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COLLECTIONS
LAW UPDATE
By
Eric Glazer, Esq.
Published
March 10, 2014
It seems as if the foreclosure crisis is certainly not as
bad as it once was, even though
Florida
is still the worst state in the nation, with approximately one
in every 346 homes in foreclosure.
The percentage of delinquencies in our community
associations are certainly down from where they were just a year
or two ago and hopefully things will remain this way.
Even though the worst may be behind us, associations and
their owners have taken a tremendous financial beating for
nearly a decade. It
happened, because the association laws are simply designed to
protect the banks and not the owners.
As most of you know, if a bank loans money to someone who
purchases a unit or home in a community, and that unit owner
does not pay the assessments to the association, if the bank
forecloses on the property and becomes the owner, the bank only
has to pay the association the lesser of one year of unpaid
assessments or 1% of the original amount of the mortgage.
So typically, even the owner is indebted to the
association for thousands or tens of thousands of dollars, the
association gets peanuts from the bank.
It got even worse this week for condominiums when the 3rd
District Court of Appeals issued an opinion in a case called
Aventura Management v. Spiaggia.
In this case, the condominium foreclosed on a delinquent
unit owner and took ownership of a condominium unit.
The bank then foreclosed, but a third party purchased the
unit at the bank’s foreclosure sale.
The condominium demanded that the purchaser at the
bank’s foreclosure sale pay the association all of the
assessments owed by the delinquent owner.
The 3rd DCA held however that the purchaser
only owes the unpaid assessments from the time the association
became the owner. In
fact, if the association rented out the property during the time
it owned the unit, the new buyer at the foreclosure sale may not
owe the association a dime.
So…..bottom line…..on the day when the condo
forecloses and takes back title to a unit, the account ledger
goes to zero.
Currently, there is a bill filed in The Florida
Legislature which seeks to make the banks pay more if they
foreclose and become an owner.
It would make the bank liable for 2% of the original
amount of the mortgage or 2 years of assessments, whichever is
less. While I hope
it passes, I believe it has little or no chance whatsoever.
So, why do the banks have so much more influence with The
Florida Legislature that Joe Citizen?
For the same reason why Dillinger thought it was a good
idea to rob a bank. BECAUSE
THEY GOT ALL THE MONEY.
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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 is currently entering his 20th year as a
Florida
lawyer practicing |
community association law and is the owner of
Glazer and Associates, P.A. an eight attorney law firm in
Orlando
and Hollywood. For the past two years Eric has been the host of Condo Craze and
HOAs, a weekly one hour radio show 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 7,000 Floridians. He is certified as a
Circuit Court Mediator by The Florida Supreme Court and has
mediated dozens of disputes between associations and unit
owners. Finally, he recently argued the Cohn v. Grand
Condominium case before The Florida Supreme Court, which is
perhaps the single most important association law case decided
by the court in a decade.
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