Foreclosures

September 21, 2016

Article by Firm’s Jonathan Mofsky in Today’s Daily Business Review: “Important Ruling for Associations Seeking to Foreclose in Advance of Lenders”

The firm’s Jonathan M. Mofsky authored an article that appeared as a 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 “Important Ruling for Associations Seeking to Foreclose in Advance of Lenders,” focused on the clarity that was created by a recent appellate ruling over some lingering questions involving community association foreclosures.

Jonathan’s article reads:

The decision by the Fourth District Court of Appeal in Jallali v. Knightsbridge Village Homeowners Association clarifies the applicability of a 2012 ruling on association foreclosures by the same appellate court in U.S. Bank v. Quadomain Condominium Association. This prior ruling was being incorrectly applied to assert that associations were barred from filing foreclosure actions based upon a claim of lien recorded after the recording of a notice of lis pendens by a lender.

The language utilized in Quadomain created confusion for cases involving association lien foreclosures, which has become one of the primary remedies for associations to address the inequities caused by mortgage foreclosure cases that take years to complete. By filing and quickly prosecuting separate foreclosure actions based on liens for unpaid assessments, associations have been able to acquire and rent properties embroiled in prolonged mortgage foreclosure proceedings.

The ruling created a substantial hurdle for associations to overcome against homeowners who raised the Quadomain defense, which in some cases enabled the owners to defeat or delay association foreclosure actions and remain in their residences without paying monthly dues or mortgage installments while the lenders’ foreclosure cases languished.

February 16, 2016

Appellate Ruling Illustrates Importance of Proper Service of Process and Procedural Steps in Foreclosure Cases

by Jonathan M. Mofsky

Jonathan M. Mofsky

Associations have been counseled for the last several years to move quickly to foreclose on units in cases of prolonged lender foreclosures so that they could utilize these residences to reap rental income while the bank cases languish. However, a recent ruling by the Fourth District Court of Appeal serves as a reminder of the pivotal importance of properly undertaking required procedural steps and executing service of process on all of the owners and other defendants in foreclosure cases prior to moving on to trials and judgments.

The appellate panel in the case of Frank Reilly v. U.S. Bank National Association found in favor of the defendant Reilly and reversed the lower court’s final judgment of foreclosure. It found that the case was not yet “at issue,” meaning ready for disposition, when the Broward circuit court issued a final judgment for the lender because the lender had not obtained a default against Reilly nor had Reilly filed an answer. Accordingly, the final judgment as to Reilly was reversed, and the case was sent back to the circuit court for further proceedings.

The appellate court also confirmed that Reilly must be allowed to raise his service of process challenges against the lender because they had not been considered by the circuit court. His service of process challenge stemmed from the lender’s claims that it attempted to find him but he was dodging its process servers, so it served him by publication. Had these issues simply been presented to the circuit court in the original proceedings, the challenge by Reilly and associated delays may have been avoided.

The lesson here for associations and lenders pursuing foreclosure cases is that their judgments can be completely undone if they fail to undertake required procedural steps or cut corners in the servicing of process for owners or other defendants in these lawsuits. Associations must rely on qualified and highly experienced process servers to properly service foreclosure lawsuits to owners, who oftentimes do everything in their power to evade them and avoid being served with the suit. In some cases, this may require retaining the process servers to stake out an owner at their work or residence, and it may take several attempts before the process servers are able to serve a defendant with the lawsuit as prescribed under Florida law.

These expenses should be considered part of the cost of doing business in the prosecution of foreclosure actions by associations, which should take note of this and other similar appellate rulings and avoid cursory and unsuccessful service processing in favor of service by publication. Otherwise, they are risking the very real possibility of increased legal and administrative costs by having their foreclosure rulings overturned and remanded for further proceedings.

January 21, 2016

Ruling Reminds Associations to Look to Their Governing Documents in Foreclosure Cases

by Jonathan M. Mofsky

Jonathan M. Mofsky

In Florida, not all foreclosure cases are the same for the state’s more than 47,000 community associations, as a recent ruling by the Fourth District Court of Appeal illustrated. The ruling serves as a reminder that community associations must look to their own declaration and governing documents in cases involving the foreclosure of mortgages.

The ruling reversed the lower court’s decision and found that a lien by the homeowners association for the Pipers Landing community in Palm City, Florida, did not have priority over a mortgage issued by U.S. Bank. The appellate panel based its decision on the fact that the HOA’s declaration did not include the necessary language specifying that its liens take priority over mortgage liens and relate back to the date of the filing of the community’s declaration.

The Fourth DCA based its opinion on the ruling by the Supreme Court of Florida in Holly Lake Association v. Federal National Mortgage Association in 1995. That ruling held that “in order for a claim of lien recorded pursuant to a declaration of covenants to have priority over an intervening recorded mortgage, the declaration must contain specific language indicating that the lien relates back to the date of the filing of the declaration or that it otherwise takes priority over intervening mortgages.”

Because Pipers Landing’s declaration did not contain any such language giving the association’s lien priority over that of the lender, the appellate panel reversed the lower court’s ruling.

Obviously, this ruling deals a blow to associations that may wish to attempt to assert lien priority in cases involving the foreclosure of older mortgages.

However, the ruling does serve as an important reminder for associations and their legal counsel to double-check the language in an association’s governing documents for cases involving the foreclosure of mortgages, as it is possible that the declaration may contain the necessary language as required by the Holly Lake ruling for the lien to be found to be superior over the lender’s mortgage lien.

December 1, 2015

Important Considerations for Community Association Foreclosures

by Michael Toback

Michael Toback

Foreclosures by community associations against their delinquent unit owners were virtually unheard of 10 years ago, as lenders would almost always move quickly with their own foreclosures against these owners, and their first-mortgage liens are superior to those of associations. Today, the practice has become the prudent approach for cases involving lenders that try to place their mortgage foreclosures into a holding pattern while they wait for the housing market to make a complete recovery.

Many community association attorneys now counsel their clients to complete their own foreclosure actions in certain cases in advance of the banks in order to acquire and rent the residences before the lenders’ foreclosures are finalized. With so many lenders taking years to complete their foreclosures, the revenues from these rentals have helped to relieve a great deal of the financial strains that some associations have faced.

Last year, the state legislature added some clarity to the law governing the liabilities of foreclosing lenders to associations for the prior owners’ association debts. The banks had argued in a number of cases that associations which foreclose in advance of mortgage lenders have effectively put themselves in the position of the prior owner, which is not entitled to collect any past-due fees. An amendment to the law fixed this loophole, and now lenders are still held liable for the safe-harbor liability caps to associations that have completed their own foreclosure in advance.

As such, the question for associations facing lender foreclosure cases that appear to be dragging on is when they should pull the trigger and foreclose their outstanding lien held on the property for unpaid past-due assessments. The answer requires qualified legal counsel to carefully review the case file along with the property appraiser website, tax collector website, court dockets and official records. Considerations that always have to be taken into account include the amount that is owed under the first mortgage, if there is also a second mortgage on the property, the exact status of the mortgage foreclosure case, and the status of the tax records on the property.

In addition to these universal considerations, some cases may also include issues involving the deterioration of the unit itself. Associations will need to carefully consider their options involving residences that will require major renovations in order to prepare them for rental. This is very important, as associations cannot rely on third parties to purchase these properties via the foreclosure sales but rather they must prepare to take title to the units.

Another important aspect of these prolonged foreclosure cases is that they can set the tone for associations that wish to take a firm and uniform stance on their collections and payment-enforcement efforts. Sending a demand letter and recording a claim of lien but going no further, even when a foreclosure that should take only a few months to complete begins to approach the one-year mark, is probably not the ideal precedent for associations to set.

While the banks are beginning to move their mortgage foreclosures a bit quicker, oftentimes they are still moving far too slowly for associations which are being burdened by the property’s outstanding unpaid assessments. Together with qualified legal counsel, associations should carefully weigh all of the above-mentioned matters and considerations to determine whether to move forward with their own foreclosure actions in advance of lenders or to wait to enforce their liens.

October 22, 2015

Article by Firm’s Michael Chapnick in Today’s Daily Business Review: Clarion Call for Changes to Outdated Association Documents

by Siegfried Rivera

Siegfried Rivera

Firm partner Michael E. Chapnick contributed a guest column that appeared in today’s edition of the Daily Business Review, South Florida’s only business daily and official court newspaper. The article focuses on two recent rulings in which outdated community association declarations enabled foreclosing lenders to avoid any liability for prior owners’ association debts. Michael’s article reads:

Essentially, both recent rulings found that the associations were barred from recouping any of the prior owners’ past-due fees from the foreclosing lenders by their very own declarations and covenants for their communities. The associations were done in by nearly identical clauses in their declarations indicating that lenders would not be responsible for the prior owners’ assessments even though Florida law has held for more than seven years that associations are entitled to receive a statutorily capped amount.

The first ruling was filed in May in the case of Genesis RE Holdings v. Woodside Estates Homeowners Association by the appellate division of Broward Circuit Court. Genesis appealed the final judgment from the county court that found it liable for the prior owner’s delinquent assessments in accordance with the law.

The appellate panel found that Woodside’s declaration, which operates as a contract between the association and the unit owners, includes a provision that exempts Genesis from liability for the former owner’s assessments.

That provision reads: “Where any person obtains title to a lot pursuant to the foreclosure of a first mortgage of record, or where the holder of a first mortgage accepts a deed to a lot in lieu of foreclosure of the first mortgage of record of such lender, such acquirer of title, its successors and assigns, shall not be liable for any assessments or for other moneys owed to the association which are chargeable to the former owner of the lot and which became due prior to the acquisition of title as a result of the foreclosure or deed in lieu thereof.”

The opinion acknowledges that this provision, which was recorded as part of the community’s declaration in 1987, serves to disadvantage Woodside, but its plain and unambiguous language absolves those who obtain title to a unit via the foreclosure of a first mortgage from liability for the former owner’s past-due assessments.

The opinion found that Florida law does not supersede the community’s governing documents because the declaration does not contain what has become known as the Kaufman language, providing that statutory changes would be incorporated automatically into the declaration.

Michael’s article concludes:

Similarly, in the case of Willoughby Estates v. BankUnited, the Palm Beach Circuit appellate division found in favor of the foreclosing lender in its ruling filed in June. It found that the association’s declaration contained language that was nearly identical to that of Woodside’s absolving foreclosing lenders from liability for prior owners’ assessments.

In addition to associations losing out on the ability to collect any of the former owners’ past-due assessments from the foreclosing lenders, the appellate rulings granted the motions for attorney fees from the lenders, so there will likely be substantial sums that the associations will be paying to the lenders for their legal counsel.

These cases and several other similar rulings by the Florida courts in the last two years are sending a clear message to the community associations in the state with outdated declarations, which likely were recorded by their original developers in hopes of facilitating mortgage financing to spur sales at the properties.

During the height of the foreclosure crisis, the foreclosing lenders and their attorneys were not bothering to review the declaration documents of the communities, but those days are now over.

The lenders and their attorneys have come to understand that many older communities throughout the state still contain provisions in their declarations to absolve foreclosing lenders from liability, and they have not been updated to remove those stipulations and add the Kaufman language to indicate conformity with all future laws.

Our firm congratulates Michael for sharing his insights into the implications of these new rulings and other similar rulings with the readers of the Daily Business Review. Click here to read the complete article in the newspaper’s website (registration required).

October 14, 2015

Community Associations Must Comply with Florida Law Protecting Tenants in Foreclosed Residences

by Awilda Esteras

Awilda Esteras

Many community association boards and property managers are still unfamiliar with Florida Statute 83.561 enacted this summer, offering limited protections to tenants in foreclosed homes.

During the 2008 – 2014 foreclosure crisis, a federal law was passed, The Protecting Tenants at Foreclosure Act, which assisted bona fide tenants by providing them the opportunity to stay in the property after the completion of the foreclosure. The Protecting Tenants at Foreclosure act expired in December 2014 to be replaced by Florida Statute 83.561.

Similar to the federal act, Florida Statute 83.561 only applies to tenants who are renting under a valid arm’s length transaction rental agreement for a rate that is not significantly below market value, and where the tenant is not the mortgagor in the subject foreclosure or the child, spouse or parent of the mortgagor in the foreclosure.

Unlike the expired federal act, Florida Statute 83.561 requires a new owner, including an association, wishing to terminate the tenancy after acquiring a property via foreclosure, to provide the tenant with a 30-day written notice of termination, which should be in substantially the following form:

NOTICE TO TENANT OF TERMINATION

You are hereby notified that your rental agreement is terminated on the date of delivery of this notice, that your occupancy is terminated 30 days following the date of the delivery of this notice, and that I demand possession of the premises on …(date)…. If you do not vacate the premises by that date, I will ask the court for an order allowing me to remove you and your belongings from the premises. You are obligated to pay rent during the 30-day period for any amount that might accrue during that period. Your rent must be delivered to . . . (landlord’s name and address).

If the tenant fails to vacate the property after the 30-day period expires, the new owner may apply to the court for a writ of possession based upon a sworn affidavit that the 30-day notice of termination was delivered to the tenant and the tenant has failed to vacate the residence after the 30-day period has expired. If the court awards a writ of possession, the writ must be served on the tenant.

Unlike the federal act, Florida Statute 83.561 does not require for the new owner to intend to occupy the residence in order to terminate the tenancy, nor does it seek for the tenant to complete the terms of the rental agreement. Rather, the new law assist tenants in foreclosed homes by providing a 30-day window to seek alternate living arrangements, while ensuring compliance by the new owner of the tenant’s rights as afforded under Florida law.

Community associations that acquire title to a unit via foreclosure and wish to terminate a tenancy should consult with qualified legal counsel in order to ensure compliance with the requirements under Florida Statute 83.561.

September 24, 2015

Article by Firm’s Michael Hyman in Today’s Daily Business Review: Knee-Jerk Reaction in Foreclosure Case Costs Association $35,000

by Siegfried Rivera

Siegfried Rivera

For the second consecutive day, an article about important issues for community associations written by one of our firm’s attorneys appeared today in the Daily Business Review, South Florida’s only business daily and official court newspaper. The article by Michael L. Hyman focuses on a recent foreclosure case in which a condominium association was ultimately done in by its own initial pleadings stating that it was only entitled to a capped amount. His article reads:

In the case of Bank of America v. The Enclave at Richmond Place Condominium Association, Bank of America appealed the trial court’s decision that it was not entitled to the statutory “safe harbor” liability caps for past-due association assessments for foreclosing lenders. The Second District Court of Appeal reversed the lower court’s ruling, and it based its decision on the association’s own initial responses and pleadings from the onset of the foreclosure proceedings.

The appellate panel found that in its answer to BoA’s initial foreclosure filing, the association affirmatively pleaded:

“The mortgage which is being foreclosed is a first purchase money mortgage which was recorded after April 1, 1992. Pursuant to Fla. Stat. § 718.116, the plaintiff’s lien is superior to any title and interest to any condominium assessments, except for those unpaid dues, which are not to exceed six months’ unpaid assessments or one percent of the original principal balance of the mortgage, whichever is less.”

After BoA acquired the property, the association claimed it was entitled to more than $36,000 in unpaid assessments, interest and various fees. BoA responded by filing a motion to enforce the final judgment, contending that it was liable for only $1,421, which represented 1 percent of the original mortgage debt, the lesser of the two amounts.

The trial court found that it had continuing jurisdiction and could therefore address BoA’s motion, and it ruled that BoA was not entitled to the benefit of the safe harbor provision.

Michael’s article concludes:

In its appeal, BoA argued that the association is estopped from taking a position contrary to that which it affirmatively took in the underlying foreclosure proceeding. The appellate panel agreed, noting in its opinion:

“We conclude that the Association’s affirmative plea of entitlement to only the lesser of six months’ unpaid assessments or one percent of the mortgage debt was a waiver of any claim to a greater assessment figure.”

The takeaway for community associations and their attorneys from this ruling is very clear and extremely important. Rather than being so specific and referencing its own governing documents in the initial pleadings, associations and their legal counsel should use the initial pleading in response to a lender’s foreclosure filing simply to state that it would be entitled to the safe harbor amounts should those caps be deemed to apply.

In addition, if during the course of the proceedings the association and its attorneys determine that they plan to call into question the applicability of the safe harbor liability caps or the provisions of the governing documents, the association must withdraw or amend its related pleadings and affirmative responses prior to the final judgment and the issuance of an estoppel stating the amount that it seeks to collect.

Our firm congratulates Michael for sharing his insights into this important new appellate ruling for Florida community associations with the readers of the Daily Business Review. Click here to read the complete article in the newspaper’s website (registration required).

September 2, 2015

Article by Firm’s Laura Manning-Hudson in Today’s Daily Business Review: Wave of Appellate Opinions on Association Assessments Owed by Foreclosing Lenders Create Roadmap for Practitioners

by Siegfried Rivera

Siegfried Rivera

Firm partner Laura M. Manning-Hudson wrote an article that appeared in today’s edition of the Daily Business Review, South Florida’s only business daily and official court newspaper, about the recent spate of decisions by the Second, Fourth and Fifth District Courts of Appeal with regard to whether the court in a mortgage foreclosure action retains jurisdiction to determine the amount of unpaid condominium and homeowners association assessments that a foreclosing lender must pay. Her article reads:

In July, the Fifth District Court of Appeal issued an opinion in Central Park A Metrowest Condominium Assoc., Inc. v. Amtrust REO I finding that the trial court lacked jurisdiction to decide a post-judgment issue – namely the amount of assessments owed by the foreclosing lender for the prior owner’s past-due condominium assessments. The lender’s complaint had averred that the condominium association “may claim some interest in or lien upon the subject property by virtue of [a] Claim of Lien.” The association answered the complaint and asserted a counterclaim for unpaid assessments. The appellate court, however, found that despite litigating the issue of past-due assessments in a counterclaim, the trial court did not have jurisdiction to determine the issue post-judgment where the final judgment merely provided that “[j]urisdiction of this action is retained to enter further orders as are proper including, without limitation, a deficiency judgment.”

For the Fifth DCA, the issue was not whether the assessments had been litigated in the underlying action, but whether the court had specifically retained jurisdiction in its final judgment to determine their amount.

However, in the two most recent opinions issued by the Second and Fourth District Courts of Appeal, the standards vary. But, there’s a lesson here.

In Citation Way Condominium Association v. Wells Fargo Bank and Leslie Linder, the Fourth DCA found that the lower court had retained jurisdiction to determine the post-judgment issue of past-due condominium assessments where “[t]he issue of unpaid assessments was raised in the underlying foreclosure action and the third-party purchaser, Fannie Mae, had a direct relationship with the plaintiff, Wells Fargo.”

Wells Fargo, as the servicing agent for Fannie Mae, had alleged in its complaint that “its lien was superior to any other claims against title and interest except for unpaid condominium assessments as provided in section 718.116, Florida Statutes.” Unfortunately, the opinion does not reference the language in the final judgment, but apparently it was sufficient basis for the appellate court to decide that the issue had been raised in the underlying action and therefore the lower court could retain jurisdiction.

However, in Grand Central at Kennedy Condominium Association v. Space Coast Credit Union, the Second DCA, citing the Central Park opinion, agreed with the association, concluding: “The trial court lacked jurisdiction because entitlement to assessments was neither litigated nor adjudicated and the trial court did not specifically reserve jurisdiction to determine the amount of assessments due pursuant to section 718.116(1)(b).” The underlying final judgment did not address the condominium’s assessments but merely “contained only a general reservation of jurisdiction.” Apparently, condominium assessments (pre- or post-judgment) were never considered in this case.

Laura’s article concludes:

As shown by these three rulings, the standard in each of the Second, Fourth and Fifth Districts varies as it pertains to post-judgment jurisdiction. While for some courts the issue depends on whether the assessments were litigated at the trial level (albeit, the extent of that litigation was not exemplified), for each of the courts the specific reservation of jurisdiction was key. In fact, the message could not be any clearer than it is in a footnote in the Second DCA’s opinion:

“This appears to be a prevalent issue in mortgage foreclosure actions to which homeowner or condominium associations are parties. In such cases, we would encourage the circuit courts to consider including in their final judgments specific language concerning the reservation of jurisdiction to address the issues of entitlement to and the amount of any unpaid assessments.”

Because attorneys typically submit proposed final judgments to the trial courts for consideration, these three opinions should serve as an instruction to practitioners to include specific language in their final judgments reserving jurisdiction to address the issue of unpaid assessments. Additionally, in order to ensure that the issue is “litigated” in the underlying case, association counsel should be similarly instructed to raise the issue of assessments (pre- and post-judgment) in their affirmative defenses to lender foreclosure cases.

For both the lenders and associations involved in foreclosure cases, it is almost always preferable that assessments be determined by the trial court as part of the foreclosure proceedings rather than via a separate action, thus saving the client both legal and court costs.

Our firm congratulates Laura for sharing her insight into these important new appellate decisions with the readers of the Daily Business Review.

August 18, 2015

Article by Firm’s Laura Manning-Hudson in Today’s Daily Business Review: Win for One Association Actually a Loss for Florida Associations

by Siegfried Rivera

Siegfried Rivera

Firm partner Laura M. Manning-Hudson wrote an article that appeared in today’s edition of the Daily Business Review, South Florida’s only business daily and official court newspaper, about the recent decision by the Fifth District Court of Appeal in the case of Central Park A Metrowest Condominium Association v. Amtrust REO I. Her article reads:

As part of the condominium association’s apparent strategy to aggressively pursue its collections for the previous owners’ debts, the association issued an estoppel to Amtrust REO demanding the full amount of past-due assessments totaling more than $30,000.

In turn, Amtrust REO responded by demanding that the association apply the safe-harbor liability limits set forth in the state Condominium Act, and it also filed a motion to determine amounts due in the foreclosure action seeking to have the same judge who had entered the final judgment determine the amount that it now owed to the association. The foreclosure court considered the motion and ruled that the agent was entitled to the statutory safe-harbor limits, and the association appealed.

The Fifth District Court of Appeal agreed with the association’s position that the trial court’s order must be reversed because it lacked jurisdiction to decide a post-judgment issue that was not a part of the lender’s foreclosure case, to wit the amount which the agent owed to the condominium association for past due assessments.

Laura’s article concludes:

However, while the association won on the technical issue regarding the post judgment jurisdiction of the trial court, it apparently lost the argument that an agent or servicer of a first mortgagee is not entitled to the safe-harbor protections afforded under the Condominium Act. Section 718.116(1)(b), F.S., provides that the liability of a first mortgagee “or its successor or assignees” which acquire title to a unit by foreclosure is limited to the lesser of 12 months of assessments or 1 percent of the original mortgage debt.

The Fifth District opinion also concluded: “Although the trial court appears to have correctly interpreted the substantive law at issue, the trial court lacked continuing jurisdiction to issue a ruling on that matter.”

Accordingly, while the trial court’s decision was quashed due to lack of jurisdiction, the opinion appears to have interpreted that an “agent” or “servicer” is the same as a “successor or assignee” and is therefore entitled to safe-harbor protection.

If the association now continues to demand the full amount of past-due assessments owed on the unit, the agent/servicer will be required to file a new action to determine its rights. If that is the case, the servicer could very likely seek — and be awarded — its attorney fees from the association.

Our firm congratulates Laura for sharing her insight on this new appellate decision with the readers of the Daily Business Review. Click here to read her complete article in the newspaper’s website (registration required).

June 16, 2015

Firm’s Jeffrey Berlowitz Discusses Implications of Recent U.S. Supreme Court Decision Rejecting Lien Stripping in Chapter 7 Bankruptcies in Article in Today’s Daily Business Review

by Siegfried Rivera

Siegfried Rivera

The firm’s Jeffrey S. Berlowitz, who has focused much of his work on helping community associations to contend with unit owners who attempt to wipe away association liens by filing for bankruptcy, was quoted extensively in an article in today’s edition of the Daily Business Review on the implications of the recent ruling by the U.S. Supreme Court in the case of Bank of America v. Caulkett. The court ruled that homeowners who are underwater on their first mortgage cannot void second mortgages by filing for Chapter 7 bankruptcy, and the ruling also appears to apply to other secured lienholders including community associations.

The article reads:

Jeffrey Berlowitz is optimistic that within the risky realm of second mortgages, the Supreme Court’s ruling may help refresh the lending stream that dried up in the market crash.

“You may see second mortgages being extended if there’s equity,” said Berlowitz of Coral Gables-based Siegfried Rivera, which represents community associations.

Still, a divisive footnote in the decision suggests if only the debtors had asked the court to overrule its 1992 decision in Dewsnup v. Timm, the court would have obliged. Three justices didn’t join Thomas’ footnote, meaning they could be outvoted 6-3 if the right case came along.

Dewsnup rejected one form of lien-stripping. The footnote quotes Thomas’ concurrence in a 1999 opinion: the “methodological confusion created by Dewsnup has enshrouded both the Courts of Appeal and … Bankruptcy Courts.”

Berlowitz said, “Thomas’ comments could lead us to believe the court could overrule Dewsnup down the road.” Then lien-stripping would be available in Chapter 7 cases, allowing debtors to void wholly unsecured mortgages. And partially unsecured mortgages could be stripped down to the property’s market value.

For now, Berlowitz is happily sharing the ruling with his condo board clients. They’ve been frustrated by homeowners who fail to pay their fees through months or years of foreclosure and bankruptcy while the association maintains the community.

“There’s such animus for the folks who aren’t paying while their neighbors are,” he said. “I had to explain to our clients this is the law, I’m not making it up.”

Our firm congratulates Jeffrey for sharing his insight into this ruling and its implications for community associations with the readers of the Daily Business Review, which is South Florida’s exclusive business daily and official court newspaper. Click here to read the complete article in the newspaper’s website (registration required).