FL - What does "foreclose the lien" mean?

Our Florida HOA Association Documents state:
"Any Assessment not paid within thirty (30) days after the due date shall be considered "Delinquent" and Past Due. Past due General and Special Assessments shall bear interest at the highest rate permitted by law, together with a late fee of $25.00 per month. General and Special Assessments and interest, late fees, costs and Attorneys Fees shall be a charge on the Lot, Unit or Parcel and shall be a continuing lien upon the Lot, Unit or Parcel, against which each General and/or Special Assessment is made."

Further, it states:
"Any assessments which are not paid when due shall be delinquent. If the assessment is not paid within thirty (30) days after the due date, the assessment shall bear interest from the date of delinquency at the maximum rate allowed by Florida law from time to time, and the Association may bring an action at law against the Owner personally obligated to pay the same or foreclose the lien against the property, and interest, costs and reasonable attorneys' fees of any such action shall be added to the amount of such assessment."

Further, it states:
"As more fully provided in the Declaration, each member is obligated to pay to the Association annual and special assessments which are secured by a continuing lien upon the property against which the assessment is made."

Further, it states:
"Upon recording of a notice of lien, there shall exist a perfected lien for unpaid General and/or Special Assessments on the respective Lot, Unit or Parcel prior and superior to all other liens, except (1) all taxes, bonds, assessments, and other levies which by law would be superior thereto, and (2) the lien or charge of any Institutional first Mortgage."

Lastly, it states:
"It shall be the duty of the Board of Directors as more fully provided in the Declaration, to foreclose the lien against any property for which assessments are not paid within thirty (30) days after due date, or to bring an action at law against the Owner personally obligated to pay the same"

I am confused as to what "foreclose the lien" means in the last paragraph. Do our Documents imply that we send out a notice for the assessment and if the assessment is not paid within 30 days of the due date, we file a lien? Also, do our Documents state that we can charge a late fee after the 30 days and add the late fee to the lien? In other words, a homeowner is 30 days past due. We charge a late fee but also immediately file a lien.

Hi David:

Foreclose the lien = force a sale of the house. There are plenty of "horror stories" of people getting forced out of houses for small amounts. The power to foreclose is an "ultimate power" that the HOA has over the homeowners to collect assessments. Unfortunately, it's sometimes used as a first resort, rather than a last resort.

Most HOA law firms handle collections issues. Typical is that they seek a monetary judgment and then go through the requisite processes to get the money, if possible (garnish wages, empty bank accounts, etc.).

One problem with foreclosures is that the HOA can end up without any money from that process, if the homeowner owes more than the home is worth; this can happen if property values fall, if they have an interest-only loan, or if they've stopped making mortgage payments.

Has anybody talked to the homeowner? There may be some temporary circumstances that would not allow them to pay assessments now, but be able to soon (such as an extended illness). A payment plan might be in order.

J. Patrick Moore, CMCA

Brad is correct. In Arizona the statues clearly insist any payment received must first be applied to outstanding assessments. That is to prevent applying a payment to say a lawyer's fee, and leaving the assessment outstanding. In Arizona an HOA can foreclose on unpaid assessments, but cannot foceclose on unpaid fines, interest, lawyer's fees, etc. so the law wants any payment received to be applied first to outstanding assessments. Harold

David, while "it SHALL be the duty", if you read carefully it does not say explicitly when this action must be taken. Except it must be taken sometime after 30 days since it states "if not paid within 30 days". Therefore I believe the Board can use good business judgement as to when to bring legal action.

I would really like to know what this country is coming to...We have troops fighting for our freedom and civil liberties when that means nothing to associations...I do not believe that an association should put a lein against anyones home they should find other ways...people work hard for what they have and to have someone use scare tactics to take what they earned away.
I do not understand how associations sleep at night. I do not believe that associations should be above the law nor do I feel there laws should be above state laws to force homes into foreclosure for their own bottom dollar.

I live in an association and they left alot out of their books when I moved in which now its to late, now I have to deal with their changes when ever they feel like it peoples voices mean nothing they do what they want, they hold elections which mean nothing they elect who they want anyway.

I bought a house not a town house and not a condo.

I worked hard to own my first home to have someone run my life and not care what they do to the people that live under their association.

I think associations should be outlawed.

a committee for grounds keeping and for the up keep of the property is cheaper
then paying for these half cocked board members to do what they want.

I guarantee they most likely do not even live under their own rules.

signed
a concerned association member

KimberlyS2, what do you suggest an association do to get people to pay their fair share? We have a home owner that hasn't paid dues in three years, another that has paid occasionally for two and a half years; a third house that hasn't paid for two years and is currently being foreclosed on their mortgage company and one house that owe years worth. We have 50 houses and an annual budget of $22,500; those four houses alone owe more than $4,500 to the Association.

Do we ask the landscaper to wait on his payment until they start paying? How about the electric company? When Homeowners don’t contribute their fair share then either we have to cut things out of the budget or have to raise everyone’s dues so that those that pay are cover for those that don’t. If someone moves without paying, what is the Association supposed to do? You feel strongly, so what do you suggest?

I have considered the options and the problem is that the laws were created to benefit the lawyers. I don’t want to add an extra $300 to someone for legal fees but I can’t find a legal alternative. I can’t contact someone’s mortgage company and have them pressure the Homeowners into paying; that would be a violation of the Federal Fair Debt Collections Act. I can’t post who hasn’t paid in either the newsletter or on a bulletin for the same reason. There is no alternative that I can find other than involving an attorney that doesn’t create some form of liability.

These people to owe money to the Association have received several notices and been offered an opportunity to appear before the board to work out a payment plan. Not one has ever showed up in person to a board meeting. When we did hear from them either on the phone or by the mail, they just used our offer of good will as a delay tactic and outright lied to us about their intentions. No extra payments were made and we never received the checks that we were promised. Deadbeats know the rules and while I feel bad about adding $300 legal fees to a $300 outstanding balance, I won’t endanger the Association.

In the end, the choice is do I let people who have received several notices and have failed to even contact the Association just not pay or do I put a lien on the house so that when it sells the Association gets paid? After a period of time, the choice is do I wait for the house to sell and the Homeowner possible is foreclosed on by someone else or do I start the proceedings myself? An interesting observation we have had is the same people who don’t pay their dues don’t keep up their house. They clearly don’t want to be in a deed restricted community, but they are and they must participate the same as everyone else.

The board is not paid at all. Virtually all Associations are non-profit organizations and if the board is reimbursed for their time that would endanger the corporate status. The board is made up of volunteers who pay the dues themselves on top of the time they donate. If you don’t like what is going on try getting involved and doing something. If you don’t you are the only one to blame.

Disputes between Homeowners and Associations are matters of Corporate law and the judge typically sees it as the Homeowner trying to not abide by the terms of a contract. If you don’t like Associations don’t buy a house in a deed restricted community. If you didn’t read the governing documents, then you only have yourself to blame. Whether you like it or not, you agreed to be part of an Association and abide by the rules of it.

Those suggests cost even more than a lien; remember, all of that requires a lawyer. So instead of adding $300 to get a lien I would be adding $1,500 to garnish wages or get a judgement. In addition to costing more, those options are less secure. If the person changes jobs or bank accounts, what has that gotten me?

I understand your viewpoint but please understand mine for a minute. I am the President of an Association in Florida who got involved because it kept getting worse. Basic maintenance wasn't done in many of the public areas, our management company kept screwing things up and we had about 8 houses that were behind in thier payments.

We have an annual budget of $22,500 and last year we were $4,400 in the hole and our insurance went up by $1,600. I persuaded the board to become self managed to save $7,000 and we have been doing much of the work ourselves.

Part of that is getting the houses that are past due caught up. About half have sent in the past due amounts and we have not recently heard from any of the others. We have had to have involve collections attorneys on two of those people. They have been sent several letters and haven't responded so a lien and persueing a foreclosure is all we can do. If they won't contact the board about working out a payment plan then there is nothing we can do.

What should I say to the Homeowners that do pay if I don't pursue those that won't?