Can condominium associations buy units at tax deed sales?

By October 14, 2018News, Questions & Answers

Q: One of the new law’s for condominiums stops board members from purchasing a unit at a foreclosure sale, how about a Tax Deed Sale?

-J.L., Fort Pierce

A: No. As of July 1, 2017, Section 718.111(9), of the Condominium Act provides that “a board member, manager, or management company may not purchase a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments or take title by deed in lieu of foreclosure.” Keep in mind this is only applicable to the Association’s foreclosure sale for its lien. It does not prohibit a board, member or manager from purchasing a Unit in the Association at a mortgage foreclosure sale. As to your question, the law does not mention tax deed sales, so a board member, manager or management company can purchase a Unit in the association at a tax deed sale. Note there is no similar law for Cooperatives of Homeowner Associations.

Q: We are an HOA still under builder control. Can a group of volunteer residents hold informal meetings to explore what to expect at turnover from the developer?

-R.S., Jupiter

A: Yes, and they should do so. Preparing for turnover of control is an important. The owners will be taking over a business and must know how it operates. This is done by familiarizing yourself with the day to day operations, the vendors performing services and everything else that goes into running the business of the Association. Another important function is to get ready to do due diligence about the construction of the community infrastructure and amenities. After turnover the Association has a limited amount of time to bring claims against the developer and others involved in construction of the community and its past financial operation. Educating yourself as much as you can before the date of transition will put you “ahead of the curve” in addressing the issues after transition. This is usually done by creating an “ad hoc” transition committee. The developer has no ability to stop this but keep in mind it is not an official committee of the Association and the developer board has no obligation to fund the committee either. In most cases the ad-hoc committee will hire a lawyer to explain and prepare for the turnover meeting.  One common misconception is that all problems and issues must be resolved with the developer prior to turnover.  This is rarely the case as the ability for the owners to collectively address such issues legally begins at turnover. An experienced community association attorney can explain the entire process and this usually helps to calm the resident’s fears about turnover.   

Richard D. DeBoest II, Esq., is co-founder and shareholder of the Law firm Goede, Adamczyk, 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, Adamczyk, 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.