Courtesy of The Sun Sentinel
Published March 4, 2010
Can Florida banks be held financially accountable
for purposely delaying condo bank foreclosure sales? A new South Florida
circuit court ruling says yes.
Amid a growing clamor for Florida banks to bear more
of the financial burden caused by widespread condo foreclosures, the
Miami-Dade Circuit Court case settled last week shows an example of
associations turning more often to courts for relief from revenue losses
tied to the state's condo crisis. And it could pave the way for other
South Florida condo associations faced with stalled foreclosures caused by
The King Cole Condominium Association in Miami Beach
filed a motion against Deutch Bank National Trust Company, alleging it
purposely stalled the foreclosure sale of a particular unit.
The unit owner has been behind in association
payments for about three years, court documents show, and the unit was in
foreclosure limbo for two of those years, in large part because of bank
problems or inaction.
Why would a financial institution want to slow condo
To avoid paying its share of association fees as
required by law, say critics such as David Cohen, the president of the
King Cole, a community of 285 condos.
"It's not exclusively the bank delays that
caused our situation," Cohen said. "Sometimes it is court
delays, and sometimes the delays are caused by unit owners. But this
ruling could help us with delays caused purposely by banks."
Miami-Dade Circuit Court Judge William Thomas
sanctioned Deutch Bank for not sending a representative to a foreclosure
sale as required by an earlier court judgment, a move that automatically
cancels a sale date, and for not publishing a public notice in a local
newspaper in time for another foreclosure sale date, again causing the
Although Deutch did not offer explanations in court
for the delays, its attorney argued that Florida courts are not allowed to
force banks to pay condo association fees. Another recent ruling by the
3rd District Court of Appeals in Florida held that a bank could not be
ordered to pay monthly maintenance fees before obtaining title to a unit.
Thomas' ruling, however, sanctioned Deutch for
improper conduct related to the foreclosure case. The bank was ordered to
pay about $7,300 in sanctions to the association and $2,000 to cover its
"Thomas' order is not a precedent,"
meaning that other judges don't have to follow it, said community
association attorney Jed Frankel, who represented the King Cole
association. "But sanctions like those imposed in this case can be a
useful tool to judges facing similar purposeful delays by banks."
Legal experts say such rulings often serve as
guidelines for cases that follow.
As a part of the condo crisis, some banks delay
foreclosures to avoid having to pay their shares of association
assessments as required by law, Frankel said.
Florida limits a bank's responsibility to a mandated
cap, the amount that a bank owes an association when it takes title of a
condo via foreclosure.
For condo associations, the cap is six months of
past-due assessments or 1 percent of the mortgage amount, whichever amount
For a condo unit with regular monthly assessments of
$200, a bank could owe as much as $1,200 of past-due assessments to be due
within 30 days of the bank taking title of the unit.
homeowner associations, the cap is 12 months of past-due assessments or 1
percent of the mortgage amount, whichever is less.
Vasquez can be reached at condocolumn@SunSentinel.com
or 954-356-4219 or 561-243-6686. His condo column appears every Wednesday
in the Business section and at SunSentinel.com/condos. Check out
Daniel's Condos & HOAs blog for news, information and tips related to
life in community associations at sunsentinel.com/condoblog
also can read his consumer column every Monday in Your Money and at