Unpaid assessment law (Florida)

Hello,

I have purchased a Condo unit from a foreclosure auction. I understand and acknowledge 100% that I am liable for all unpaid assessments prior to me taking title. This is not in dispute....the law is clear on that part...

Here is the actual law on this issue (from my state, Florida):

"Florida Statute § 718.116 ... [new owner is] jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. "

If you read the text literally it says "all unpaid assessments" - it does not say interest, late charges, penalties, attorney charges, lien filing fees, etc etc...which in my case amount to $7,000

I am only disputing the $7,000 that is owed which is above and beyond the unpaid assessments - that part I have tendered to the association.

The association is unwilling to negotiate one penny and I have yet to hear back from them on the $7,000 that is still "owed" ...

Thanks for your input on this!

Yes the previous owner (member of the association) was in fact levied those "interest charges, late penalty fees, lien costs, attorney charges, etc"

I have spoken to several lawyers about this (free consultations) and they all say that this particular issue has not been challenged in Florida. Some lawyers agree that I am only liable for the literal text of the law - "all unpaid assessments" - other lawyers feel that the law "intended" it to mean other fees as well otherwise they would not be able to collect such fees...

So ... I'm in a bit of a pickle =)

The bank foreclosed and I bid and won the auction - then title was transferred to me. The HOA has a lien on the unit.

Hi Melissa,

I don't know about your state - but in my state (Florida), a new owner is liable for the previous owner's unpaid dues. There are thousands of cases (precedent) on this. If I would have bought it from the bank then in order to give me clean title (title insurance) they would have had to have settled with the HOA - but since I bought it from a foreclosure auction the HOA lien remains in place and is valid up to the extent of the previous "unpaid assessments" - the point I am stuck on is whether I owe above and beyond the assessments.

Here in Tennessee, we are SOL on assessments if a property goes into foreclosure. The bank will pay for when they have possession, but before that, we're generally out of luck. We surely wouldn't go after the new owner for the previous owners debt, let alone all the fees, etc.

From the wording of the statute, I'd say you are on the hook for the assessments. It's not your fault they're late. Honestly, they should thank their lucky stars they're getting anything and let it be.

Steve,

I would have to agree with Glen that this is a $7,000 crapshoot.

There is a third alternative: Hire an attorney to first give you some insight into what the law might have to say on this matter. You said you got some free advice and I think so far you got just what you paid for. A good attorney will answer your question with, "I will have to research the subject before I can answer that." Then be prepared for a bill for his research time.

If you think you have a case, then let the lawyer rattle his saber for you. Condo boards are generally made up of people with no business or legal background. In fact, their sole qualification for being on the board is that they own a unit. These same people who strut around thinking of themselves of captains of industry would be hardpressed to qualify as a janitor at McDonald's.

Once your lawyer starts in on your condo board, they will get their lawyer involved and, unless their attorney is a total jerk, the attorneys may be able to negotiate the amount downward. Since the scope of the law seems to be untested, it would be just as much a crapshoot for the board as it is for you.

One question I do have about this law: If the condo association had a claim for past assessments, why did they not join the foreclosure action? Courts generally do not tolerate covering the same ground in multiple lawsuits. Is there something in the statute that requires the condo association to assert its claim along with the bank's in the same foreclosure? In most states it looks like the matter is handled by making the lender's lien superior to the association, shutting them out in the cold when the banks foreclose. In Florida it looks like the association and the lender are on equal ground but I find it hard to believe that the courts would permit a party with a claim against the property to sit on their hands while the court grants title to the property to another person.

For all who, like me, thought it was not possible for a new owner to be liable for the previous owners assessments, here is what FL 718.116 says:

718.116 Assessments; liability; lien and priority; interest; collection.—
(1)(a) A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the owner may have to recover from the previous owner the amounts paid by the owner.

Looks like the law places the burden on the new owner to recover past due assessments from the previous owner OR make darn sure that all assessments are paid at closing.

That would be what I would do at this point. Going to court is a dicey proposition so playing "Let's Make A Deal" is probably your best bet.

Hi John,

This is a tiny association with a tiny law firm in a tiny city somewhere in Florida =)

I think there is a clear misinterpretation of this law your posting. I don't believe it's in regards to the entire past dues of the previous owner. When I read it, I get that you are responsible for the dues owed during the transition period and then from now on after ownership. This is what your lawyer is seeing as well. That is why he's saying it is kind of vague but you could most likely win. Paying the HOA's legal bill is negotiable at the court level. Both lawyers will ask the other party to pay their legal bill in court. The judge will then decide who will pay. It could be that you both pay your own or the other parties. Do NOT read into his advice that you would pay. It would be illegal for him to NOT inform you that the HOA could ask for you to pay their legal bill. Most likely they will but the court would decide that. I don't want you NOT to pursue this because this is the risk of every and all court cases if you were to file.

Here's my translation and what makes it so vague but in your favor. It's more of a "proration" of the dues than an entire back dues payment. A good example is renting out apartments. Let's say the rent is $500 a month starting on the 1st of the month. You take over the lease of the tenant on the 15th. The amount of rent you would be responsible for would be the 15th to the 30th and then the next month's rent. It would be the same for your assessments here. You take over on the 15th and the dues are monthly, then you must pay the rest of the monthly assessment.

This is what I get from this legal statement. My guess is that is what your lawyer did too. It's just because of it's vagness it's hard to estimate when the HOA is defining the actual takeover of the property. That is where the entire amount is coming from on their side. If the dues are collected monthly then you owe for the rest of the month you took over and from now on. If they are collected yearly, then you need to prorated that amount.

Melissa,

The issue of the new owners being liable for the previous owner's unpaid assessments is very established in Florida. It is a de-facto in this state...the only exception is if a bank (mortgage holder) forecloses then they have a "safe harbor provision" where they only pay 1% of the loan amount or 6 months of back-dues whichever is less (something like that).

See below:
http://www.avvo.com/legal-answers/do-i-owe-all-of-the-association-fees-on-a-condo-i--716786.html
http://www.avvo.com/legal-answers/is-there-any-negotiating-past-hoa-fees-after-buyin-528674.html

Thanks for all the input so far, I think it's best to consult with an attorney.

JohnC46,

The 718 statutes you quote are the Condo statutes. HOA are governed by the 720 statutes. In some areas they are very similar and in some areas they are very different.

This is what I would do...I would tell the HOA to come pursue this in court or negotiate. If they took me to court, I would file a counter suit for ALL my expenses like consulting the lawyer. You don't need a lawyer to file a counter suit which will save some money. Make the HOA prove the gray area in their favor. Which it only takes 51% of the judge to believe one side of a case over another. That's enough for me to be able to take my chances against the HOA instead of the reverse.

It sounds counter-active but forcing the other side to prove their case in this gray area may make the most sense. Atleast motivate them to pursue a negotiation of you NOT paying the interest/late fees or other costs owed besides back dues. Any chance of any money coming in instead of pursuing a lawsuit should motivate anyone to negotiate.

Unfortunately, this is something that sometimes happens when people insist on "State laws" regulating their HOA instead of the internal one they create/modify themselves. You get this kind of situation. Most states that I know do NOT force a new owner to pay any of the old owners debts when exchanging hands. It's a risk a HOA takes whenever they pursue liens/foreclosures. Good luck!

Steve,

Of that $7000 the association claims that you owe, how much of that is their lawyer's fees?

The reason I ask is that attorney's fees are usually limited either by contract or by law to a "reasonable" amount. I have seen attorneys tack outrageous fees onto a collection knowing that their fees are not reasonable and are unlikely to be upheld in court. The do this because they never expect to go to court and, therefore, there is no judicial review of the reasonability of the fees.

If the association is claiming that a significant part of the $7,000 is attorney fees, request their records to see how much they actually paid. Chances are pretty good that the association paid him nothing. In AZ, a party seeking attorney's fees in court can never collect more than what he actually paid his attorney.

First Melissa says you owe nothing then she say's pay this but not that.

Now you are getting inside information??? B.S.

Do yourself a favor... turn off the computer and seek legal advice. You do owe monies and you can find facts but likely cannot negotiate.

Keep in mind this forum is nothing more than a chat room.

Just pointing out the accuracy, value, and dependability of your "inside information".

Melisa do think the HOA will freeze the amount at $7,000 or will they add interest, late fees and additional legal fees. It's easy to play chicken when it's not your money at risk.

There is no negotiation.

A contract was entered into, i.e. the purchase of a property and all encumberances attached.

Now the OP wants to renegotiate the terms?

Try that the next time you purchase something.

If successful others would withhold payment and negotiate a reduced payment, debt, settlement, etc.

Just pay and learn your lesson.

Most states?

The OP is referring to Fl.

If you can't help please pass.

Your information thus far is worthless.

Steve one suggestion for you. Check the CC&R's to see if they cap interest rates, I know our CC&R's written in the 90's have a ridiculously low rate. You then need to check FL law to see if they have away around it. May save you a few bucks.

"There was no contract as you mention - this property was purchased from a foreclosure auction."

Someone agreed to buy a property for $X.

Someone agreed to sell it for $X.

That's a contract.

Now you wat to change the terms.

That's the dispute, not what is owed the HOA.

Yes you have.
But that is after the fact (of purchase).

Sounds like someone should take their own advice...

I like the idea of verifying the amount for the interest charged. There could be a difference in the documents versus the state allowable. Ours has a 6% interest. I've seen others state something like the "prime rate" plus so-and-so above that. The states have their own "Loan Sharking" laws which this falls under. If your going to look up the law for your state on interest maximum allowed to charge.

I didn't realize you had already paid the other amount of money for the back dues. I thought it was just $7K altogether. Sorry, my advice didn't include what to do with just the charges for the legal fees and interest. I was applying it to the whole payoff amount. This changes things a bit and now know why they are lacking the negotiating with you. The negotiating should have happened much earlier. Now it just seems to them you are witholding paying the entire amount. It's hard to put the worms back into the can once they get out. That 7K is now a loose worm...

This changes things a bit knowing this is the amount you witholding basically versus it being the entire amount owed. You can't really negotiate much when you pick and choose what your not going to pay. My advice has changed. It's now you might have to pay this leftover 7K or sue for the previous paid dues of 19K. Quite the pickle your in...

Okay, I can understand that advice...but still didn't win you the war did it? That just sucks...Looks like a legal fight after all. Again consider counter-suing if it does go to court. Think you have a good case. Good luck!

The association did have a lien for $12k when I purchased it at auction. That's the amount I went into it ready and willing to pay.

The association then turned around and informed me that the $12k amount was just back-dues and there's an additional $7k in interest, penalties, and attorneys charges. They did not contest this in the foreclosure case brought by the bank. The lien has survived, is valid and will soon be put in my name. The association has been unwilling to negotiate a penny even after being made whole the $12k.