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Article by Michael Hyman in Today’s Daily Business Review: “Appellate Ruling Bolstering Association Collections Conflicts With Prior Rulings”

Firm shareholder Michael L. Hyman authored an article that was featured as the “Board of Contributors” guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Appellate Ruling Bolstering Association Collections Conflicts With Prior Rulings,” discusses how Florida condominium associations, especially properties under the jurisdiction of the First District Court of Appeal in the panhandle and north Florida, have received a powerful new collections weapon with a recent ruling.  Michael writes that the new First DCA opinion, which includes a certified conflict with several prior rulings by the Third District Court of Appeal, should be taken up by the Florida Supreme Court.  His article reads:

. . . In Coastal Creek Condominium Association v. FLA Trust Services, the case hinged on whether the current owner’s shared liability with the previous owner for unpaid association dues was limited solely to the assessments that accrued during the ownership of the most recent previous owner. The unit involved in the case was acquired via auction after the mortgage lender’s foreclosure, and the company that acquired it transferred the property via quit claim deed to an LLC just six weeks later.

The question for the court was whether the condominium association’s collections from the new owner were limited only to those for the intervening owner’s six weeks or could it also still collect on the significant debts of the original owner who lost the unit to foreclosure?

dbr-logo-300x57The trial court ruled that the new owner was only responsible for the assessments that came due during its ownership and the immediate prior owner’s six-week ownership, but not any additional assessments from the original owner.

The First DCA reversed the lower court’s ruling. The appellate panel concluded that the present owner is jointly and severally liable with the previous owner for unpaid assessments that came due during the ownership of all previous owners.

The opinion concludes that the phrase “the previous owner” in the statute reading “a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title” pertains to the person with whom the present owner has joint and several liability. It does not pertain to the period of ownership during which the present owner is liable for unpaid assessments.

The First DCA panel determined that the phrase “all unpaid assessments that came due up to the time of transfer of title” supports its interpretation. It reasoned that if the legislature intended to limit the present owner’s joint and several liability to unpaid assessments only to those that came due during the previous owner’s ownership, it could have written the law as: “a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due during the previous owner’s ownership.”

Unlike the 2013 version of the statute that was relied upon by the Third District Court of Appeal in Aventura Management v. Spiaggia Ocean Condominium Association, the 2017 statute had been amended to provide that the term “previous owner” does not include an association that acquires title. The amendments stipulate that “a present unit owner’s liability for unpaid assessments is limited to any unpaid assessments that accrued before the association acquired title to the delinquent property through foreclosure or by deed in lieu of foreclosure.”

In considering this amended statutory language, the First DCA concluded “when the previous owner is the association, the present owner is liable only for unpaid assessments that accrued before the association acquired ownership; that is, during the original owner’s ownership.” Therefore, the panel found that the amendments to the statute and its unambiguous language make it clear that the present owner would be “ … liable with the previous owner for unpaid assessments that came due during the ownership of both the previous owner (unless it was the association) and the original owner.”

The First DCA’s ruling includes a certified conflict with the Aventura Management decision as well as several other Third DCA opinions from 2016, 2014 and 2013 pertaining to their limits of a current owner’s liability only to unpaid assessments that came due during the ownership of the immediate prior owner.

Determining owners’ post-foreclosure liabilities for delinquent assessments can be complex, and this recent ruling with its certified conflict makes it even murkier. The Florida Supreme Court should take up the case, and its considerations should include the fact that the intervening second ownership period was very short. If the assessment liability had been limited only to the immediate past owner, it would have created a severe loss for the association and could have provided a road map for abuse involving the use of straw buyers as short-term intervening owners to wipe away significant assessment debts to associations. . .

Michael concludes the article by noting that as a result of this recent ruling, courts under the jurisdiction of the First DCA will uphold a completely opposing interpretation of the law than those under the Third DCA. Which interpretation will hold sway in Florida’s other appellate districts is now anybody’s guess, so the state’s highest court should move quickly to establish a uniform statewide construct for the statute.

Our firm salutes Michael for sharing his insights into the ramifications of this recent ruling with the readers of the Daily Business ReviewClick here to read the complete article in the newspaper’s website (registration required).

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