Florida Condo & HOA Legal Blog : Florida Condo Lawyer & Attorney : Becker & Poliakoff Law Firm : Condominium & HOA Law Blog

Community leaders struggle with budget shortfalls every day.  What if there was something you could do when owners fall behind in maintenance payments, mortgages and other expenses?  Do you agree that a six month reprieve from mortgage payments can enable homeowners to bring their account with the association current?  If so, you need to learn about the financial assistance available.

The state received close to a billion dollars in federal funds to help struggling homeowners fend off foreclosure.  The program, administered by the Florida Housing Finance Corp., is designed to provide homeowners with some "breathing room" by giving them a temporary break on mortgage payments.  By raising awareness of the program and offering assistance to qualified applicants, community leaders can help improve residents' financial situations while improving the association's financial condition at the same time.

Eligibility Criteria:  Applicants must be eligible to receive assistance.  Help is limited to those Floridians that are unemployed or under-employed, not those suffering financial hardships as a result of divorce, disability or death of one of the borrowers.  An applicant ...

• Must be a Florida resident;
• Must occupy property as primary residence (the property cannot be vacant, abandoned or rented);
• Borrower/co-borrower must be unemployed or underemployed through no fault of his/her own, which makes the first mortgage unaffordable;
• Must have documented total household income at or below 140% of the area median income (AMI), adjusted for household size;
• Must have an active checking/savings account that can be debited by the ACH method of funds transfer;
• May not have unencumbered assets of $5,000 or more, or three times the current monthly mortgage payment (whichever is greater);
• Cannot have a bankruptcy that has not been discharged or dismissed; and
• Cannot have been convicted of a mortgage-related felony in the last 10 years.

Click HERE for frequently asked questions and answers about the Hardest-Hit Fund.  TheFlorida Housing Finance Agency hopes to assist close to 40,000 people with this program - wouldn't you like your owners to take advantage of this opportunity, especially if that will help them catch up on delinquent assessments?

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The Quail Run story demonstrates the power one, two or a few delinquent owners have over the paying owners.  According to the Sun-Sentinel, close to 100 condo owners have been shut out of the pool, clubhouse and other Quail Run recreational facilities, even though a very small minority are behind in payment of maintenance fees.

The Condominium Act was amended, effective July 1, 2010, to allow associations to suspend use rights in the event an owner is more than ninety (90) days delinquent.  Section 718.303, Florida Statutes says in part:

If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid.

There is a similar provision in the statutes that govern homeowners' associations operations.  Section 720.305, Florida Statutes likewise states (in part):

If a member is delinquent for more than 90 days in paying a monetary obligation due the association, an association may suspend, until such monetary obligation is paid, the rights of a member or a member’s tenants, guests, or invitees, or both, to use common areas and facilities and may levy reasonable fines of up to $100 per violation, against any member or any tenant, guest, or invitee.

Thus, it is evident that the association (whether a condominium association or a homeowners' association) has certain remedies available to it against a delinquent owner.  The question here is whether this punishment may be imposed against all owners in a particular sub-association when some are delinquent and others paid in full.

Many communities are developed with several neighborhoods inside a large subdivision.  There is a master association that bears responsibility for certain portions of the property, generally including the roads, perimeter fencing or walls, security gates and recreational facilities.  In newer communities, typically the governing documents will give the master association's board the choice to 1. collect assessments directly from the individual owners, or 2. to require the sub-association to pay the aggregate amount.  Obviously the latter is far easier for the master association administratively - keeping track of 5, 8, 10 or 15 payments is a lot easier than keeping track of hundreds or thousands of payments from individuals.  The master doesn't necessarily need to keep track of property transfers or participate in many of the lender foreclosure actions when the sub-association bears responsibility for payment of the assessments attributable to its units/homes (although in many cases it may be wise).

Not all governing documents give the master association the options stated above.  Some of the declarations merely require the sub-association to act as a conduit, not as a guarantor of payment.  Some declarations actually require the master association to collect assessments from the individual owners.

One of the sub-association boards in the Quail Run community decided it could not absorb the costs of owners in default and only paid the master association for the unit owners that submitted their payments.  The master association, relying on the language of Section 718.303, Florida Statutes, then suspended use rights for everyone in that neighborhood, rather than limiting the suspension to the owners in default.   A hearing was recently held to determine whether the master association was right or wrong by taking that action.  We'll be sure to report on further developments in this particular case as they become known.  In the meantime, be sure counsel has reviewed your governing documents to see what options are available to secure your community's continued viability.

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In a previous post I addressed whether an association could cut off cable or shut down water.

 An association in Hillsborough County amended its documents to ostensibly allow it to take these actions if any of the homeowners failed to pay assessments.  Remember, HOA's have the authority to suspend use of common areas and facilities if the governing documents contain appropriate language. 

The Court found that the association went to far and on Wednesday, September 16, 2009, it Ordered the association to restore water service to the townhome of the delinquent owner. 

A Fox News video relating to this story shows conditions associated with the property. 

Many communities are struggling to make ends meet.  If water/sewer is paid for as a common expense because there is only one meter, it may be advisable to investigate whether sub-metering is an option.  Of course, there are legal issues that need to be addressed and therefore please consult with your community association attorney before making any changes to the property or utility services.

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Court Rules in Favor of Use Blanket Receiver to Collect Rental Income When Investment Owners Fail to Satisfy Financial Obligations to Association.

The Miami Herald and Sun-Sentinel both reported that the Third District Court of Appeal denied a challenge to an Order appointing a 'blanket' receiver to collect rental income from tenants when the unit's owner failed to pay assessments.  The owner challenging the Order owns several units, most or all of which are in delinquency status.  The appellate Court denied a request for a Writ of Prohibition, allowing the Association to continue enforcement of the blanket order requiring rent to be paid to the receiver to satisfy outstanding assessments and other sums due.

This 'mini-receiver' program has been very successful in South Florida.  The Order entered in the Verabella Falls Condominium Association case specifically requires the receiver to collect all rents and monies from tenants due to unit owners when the unit's owner is subject to a foreclosure action for the failure to pay past due assessments.  It also permits the receiver to engage a property manager to offer unoccupied units for lease or rent when the unit's owner is a defendant in foreclosure proceedings filed by the Association. 

Seminars will be held throughout the State to explain the success of these programs to community leaders.   Please check this site for more information regarding those seminars and other educational events.

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