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Florida banks are getting sued again, and this time it’s pretty interesting.  Why?  This time, the banks are in the role of defendants in Florida foreclosure lawsuits filed in the bottle necked Florida judicial system.

That’s right: the banks are having to mount a foreclosure defense strategy.  Lenders are having to file answers and appear before a judge to argue why the foreclosure judgment should not be entered.

Perhaps they can pull some old files, and review what some Florida home owners and mortgage home loan borrowers argued in foreclosure actions that these same banks filed in the past.   Ask any Florida foreclosure defense lawyer, and he or she will be able to pull out so many war stories about different defenses asserted in Florida foreclosures.  It’s like each defense lawyer carries a full deck of cards with each card representing a different argument used against the impropriety and illegality of a past foreclosure action.

Needless to say, there’s not a lot of tears being shed over this turn of events.  As for who is filing foreclosure actions against the banks, look no further than Florida homeowners’ associations.

It’s the local condo boards, townhouse communities, and neighborhood associations that are going to court: the same associations we’ve discussed here – the community associations who are dealing with things like foreclosing on units for failure to pay association fees; or defending against assertions of selective enforcement; or who are fighting against wildcatters trying to take advantage of defaulting association members.

Florida Homeowners’ Associations Foreclosing on Banks

Banks become responsible for property the minute a judgment is entered in the foreclosure lawsuit and a certificate of title is issued transferring the property to them from the home owner.  When the home is a property governed by a Homeowners’ Association then the bank becomes responsible to that association just as any other unit owner in the association.

However, the problem is that here in Florida, many lenders are not paying the fees required by the Homeowners Association. The lenders are not coming up with the money to cover defaulted association fees (that the foreclosed-upon borrower did not pay in the past).  The banks aren’t paying their unit’s share of current expenses to the association, as well.

Budget shortages are commonplace among Florida homeowner’s associations in this bad economy, and many have already had experience in filing lawsuits against unit owners in their communities to collect money due and owing the Association.    Everyone suffers in the neighborhood or condo tower when the Association does not have sufficient funds in its accounts to do things like needed maintenance, landscaping, upkeep, garbage collection, sewage, and other expenses common to a shared community.

Which means it is not a big stretch for the Florida Homeowners’ Association to file a foreclosure lawsuit against a bank that isn’t paying up.

Larry Tolchinsky’s Tip

Here in the Hallandale Beach area, you can open the window and throw out a stone in any direction and you’ll likely hit a property that’s governed by a Florida condo or homeowner’s association (see a listing of local Hallandale Beach condo/homeowner’s associations here).   Unit owners have had several years of stressful living as units have gone into default, or distressed owners have turned their units into rentals, or association boards have done crazy things trying to keep up the premises and hold onto things like trash pickup and sewage services.

It’s been tough for condo owners and for Homeowners’ Association boards as the Florida housing economy tanked.  So, for banks and lenders who are sitting with units on their balance sheets to get hit with a foreclosure lawsuit in order to force payment of fees and expenses – well, it’s karma.

It would be nice to hope that these lenders would cull through their foreclosure properties and make sure that they’re doing the right thing as owners of these foreclosures.  Don’t count on it.   Well, maybe if the property is in a certain zip code:  there’s talk that banks are checking their properties and acting responsibly for some of them — if they are in the right part of town.

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

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