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HOW ONE ASSOCIATION LOST BIG BY FAILING TO UPDATE THEIR DOCS
By
Eric Glazer, Esq.
Published June 8, 2015
Every now and then, the courts of our state
issue an opinion in a case involving a condo or HOA that is very
important and certainly worth mention. On June 1st, the 4th
District Court of Appeals issued a decision in
Pundit 2 Joint Venture v. Westwood Gardens HOA that
does not bode too well for some associations.
Here is what the case is about:
A bank foreclosed on a unit and at the foreclosure auction a 3rd
party bought the unit. Usually, that’s great news for the
association, because the HOA statute (Florida Statute 720)
states that a new buyer is jointly and severally liable with the
old buyer for any unpaid assessments owed to the association.
Thinking that was the situation here, the attorney for the HOA
sent a letter to the new owner telling the new owner to pay the
association and bring the account current. Usually, the HOA and
their lawyer would be right. But not this time.
The problem in this case was that the governing documents of
this community specifically stated that purchasers at a judicial
foreclosure sale are not responsible for the unpaid assessments
that are owed on the unit by the prior owner. This new buyer
said to the association “Hey…..read your own documents…..I don’t
owe you anything.”
In court, the association argued that a Florida statute that was
passed subsequent to the recording of the declaration clearly
made the new buyer responsible for the unpaid assessments and
that this new statute superseded the express terms of the
declaration. The trial court agreed and ruled with the
association. However, on appeal, The 4th DCA reversed the trial
court and sided with the new owner and said that the new owner
does not owe the association any back assessments whatsoever.
The reason the association lost was that was that their set of
governing documents did not contain the “as amended from time to
time” language I always talk about at our seminar. In other
words, there was no language in the governing documents that
automatically adopted this new statute and change in the law
making new owners responsible for the unpaid assessments ….and
because that as amended from time to time language wasn’t
there…….the new law did not automatically apply in this HOA and
the HOA was stuck with what their governing documents said. The
court found that to apply the new statute to the new buyer in
the absence of the “as amended from time to time” language would
violate the United States Constitution.
Here’s why this decision is so important…….A great deal of HOAs
out there have the same exact language in their governing
documents that specifically states that buyers at a judicial
sale are not responsible for past due assessments owed by the
prior owner. So……the only way for an HOA to protect themselves
now from getting wiped out is to have the community vote in
favor of amending their governing documents to make new owners
who purchase at judicial sales liable for the unpaid
assessments. If your association fails to properly amend the
documents --- they will be owed zero. So in other words….get
busy.
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About
HOA & Condo Blog
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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
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decades and is the owner of Glazer
and Associates, 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.
See:
www.condocrazeandhoas.com.
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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