Notifying an HOA of a member about delinquent taxes

Not sure if anyone has asked this before. Is there any process or mechanism in which the taxing jurisdiction can notify an HOA that member property owner's taxes are delinquent and heading to public auction? At present, an individual voluntarily tracks all parcels in our HOA for delinquencies. Otherwise, we have no other way of learning if a member property is headed to the auction block. Our HOA has strict screening standards and are at risk of someone buying the property and demanding to move in.

We are a resident-owned corporation in which each lot owner owns a share of the corporation.

Anyone?

Melissa, I aware of what you say. I was simply hoping if it was possible for the taxing entity to also notify the HOA. It would be awkward for someone to buy at auction and then find out he does not the financial ability to live and maintain the property under the rules of the Corporation.

That is the dilemma we are trying to avoid.

-- Isn't the bigger issue what to do when someone buys the HOA home but does not meet your HOA's screening standards?

-- Are your HOA's screening standards published in the HOA Declaration? The significance of this is that the Declaration is likely recorded with the County. Meaning that the Declaration puts all buyers on notice of the restrictions. Meaning that I think a competent HOA attorney would say that your HOA has the right to tell a buyer that he/she cannot reside at the HOA.

-- What exactly does your HOA's Declaration say about screening people out?

-- Can you share what these standards are? In Florida yes, certain screening restrictions are allowed (though I bet they have to be authorized in the Declaration). Some discussion appears at https://www.hoaleader.com/public/Can-HOA-Screen-and-Reject-Potential-Owners-Florida-County-Says-Yes.cfm and https://www.floridahoalawyerblog.com/community-associations-rights/ and https://berlinpatten.com/hoa-buyer-approval-avoid-next-and-receive-your-rose/

-- For the sake of argument, suppose a convicted felon buys the property at a tax auction. The crime was violent and physically hurt people. The felon's rights have not been restored. Your Board's attorney says the HOA has the right to reject such a person as an owner, but it may cost the HOA a lot by way of a lawsuit to keep the felon out.

A person buying into a property can pay for a title search which would show outstanding all outstanding liens and whether property taxes are current and/or delinquent.

I think this is a horrible idea.

A HOA does NOT own the home or the condo. So what is it of their business to keep up with the Taxes on homes? A HOA should ONLY concern itself with dues collections on the property. It is the only thing they have a hand in or responsibility.

In case you haven't read or understand, the owners owe the land on which the RV park sit on, so they actually have more of a stake than the normal HOA.

Love you sharp legal mind. So refreshing.

Big difference from a condo in that the owners purchased the mortgage for the park. The owners own a share. When you leave a condo, you don't get any money from the condo, you would in this case.

I should add that Palm Beach County is located in South Florida on the Atlantic side. We are in Boynton Beach which over time has become a very desirable, higher priced area for development. We get about 3=5 inquiries each year from speculators and developers about selling the park. When we tell them the park or mobile home community is "resident-owned" with 254 shareholders, and that it requires a two-thirds vote to sell, the developer/speculators back off.

Furthermore, knowing our location on South Military Trail is very desirable, we have attracted all sorts of folks seeking shareholder membership. A long time ago, we instituted screening with background checks knowing that we were becoming an "exclusive" place to live. We have even made screening tighter. Per our bylaws, the applicant has to prove he or she is able to meet all the financial responsibilities and has no convictions (if any) of less than five years old per our attorney.

We encourage folks to plan their "legacy" as to who to leave their mobile to. Our park has 3rd generation residents from those who initially created the corporation. That is good for continuity; however for those who have no legacy plans, we worry about who the next shareholder will be. Our park is 60% American and 40% Canadian, Sweden and Dutch. Our park is not an RV park. It is a 55+ mobile home community with incomes that can astound you. We are a mix of people with backgrounds ranging from skilled labor to professionals.

All the realtors around here know that if a purchase offer is presented, it is subject to approved screening with background check. However, anyone who purchases by county auction is not aware of this.

I don't understand why you reply to topics you don't even read.

They are worried about who will buy it.

Nothing to be done about it, though. It's likely to happen sometime, someone who doesn't meet the qualifications is going to buy in and have a problem.

One I never thought of before, and it's interesting.

Our HOA wanted at one time to have restrictions on who we can rent to and that didn't go over.

Any restrictions we did have on who can live here were overturned by Federal Fair Housing laws.

-- What restrictions were these?

-- Did HUD actually come after your condominium? Or was it the condo association's attorney who said that the condo association could not apply the restrictions?

Ron

I think you all are overreaching and I might go as far as to say it is racially motivated.

No one under 18. A resolution was created to change the by-laws to match federal guidelines.

Want and NEED two different things. There is no Need here to know. It is ALL want. Which if want it then it is public information you can look up. HOA has no need for it. They NEED to care about dues collection only. All else is some else's need.

Understood. Sounds like a 'discrimination on the basis of familial status' type of restriction (which as you noted, now no longer exists at your condominium). From my reading complaints of discrimination on the basis of familial status leads the way with successful discrimination complaints, right alongside complaints of discrimination based on disability and complaints of retaliation for just submitting a Fair Housing complaint.

Maybe I should use a better word than lien. We would not wait for someone to die. It would probably be more like a loan to a shareholder to avoid tax sale, payable over a period of time. Just trying to control how the property is acquired.

I do like the suggestion about including screening and background as a condition of share ownership in the Declaration. But how would a tax sale know about that?

The courts say that, if the Declaration/Bylaws are recorded with the County Clerk, then the buyer (at a tax sale or otherwise) has been properly legally noticed of the Declaration/Bylaws. In other words, if a buyer purchases the mobile home lot (and mobile home?), and is only 43 years old, but the Bylaws/Articles of Incorporation say only 55+ year-olds may live in the community, then I believe the buyer would be stuck with selling the home to someone who is 55+ and meets whatever other legal requirements there are for owning in the community.

Another example: Suppose a buyer has a St. Bernard dog and buys a condominium that has a covenant prohibiting dogs period. The covenant against dogs has been properly enforced for over twenty years. Can the buyer successfully sue to allow her dog at the condo? No. Why? Because the buyer had proper notice via the covenants being recorded with the County. The courts expect buyers to check the county records before buying. The main point of recording docs with the county is to put the public on notice that xyz exists.

Florida like many states also has disclosure laws. Ron, you might ask the authorities running the auction if your HOA can attach its Bylaws to the documents advertising a sale? Though if I recall correctly, tax sales are notorious for being "as is"; one buys at one's own risk. This means buying a tax sale property might result in inheriting massive debt on the property.

Before someone jumps in with "Bylaws are not usually recorded with the County... ," please go read the Florida statutes Ron referenced. Florida Mobile Home Parks tend to be governed by only (1) Articles of Incorporation; and (2) Bylaws. It appears Declarations are generally not used. It appears the statutes tend to expect the Articles and/or Bylaws to be recorded with the County.

Ron, thank you for your patience in explaining about the demographics and that the motivation as far as you are concerned is not to discriminate on the basis of race.

AugustineD,
Thank you for the most informative responses so far in my quest for good advice. Yes, we established in 1987 pursuant to PA 723 which explains why I cannot find any Declaration document. That said, our attorney told us that when he researched our current status in some state or county directory of mobile home parks, we were not listed. Upon inquiry, he was told the state or county division in charge of mobile home parks "released" jurisdiction over us. Hence, we may have started out under 723 but now he advises us to base our draft AOI and draft bylaws on PA 617.

One humorous comment by the attorney is that we are structured "like a country club". I thought he was joking until he explained that similar to a country club, a member has to buy a share in the club. If he is kicked out, the Corporation or the replacing member buys him out.

I will probably need to look into model Declarations for language and format. And I think your comment makes a lot of sense about how Declarations can affect the outcome of a tax auction.

Mellisa, Thanks for your comments, too. You sound like you're a strict interpretationist and don't look at creative ways to solve issues....pretty much by the book.

RonL15,
former Board Treasurer of my HOA in Boynton Beach (my winter quarters),
retired city manager/community planner from Michigan now living in Wisconsin.

Ron, I spoke too soon. The Florida Secretary of State site has two entities listed that have the same address, and both look like your community. One is an LLC. The other is a "foreign profit corporation." Both have 20+ years of annual reports linked. They have the same registered agent.

Now I am in way over my head.

"Oh Canada we stand on guard for thee... " That's a mighty big buffer zone between Florida and the Canadian border.

Converting to non-profit makes perfect sense to me, based simply on the reality that every HOA/Condo/Co-Op of which I have heard is also a non-profit corporation.

I think my main question now is what sort of non-profit corporation (dedicated to homes) your community will be. Surely not a Florida condominium (Ch. 718). Surely not a HOA of stand-alone homes (Chapter 720). Is there a problem with making the community subject to Chapter 623 once again?

I trust the community will have to vote on changing to a non-profit corporation from whatever it is now.

As for screening to make sure buyers have sufficient means to pay the dues: I am thinking maybe the basis for such a screen could be a credit check meeting requirements your community sets. Landlords do this with prospective tenants all the time. It's legal. It seems relatively easy. Then when all is recorded with the County, and some person buys a mobile home lot at a tax auction, hopefully the existence of the covenants (on record with the county) would ensure the buyer passes the screen. If he/she does not, then since they had proper notice via the recording at the county, they are out of luck and would have to turn around and sell the lot.

1.5 cents.

I'd be more concerned with the "no convictions in the last 5 years" restriction. I don't think that's going to stand up to a HUD challenge. Something like that might be acceptable; but a blanket 5-year time limit is probably not.

Per GenoS's post, the above articles are way outdated and now, irrelevant. HUD in 2016 declared that, in housing matters, blanket prohibitions against ex-convicts are "de facto discrimination." HUD has said that, in some cases, turning down an ex-convict because of the particular circumstances of her or his conviction may be legally justified.

Ron's Bylaws would have to be kind of vague about any screening requirement concerning ex-cons. Something like, "The HOA has the right to perform a criminal background check. Pursuant to Fair Housing guidelines, and depending on the nature of the conviction, the years that have passed, and other reasonable factors, the HOA has the right to deny housing ownership to felons."

That's exactly what I was referring to. There was an uproar of sorts over that HUD ruling.

The upshot was that denying housing to someone based strictly on an arbitrary "conviction" became unlawful. According to the HUD ruling, each case has to be considered individually and the potential for harm to the community evaluated in context. If someone was convicted of robbing a bank, let's say, and now they're back on the street a few years later, you'd be hard pressed to conclude that a former bank robber poses a threat to the other homeowners in the community, felony convicion notwithstanding.

Here's a link I bookmarked back in 2016 that seems relevant, although I don't remember making it, who these guys are, or what their business is. HUD Guidance on Criminal Record Screening.

I appreciate your pointing this out. I had it all wrong. I was aware of the HUD ruling but was going from memory that the ruling was not all that rigorous. Au contraire. As you pointed out, it is rigorous: A blanket prohibition like the one Ron is proposing would not fly, according to HUD.

From the net what I am seeing is not individual ex-cons bringing suit against apartments/condos/HOAs et cetera. Instead, and in the last several years, nonprofit organizations that help ex-cons transition to non-prison life have met with success to get rid of these blanket prohibitions.