New Case says that Association Can Not Collect Past Due Amounts from New Owner after the Association has Taken Title—CALL Alert for January 23, 2013

A new appellate decision from the 3^rd District Court of Appeals has addressed what happens to the outstanding delinquency if the association becomes the property owner as a result of foreclosure of the Association’s lien. Ultimately the Third District ruled that the new owner did not have to pay.

(Here is a link to an excellent blog post by Becker & Poliakoff attorney, Lisa Magill, Esq. explaining the new decision)

In my opinion, an association should not lose the right to collect past due assessments just because it has foreclosed its own lien. While some will argue that the decision is fair because the association could still rent the unit and recoup some of the delinquent fees through the collection of rent, there are times when the unit is not in a rentable condition. Further, even if the unit can be rented, the association may not own the unit long enough to recoup all of the past due assessments. CALL takes the position that the statute should facilitate association collections of delinquencies, not provide a safe haven for investors.

The court case actually comes at a good time, as the Legislature is set to convene in March for the 2013 Legislative Session and could fix this problem for associations legislatively.

Very Truly Yours,

Yeline Goin Executive Director
Community Association Leadership Lobby (CALL)

Follow me on Twitter: http://twitter.com/YelineGoin_CALL

DJGG

Yeline, I agree with your assessment. Not only are some condos not habitable, but others have been in limbo for many years. We have one case that is now 7 years old; with no payment of dues, coupled with legal fees owes the association almost $50K. The condo is only worth $100k. Also, we have another case where we took cert. of title, had to put money in the condo to rent it and after we rented it, the bank foreclosed their lien and Fannie Mae took title and our tenant. The Associations are in a lose-lose position here and I hope the Florida reps do something to help us recoup something for the remaining owners who are left paying the bill.

RLYG

I’m just curious to know if Fannie Mae paid 100% of all past due including collection costs since they were not the original lender?

DJGG

the answer is no. Our attorney at B&P suggested we take what they offered; less than half, stating we could end up with nothing if they find they can challenge it. Our loss…

http://www.floridacondohoalawblog.com/ Lisa Magill

Agreed. Hopefully foreclosure reform will give associations more power to move the bank foreclosure cases. CAI has been looking for someone to sponsor language to rectify this situation by eliminating joint and several liability if the association takes title. We will see. Thanks for the comment.

jsn1

This is an excellent post it would seem that now Associations will have to be vigilant in determining which homes to proceed with foreclosure action and how is this going to impact selective enforcement?