Article X, Section 4 of Florida’s Constitution protects homestead property from many kinds of forced sales. However, since foreclosures of homestead properties for unpaid association assessment debts and for unpaid mortgage debts occur routinely, it is easy to see how many homeowners’ associations and condominium associations are lulled into thinking that constitutional homestead property protections do not apply to association matters. However, that is a mistaken conclusion, and there are a number of things about constitutional homestead protections about which associations should be mindful.
The first is that an association’s continuing lien against each community parcel or unit for assessments arises from the developer’s recording of the declaration. Thereby, the assessment lien is created at the inception of the community’s development and before any owners have purchased and are able to establish homestead interests. The Florida Supreme Court held in the early, seminal association case Bessemer v. Gersten, 381 So. 2d 1344 (Fla. 1980) that an association’s lien for assessments relates back to the recording of the declaration and that, since establishing homestead status does not defeat prior liens, associations’ assessment lien rights prevail over owners’ later-established homestead rights. This is the reason that homestead properties are able to be foreclosed by associations for unpaid assessments.
However, not all debts owed to associations are assessments subject to foreclosure. In actions to enjoin violations, associations have statutory rights to recover attorneys’ fees and costs if they are the prevailing party. However, these awards are money judgments and often will not attach as judgment liens to properties that are protected as the homeowner’s homestead. This means that these fee awards typically cannot be foreclosed in the same manner as unpaid assessments. See Andres v. Indian Creek Phase III-B Homeowner’s Association, 901 So 2d 182 (Fla. 4th DCA 2005).
In addition, there is particular complexity in homeowners’ associations that merits some attention. Fla. Stat. §720.305 provides that fines of less than $1,000 may not become liens against a parcel. This invites homeowners’ associations to adopt covenant amendments allowing fines of $1,000 or greater. While the definition of “assessment” in Chapter 720 of the Fla. Stat. provides that any charge owed to an association which results in a lien is an assessment (suggesting enforcement through foreclosure), Zerquera v. Centennial Homeowners’ Association, Inc., 752 So. 2d 694 (Fla. 3d DCA 2000) strongly suggests that liens for fines may not be foreclosed upon homestead property unless the community declaration expressly provides that fines will be treated as assessments for collection purposes.
For all of the foregoing reasons, constitutional homestead protections affect associations even though they may not frequently attract much attention. The takeaway is that associations should not hastily assume that every type of debt it is owed is capable of being collected through foreclosure and also that it is often beneficial for associations to adopt covenant amendments that allow them to treat attorneys’ fee awards, homeowners’ association fines of $1,000 or of a greater sum, chargebacks, and other monetary obligations as assessments for collection purposes.
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