Too often in today's economy, property owners fall behind on the payment of their community assessments, which leaves their community association with the expenses of maintaining the community and having fewer resources to pay for that maintenance. However, Florida law gives community associations the ability to collect those assessments by placing a lien on the delinquent owner's property. When a person purchases real property in a common interest community (i.e., a property governed by a condominium association or a homeowners' association), that owner becomes liable to the association for all assessments which come due during the time he or she owns the property. The owner also becomes liable to the association for the assessments and charges owed by the previous owner if such expenses are not paid at closing.
Under Florida law, a community association may place a lien on the delinquent owner's property if the owner refuses to pay the assessments; however, an association cannot record a lien on the property until certain procedural requirements are met. First, the community association must send the owner a written notice by both regular and certified mail to the property address stating the association's intent to record a lien on the property if the assessments are not paid within a specified period of time (30 days for condominium associations and 45 days for homeowners' associations). Next, if the delinquency continues beyond the time specified in the Notice of Intent to Lien, the association may record a Claim of Lien against the property in the public records of the county in which the property is located. After the Claim of Lien is recorded in the public records, the association may sue the property owner to foreclose the lien and have the property sold at a foreclosure sale. If the property is tenant-occupied, the association may also elect to
However, community associations should be aware of the potential consequences to foreclosing a lien. First, if the property is encumbered by a large mortgage lien and there is no equity in the property, it is unlikely the property will be sold for any substantial sum at a foreclosure sale because any buyers would be purchasing the property subject to the superior mortgage lien. Second, if there are no buyers willing to buy the property at the foreclosure sale for at least the amount due to the association, the association itself may have to purchase the property itself in order to try to recoup the money owed to it. One suggestion is that the association foreclose the lien and rent the property until the mortgage holder forecloses and the property is sold at a subsequent foreclosure sale. This may be an appealing option for some associations, but it could present problems for associations that have restrictive covenants which prevent leasing properties.
Under Florida law, if a first mortgage holder takes title to a condominium unit at a foreclosure sale, the condominium association is only entitled to receive from the mortgagee one year's worth of assessments or one percent (1%) of the original mortgage value, whichever is less. If the owner was delinquent for a long period of time, there may still be a large balance owed to the association that the association will still need to collect from the prior owner personally. As previously mentioned, when a new owner other than the mortgagee eventually takes title to the property, he or she is jointly liable with the previous owner for the delinquency. If that owner fails to pay the association within a specified period of time (30 days for condominium associations, and 45 days for homeowners' associations), the association may proceed with collecting the previous owner's delinquency in the same manner as it would collect any other delinquent assessment. The community association board should also be aware that, if the association takes title to the property at any foreclosure sale, any new purchaser will not be liable to the association for any assessments that came due while the association held title to the property; however, the purchaser will remain jointly liable with the previous owner for the delinquent assessments that became due while the previous owner held title to the property.
The board of directors for the association should consult an experienced community association attorney to determine the best course of action to collect delinquent assessments.