Mix and Match Fines and Assessments in Florida?

If it's effective, what's the problem?

We don't have fines in our community (because case law in this state doesn't allow it - yet), but when people owe delinquent assessments, the payments work in a similar way. the money is applied to the oldest account first, starting with the collection costs and attorneys fees, followed by the late fees and finally the original amount owed. rinse and repeat for the second oldest account and so on. Homeowners receive an itemized list on what's owed so if they pay the entire amount in one shot, that takes care of it.

All of this is money due to the association, so if people don't want to pay fines, they need to comply with the community rules and pay their assessments in full and on time. Our collection policy is sent to homeowners every year so they should understand how this works. This is also why HOAs who assess fines should have an appeals process when fines are assessed - it could allow for the fine to be suspended until the dispute is settled (if it goes in the homeowner's favor, the money could be refunded or credited to his/her account towards the assessment)

We have a Fines Committee and abide by all Florida Statute ... however, this practice surprised me because I had not considered it reasonable.

I want it to be legal and ethical.

This is Florida specific - I can’t find any priority process.

GeorgeS21, there is a priority of payments received that's spelled out in FS 720.3085 (3)(c).

"Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment. A late fee is not subject to the provisions of chapter 687 and is not a fine. The foregoing is applicable notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The preceding sentence is intended to clarify existing law."

With the exception of saying a late fee is not a fine, there's no mention of fines at all. So if an owner makes a regular assessment payment but also owes for an unpaid fine my take is that the priority order in the statute must apply and if there's anything left over then perhaps it could be applied toward any fine(s). We'd probably ask our attorney before doing that for the first time.

I have seen plenty of CC&Rs that attempt to do an end-run around the statutory fining process by claiming that "fines" become "assessments" after a time. I think that's not legal but I'm no lawyer. As far as I know the issue hasn't been litigated. Or if it has I haven't seen any case citations or rulings.

The fining statute in FS 720.305 says, "A fine of less than $1,000 may not become a lien against a parcel. In any action to recover a fine, the prevailing party is entitled to reasonable attorney fees and costs from the nonprevailing party as determined by the court." Again, not a lawyer, but to my pea brain that's saying a fine of $1,000 or more may become a lien, but for anything less than $1,000 it can't be re-defined into some sort of "assessment"; collection must be pursued as with any other civil matter in court. What's typical is that unpaid fines sit there on the account and are settled when the property is sold. An astute buyer won't close on a property after being informed there are outstanding debts for which he could be held liable. Florida is one of those states where a new owner is jointly liable with the previous owner for outstanding moneys owed.

In Florida it is just the opposite (Chapt. 720.3085 (3)(b)): Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment. A late fee is not subject to the provisions of chapter 687 and is not a fine. The foregoing is applicable notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The preceding sentence is intended to clarify existing law.

I was under the impression there were very few states that allowed an association to apply dues payments to any outstanding fines before applying it to dues. This would mean a lot in SC as we cannot foreclose for unpaid fines but we can for unpaid dues.

When I asked our lawyer about this (a major HOA law firm), he said he was unaware of anyone in SC trying such (applying dues to fines) and he would not like to test it in court unless being paid for the test. We dropped the conversation.

Geno,

I agree - they imagine they have power far in excess of Florida statute.

A lien exists in Florida for unpaid assessments. The only question is whether to record it or not when an owner falls behind. Virtually every HOA has the power to lien for non-payment of assessments. It's the one power that gives the association any teeth. It's also what makes it relatively "easy" for associations to obtain loans.