Condominium Law – There Is A Narrow Exception To Bank Safe Harbor Protection For Homeowner Associations – November 28, 2016

Dated: November 28 th, 2016


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Cuevas, Garcia & Torres, P.A. .

Vantage Property Title Company.

Andrew Cuevas, Esq. – President
E-mail: [email protected].

Tel: (305) 461-9500
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Mr. Andrew Cuevas, Esq., is the President of Cuevas, Garcia & Torres, P.A., and Vantage Property Title Company. Cuevas, Garcia & Torres, P.A., provides legal services in the areas of Community Association Law, Corporate Law, Real Estate law, and Business Immigration, including title insurance services through Vantage Property Title Company. If you have any questions regarding this article or any other questions, you may contact Mr. Cuevas at (305) 461-9500 or via e-mail at [email protected]. If you are interested in reading previous newsletters, please visit, select the icon for Newsletters , and then choose the area of law you are interested in.

There Is A Narrow Exception to Bank Safe Harbor Protection for Homeowner Associations

The history of American jurisprudence has many examples of the interpretation of statutory language being greatly affected by grammatical technicalities and the location of specific words within statutory text. For instance, you have the “Constitutional Comma” within the Second Amendment which the United States Supreme Court utilized to protect the right to bear arms as that being a right separate from the right to establish militias. Now you have the use of the word ” initially” within the Homeowners Association Act (Florida Statute 720) which seems to have created a breach in the armor of the Safe Harbor protection enjoyed by many banks. Let me explain.

The Fourth District Court of Appeal recently held that the word “initially” in the Homeowners’ Association Act created a condition precedent to the application of the HOA safe harbor, §720.3085(2)(c) Fla. Stat. The statute reads in pertinent part as follows:

The limitations on first mortgagee liability provided by this paragraph apply only if the first mortgagee filed suit against the parcel owner and initially joined the association as a defendant in the mortgagee foreclosure action .

In the case of Federal National Mtg. Ass’n. v. Mirabella at Mirasol HOA, Inc., Case No. 4D 15-4792 (Fla. 4 th DCA, November 23, 2016), FNMA did not join the HOA as a defendant until four years after the foreclosure complaint was filed. The court held that the statute was deemed not ambiguous and relied on “good old fashioned” grammar in concluding:

It takes no linguistic feat to determine that the adverb “initially” modifies “joined” and not “action.” If the legislature had intended the word to apply to “action,” it would have used the adjective “initial” instead of the adverb “initially” and placed it next to the phrase “mortgage foreclosure action.” Simply put, while the legislature could have provided that the safe harbor applied if the association were joined at any point in the initial mortgage foreclosure action, that is not what the legislature said.

The court decisively rejected FNMA’s argument that the interpretation was absurd. In ruling against FNMA the court concluded that joining an Association in the foreclosure has many reasons, including the ability to monitor the foreclosure and to seek lawsuits forward to minimize assessment losses. As the court apparently quoted or paraphrased the HOA, “FNMA never sailed into the safe harbor”!

This decision provides an incentive to HOA’s to confirm if there covenants include the recent statutory language or to amend their covenants to adopt that language. However, if your HOA covenants already quote the Safe Harbor benefit in favor of banks without the use of the word “initially”, then this most recent 4 th DCA decision will not be of any benefit to you.

Note that the same DOES NOT apply to Condominiums. Section 720.3085(2)(c) deliberately differs from the Condo Act ( §718.116(1)(a), Fla. Stat.) on this point. The word “initially” does not appear in the earlier adopted Condominium Act provision. This addition of “initial” to the Homeowners’ Association Act was added in 2008, Fla. Laws Chp. 2008-175, when the Homeowners’ Association Act was amended to add a safe harbor.

This article is solely a partial explanation of all the issues related to the topic of this newsletter, and is not to be considered legal advice. Associations who seek to determine if exceptions to the Safe Harbor Provisions apply in any particular circumstance should consult with legal counsel to obtain explanations of all issues addressed herein. This Newsletter is for informational purposes only and should not be relied upon as a legal opinion.