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Maryvel-De-Castro-Valdes-002-200x300An article authored by firm shareholder Maryvel De Castro Valdes is 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 “Ruling Proves Community Associations Need to Revise Own Governing Documents,” focuses on a recent ruling by Florida’s Third District Court of Appeal that added to the growing string of decisions in recent years illustrating how an old and outdated provision in HOA and condominium association declarations is preventing some communities from collecting what they would be owed under the current state law from purchasers in foreclosure actions.  Her article reads:

. . . The ruling came in the case of Old Cutler Lakes by the Bay Community Association v. SRP SUB, LLC. The LLC took title to a unit within the community via a mortgage foreclosure auction and subsequently filed an action for declaratory relief seeking to determine its liability for the association assessments that accrued prior to acquiring title.

dbr-logo-300x57While Florida law holds that a parcel 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, including by purchase at a foreclosure sale, the LLC was apparently well aware that the association’s declaration contained a provision that essentially extinguished its liability for the past-due assessments owed by the previous owner.

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RobertoBlanch_8016-200x300An article authored by firm shareholder Roberto C. Blanch was featured as the HOA View expert guest commentary column in the Business Monday section of today’s Miami Herald.  The article, which is titled “HOAs, Condo Boards Should Brace for a Slowdown in Dues and Tread Carefully,” focuses on the strategies that community associations should deploy in response to the financial strains created by unit owners who become unable to pay their monthly dues.  His article reads:

. . . As they begin to consider their options, some associations are now giving thought to relaxing their collections by waiving late fees and interest on delinquencies, and perhaps also foregoing entire monthly payments for those who become unable to pay due to the economic standstill. While this may appear to be a reasonable response, association directors must not lose sight of the fact that they are fiduciarily obligated to pursue the uniform collection of all payments and delinquencies, so they may be limited in their ability to offer any special considerations or concessions for those experiencing financial difficulties.

Payment waivers for the economic casualties of the COVID-19 pandemic could also open the door to future requests by unit owners for similar concessions related to other financial setbacks.

MHerald2015-300x72Instead, associations could borrow a page from the playbook of previous economic downturns and consider sanctioning a uniform payment plan to assist owners who become delinquent. With the help of qualified legal counsel and financial professionals, they could create a payment plan that is uniformly available to assist all the unit owners who suddenly become unemployed.

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RobertoBlanch_8016-200x300Firm shareholder Roberto C. Blanch was quoted extensively in an article today by The Real Deal South Florida on the looming financial strains for community associations due to the spike in unemployment caused by the COVID-19 economic standstill.  The article, which is titled “South Florida HOAs and Condo Associations Prepare for a Drop in Collections,” discusses the options that associations are considering in response to the expected delinquencies.  It reads:

. . . Attempting foreclosure is also an expensive process that some associations will want to avoid, and the temporary freeze on foreclosures and evictions until mid-May is expected to create a backlog of cases.

Plus, “the end game – foreclosure – may not necessarily be in the best interest of the condo [association],” said Siegfried Rivera attorney Roberto Blanch.

A number of associations he represents have been proactive about reducing operating expenses wherever possible. Blanch said associations are “anticipating they are going to have difficulty collecting payments from owners who have lost their jobs, who have been furloughed, or been laid off.”

TRDlogo-300x80Some are offering payment plans or waiving late fees to owners who have requested that, similar to what happened in 2008 and 2009. But the true impact has yet to be seen, he said. Payment plans could consist of lowering the portion of fees an owner has to pay for the first three months, and then spreading the rest out over the remaining set period of time.

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Firm partner Michael E. Chapnick authored a guest commentary column that appeared in today’s Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Condo Associations Don’t Need to Record Lien to Collect From Tax Sale Proceeds,” focuses on a recent appellate court ruling which found that condominium associations do not absolutely need to record a lien in order to collect from the surplus funds after a tax sale.  Michael’s article reads:

In Calendar v. Stonebridge Gardens Section III Condominium Association, the Fourth District Court of Appeal concluded that the association was not required to actually file a lien in order to be entitled to priority over the unit owner in the distribution of surplus funds generated by the tax sale of her residence.

MC-article-5-18-300x220In upholding the trial court’s order that surplus funds from the tax sale of the owner’s residence be disbursed to the association based on its claim for unpaid assessments, the Fourth DCA found that Section 718.116 of the Florida Statutes implies that a claim of lien against a unit owner for assessments becomes necessary only in cases in which a mortgagee is also asserting a claim. Therefore, recording a claim of lien is not an absolute prerequisite to the enforcement of a lien for unpaid assessments.

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After several years of failed attempts, the estoppel bill has become law in Florida and mandates major changes to the way community associations in the state prepare estoppel letters (also called estoppel certificates), which are legal documents detailing the amounts owed by a unit owner prior to the sale of their residence.

Below are the changes required by the new law:

  • Reduces the time associations have to respond to written or electronic requests for estoppel certificates from 15 days to 10 business days.
  • Requires each association to provide on its website the identity of a person or entity (and their street or e-mail address) to which requests for estoppel certificates may be sent.
  • Provides that estoppel certificates must be submitted by hand delivery, regular mail, or e-mail to the requestor on the date of issuance of the certificate.
  • Changes authorized association signatories for estoppel certificates from officer or agent of association to any board member, authorized agent, or authorized representative of the association, including authorized employees of the association’s management company. Continue reading

The firm’s Michael Toback authored an article that appeared as a “Board of Contributors” guest 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 “Association Documents Override State Law in Previous Owners’ Assessments,” focuses on the growing consensus among Florida’s district courts of appeal that community associations’ existing governing documents, including their declaration of covenants, override existing Florida law assigning liability to new unit owners for the previous owners’ unpaid maintenance assessments.  His article reads:

The latest ruling reaffirming this holding came in late May from the Third District Court of Appeal in the case of Beacon Hill HOA v. Colfin Ah-Florida 7. The association appealed the final summary judgment in favor of Colfin, which had acquired a unit in the community via foreclosure sale, finding that the company was not liable for any amounts owed by the previous owners of the property due to the language in the association’s recorded declaration.

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Florida community associations are always seeking to implement the most cost-effective options at their disposal to collect unpaid dues and compel unit owners/residents to comply with their rules and restrictions.  CPool-300x227ondominium associations used to have very few practical remedies at their disposal to address delinquencies and violations.  They could file lawsuits or arbitration actions, but the costs of pursuing these cases can be a significant expense, and the imposition of fines requires the use of a fining committee and can be difficult to collect.

As a result of legislative changes to the state’s Condominium Act a number of years ago, associations are now able to suspend the rights of an owner, tenant or guest to use common elements and facilities if the owner of the unit is delinquent more than 90 days in paying a monetary obligation to the association.  Condominium associations may also suspend, for a reasonable period of time, the right of an owner and/or resident to use common elements and amenities for the failure to comply with any provisions of the association’s declaration, bylaws or rules. Continue reading

Each year, our elected state representatives and senators meet in Tallahassee for a legislative session where they review and debate an extensive amount of proposed bills, only to send a few of those bills to the governor to be signed into law.  For the third year in a row, our elected lawmakers will be discussing a bill that has once again resurfaced, and if passed, may have a significant impact on community associations’ wallets.

House Bill 483 — also known as Senate Bill 398 or “the home tax” bill — proposes to place a considerable amount of requirements relating to the issuance of estoppel certificates on the condominium, cooperative or homeowners association responsible for preparing them. If signed into law, community associations will need to be both financially and operationally prepared to abide by the stringent changes set forth in the bill.

An estoppel is a legally binding document prepared by a community association or its agent that discloses any liens, overdue assessments or any other money owed to the association, such as late fees and attorney’s fees.  Estoppels are required by title companies in standard real estate transactions in order to inform the seller and buyer of any outstanding financial obligation(s) on the unit or parcel.  If prepared incorrectly, the community association could be liable for miscalculated or incomplete balances, resulting in a loss for the association.

Contrary to some people’s beliefs, estoppels aren’t generated by the push of a button. They take time and precision to prepare, which is why a bill that shifts even more of the burden on the association could be detrimental.

Florida-legislature2-300x169One of the main components of this proposed bill is to mandate more rigorous deadlines for the preparation of estoppels.  Currently, associations have 15 days to prepare and deliver an estoppel once it is requested.  The bill would shorten this period to 10 business-days, which could be difficult for associations of varying sizes and levels of sophistication, as some will be anchored by antiquated bookkeeping or a lack of resources.

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When the Condominium Act was amended several years ago to allow associations to demand and collect rent directly from the tenants of unit owners who were delinquent in the payment of their monthly fees, community associations thought it was an answer to their prayers.  Associations were struggling to recover from the foreclosure crisis, and many homeowners made the decision to rent their units to make some money but, unfortunately, they also chose not to pay their associations.

However, utilization of this amendment has proven to be difficult and sometimes costly to enforce in cases in which de facto tenants and their landlords are able to demonstrate to the court that a tenancy under the letter of the law is not actually in place.  How many times have we heard that the tenant is “family,” that the tenant does not pay the landlord, and that there’s no lease in place?

A noteworthy example is found in a ruling last year by the Miami-Dade County Circuit Court Appellate Division in the case of Cecil Tavares v. Villa Doral Master Associationvdoral-300x226 Tavares had conveyed his condominium unit via quit claim deed to a new owner, but he and his wife continued to live there.  When the new owner went into arrears with the association, it attempted to collect the rent directly from Tavares and eventually filed for an eviction.

The county court granted default judgment in favor of the association and issued a writ of possession to enable it to move forward with the eviction, but Tavares appealed on the question of whether the court erred by defining him as a tenant based on the quit claim deed.

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MTobacksrhl-law2-thumb-120x179-96777The firm’s Michael Toback authored an article that appeared as a “Board of Contributors” guest column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was titled “Rulings Clarify Application of Safe Harbor Caps on Association Dues,” focused on a couple of recent Florida appellate court rulings that brought additional clarity to the application of the criteria for foreclosing lenders and servicers to qualify for the caps that limit their liabilities for association dues.  Michael’s article reads:

In Brittany’s Place Condominium Association v. U.S. Bank, the Second District Court of Appeal settled some lingering questions as to whether a lender or servicer that takes title to a residence via a mortgage foreclosure must also be the current owner of the first mortgage when the final judgment of foreclosure is issued.

The case stems from a 2009 mortgage foreclosure action filed by U.S. Bank against the unit owner and all interested parties, including the association. The bank alleged that it was both the holder and servicer of the note and mortgage, acting on behalf of and with the authority of the owner. It was in possession of the note endorsed in blank, but the Federal Home Loan Mortgage Corp., better known as Freddie Mac, owned the note and mortgage.

After securing a final judgment of foreclosure and acquiring title to the property via the foreclosure sale, U.S. Bank requested an estoppel letter from the association to determine the amount of past-due assessments. The parties could not agree on the extent of the lender’s liability, and the association eventually filed a lien foreclosure complaint against the lender, which then filed a counterclaim to seek compliance with the safe harbor caps.

dbr-logo-300x57The trial court found that there were no genuine issues of material fact and U.S. Bank met the statutory requirements entitling it to the limited liability provisions provided by the safe harbor caps, so the court granted the bank’s motion for summary judgment.

In the subsequent appeal, the association contended that U.S. Bank did not satisfy the safe harbor statute, which requires the entity acquiring title to have also been the first mortgagee or its successor or assignee. The association interpreted “first mortgagee or its successor or assignees” as necessitating ownership of the loan.

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