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.
October 7, 2008 at 12:14 pm |
This will be become a bigger problem down the road. If you can only collect the past 12 months assessments (or 1%) from the banks can you collect any additional amounts owning from the previous owner on the new owner who purchased from the banks? If we, as an hoa can only collect say 5000 of past due balance of 11000 from the banks can we go after the new owner for the other 6000 owing?
November 17, 2008 at 11:23 pm |
I believe you have to file a money damages complaint in county/circuit court for the additional amount owed. Or, if HOA/COA is named in bank foreclosure, file a crossclaim against the owner.
November 30, 2008 at 9:09 am |
Sure, you can file an action or cross claim against the owner for the damages, but the point would be to actually get some of your money back. From a practical standpoint, this almost never works in a foreclosure situation, where the owner is usually “judgment proof” because there are no identifiable assets. The debtor is dead broke. If there are assets, they can be expensive and/or very dificult to identify requiring time, which is the same thing as money, against which to execute a judgment.
The available remedy will not really remediate anything; it only throws good money after bad.
November 30, 2008 at 9:12 am |
For Tammy Lee:
It depends.
The legislature doesn’t say you cannot. If the bank actually pays the their percentage or fee, then you may be cut off from collecting the balance from the subsequent owner.
The more likely scenario is that the bank pays nothing before “flipping” the property to a new owner. If this is the case, I would not hesitate: I would go to the new owner for the full amount.