Joseph Adams | 09-17-2013
Question: I read your recent article regarding homeowners’ associations and the new law permitting recovery of unpaid assessments. How does this work if the current owner is under water with his mortgage and the HOA takes title subject to the mortgage? J.M.
Answer: You are referring to the July 1, 2013 amendment to Section 720.3085(2)(b) of the Florida Homeowners’ Association Act which dealt with a problem created by (or perhaps to be more accurate, confirmed by) the ruling of a Florida appeals court in a recent case called Aventura Management v. Spiaggia Ocean Condominium Association, Inc. In the Aventura case, a condominium association case, the court held that once the association took title to a unit through foreclosure of the association’s assessment lien, the ability to claim past-due assessments from a future owner, under the “joint and several liability” provisions of the statute, was cut off.
In 2013, the Legislature “fixed” this problem by amending the statute to provide that an association is not considered an “owner” for joint and several liability purposes, even after the homeowners’ association forecloses its lien. In other words, an HOA can still make a claim for past-due assessments after the parcel transfers out of the association’s name. Unfortunately, the Legislature did not provide the same “fix” for condominium associations, so Aventura is still “good law” (or one might say “bad law”) in the condominium context.
As applied to your case, the change in the law probably will not make a difference. If the unit is “under water” (meaning the outstanding mortgage balance is greater than the fair market value of the property), the property will probably not attract any third-party bidders at a foreclosure sale.
If the bank takes title to the property as the successful bidder of its mortgage foreclosure, regardless of whether this occurs before or after the association’s lien foreclosure, the bank (as well as its successors in title) will only be liable for the “safe harbor” amount. Under current Florida law, that is twelve months of unpaid assessments, or one percent of the original mortgage debt, whichever is less.
Also, there are a few possible variations here, which may be influenced by the language in your governing documents, or the date upon which a particular mortgage was recorded. Your association’s attorney ought to be able to quickly answer questions you have about how this statutory change will apply in any particular collection case that you might have.Back to News | View Related Link
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