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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.

 

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8 Comments
  • Avatar
    R Ahlquist
    August 3, 2009

    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?

  • Avatar
    Bob Maynard
    August 22, 2009

    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.

  • Avatar
    Lourdes Yturralde
    April 13, 2011

    I dont owe any monney to the association al at…know for all my rentals they want my tenants deposit…in wich I will never see that money come back to me …is that a law? is this something that they can do?.. I have my 3 apt since 1994 and never owed 1 penny..please help me …thankyou
    RESPONSE: Its not unusual for an association to require a damage deposit. They need to have the authority to do so and return the deposit at the conclusion of the tenancy if there aren’t any damages or the funds aren’t utilized for other authorized purposes.

  • Avatar
    ellen simonds
    September 2, 2011

    we are currenting renting a foreclosed condo and have been paying the HOA dues and was told yesterday we need to start paying rent. They will not be are landlords and will only fix minor things… we have fixed many thing out of our pocket and there are many things wrong with condo including mold etc. Is this legal? I live in Florida
    RESPONSE: The association does not take on the obligations of the owner as landlord. Please direct any issues associated with the unit (damaged or inoperable items) with the owner of the unit.

  • Avatar
    Joe Testa
    April 10, 2012

    I AM A BOARD MEMBER AT THE ABOVE NOTED CONDOMINIUM COMPLEX. WE HAVE SEVEN HOMES IN BANK FORECLOSURE. WE ALSO HAVE INITIATED ACTIONS FOR FORECLOSURE AS TO THOSE SEVEN UNITS. THE BANK FORECLOSURES ARE STALLED. OUR ACTIONS CONTAIN ONLY ONE CAUSE OF ACTION FOR FORECLOSURE OF LIEN. FOR SOME REASON WE DO NOT HAVE A SECOND CAUSE OF ACTION FOR COLLECTION OF THE LIEN.
    THE BOARD HAS DECIDED TO MOVE TO TRIAL ON THESE CASES. MY QUESTIONS IS CAN WE FORECLOSE ON THAT LIEN BEFORE A DECREE/JUDGMENT ON THE LIEN IS GRANTED.
    JOE
    RESPONSE: The information on this blog is general in nature for informational and educational purposes only. Your counsel can (and should) answer this question.
    In general terms, the association has the right to foreclose its lien for delinquent assessments. The foreclosure judgment should include the entire delinquency on the account, as well as an award of attorney’s fees. If there are no other bidders at the foreclosure sale, the association can and usually does acquire title. At that point the association can remove any occupants and possibly rent the property to recoup some of the lost assessments.

  • Avatar
    Monis
    September 15, 2014

    the Condo Association rented me a condo which was foreclosed by them due to pending assessments. I was notified two days ago about a mortgage foreclose. my lease with the Association expires in November. Do I have to vacate after unit is foreclosed. To who I am suppose to pay the rent.

    • Avatar
      Lisa Magill
      September 16, 2014

      Rent is payable according to your contract. Many associations include an early termination clause in these leases in case the mortgage holder forecloses. Check with the mortgage holder, sometimes they offer relocation assistance (payment) to tenants.