By: Clark, Campbell, Lancaster & Munson, P.A.
Q: How can homeowners’ associations collect assessments while awaiting a first mortgage holder foreclosure?
A: Depressed property values and myriad bank-owned properties have left lenders slow to foreclose. Homeowners may enjoy delay; but, HOAs can lose out on their assessments.
Recent changes in Florida law have altered the assessment collection landscape.
First, an HOA can now foreclose on its lien for unpaid assessments without cutting off a future buyer’s liability for past assessments. Associations now have an incentive to foreclose, take ownership and rent out the premises during the pendency of the first mortgage foreclosure.
Second, associations can now request an “order to show cause” at the outset of the mortgage foreclosure, forcing the court to require the homeowner to show cause for why a foreclosure judgment should not be immediately entered. This change may end up greatly reducing a lender’s delay.
As most associations are aware, associations typically can recover up to 12 months of past assessments from the foreclosing lender if the lender takes title after the foreclosure sale.
Please note, however, that a federal court in January cut off that liability because of lender-friendly language in one association’s governing documents. It is of the utmost importance for associations to review and amend documents as necessary to remove impediments to collecting assessments.
The March 13 edition of “Simply the Law” will cover maximizing homestead exemptions, particularly for senior citizens.
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