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.

Comments

2 Responses to “What Associations and Condo Owners Can Do About a Nonpaying Florida Condo Unit Owner”

  1. Gina Mentor says:

    Asa condominium owner, I understand my obligations to pay the Association for periodical assessments, including the 40-year assessment. But I have a question: if the Association has lost our 40-year assessment’s money ….

  2. Charles Slaka says:

    There is an owner who owes this condo over $40,000 who finally ….

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