Additional Remedies To Collect Delinquent Assessments
As most of us know, there have been substantial changes to the laws that affect community associations. Senate Bill 1196 becomes law on July 1, 2010, and the purpose of this brief article is to assist Property Managers and Members of the Board of Directors to understand and implement the changes for the operations of their communities as it applies to delinquent assessments. Additional articles will be distributed in the future to discuss other changes passed by the Florida Legislature.
Additional remedies are now available to collect delinquent remedies – For many years, the sole remedies that condominium associations had for collecting assessments were the demand letter, lien, and foreclosure action. Also there was the ability to utilize a court appointed receiver, which had its limitations and costs. Now associations have some “self help” remedies which did not exist before.
Control Over Rental Income and Ability to Evict – Section 718.116(11) was added to the Condominium Act which, among other additions, provides that an Association can now instruct renters to pay all rents directly to the Association in the event that the unit being rented is behind in their maintenance. Rental payments are to be made to the Association until the delinquency is cured. Though the law is new, one could assume that future collection actions and direct responsibility would not only fall against unit owners, but also renters who do not comply with an Association’s reasonable demands for direct payment of all rents until maintenance arrearages are cured. In any demand sent to a unit owner, it would be wise to also mention to the tenant that the payment of the rent directly to the Association is statutorily authorized and therefore would not result in a breach of the rental agreement between unit owner and landlord. Going forward, if legal action is required for noncompliance, it could be argued that the tenant would not necessarily be responsible to the Association for all maintenance arrears, but solely rent improperly paid to the unit owner after receiving a demand from the Association for direct payment to the Association.
The new §718.116(11) also provides the Association the authority to sue for eviction if the required rental payments are not made directly to the Association. However, the Association otherwise cannot act as a landlord nor has any duties of a landlord.
Limiting Access to Common Elements – Condo Associations can now limit the use of common elements for those unit owners who are behind in their maintenance. This does not mean that an association can deny a unit owner access to their home or parking space, but it would be reasonable to deactivate access cards for usage of the pool, gym, parking garage (we recommend that at least the valet park unit owner cars), and other common elements to the property. If certain common areas, such as the pool, are not access restricted by gates with access cards, enforcing the limitations of use could be more difficult. However, it could be argued that a representative of an Association would have the right to ask a unit to leave a certain amenity due to maintenance delinquency, but of course confrontations should be avoided.
Limitation of Voting Rights – Voting rights for delinquent unit owners can also be suspended, where previously for condominiums it was solely a unit owner’s ability to run for the Board which was affected by their delinquency. Therefore, it is now incumbent upon management to have at meetings where unit owners votes are going to be considered not only a roster of unit owners but also financial statements available to determine if unit owners are allowed to vote.
Summary – The increased available remedies for collecting maintenance should assist greatly in increasing cash flow. The changes in the law will require changes in form letters for initial demand, lien letters, as well as the form of the foreclosure complaints filed by attorneys. Demand letters could also be sent by management directly to renters prior to referring a collection matter to legal counsel, but such letters need to be legally sufficient and compliant with the new laws.
The Law Office of Cuevas, Garcia & Torres, P.A. is providing this newsletter as a brief summary of recent legislative changes in the area of community association law. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this news letter does not create any attorney-client relationship between the reader and Cuevas, Garcia & Torres, P.A. The hiring of an attorney is a decision that should not be based solely on advertisements or this newsletter. Before you decide, ask us to send you free written information about our qualifications and experience.