Attempting to help homeowners, the Florida legislature ended up hurting them somewhat with revisions to Section 720.3085 this past session. The statute was supposed to make new owners in HOA communities liable for all overdue assessments, no matter how they acquired the property. This applied to private sale, deed in lieu, or foreclosure sales. At foreclosure sales these days, the bank is the buyer more often than not. Faced with the unexpected high costs, in some cases, they balked at this change in the law. Now they are challenging its constintutionality in each individual foreclosure action and circuit judges are ruling in their favor, agreeing that HOA’s liens are extinguished along with other junior lienholders if there is no money left in the property after the mortgage is satisfied.
This means that homeonwers who are paying their assessments are also getting hit with bigger HOA fees because they are forced to make-up the shortfall created by the non-paying members. Little or no equity in the foreclosed property leaves nothing for the HOA if the banks or new owners are not held responsible for past-due assessments and costs of trying to collect the money from the delinquent member.
The legislature should address this problem in its next session, but meanwhile HOA boards are left to figure out how to come up with an annual budget that meets the needs of their community and takes into account a record foreclosure rate with the consumate loss of revenue.
Posted by tedkbrown 