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New homeowner association law provides for uniform assessment collection
by: Rob Samouce
There were a few new laws passed by the state Legislature this year that affect homeowner and condominium association operations. This month we will discuss Senate Bill 1844 that became effective on July 1, 2007 which provides for uniform assessment collection provisions and procedures for all homeowners associations within the state which are similar to, yet of course a little different than, the provisions and procedures that condominium associations in Florida have followed for many years.

We will look at the other new condominium and homeowners association laws (concerning a variety of items such as termination, mortgagee rights for condominium associations and reserves and architectural control for homeowners associations) in my September and October articles.

Senate Bill 1844 created a new section to Chapter 720, the laws affecting homeowners associations, Section 720.3085, to address how delinquent assessments should be collected as the chapter was silent on this issue and many association’s declarations of covenants or bylaws had all kinds of different provisions making it difficult for association management companies and attorneys to have any kind of standard system for such collections.

First, the new law clarifies that a parcel owner is responsible for all unpaid assessments that come due while he is the parcel owner and is also jointly and severally liable with the previous parcel owner for all unpaid assessments that came due prior to the transfer of title.

Next, if an association’s declaration or bylaws are silent as to what interest rate to apply for assessments that are not paid on time, interest will accrue at 18 percent per year. If the declaration or bylaws so provide, the association can also charge an administrative late fee in an amount not to exceed the greater of $25 or 5 percent of the amount of each installment that is paid past the due date.

Very importantly, to make sure that all assessments, fees and charges are paid by the delinquent, the law now provides that any payment received by the association shall be applied first to any interest accrued, next to any administrative late fee, then to any costs and reasonable attorney’s fees incurred in collection, and finally to the delinquent assessment.

Also, the association can now accept any payment as any attempted restrictive endorsement, designation or instruction placed on or accompanying a payment will have no affect the order that the payment will be applied: first to interest, second to late fees, third to costs and attorney’s fees and fourth to the delinquent assessment.

Now, when it comes time to file a lien for those owners who refuse to pay, the new law requires that the owner first be given a 45-day notice letter by both certified and first-class mail providing the owner with 45 days to make payment of all amounts due including the interest, late fees, costs, attorney’s fees and the delinquent assessments.

If the owner dose not pay by the 45-day deadline, the association can then file a lien the owner’s property and at the same time provide the owner with another 45-day letter informing the owner of “notice of the association’s intent to foreclose and collect the unpaid amount.”

If the debtor still does not pay, then the association will file a lawsuit to foreclose on the lien and also seek a monetary judgment. At any time prior to a foreclosure judgment, the debtor can then make a “qualifying offer” which may not exceed 60 days, which is a written offer to pay all amounts secured by the lien of the association plus interest accruing during the pendency of the offer. No further legal work will by done by the association’s attorney during this 60-day period that stays the lawsuit as the association will not be able to collect any attorney’s fees expended on the lawsuit during the qualifying offer 60-day stay period.

Although it is extremely helpful for associations, managers and association attorney’s to now have standard policies and procedures for collecting delinquent assessments in homeowners association, it is evident that there are a lot of new imposed mandatory time delays that have to be followed in actually making the collections. These time burdens can have a real negative effect on getting the money in the association’s need to operate when they face one or more real overextended deadbeats who have no real intention to pay either the association, nor their mortgage company but will drag out living free in their house as long as they can before its taken away by the association or the mortgage company. It is therefore wise to work closely with our association legal counsel, to make sure your collection process proceeds just as fast as legally possible under the new regulations.
Rob Samouce, a principal attorney in the Naples law firm of Samouce, Murrell, & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners' associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.