What Associations and Condo Owners Can Do About a Nonpaying Florida Condo Unit Owner

Posted By on November 25, 2014

In Florida, there may be more nonpaying condo owners causing headaches for condominium associations and their fellow condo owners than any other state in the country.   Our state’s real estate market is still recovering; Florida was often cited as number one in the nation for underwater mortgages and foreclosure filings.

One result:  the hangover from the foreclosure crisis and the tight economy have left lots of Florida condo owners behind on condo maintenance fees and special assessments.   Condo owners that live in their unit, as well as condo owners that rent their unit, may not be current on their condo obligations.  Out of state condo owners, those who bought a Florida condominium unit as an investment, face particular temptations to slow pay or not pay their condo obligations at all.

 

Notwithstanding their issues, all condo owners are responsible for paying special assessments as well as general assessments. It’s a shared responsibility that exists to pay for the shared benefits of living the condo lifestyle.   Florida oceanfront condos offer lots of amenities and pleasures that single family homes do not.  The result, there are lots of  frustrated and angry Florida condominiums owners that are left holding the bag for the non-paying neighbors.

So what can condo associations and condo owners do?  Whatever the Florida Legislature allows them to do.

“In Florida, condominiums are creatures of statute and as such are subject to the control and regulation of the Legislature.” Century Vilage, Inc. v. Wellington Condominium Ass’n, 361 So.2d 128 (Fla. 1978).  For the most part, dealing with a nonpaying Florida condo owner means referring to the provisions and powers contained in the Florida Condominium Act, passed by the Florida Legislature as Chapter 718 of the Florida Statutes.

Assessments: General and Special

Pursuant to Florida Statute 718.103, an “assessment” is a share of the funds which are required for the payment of common expenses, which are occasionally assessed against the unit owner. These are general assessments, where all the unit owners share in the burden of things like repair, maintenance, and upkeep of the property.

Special assessments are shares of expenses that are outside the expenses contained in the annual condominium budget. Special assessments are for things that pop up outside of the general budget, for things like unexpected roof repairs after a hurricane or repairs required under a 40 year inspection report.

Assessments can be assessed against the condo owners up to four times a year (quarterly). Assessments are to be expected by unit owners and they are due and owning to the association so that the condominium property can be maintained.

Condo owners that fail to pay their obligations force their remaining condo owners to deal with the realities of property upkeep without sufficient funding. It’s a big problem.

Directors on the Board of Directors of the Condo Association risk allegations they have breached their fiduciary duty if they don’t keep up with the condo’s responsibilities regardless of whether or not the association is having collection problems.  It’s a big deal.

1. Condo Association vs. Nonpaying Condo Owner

The condo association can file a lien against the delinquent condo unit. The lien amount should be equal to the amount of past due assessments. This needs to be done carefully because the association may need adhere to the requirements of the Florida Fair Debt Collection Practices Act (the answer depends on who seeks to collect the debt).

The Florida Condominium Act also allows the condo association to do more actions to prod the nonpaying owner into getting current with their condominium responsibilities. These include things like suspending the right to use the common areas (if the delinquency is over 90 days) and blocking the unit owner from being a member of the association’s board of directors. An association can also suspend a unit owner’s voting rights.

As a last resort, Florida law allows a condominium association to foreclose on a condo unit that has failed to pay assessments.

2. Condo Owners vs. Nonpaying Condo Owner

It is possible for an individual condo owner, or maybe a condo owner together with a few of his fellow owners, to deal with a nonpaying condo owner independently from their condo association. Here, the condo owner sues the nonpaying condo owner for their delinquency. To have standing to do this, it is probably necessary for this owner (alone or together with his fellow owners) to get the cause of action assigned to them from the condo association itself.

Why would a condo association do this?

Today, many Florida condo associations are strapped for cash while having to deal with their duties under the Florida Condominium Act to keep a budget each year that under the Act must have enough funds to cover all past due, current, and future obligations, and also hold amounts in set statutory reserves.

Setting between a rock and a hard place, many Florida condo associations have been forced to get lean and mean with their activities. Money cutbacks include less funds for things like routine maintenance, insurance coverage, and repairs.

Given that the condo association, run by the elected board of directors, can pay a lawyer to proceed with a foreclosure action and other collection efforts – or turn that problem over to a small group of condo owners who are willing to undertake the task of dealing with the delinquent condo owner for them, it’s reasonable to expect that some condo owners may get that go-ahead.

Going After the Nonpaying Condo Owner

If you own a condo in a condominium where there is a problem with one or more nonpaying unit owners, Florida law may provide an avenue for you to solve that problem even if the condo association is not willing to foreclose or take serious action. An experienced Florida condo lawyer can help.

Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

How Can Florida Condo Owners Boot a Bad Condo Manager?

Posted By on November 18, 2014

Most large Florida condominiums are overseen by property management companies that are hired by the Association to handle the day to day operations for the condominium. (Small Florida condo associations usually have an individual condo manager to manage the property.)

Either way, a good condo manager is adept at handling all sorts of things, from problems with common area maintenance to dealing with personality clashes between unit owners.

Good condo managers are a great thing for an association to have. However, a bad condo manager can make the daily life of condo owners very stressful. A terrible condo management company can make daily condo life dismal.

Getting Rid of Bad Condo Managers: The Contract Controls

So, how can condo owners remove and replace a bad condo manager? Well, it’s not that easy.

First of all, managers and property management companies are hired by the Powers that Be on the Board of Directors of the Condominium Association. The contract is between the Condo Association and the Manager; individual owners aren’t a direct party to the contract and therefore they can’t do anything on their own.

The Florida Condominium Act provides specific things that must be included in these agreements, as well.   According to Florida Statutes 718.3025(2):

In any case in which the party contracting to provide maintenance or management services fails to provide such services in accordance with the contract, the association is authorized to procure such services from some other party and shall be entitled to collect any fees or charges paid for service performed by another party from the party contracting to provide maintenance or management services.

Actions Open to Individual Condo Unit Owners

So, according to the Florida Condo Act and in most, if not all, contracts, individual condo owners are not able to terminate or deal with substandard condo management by themselves. Unit owners must move through the governing process and address their concerns through their association.

1. Petition the Board of Directors under Florida Condo Act

Under Florida law, 20% of the condo owners can formally petition the Condo Board of the Association to deal with the unsatisfactory Condo Manager. See, Section 718.112(2)(c)1 of the Florida Condominium Act.

That means, that unhappy unit owners need to get one-fifth of their fellow owners to agree with them and sign a petition in order to formally request that the Board do something about the problem.

2. Special Meeting Under the By-Laws

For many Florida condo owners, the By-Laws may offer an avenue where the unit owners can call a special meeting of all the Condo Association members. Here, the majority vote of the Association could sway the Board of Directors to address the bad management issue.

What If the Board of Directors Is Happy Enough With the Property Manager?

The remedies open to the condo owners who aren’t happy with the condo management is limited if the Board of Directors are happy with the property manager. The relationship is between the Board and the Manager/Management Company and the Board is the one who must make the change.

If a Condo Board isn’t listening to the individual condo owners, then it maybe time to reconsider who’s sitting on that Board. In this type of situation, or where there is one director who is blocking a change, there is a procedure where the condo association can recall a director. If it’s a bigger problem, then unit owners may need to work toward replacing the entire Board with directors that are more empathetic with those who own a majority of the condo units.

Another Hurdle: The Management Contract Provisions

Finally, even if the Condo Owners and the Condo Board are in total agreement that the current management needs to change, the contract between the Board and the Management company must be reviewed.

Normally, the provisions of the property management contract control how the manager is released from their position. Several provisions of the agreement may control over how and when the management company can be removed for “cause” and when the condo manager can be released from responsibility “without cause.”

There will likely be time frames set forth in any termination provision(s). For instance, the manager may contractually need to receive 1, 2, or even 3 months notice of termination if they are being fired “without cause.”

In these situations, having the advice and counsel of an experienced Florida Condo Lawyer to walk both the condo owners and the Board itself in dealing with transitioning between managers is helpful and wise.

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

Can Condo Owners Be Fined by Their Condo Association?

Posted By on November 11, 2014

There’s some good news for you if you own a unit in a Florida Condominium: at least you’re not living in a Florida HOA! Under Florida law, for whatever reason, a Florida Home Owner Association is able to place a lien on a home if the owner fails to pay a fine that  has been properly assessed against the home owner. Florida statutes do not allow Florida Condo Associations this power (yet).

So, Florida Condo unit owners cannot face a foreclosure action by their Condo Association for failing to pay a fine. However, there is still some troubling consequences for a condo owner who fails or refuses to pay.  Additionally, fine fights are often fuel for larger controversies between owners and associations that can have lasting consequences.

What Type of Behavior Can a Condo Association Fine An Owner For Under Florida Law?

Under Florida Statute 718.303, unit owners in a Florida condominium can be fined for certain actions and behaviors. The law provides:

“… the association may levy reasonable fines for the failure of the owner of the unit or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association.”

These fines cannot total a sum in excess of $1000.00, and under the statute an individual fine cannot be more than $100.00. Fines can be levied on condo owners for all sorts of things, it all depends on the language regarding violations and fines contained within the Condominium Documents.

Common Condo Fines

Fines are usually levied against condo owners for infractions to the common enjoyment of the entire property by all the owners and their guests. For instance, a fine may be levied by a Condo Association for things like:

  • parking your car in a parking spot designated specifically for guests
  • failing to pick up after your pup might cause you to be fined
  • playing your music too loud.

Contesting Condo Association Fines

Florida law establishes how condo owners are to go about contesting fines that have been levied against them by a Condo Association. The fine is not officially due and payable until,

“ … the association first provides at least 14 days’ written notice and an opportunity for a hearing to the unit owner and, if applicable, its occupant, licensee, or invitee. The hearing must be held before a committee of other unit owners who are neither board members nor persons residing in a board member’s household. If the committee does not agree, the fine or suspension may not be imposed.”

In other words, you have the legal right to fight the fine at a hearing before a committee of your fellow unit owners who are neither on the Board of Directors for the Condo Association nor a member of your residence. Basically, if you can convince the committee that the fine is unfair, you won’t have to pay.

This may be easier to accomplish that you might think at first. How many of your neighbors are going to want the chore and burden of fining the people that they see all the time in the elevator or by the pool?

What are the Consequences for Not Paying a Condo Fine?

If you do lose your fight against the Condo Fine, there can be serious consequences for failing to pay, no matter how irritating it may be to pay the fine. A small fine can combust into a major headache for an owner.

Florida Statute 718.303(4)-(6) details the consequences of what can happen to a Condo Owner who fails to pay. The law is clear as to what happens, taking the matter out of the hands of both the owner and the Association.

Once the fine has gone unpaid, and there is a properly noticed meeting of the Condo Board of Directors, then the Condo Owner faces the following action by the Condo Association:

  1. Once the fine is past due for 90 days, then the Association is legally able to suspend the Condo Owner’s right to use any condominium property outside the unit itself, the parking area, the elevator, and the utilities. In other words, the owner can be barred from enjoying all the common elements as well as the shared facilities (like the pool or the tennis courts).
  2. Additionally, the Condo Owner may see their voting rights suspended until the fine is paid. Voting rights cannot be suspended until the fine is 90 days past due.

One last thing, if someone other than the Condo Owner resides in the condo, then they have to deal with these inconveniences even though the Fine Fight may be between the Association and the unit owner.

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

Will Your Old Condo Association Sue You For Past Due Assessments After a Foreclosure?

Posted By on November 4, 2014

You have gone through all the stress and heartache of a foreclosure proceeding on your Florida condominium. Maybe you’re a Florida resident who lost their home to the bank. You could be a snowbird or an out of state investor who was sued for foreclosure by your lender. As an owner, you’ve seen your credit rating get hit with a foreclosure notification and you’ve gone through the practical process of moving your stuff out and saying goodbye to that beautiful oceanfront balcony view.

For many Florida condo owners who have gone through foreclosure, they may think that the worst is over. Now they can rebuild and move on. Thing is, they’re wrong. They’re still on the hook for their past due condo assessments.

 

 

Did You Receive a Letter From a Lawyer?

The first that these condo owners may know of this continuing nightmare is a formal notice letter that they get in the mail. Usually certified mail, return receipt requested, so the sender can have proof of receipt.

In that letter, they’ll be notified — usually by a Florida law firm — that they are responsible for paying the assessments that had accumulated and were due and owing on the condo up to the date of the foreclosure judgment being signed by the judge. Sometimes, the total due and owing can be thousands of dollars.

The letter will include a deadline for payment. It will include instructions on how to make payment. It will probably offer a payment plan opportunity if you want to try and negotiate one. And it will include an official notice that the letter is being sent pursuant to the Florida Fair Debt Collection Act.

Florida Statute 718.116 and the Condominium Documents

Both Florida statutes as well as the individual condominium documents apply to this situation.

1. Florida Condominium Act

Pursuant to Florida law, specifically Florida Statute 718.116(1), all condominium owners are legally responsible for paying the assessments on their condos from the time that they take ownership of the unit through the last day that they hold legal title to it. The statute states:

A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the owner may have to recover from the previous owner the amounts paid by the owner.
(b)1. The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee’s acquisition of title is limited to the lesser of:
a. The unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or
b. One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.

2. Condominium Documents

The unit owner will also find language within the Condominium Documents (e.g., Declaration) that will apply to these unpaid assessments. There, language regarding interest that will accrue on unpaid assessments, as well as liability for paying any court costs and legal fees expended to collect these assessments will be detailed.

Here, the condo owner agreed to be bound by these terms when they signed to purchase the condominium unit. These are contractual obligations that survive the foreclosure.

Some Florida Condo Associations Need Cash!

All too often, Florida Condominium Associations are facing a tough time trying to meet their financial responsibilities of upkeep and maintenance of the property because of a drop-off in assessment revenue due to foreclosures upon condo units and non-payment of assessments. The Condo Association will itself be liable to the unit owners for failure to meet its obligations. The Condo Board members may face allegations of breach of fiduciary duty if the obligations toward the common elements aren’t met.

Under Florida law, each condo owner is responsible for paying “…their share of the funds which are required for the payment of common expenses, which from time to time is assessed against the unit owner.” Florida Statute 718.103.

Florida condo owners that have been foreclosed upon need to know that they’re still facing the wrath of their old Condo Association, who is willing to hire legal counsel and pursue those unpaid assessments. Their collection efforts can include a new lawsuit different from the foreclosure lawsuit filed by the bank when they took title to the unit.

If successful, the Condo Association may be able to obtain a civil court judgment allowing them to proceed against the condo owner’s property for payment (including their attorneys’ fees and costs), leaving the condo owner’s stocks, bonds, and other non-exempt property vulnerable to being taken in order to pay off the second judgment.

Be aware, condo owners! And if you get one of these collection letters, don’t ignore it. Contact a Florida condo lawyer for guidance.

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

Inspecting Your Condo Records: What are the Official Records that a Florida Condo Association Must Maintain?

Posted By on October 28, 2014

Every Florida Condominium Association is required by Florida law to maintain and keep certain documents as part of its official records. The Condo Association has no option; it would be a violation of the Florida Condominium Act for specific documents not to be kept and preserved and ready for inspection by the unit owners.

What Records Need to be Kept By the Condo Association?

Pursuant to Florida Statute 718.111(12)(a), the following documents are considered to be the “official records” of each Florida condominium, and its association has the legal responsibility to act as custodian of these documents:

1. A copy of the plans, permits, warranties, and other items provided by the developer pursuant to s. 718.301(4).
2. A photocopy of the recorded declaration of condominium of each condominium operated by the association and each amendment to each declaration.
3. A photocopy of the recorded bylaws of the association and each amendment to the bylaws.
4. A certified copy of the articles of incorporation of the association, or other documents creating the association, and each amendment thereto.
5. A copy of the current rules of the association.
6. A book or books that contain the minutes of all meetings of the association, the board of administration, and the unit owners, which minutes must be retained for at least 7 years.
7. A current roster of all unit owners and their mailing addresses, unit identifications, voting certifications, and, if known, telephone numbers. The association shall also maintain the electronic mailing addresses and facsimile numbers of unit owners consenting to receive notice by electronic transmission. The electronic mailing addresses and facsimile numbers are not accessible to unit owners if consent to receive notice by electronic transmission is not provided in accordance with subparagraph (c)5. However, the association is not liable for an inadvertent disclosure of the electronic mail address or facsimile number for receiving electronic transmission of notices.
8. All current insurance policies of the association and condominiums operated by the association.
9. A current copy of any management agreement, lease, or other contract to which the association is a party or under which the association or the unit owners have an obligation or responsibility.
10. Bills of sale or transfer for all property owned by the association.
11. Accounting records for the association and separate accounting records for each condominium that the association operates. All accounting records must be maintained for at least 7 years. Any person who knowingly or intentionally defaces or destroys such records, or who knowingly or intentionally fails to create or maintain such records, with the intent of causing harm to the association or one or more of its members, is personally subject to a civil penalty pursuant to s. 718.501(1)(d). The accounting records must include, but are not limited to:
a. Accurate, itemized, and detailed records of all receipts and expenditures.
b. A current account and a monthly, bimonthly, or quarterly statement of the account for each unit designating the name of the unit owner, the due date and amount of each assessment, the amount paid on the account, and the balance due.
c. All audits, reviews, accounting statements, and financial reports of the association or condominium.
d. All contracts for work to be performed. Bids for work to be performed are also considered official records and must be maintained by the association.
12. Ballots, sign-in sheets, voting proxies, and all other papers relating to voting by unit owners, which must be maintained for 1 year from the date of the election, vote, or meeting to which the document relates, notwithstanding paragraph (b).
13. All rental records if the association is acting as agent for the rental of condominium units.
14. A copy of the current question and answer sheet as described in s. 718.504.
15. All other records of the association not specifically included in the foregoing which are related to the operation of the association.

Courts are Strict About Keeping These Official Records

It’s important for the Condominium Association not only to keep the official documents as defined by law, but to keep these records in their proper format. The Condo Association is held to a high legal standard here, and these “official records” need to be properly respected by the association.

For example, in the case of Hobbs v. Weinkauf, the Condominium Association was held to have violated the Florida Condominium Act not because they failed to keep records, but because they keep summary accounting records for each of the condo units instead of a complete and full accounting record for each individual unit.

Inspecting The Official Documents of the Condo Association

Pursuant to Florida Statute 718.111 (12)(b),(c), the Condominium’s Records have to be open and available for review by condo unit owners; however, that right to look at the Condo Documents is limited to a reasonable time and place as defined in the law.

1. The members of the Condominium Association (i.e., all of the unit owners) can look at the documents and make copies of them at their own expense; and

2. The Condo Association is free to adopt reasonable rules on things like frequency, time, location, notice, and manner of record inspections and copying.

Failure to Allow Inspection of the Condo Association Official Records

If the Condominium Association fails to provide access to the condominium records, then damages can be assessed against the Association under Florida Statute 718.111(12). The law sets minimum damages here as $50 per calendar day for up to 10 days, beginning on the 11th working day after receipt of the written request. Attorneys’ fees are also available under the statute for those who are forced to expend legal fees after being “… directly or indirectly, knowingly denied access to the records.”

Failure under the statute to provide the Official Records is established (though it can be rebutted in specific cases by the Condo Association) if it can be shown that, after a written request was presented to the association, 10 working days (you cannot count weekends or legal holidays) has passed without access to the records being provided.

Need Help Getting Access to Your Condo Association Records?

If you are unable to get access to your Florida Condominium’s official records or your Condominium Association has violated its legal duties regarding care and control of the condo documents, it may be necessary to enlist the help of a Florida condo lawyer to force the association to play by the rules.   Most real estate lawyers who practice this area of law will be happy to help.

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Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

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