Can Your Community Association Collect Rent Monies?

It’s extremely frustrating when an owner fails to pay their assessments.  After all, the collection of assessments is the backbone of all condominium and homeowners’ associations.  It doesn’t matter if your association is new or old, small or large, gated or non-gated, full of amenities or not.  Each and every community association requires money to operate and, for the most part, that money comes from the owners timely paying their assessments.

It’s probably even more frustrating when an owner fails to pay their assessments…but month-in and month-out collects rent monies from their tenant!  Fortunately, both Chapter 718, Florida Statutes (the Condominium Act) and Chapter 720, Florida Statutes (the Homeowners’ Association Act) provide a solution for our community associations.

Specifically, Section 718.116(6) (pertaining to condominiums) and Section 720.3085(1) (pertaining to homeowners’ associations) state that if a unit or parcel is rented during the pendency of the Association’s lien foreclosure action, the Association is entitled to the appointment of a receiver to collect the rent.  Typically, the Court will enter an order appointing our law firm, Martell & Ozim, P.A., as the receiver to collect rent monies on behalf of the Association.

The Court’s order will direct the tenant to make all rent payments to our law firm.  The tenant can make payment to the Association in the same form as he/she pays the owner.  In other words, the Association can’t require the tenant to make payment via certified funds or credit card.  The tenant’s obligation to pay rent to the Association begins immediately, unless the tenant already sent payment to the owner before receiving notice.  In that case, the tenant must provide the Association with written proof of payment within fourteen (14) days after receiving notice and the tenant’s obligation to pay rent to the Association begins with the next rental period.  If the owner receives any rent payments from the tenant after entry of the Court’s order, the owner shall forward said payments to our law firm within seven (7) days of receipt.

Once the account is paid in full, including all assessments, interest, late fees and attorneys’ fees and costs, the Association will dismiss its lien foreclosure lawsuit and notify the tenant to resume rent payments to the owner.

It’s important to remember, the tenant’s obligation to pay rent monies to the Association gives the tenant complete immunity from any claim for rent by the owner.

The ability for your condominium or homeowners’ association to collect rent monies from a tenant who is paying a delinquent owner is a great tool!  If your community association has owners who are delinquent in the payment of monetary obligations, contact Martell & Ozim, P.A. to schedule a free collections strategy session at (407) 377-0890 or info@martellandozim.com.

Can Condominium or Homeowners’ Associations Suspend Use Rights and Voting Rights Due to Delinquency?

You’ve likely been there before.  An owner is delinquent in the payment of a monetary obligation to your condominium and/or homeowners’ association, but that owner is still enjoying the common area/element amenities, such as the pool, gym, clubhouse, etc. and voting in association-related matters.  That’s certainly frustrating and our Firm is often asked what recourse an association has in this type of situation.

Fortunately, both Chapter 718, Florida Statutes (which governs condominium associations) and Chapter 720, Florida Statutes (which governs homeowners’ association) provide a few options.

Suspension of Use Rights

With regards to suspension of common area/element use rights, Section 718.303(4) states, “If a unit owner is more than 90 days delinquent in paying a fee, fine, or other monetary obligation due to the association, the association may suspend the right of the unit owner or the unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the fee, fine, or other monetary obligation is paid in full. This subsection does not apply to limited common elements intended to be used only by that unit, common elements needed to access the unit, utility services provided to the unit, parking spaces, or elevators.”

Likewise, Section 720.305(3), Florida Statutes states, “If a member is more than 90 days delinquent in paying any fee, fine, or other monetary obligation due to the association, the association may suspend the rights of the member, or the member’s tenant, guest, or invitee, to use common areas and facilities until the fee, fine, or other monetary obligation is paid in full.”

As you can see, both condominium and homeowners’ associations can suspend common area/element use rights if an owner is more than 90 days delinquent in paying a monetary obligation to the association.

Suspension of Voting Rights

Moreover, pertaining to the suspension of voting rights, Section 718.303(5) reads, “An association may suspend the voting rights of a unit owner or member due to nonpayment of any fee, fine, or other monetary obligation due to the association which is more than $1,000 and more than 90 days delinquent. Proof of such obligation must be provided to the unit owner or member 30 days before such suspension takes effect.”

On the other hand, Section 720.305(4), Florida Statutes states, “An association may suspend the voting rights of a parcel or member for the nonpayment of any fee, fine, or other monetary obligation due to the association that is more than 90 days delinquent.”

While both condominium and homeowners’ associations can suspend voting rights, there is a slight difference in the criteria.

Ultimately, the outcome is the same.  A voting interest associated to an owner who has been suspended by the association shall be subtracted from the total number of voting interests in the association.

Remember, proper notice of the above-referenced suspensions must be provided to owners.  So, if you have any questions or need any assistance, please do not hesitate to contact Martell & Ozim, P.A. at 407-377-0890.

Protecting your Community Association during Hurricanes

For everyone who calls beautiful Central Florida home, hurricanes and other dangerous storms are a reality that we must respect and adequately prepare for this time of year.  As a reminder, hurricane season officially ranges from June 1st through November 30th and the purpose of this article is to help our condominium and homeowners’ associations prepare for hurricanes and other potentially dangerous storms.

For starters, it is essential for your community association to review its current emergency preparedness procedures.  Amongst other items, a hurricane plan should include emergency contact information, responsibilities of the board, management, and residents, and a list of services that might be unavailable during and after a hurricane.

Moreover, the following safeguards and tasks should be considered:

  • Have an updated roster of the community association available to multiple parties, specifically your Board of Directors and Management Company.  It is essential to account for the whereabouts of people residing within your community association during a hurricane or dangerous storm.
  • Take date-stamped photographs of your common elements/common areas before and after the storm.
  • In advance of a storm, reach out to vendors whose services you will likely need as a result of any damage to your community associated caused by the storm.  You will want to make sure that your legal counsel reviews any contracts.
  • Make sure that your community association has enough supplies, such as flashlights, batteries, water, etc.
  • Always back-up your computer files and data.
  • If your community association has an elevator, contact your elevator company for proper guidance in advance of the storm.
  • Remember to secure the property.  This includes pool furniture, planters, exterior decorations, etc.  All items that could become a danger due to high winds and/or rain should be secured and locked inside if possible.

In addition, your community association’s plan should have a prepared notice advising residents of an impending hurricane or dangerous storm and the risks of staying in your community, as well as a form to be filled out by residents who decide to stay within the community during the storm.

Community associations also can make a list of relief organizations that residents can reach out to for help.  The bottom line is that communication is critical, as a hurricane or dangerous storm will certainly bring a level of chaos and disruption.

Certainly, we hope that none of your condominiums or homeowners’ associations are affected by a hurricane or other dangerous storm this year.  However, living in Central Florida, the reality is that you likely will be affected in some way.  Please be proactive and take necessary measures to safeguard your community association and its residents.

As always, please do not hesitate to contact Martell & Ozim, P.A. for any of your community association needs.

Can Florida condominium owners install electric vehicle charging stations?!

Protecting Florida’s environmental resources through conservation and promotion of clean energy is an absolute necessity.  Last year, Section 718.113, Florida Statutes, added a new subsection providing that a condominium association may not prohibit a unit owner from installing an electronic vehicle charging station in a limited common element parking area assigned to a unit owner.

Effective July 1, 2018, Section 718.113(8) states, in part, as follows:

(8)  The Legislature finds that the use of electric vehicles conserves and protects the state’s environmental resources, provides significant economic savings to drivers, and serves an important government interest.  The participation of condominium associations is essential to the state’s efforts to conserve and protect the state’s environmental resources and provide economic savings to drivers.  Therefore, the installation of an electric vehicle charging station shall be governed as follows:

(a)       A declaration of condominium or restrictive covenant may not prohibit or be enforced so as to prohibit any unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area…

damage to the condominium property.

(c)        The electricity for the electric vehicle charging station must be separately metered and payable by the unit owner installing such charging station.

(d)       The unit owner who is installing an electric vehicle charging station is responsible for the costs of installation, operation, maintenance, and repair, including, but not limited to, hazard and liability insurance.  The association may enforce payment of such costs pursuant to s. 718.116.

(e)        If the unit owner or his or her successor decides there is no longer a need for the electric vehicle charging station, such person is responsible for the cost of removal of the electronic vehicle charging station.  The association may enforce payment of such costs pursuant to s. 718.116.

Florida Statutes requires condominium associations to permit installation of electronic vehicle charging stations in “limited common element” parking areas assigned to individual unit owners.   Condominium associations are not required to permit installation of electronic vehicle charging stations in condominium common elements or other portions of the condominium property that are maintained for the use and benefit of all unit owners.

If parking spaces are “limited common elements” within the meaning of the condominium’s governing documents, then the condominium association must permit installation of electric vehicle charging stations subject to certain conditions.  For example, the association should require the charging station to be located entirely within the boundaries of the unit owner’s limited common element parking area so that it does not interfere with any other unit owner’s use and enjoyment of the condominium common elements.  Additionally, any unit who desires to install an electric vehicle charging station must pay all costs and expenses associated with the installation, operation, and maintenance of the charging station.  Moreover, the condominium association should confirm that the unit owner operating an electric vehicle charging station to obtained adequate insurance to protect the condominium association from any liability that may arise out of, or relate to, the unit owner’s operation of the charging station.

If your condominium association includes limited common element parking areas, it should consider adopting reasonable rules and regulations governing the installation of electric vehicle charging station in parking areas.  Please contact Martell & Ozim, P.A. if your condominium association has any questions regarding electric vehicle charging stations or if you would like assistance adopting rules and regulations.

 

Collection of Assessments

The collection of assessments is the backbone of all condominium and homeowners’ associations.  It doesn’t matter if your association is new or old, small or large, gated or non-gated, full of amenities or not.  Each and every association requires money to operate and, for the most part, that money comes from the members timely paying their regular assessments.  Each and every association requires money to operate and, for the most part, that money comes from the members timely paying their regular assessments.

Typically, the collection process begins with your management company providing coupons for the regular assessment to all members based on the adopted budget.  If an Owner fails to pay an assessment, the following procedural steps are commonly taken:

 

  1. The Association’s management company sends an initial ten (10) day courtesy notice regarding the Owner’s delinquency.  This notice serves as a friendly reminder that the Owner missed a payment.

 

  1. If payment is not received, the first statutorily required pre-suit demand letter that must be sent is a Notice of Intent to Lien letter (ITL).  By law, the ITL gives a condominium Owner thirty (30) days to make full payment before the Association may record a lien against the property.  On the other hand, by law, the ITL gives a homeowners’ association Owner forty-five (45) days to make full payment before the Association may record a lien against the property.

 

  1. If full payment is not received after expiration of the ITL, a lien may be recorded in the public records of the county where the property is located.

 

  1. Next, the second statutorily required pre-suit demand letter that must be sent is a Notice of Intent to Foreclose letter (ITF).  By law, the ITF gives a condominium Owner thirty (30) days to make full payment before the Association may file its lien foreclosure lawsuit.  On the other hand, by law, the ITF gives a homeowners’ association Owner forty-five (45) days to make full payment before the Association may file its lien foreclosure lawsuit.

 

  1. If full payment is not received pursuant to the procedures outlined above, our Firm will order title work in order to reveal any and all encumbrances on the property.  All lien holders other than the first mortgage holder must be named as defendants in the Association’s lien foreclosure lawsuit.

 

  1. Our goal is to reach a resolution with the Owner, however, if that does not occur our Firm will litigate the case and obtain a Judgment scheduling the property for sale. Foreclosure sales are typically set about 45 days from the entry of a Judgment.

 

Please note that the above procedure summarizes a typical collection action as it moves through the collection process.  At any time, an Owner may make payment to satisfy all of the Association’s assessments and withheld legal fees, resulting in a release of the lien or dismissal of the lawsuit.  An Owner and the Association may also agree to a monthly payment plan which will abate or pause the process until the debt is paid in full.  Further, if a renter resides at the property, the Association has the option of demanding rents through a court receivership to collect all rents during the lawsuit.  A knowledgeable and practiced association attorney can help the Association successfully navigate the collection process to ensure that the best collection strategy is being used for the Association and its members.

Our Firm firmly believes in communication.  Therefore, we provide free collection strategy meetings to identify appropriate cases for collection and we also offer monthly updates on all files with our office.  All of our attorneys’ fees are withheld throughout the collection process.  All attorneys’ fees will be documented, added to the delinquent owner’s account and collected from either the delinquent owner or a third party.  The incentive is to settle or litigate the case as quickly and efficiently as possible since we do not collect our attorneys’ fees until there is a resolution (remember, no monthly invoices).

If your community needs assistance with the collection of assessments, please do not hesitate to contact Martell & Ozim, P.A.

Legal Opinions

Fining Procedures – Converting Fine to Assessment

Many of our clients, both condominium and homeowners’ associations alike, often ask about the proper procedures for issuing and collecting a fine. In our previous blog post titled “Fining Procedures – Issuing a Fine” we discussed how both condominiums and homeowners’ associations properly issue a fine. This blog post will focus on converting a fine into an assessment.

As you’ll recall, a condominium association’s fine cannot exceed $1,000.00 and cannot become a lien against a Unit. Thus, a condominium association’s fine cannot be converted into an assessment and placed on the Owner’s account ledger.

Conversely, a homeowner association’s fine can become a lien against the Lot if the fine is at least $1,000.00 in the aggregate and depending on your governing documents the fine may be able to exceed $1,000.00. Because Florida Statutes provide that homeowners’ association fines may be converted to liens, the Association may move forward with such actions so long as the Association properly converts the fine to an assessment. Once the conversion is complete, the Association can add the assessment to the overall account ledger for the Owner. Therefore, if a fine is unpaid, the Board should hold a meeting to levy an assessment against the Owner for the amount of the fine.

It is important to emphasize that you may only convert a fine to an assessment if it equals or, if your governing documents permit, exceeds $1,000.00 per violation. Please note that you may not combine two (2) separate violations to reach the $1,000.00 minimum requirement to lien for the fine.

Pursuant to Section 720.303(2)(c)2, Florida Statutes, the Board of Directors must provide the fined homeowner at least fourteen (14) days advanced written notice of the Board Meeting at which the homeowner’s fine will be converted into an assessment. The written notice must also include a statement informing the homeowner that the Board will consider assessing the homeowner for the fine at the Board Meeting.

Always confer with your legal counsel to make sure your following all of the appropriate steps contained in your Governing Documents and Florida Statutes.  Our Firm recommends that both condominium and homeowners’ associations have a written fining policy in place, thoroughly outlining the fining process, including issuing a fine and subsequently converting the fine into an assessment.

Please stay tuned for more condominium and homeowners’ associations content.  As always, please do not hesitate to contact our Firm for any of your community association needs.

Construction Defects

Fining Procedures – Issuing a Fine

Many of our clients, both condominium and homeowners’ associations alike, often ask about the proper procedures for issuing and collecting a fine.  Section 720.305, Florida Statutes, which governs homeowners’ associations, states as follows:

The association may levy reasonable fines. A fine may not exceed $100 per violation against any member or any member’s tenant, guest, or invitee for the failure of the owner of the parcel or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association unless otherwise provided in the governing documents. A fine may be levied by the board for each day of a continuing violation, with a single notice and opportunity for hearing, except that the fine may not exceed $1,000 in the aggregate unless otherwise provided in the governing documents. A fine of less than $1,000 may not become a lien against a parcel. In any action to recover a fine, the prevailing party is entitled to reasonable attorney fees and costs from the nonprevailing party as determined by the court.

On the other hand, Section 718.303, Florida Statutes, which governs condominium associations, reads in relevant part:

The association may levy reasonable fines for the failure of the owner of the unit or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association. A fine may not become a lien against a unit. A fine may be levied by the board on the basis of each day of a continuing violation, with a single notice and opportunity for hearing before a committee as provided in paragraph (b). However, the fine may not exceed $100 per violation, or $1,000 in the aggregate. Emphasis Added

Did you notice the differences? Most notably, a condominium association’s fine cannot exceed $1,000.00 and cannot become a lien against a Unit.  Conversely, a homeowner association’s fine can become a lien against the Lot if the fine is at least $1,000.00 in the aggregate and depending on your governing documents the fine may be able to exceed $1,000.00.

Moreover, please keep in mind that the Board must appoint a fining committee to accept or reject the fine. The fining committee must consist of at least three (3) members appointed by the Board who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee. The role of the fining committee is simply to accept or reject the fine, and the fining committee cannot accept the fine at a reduced amount.

Always confer with your legal counsel to make sure your following all of the appropriate steps contained in your Governing Documents and Florida Statutes. Our Firm recommends that both condominium and homeowners’ associations have a written fining policy in place, thoroughly outlining the fining process.

Please stay tuned for Fining Procedures (Part 2) – Converting a Fine to an Assessment.  As always, please do not hesitate to contact our Firm for any of your condominium or homeowners’ association needs.

Who Manages my Homeowners’ Association’s Day-to-Day Responsibilities?

Your homeowners’ association may be managed by a management company, which handles many of the day-to-day responsibilities. If necessary, your management company may need to obtain the help/guidance of the homeowners’ association’s legal counsel to provide legal opinions, collect past due assessments, amend/revise the Association’s governing documents, etc.

What Determines the Rules I Must Adhere to in my Homeowners’ Association?

A homeowners’ association has a set of governing documents, starting with an Association’s Declaration of Covenants, Conditions and Restrictions. For a lack of a better way to describe it, the Declaration is like the U.S. Constitution and governs what a homeowner may, may not, or must do with his/her property located within a homeowners’ association.

An Association’s Bylaws and Articles of Incorporation establish the non-profit organization, set forth general corporate powers, establish election procedures and provide the composition of the Board of Directors, amongst other things. An Association likely also has Rules and Regulations, which may provide more detailed explanations, clarifications and definitions of restrictions and authorities found in the Declaration, Bylaws and Articles of Incorporation.

What are Homeowners’ Association Dues or Assessments?

These are monthly, quarterly, semi-annually, or annual payments made by the homeowners to the homeowners’ association to pay for association expenses.