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Voting privileges for new member who inherits delinquency

Started by JohnP17 • 21 replies • 2677 views

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JohnP17 (Florida)
Posts: 2
Posted:

Hello.

I am involved in an association in Florida that has a delinquent member. The member is over 90 days past due on his financial obligations to the association, and, therefore, in accordance with Florida law, does not have voting privileges and cannot sit on the board. That member is about to sell his home. The association has never put a lien on the property. According to my understanding, the delinquent amount past due will be inherited by the new owner if the old owner fails to pay before the closing. However, my question is, will the new owner also inherit the length of delinquency? In other words, will the new owner automatically be over 90 days past due and be ineligible for voting privileges? Or, do we have to give the new owner voting privileges because the length of delinquency resets for the new owner?
SureshD
Posts: 268
Posted:

JohnP,

First, you have overstated the Florida Law regarding suspension of voting rights.

The statute reads as follows:

720.305
"(3) IF THE GOVERNING DOCUMENTS SO PROVIDE, an association MAY suspend the voting rights of a member for the nonpayment of regular annual assessments that are delinquent in excess of 90 days."

Furthermore, Any denial of BOD participation would most likely be covered in your HOA By-laws.

As far as unpaid past due assesments, 720.3085 contains the following:

"2)(a) A parcel owner, regardless of how his or her title to property has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments that come due while he or she is the parcel owner. The parcel owner's liability for assessments may not be avoided by waiver or suspension of the use or enjoyment of any common area or by abandonment of the parcel upon which the assessments are made."

Thus it would APPEAR (to a layman) the new owner is responsible for the past-due debt BUT you should contact your HOA's legal counsel to obtain clarification AND make sure that it [debt] is properly recorded.
JohnP17 (Florida)
Posts: 2
Posted:

Thanks for your reply, SureshD.

You're right. I did overstate the Florida law, but I did so because our association's governing documents do grant us the right to suspend voting privileges. So, that clause of the Florida statutes does apply to us.

You quoted paragraph 2a of 720.3085, but paragraph 2b is what really answers the question about whether or not the new owner is liable for the past due amounts. It says quite bluntly that the new owner is "jointly and severally liable with the previous parcel owner" for the overdue amounts.

So the new owner inherits the debt. But, does the new owner also inherit the length of time the debt has been owed? Perhaps the two issues are one and the same, and I'm over-thinking it. I just need to know if we can deny the new owner voting privileges just like we have the old owner.

GlenL (Ohio)
Posts: 5,491
Posted:
Why would you want to????? It's bad enough IMHO that you are trying to pull a fast one and get the new owner to pay the old owners debt instead of filing a lien on the property. That way the old owner would have to settle up before he could give a clear title.
Studies show that 5 out of 4 people have problems with fractions
GlenL (Ohio)
Posts: 5,491
Posted:
And to answer your question; IMO no since the new guy is not 90 days in arrears. His time should start when he is notified of the debt.
Studies show that 5 out of 4 people have problems with fractions
SusanW1 (Michigan)
Posts: 5,202
Posted:
Hopefully, this was all disclosed at the time of purchase . . .
MicheleD (Kentucky)
Posts: 4,491
Posted:
John, could you please post the language from 2(b) here because the way I read 2(a) is quite different from the interpretations stated here.

I see that as saying that he is only responsible for the assessments that are due during HIS/HER ownership: ". . . is liable for all assessments that come due while he or she is the parcel owner. "
MaryA1 (Arizona)
Posts: 7,043
Posted:
Michele,

I wondered about that too, so I took a look at the statute. Here it is:

(2)(a) A parcel owner, regardless of how his or her title to property has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments that come due while he or she is the parcel owner. The parcel owner's liability for assessments may not be avoided by waiver or suspension of the use or enjoyment of any common area or by abandonment of the parcel upon which the assessments are made.

(b) A parcel owner is jointly and severally liable with the previous parcel 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 present parcel owner may have to recover any amounts paid by the present owner from the previous owner.

MicheleD (Kentucky)
Posts: 4,491
Posted:
Quote:
Posted By MaryA1 on 06/26/2010 8:43 AM
Michele,

I wondered about that too, so I took a look at the statute. Here it is:

(2)(a) A parcel owner, regardless of how his or her title to property has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments that come due while he or she is the parcel owner. The parcel owner's liability for assessments may not be avoided by waiver or suspension of the use or enjoyment of any common area or by abandonment of the parcel upon which the assessments are made.

(b) A parcel owner is jointly and severally liable with the previous parcel 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 present parcel owner may have to recover any amounts paid by the present owner from the previous owner.


Thanks! So that simply passes the burden of collecting delinquent assessments from the seller. That's freaky.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Michele,

I agree! I've heard of assn docs that say the deliquent assessments shall pass to the new owner, which is bad enough. But to see it written in state law is even worse. I certainly would think twice about buying a home that required me to pay off the previous owner's debts.
DianeW (Maryland)
Posts: 147
Posted:
The realty company and/or the Title company handling the sale/closing should be contacting the HOA for current information pertaining to dues and then deducting them from the previous owner's profits from the sale at the closing. That's how it works in my area of Florida anyway.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Diane,

In AZ, this cannot be done unless a lien has been placed prior to closing. And, I don't believe this tactic works if there is a foreclosure.
DianeW (Maryland)
Posts: 147
Posted:
Mary, you are correct about a foreclosure being a whole different scenario. But here in Florida, I get calls all the time from the realtor/Title company for information regarding dues status prior to closing. Certainly makes my job as treasurer a lot easier as the Title company sends me the money shortly after the closing.
JoanneD1 (Arizona)
Posts: 447
Posted:
It would be wonderful if new owners would have to assume the debt of the prior owner, but that does not even make sense. Who would buy a property if they had to assume the debt of the prior owner? What would the incentive be for anyone to pay their dues and assessments. Their is a legal firm in Phoenix that claims this debt can be carried forward, but we have asked our legal counsel and they say NO! You must file a lien that is for sure or you have no chance for recovery.
JoanneD1 (Arizona)
Posts: 447
Posted:
Diane, Is it possible that you are getting calls from the realtors and title companies because they need to know what is owed by the CURRENT owner so that they can get the deal closed or possibly the seller is giving a credit to the buyer?
DianeW (Maryland)
Posts: 147
Posted:
Joanne, yes the Title company is calling to verify what the current owner owes so when the title is exchanged, any past due monies can be deducted from the current owner's profits. John said the current owner was delinquent and may be selling his house. He further questioned what would happen with the new owner as it pertained to the dues. I simply stated that any monies owed should be taken care of at the closing.

And yes, there are instances where the new owner is responsible for accumulated dues prior to his purchase. Our HOA just received $800 from just that scenario last week. It was money we thought we may never see but someone bought the lot, which we had a lien on, at a tax deed sale. The new buyer knew about the lien but did not realize he was responsible for the past due amount. Once advised of the law here in Florida, he paid.
SusanW1 (Michigan)
Posts: 5,202
Posted:
If somethings gets as far as a tax deed sale, then, yes, the buyer will have to satisfy all liens. these usually include all kinds of municipal property taxes, maybe even some contractor's liens, etc.

But for a regular transaction, any buyer would have checked to see if the deed was clear and there were no liens on the property or dwelling. That's where real estate negotiations would come into play.
JoanneD1 (Arizona)
Posts: 447
Posted:
In the state of AZ, the title company does the searches and the title will not transfer until the liens are clear and who would buy property with a cloudy title. If the home is begin foreclosed, the buyer new buyer assumes NONE of the debt that was accrued by the seller.mary can verify whether or not this is correct.
DianeW (Maryland)
Posts: 147
Posted:
Where I live, the tax deed sale went through with the lien properly filed. The HOA was notified of the proposed sale and the eventual sale but the HOA still had to go after the new owner for the money. It would have been great if the county had taken care of that at the sale.
JoanneD1 (Arizona)
Posts: 447
Posted:
If you didn't have so many bugs and so much humidity, I'd move there! We have an owner that owes us over $12K and the property is going to be foreclosed on and we are not going to get a thing BECAUSE the property is so upside down and the owner is filing for bankrupty (we're told) so there is no blood to get from this turnip. I don't get it. Lenders have really tighened down the lending that they are doing in AZ condos because our market is so awful. We are mortified when we see the sell prices when compared to what the unit whould have sold for 3 yrs ago.A friend of mine in Tucson had a 2mil appraisal 3 yrs ago and this week the new appraisal was for 1 mil.All these numbers are relative, but a 50% loss is still 50%.
JoanneD1 (Arizona)
Posts: 447
Posted:
Diane, Our CC&R's also say that it is up to the BOD if they want to publish the names of the delinquent owners, BUT they tell me there is some new law that could get us into trouble if we did that.Everything to protect the owners and nothing for the HOA except legal expense.People have no shame anymore.
SteveM9 (Massachusetts)
Posts: 3,699
Posted:
Quote:
All these numbers are relative, but a 50% loss is still 50%.


This is nothing compared to the downfall of real estate in the 1980's. I remember a new condo development where units were selling for $150,000 and after the real estate market fell apart, they were selling for $30,000.

Think it can't get any worse? Think again.

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