossible) to collect from a corporate unit owner or a foreign person.  Nonetheless, your community should consider its options after a bank foreclosure – you may be leaving money on the table.


  • Shelby Hernley

    Question on Collection efforst after bank foreclosure=I see in this information “judgement”. Most of our legal actions are “liens” now to me these are 2 different things. Please clarify. Shelby
    RESPONSE: Community associations in Florida have a statutory right to place a lien against the property in the event of non-payment. When the association files suit after non-payment of the lien (and all appropriate notices), the Complaint filed with the Court should request two different, alternative types of relief. One request is for a foreclosure judgment and the other request is for a money judgment (there may be others depending on the circumstances). If the bank forecloses before the association finishes its foreclosure action, usually the association just “drops the case” and gives up. Sometimes that is the right choice but other times it is worthwhile to continue the case. Your board should evaluate each case on its own merit with counsel.

  • clare bennett

    If an association is the one to foreclose on a condo and the bank accepts a short sale on the property and the association does not get any money from the short sale can the association still go after the owner for the money due the association from past dues and assessments?
    RESPONSE: If the association acquires title as a result of foreclosure then it has attained the relief sought in the lawsuit. The association has to make a choice – either pursue a foreclosure judgment or a monetary judgment. Thus, once it pursues a foreclosure judgment it cannot then seek to obtain a monetary judgment against the former owner.
    Associations will not be paid from the bank on a short sale if they have already acquired title. However, associations are entitled to payment in full if a short sale occurs between the delinquent owner and a new buyer.

  • fran griner

    So are you saying after an HOA does it foreclosure, then it can can just turn the difference still owed for assessments, into a money judgment with no further notice to the homeowner, or no filing of a separate lawsuit for a money judgment??
    Seems to me, if the association gets the 1% that is all that would be allowed per law. Afterall, the person did lose his home because of the association liens. (in some cases they are foreclosded based on disputed and false liens)
    Please provide the Florida law, or Fed. law that would allow this action to take place.
    I know the FDCPA states that whoever files a lis pendens must have an interest in taking the property.
    RESPONSE: No. I’m saying that the association can seek to obtain a money judgment against the former owner after the bank forecloses, for the difference between what the bank pays and what is still due on the account.

  • Fran Griner

    RESPONSE: If the association acquires title as a result of foreclosure then it has attained the relief sought in the lawsuit. The association has to make a choice – either pursue a foreclosure judgment or a monetary judgment. Thus, once it pursues a foreclosure judgment it cannot then seek to obtain a monetary judgment against the former owner.
    Lisa, thank you for your response. I have been trying to figure out the legality of this HOA foreclosure v. money judgment issue. If the HOA “acquires” title” through a lis pendens foreclosure action, why would it then have to make a choice between a foreclosure judgment or a money judgment?” Seems like the HOA already prevailed and has already obtained title to the property and it would belong to the Association.
    Some HOA attorneys are turning their foreclosure wins into a money judgment without going through the proper process of filing another money judgment action in small claims court…. The HOA could be keeping the property too.
    Sometimes there is a HOA disputed lien foreclosed on, and there is no bank mortgage. Some attorneys are just “changing” their foreclosure win into a money judgment instead of taking the property for some unknown reason!
    In the actual lis pendens lawsuit the HOA lawsuit contains a “count II” Action for Money Judgment. This just seems to me unlawful to file a foreclosure lawsuit with a lis pendens action and at the same time be making it an action for a Money Judgment???!!
    It seems the Association attorneys are telling the court, “we are doing foreclosure actions but we really aren’t taking their homes, we are just going to do money judgments instead. We just hope to foreclose on a few to scare the rest into paying.”
    That just doesn’t sound legal based on foreclosure laws I have read.

  • Susan Carr

    I am on the Board of my HOA. We have no authority to waive any past due fees after foreclosure has taken place. When the foreclosing Bank send us the estoppel we put the entire amount owed. We take the position that under FL.ST. 720.3085 (2)(b) A parcel owner is jointly and severally liable with the previous parcel owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the present parcel owner may have to recover any amounts paid by the present owner from the previous owner.
    Whatever the Bank will not pay is the responsibility of the new owner. This has worked everytime and we have been successful in collecting 100% of what is owed to us. If all HOA and Condo association did this they would not have the financial problems they are having. This saved our association from dipping in to our reserves to pay the bills.
    Think about it! It’s the easiest and quickest wat to collect!

  • Remo

    In a County auction situation, where the County forces a sale to establish NEW ownership, if an individual has a winning bid and subsequently and through the proper process gains a Title directly from the County…what liability can still exist afterwards.
    How does the County disburse the funds and to whom?
    Is the Totle attained a ‘clear’ Title “partially clear”?

  • Rocky

    Hi Lisa,
    I am purchasing a foreclosed condo and just got the estoppel today. The previous owner owed about 12 months HOA. from July 09 to July 10. The bank to ownership in August 10 and now i found out that I am responsible for the unpaid HOA from 09 to 10.. DO I have any recourse here? How can I negotiate with the bank to pay or split the unpaid HOA penalites, and legal fees? DO i have any negotiating power with the bank attorney, or the HOA?The fees are over 5k, and would probably make this deal undoable for me. Any advice is greatly appreciated..

  • Kathy

    If one has lost a home to foreclosure do to lost job, the bank has completed foreclosure. The HOA has essentially until eternity to collect unpaid HOA fees, if they can renew every 10 years? How does the individual know from what date to what date they are responsible for HOA fees from?
    RESPONSE: The Statute of Limitations to collect a debt arising under a contract is generally five (5) years from the date of breach.

  • Ben

    I am VP of Condo assn.
    If the assn. has lien against a property, and the mortgage company foreclosed, I understand that they are obligated by law to pay up to 1% of original mortgage or 12 months (whichever is less).
    However, as holders of the lien, can the association simply turn back to the bank (now holder of the title) and simply say that we will not remove the lien until ALL arrears are made current?
    RESPONSE: No. The association’s lien is inferior to the first mortgagee’s lien. Thus, once the first mortgagee obtains a judgment against the association, the document recorded in the Public Records no longer operates as a lien.

  • Fay johnson

    I am behind on my association payment and the association put lien on my property. Can association foreclosure on my home and take my home?

  • diana

    HI Lisa
    If the association put a lien on the property before the bank’s lis pendens and the HOA had a judgement accepted by a court to sell the property, can the bank demand the new homebuyer to pay the old homeowner’s debt or is the bank foreclosed of any right to the property, since the HOA sold the property????
    RESPONSE: The bank can foreclose against the new owner. The association takes title subject to the first mortgage. If it sells the property the buyer takes title to the first mortgage. The first mortgagee doesn’t lose its right to foreclose if the association forecloses first.

  • cliff

    I recently purchased a townhome at foreclosure sale. There was not lien recorded at the time of sale. After the my purchase the association wants $9,500 of back fees including interest and attorney’s fees. Do I have any recoarce since there was no lien and the association was named as a defendant in the bank foreclosure?

  • Devan

    I purchased a condo at the court online auction.It seems that the association foreclose for non payment of ass. fees. And now I am told that I am responsible for thefirst and second mortgage on the condo unit? is this true , and if so what can I do?
    RESPONSE: The buyer bears responsibility for any mortgages or other obligations that haven’t been foreclosed out by the association’s lien foreclosure case. In most cases the association will foreclose against both the owner and any junior lien holders.

  • Kevin O’Brien

    I purchased a condo at foreclosure at the court house the condon had a lien on the property from the condo assocation for $2,700 the bank was awarded a final judgement to foreclose the condo association was notfied. I thought all junior liens would get wiped out at foreclosure if they were notified except for taxes. The Condo Association is coming after me for 2010 fees and penalties now at $8400.00 should i hire a lawyer or do I owe these fees?
    RESPONSE: The statute provides a safe harbor for the first lender, not any purchaser at a foreclosure sale. Third party purchasers are jointly and severally liable for assessment delinquencies.

  • Cindy

    Is a 3rd party purchaser at lender’s foreclosure sale laible for assessment delinquencies even if association had not filed a lien for the delinquent assessments?
    RESPONSE: The statute provides for joint and several liability, which means any third party purchaser must pay the association in full.

  • Dama Yanti

    I’m in the process of purchasing a foreclosed apartment in a condominium in Florida. I have a closing date…but got a phone call from the realtor telling me there are arrears for the HOA and they (bank & HOA) need to talk about that payment. There would be a delay in the closing. My question is how long will it takes to the bank and HOA to come up with an agreement? What is the timing?