Editor’s note: Attorneys at Goede, DeBoest & Cross, respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.
Q: We have a house down the street in our neighborhood that has been empty for somewhere around 10 years. This house has mold on the outside of the house, every now and then the front lawn is mowed and the trees and shrubs are cut back. The house is an eyesore and obviously empty, children have been caught on several occasions going into it and I’m afraid someone is going to get hurt. What can be done to get this house sold or torn down? Our HOA board claims the attorney said it is too expense to foreclose on. I emailed the Bank of New York which is listed on the County’s website as the owner and asked them if they were ever going to do something with the house, and they responded that Bank of America is the servicing bank so it’s up to them. This is a ridiculous situation that needs to end soon. What can I as a homeowner do to get this house dealt with?
-B., Stuart, FL
A: I regret that your neighborhood has been burdened with this dilapidated home. However, based on the rights given to Florida Homeowner Associations (“HOA”) under associations governing documents and the provisions of Florida law, there is a solution.
The governing documents of Florida HOA’s and the Florida Homeowners’ Association Act (the “Act”) require all homeowners who reside in a community governed by an HOA to timely pay HOA assessments and provide the HOA with the corresponding right and obligation to enforce the assessment payment provisions. The HOA’s right to enforce the timely payment of assessments includes the obligation to send notices of non-payment, record a claim of lien and to foreclose on the lien. Under the scenario you described, it appears that the subject home is owned by Bank of New York. In the context of HOA’s, when title to a home situated in the community governed by the HOA is in the name of a bank, the logically conclusion to be drawn is that the subject bank acquired title as a result of a mortgage foreclosure judgment.
When a bank becomes the title holder of such a parcel of property, for purposes of abiding by the HOA’s governing documents and the HOA Act, unless the governing documents provide otherwise, the bank is treated like any other community homeowner and is charged with the obligation to pay HOA assessments which accrue from the date the bank is conveyed title to the home. Depending on the language of the HOA’s governing documents, the foreclosing bank is also liable for payment of assessments which were past due at the time it acquired title to the property to the extent of 1% of the original principal amount of the first mortgage or 12 months of assessments for the year immediately preceding the banks receipt of title, whichever is less. Therefore, your HOA has the right to force the Bank of New York to pay assessments due on the home it owns, and the obligation to sue the bank in the event the bank, after receipt of required written notices of past due assessments and notice of intent to foreclose, does not pay all assessments due and owing. The fact that the bank has delegated its servicing duties to Bank of America is of no consequence to the HOA. Bank of New York is the owner of the parcel and as such it has the obligation to comply with its obligations under the governing documents and the Act.
Although you advise that board of your HOA apparently does not desire to incur the expense of filing a foreclosure action, which is understandable, the bad news is that the HOA board has a fiduciary duty and obligation to enforce the governing documents; however, the good news is that the HOA Act entitles the HOA to an award of prevailing party attorney’s fees and costs incurred in the foreclosure action. Therefore, the financial disincentive inherent in filing such lawsuits is mitigated because in the event the HOA wins the foreclosure lawsuit, it will be reimbursed for the attorney’s fees and costs incurred in compelling the bank to pay the past due assessments. As to the board’s concern concerning the expense of paying a lawyer to handle the collection matter, there are an abundance of qualified attorneys who handle association collection cases under a variety of fee arrangements. Moreover, the bank is certainly financially capable of paying the amount of the foreclosure judgment. Therefore, enforcing a judgment entered against the bank will not entail concerns about the bank’s ability to pay the amount of the judgment. I suspect that when the bank receives notice of the HOA’s intent to foreclosure, it will comply with its obligations.
As to the rectifying the horrible condition of the home, HOA documents customarily contain terms which require homeowners to maintain their homes, which if not properly maintained permits the HOA to enforce the maintenance provisions to the same extent the HOA has the power to enforce the homeowners’ obligations to pay assessments. If the HOA has to file an action to enforce the maintenance terms of the governing documents, the HOA is entitled to an award of prevailing party attorney’s fee and costs.
The failure to maintain and the failure to pay assessments can be addressed in one demand letter and one lawsuit, if the bank does not comply with the pre-suit demand letters which requires the HOA to file a lawsuit
Ronald E. D’Anna, Esquire, is Partner of the Law Firm Goede, DeBoest & Cross, PLLC. Ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, PLLC, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.