By Eric Glazer, Esq.

Published June 22, 2020


So here is what you need to know in a nutshell:

  1. Mortgage defaults are soaring.  In fact, homeowners stopped paying mortgages in record numbers in April.  It was the largest one month increase ever recorded.

  2. Under Florida law, that spells financial disaster for our condos and HOAs.

Keep this in mind as you read this.  Florida law protects the banks.  When a bank forecloses on a condo unit or a home, several things normally happen:

  1. The owner is also not paying the condo or HOA assessments;

  2. The bank foreclosure takes many months and even years;

  3. Even when the bank finally finishes their foreclosure and owns the home or unit, they owe the condo or HOA very little and the association just lost a lot of money.

So why does Florida law allow the condos and HOAs to get slaughtered?  Under Florida law, if the bank winds up owning the home or unit --- even if the association has not been paid in years – the bank only owes the association the lesser of one year of assessments or 1% of the mortgage debt.  In sum, it is usually a fraction of what is owed to the association.


So why is the law written this way?  Clearly to protect the banks.  The theory is….. if we pass a law and make banks responsible for payment to the association for all of the unpaid dues of the owner they just foreclosed on, banks simply will not lend money to people who want to buy in a condo or HOA.  Maybe that’s true.


If however such a law did exist, all it would mean that banks would have to protect themselves a little more.  They already protect themselves when it comes to real estate taxes.  You know how they make you escrow a year of real estate taxes in advance?  That’s done because real estate taxes have a greater priority than mortgages do.  If the taxes don’t get paid, the county can wipe out the mortgage and the bank would be owned nothing.  So in response, the bank makes you pay the real estate taxes in advance so they’re covered. 


Condo and HOA assessments can be treated the same way by the banks if it were necessary but, as you can see, the politicians make sure they the money owed to the county is given SUPER PRIORITY over all other obligations on the property.  Taxes are first in line.  Their money is guaranteed. To the contrary, they don’t care about the money owed to the associations.  I the law were changed, the bank can easily make a borrower escrow a year of assessments if they want to buy that condo or home  so just in case all goes bad, the association is covered. Maybe they can charge an extra quarter of a point in interest as well.  At least  people on fixed incomes won’t have to cover the delinquencies of their neighbors.


So now you know why you get the short end of the stick when foreclosures increase and the economy tanks.  Next week we will tell you what to do about it.


Suffice to say……..there may be a rough road ahead.

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About HOA & Condo Blog

Eric Glazer Eric Glazer graduated from the University of Miami School of Law in 1992 after receiving a B.A. from NYU. He has practiced community association law for more than 2

decades and is the owner of Glazer and Sachs, P.A. a seven attorney law firm with offices in Fort Lauderdale and Orlando and satellite offices in Naples, Fort Myers and Tampa.


Since 2009, Eric has been the host of Condo Craze and HOAs, a weekly one hour radio show that airs at noon each Sunday on 850 WFTL.




He is the first attorney in the State of Florida that designed a course that certifies condominium residents as eligible to serve on a condominium Board of Directors and has now certified more than 10,000 Floridians all across the state. He is certified as a Circuit Court Mediator by The Florida Supreme Court and has mediated dozens of disputes between associations and unit owners. Eric also devotes significant time to advancing legislation in the best interest of Florida community association members.

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