Receiverships to Collect Rents from delinquent Condominium Unit and HOA home owners
For a number of years, the Florida Condominium Act, and now Chapter 720, Florida Statutes, have dealt with Condominium and Homeowner Associations and provide that an association has the right to have a receiver appointed to collect rent in the event of a lien foreclosure. Until recently, lien foreclosures for condominium associations and homeowner associations were not that prevalent.
Additionally, once they became prevalent, we found that it is costly and cumbersome to file a motion in each separate foreclosure action to seek to have a receiver appointed to collect rents from condominium unit or HOA home owners and repeat that 15 or more times in a community in each separate foreclosure. Believe me, filing many foreclosures and then going to court 15 times for the same Condominium or Homeowner Association to have a receiver appointed to collect rents to pay delinquent assessments is not fun.
Law Offices of Robert L. Tankel, P.A.
Call 727-736-1901 or Toll Free 888-266-3652
The pattern that has begun to emerge is a recognition by courts around the state that condominium associations and homeowner associations are on the verge of collapse due to those owners who are not paying their assessments. It adds insult to injury when a condominium unit or HOA home owner is not paying assessments, is not paying the mortgage or lender and is collecting rent.
In order to battle this problem, the law firm of Robert L. Tankel, P.A. has developed a several-prong course of action, (none of which can be guaranteed that they will result in a favorable ruling, but all of which need to be considered by associations where there are owners who rent and are not paying their assessments) to take where condominium unit and HOA home owners are not paying assessments and are in mortgage foreclosure and/or are renting and not paying condominium or Homeowner Association assessments.
- The first, and most straightforward, is an action in foreclosure against the condominium unit owners who are renting their units. Each of the owners is named, their unknown (or known) tenants are named, and as many as neccessary summonses are issued. A foreclosure complaint is filed, we begin service of the lawsuit on the owners and tenants, but the goal is to have the court appoint a receiver who has the power to collect rent from the condominium unit and HOA home owners and their tenants to pay their delinquent assessments. . If the condominium unit or HOA home owners fail to cooperate, the receiver reports them to the judge who issued the order so that they may be held in contempt of court (if you are held in contempt of court, you can be jailed by the judge or be fined).
- A somewhat more aggressive approach is to simply file an action with the court asking to use inherent equitable powers to require the condominium unit owners or homeowner association owners to submit rents to a receiver if they are delinquent in Condominium or Homeowner Association assessments. While this is not specifically called for by the statutes, courts have inherent equitable powers, and the relief sought is essentially an injunction to prevent the owners from collecting rent and not paying their assessments to the condominium association or homeowner association. We strongly recommend against this as judges are reluctant to exercise jurisdiction against people who are not named in the suit or are not yet in Condominium or Homeowner Association lien foreclosure.
- Finally, the most aggressive type of action against delinquent condominium and homeowner association members is a variation of the one discussed above: sue all delinquent owners and rent empty units. We ask the court for authority to not only appoint receivership for collecting rents, but for the authority to enter empty condominium units, inspect them for damages, and if undamaged, proceed to rent them and apply the rents toward the delinquent assessments. Again, this is a very aggressive course of action, and there is no guarantee that judges will agree to grant this relief by appointing a receiver for collection of Condominium or Homeowner Association assessments.
What this does is arguably of benefit to the owners of the abandoned units as well as the other condominium unit or HOA home owners and mortgage holders, because the association is paying for insurance, security, electricity, and other common benefits which uphold the values of the units, but those condominium unit or HOA home owners are not paying their share of assessments and have abandoned the units. If and when the foreclosing mortgage holder takes title, the fact that the Condominium or Homeowner Association was able to continue to provide the insurance and maintenance to the common elements has upheld the value of the units, and thus avoided a catastrophic failure of the association.
With regard to the issue of appointment of a receiver to collect delinquent Condominium or Homeowner Association assessments, in a condominium, it is generally pretty easy to figure out who is renting because the association often has control over who comes on the property, ranging from parking stickers to gate codes and perhaps even a right of approval of tenants. With an HOA home owner rental, it is usually safe to assume that owners whose mailing addresses are not in the community are renting if their homes are occupied.
If your condominium documents allow for approval of tenants, one condition of approval should be that the tenant agrees to pay all rents to the condominium association until a delinquency is paid in full.
Although the Condominium Act provides that the Condominium Association has the right to disapprove a lease if an owner is delinquent, it makes more sense to allow a tenant to occupy the unit, make rental payments directly to the Condominium Association or to your lawyer, and reduce the outstanding debt in that fashion. An empty unit is nothing but trouble.
When dealing with Homeowner Associations, it is difficult, if not impossible to determine who is renting. We suggest that the condominium association or homeowner association board of directors consider using anyone who has an offsite address as being occupied by a tenant if the home is occupied and the owner receives mail elsewhere. The receiver then has the authority to contact the owner and the occupant to determine if there is a lease, and if the receiver determines that the owners are lying, that can be reported to the court. Judges generally tend to frown upon liars and sanction them accordingly.
In conclusion, , there are a number of creative options available to Condominium and Homeowner Associations where the owners do not live onsite and/or are renting their units or homes and not paying assessments. Aggressive action through the courts seeking relief on behalf of the Condominium or Homeowner Association is one of several methods of obtaining payment by delinquent condominium unit and HOA home owners.
To learn more about receivership or the services we provide, contact our firm for a consultation with an experienced attorney.
Further Information
Robert L. Tankel, P.A.
1022 Main St, Ste D
Dunedin, FL 34698
Telephone: 727-736-1901 | Fax: 727-736-2305
Toll Free: 888-266-3652
Amelia Island Office (by appointment)
28 South 10th Street
Fernandina Beach, FL 32034
Telephone: 904-461-7590