Condominium Assessment Lien Foreclosure in Florida

Condominium Assessment Lien Foreclosure in Florida

By Christopher M. Cobb April 9, 2020 Posted in Community Association Law

Basically, a condominium assessment lien foreclosure action is a lawsuit.  A condominium association may bring an action in its name to foreclose a lien for assessments in the manner a mortgage of real property is foreclosed, and it may also bring an action to recover a money judgment for the unpaid assessments. The association is entitled to recover its reasonable attorney’s fees incurred in either a lien foreclosure action or an action to recover a money judgment for unpaid assessments. See 718.116(6)(a). Condominium lien foreclosure is not subject to the alternative dispute resolution proceedings found under Section 718.1255, Florida Statutes, which means that the parties do not have to engage in mediation or arbitration.

Pre-Suit Considerations

The first step in the foreclosure process is to determine whether the proper notices have been sent. Thereafter, the condominium association must determine the priority of its lien with a title search on the Unit and identification of the proper party Defendants. Every person or entity claiming an interest to the condominium property—and whose interest is inferior to the association’s lien—must be joined as a defendant if that person’s or entity’s right or interest is to be extinguished. If there are unknown tenants residing in the unit, then the names of said tenants may be identified as “John Doe and Jane Doe, tenants in possession” or “Unknown Tenant One and Unknown Tenant Two.”

Foreclosure Complaint

After confirming the pre-suit notices were sent and the proper parties are identified, the association will file its action to foreclose on the unit. If the unit owner does not respond, then the association can obtain a default and obtain the foreclosure rather quickly. If the unit owner defends and contests the lawsuit, then the association is engaged in contested litigation and will need to file motions and conduct discovery in order to prevail in the foreclosure.

As with any action to determine interests in real property, the foreclosing association should record a lis pendens. The recording of a lis pendens provides record notice to all of the pendency of a lawsuit affecting the real property. See 48.23(1)(a), Florida Statutes. As the recordation of an assessment lien is an item that affects title, the lis pendens is appropriate. The lis pendens will be recorded in the official records of the County where the property is located. The lis pendens will show up on any title search, thus preventing the Unit Owner from selling or transferring the property in avoidance of the assessment foreclosure action. Any transfer of title after the recording of a lis pendens takes subject to the pending lawsuit. The lis pendens must contain the name of the parties, the date of institution of the action and case number, the name of the court, the description of the property involved and a statement of the relief sought. See Form 1.918, Florida Rules of Civil Procedure (2014).

Condominium associations are entitled to plead in the alternative claims for money damages for the failure to pay assessments. 718.116(1)(a); Maya Marca condominium Apartments, Inc. v. O’Rourke, 669 So.2d 1089 (Fla. 4th DCA 1996). The additional count allows an association to still seek recovery of assessments if there is a technical defect in the lien. Additionally, the alternative count allows the association to recover a judgment if—in the middle of proceedings—a superior lienor such as a first mortgagee obtains title, rendering the association’s foreclosure claim moot. In any event, if a condominium association is named in a lender foreclosure because the unit owner is not paying his or her mortgage, then the association can crossclaim for money damages against the unit owner in the same lender foreclosure action. Regardless of who is bringing the foreclosure action, it is always good practice for an association to obtain the money judgment. The statute of limitations on damage claims is five years because the claim is based on a written instrument, the declaration. F.S. 95.11(2)(b) and not the condominium assessment lien.

Foreclosure Judgment and Sale

The foreclosure judgment should liquidate the amount of money due to the association, including principal (the assessments), interest, late charges, costs, attorney’s fees and advances, if any. The lien merges into the final judgment and no longer exists after the judgment is entered. Thereafter, the unit owner has an absolute right of redemption to pay the amount due and save the property from foreclosure. This is actually good for the association, because it means that they would recover 100 percent of the delinquent amount, interest and attorney fees.

In order to complete the sale, a “notice of sale” must be published once a week for two consecutive weeks in a local paper of general circulation no less than 20 days before the date set for sale. See 45.031. The association usually provides the court clerk with a notice of sale. The clerk files the notice and, if asked to, usually forwards the notice to a paper of general circulation for publication. The association’s lawyer should request the publisher to provide an affidavit of publication setting forth the text of the notice as published and the basis for the determination that the publication is one of general circulation.

Condominium Assessment Lien ForeclosureThe court clerk conducts a public auction as stated in the order and notice. Some locations have the sale conducted online. Whether the sale occurs at a physical location or by electronic sale, the plaintiff is entitled to attend the auction and make the first bid. If the association utilizes an agent to do the bidding, the agent must know the location of the auction and understand the association’s bidding instructions. See United Companies Lending Corp. v. Abercrombie, 713 So.2d 1017 (Fla. 2d DCA 1998). If authorized by the judgment, the plaintiff may receive bidding credits equal to the judgment amount, together with post-judgment costs and attorneys’ fees. Generally, the minimum bid is $100.

A certificate of sale is issued promptly after the sale to all parties who have not defaulted. F.S. 45.031(3). The high bidder is entitled to a certificate of title if the owner does not pay the money due within the redemption period. To obtain possession, an association may have to evict the occupants through enforcement of a writ of possession.  Condominium association board members and managers should understand the assessment foreclosure process and timing in order to aggressively enforce collection of assessment liens.  An association with a good property manager can develop and implement a strong collection policy and practice that is uniformly enforced.

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