Banks enter debate on how associations deal with foreclosures

Article Courtesy of Naples Daily News


Published March 22, 2009

— Economic conditions being what they are, banks have entered the ongoing war in Tallahassee over condo and homeowners associations.

There has long been friction between property managers or association directors, and individual property owners. Now, with the number of foreclosures around the state, banks have entered the fray.

Attorney Yeline Goin, of Becker and Poliakoff, said it’s too early in the session to support or oppose any particular piece of legislation.

“There are concepts and ideas in all of the bills that we support,” said Goin, co-executive director of Community Association Leadership Lobby.

But some of her preferences include revising provisions in the law dealing with mortgagee liability to require banks to pay more of the unpaid assessments when it takes title to a unit.

This issue is dealt with in Senate Bill 880, House Bill 831, Senate Bill 998, House Bill 1397 and Senate Bill 2604. Goin and her staff will work with the sponsors of all of these bills to get that issue heard and the law changed on that subject.

“However, we know that the banking industry lobby is fighting against any changes,” Goin said.

That is a problem Collier County officials have been addressing as well.

Code Enforcement Director Diane Flagg, the head of Collier’s Blight Prevention Program, has said that while many banks she’s worked with have been extremely cooperative, they will sometimes draw out the foreclosure process because once they take title, they have to pay assessment fees.

Donna D. Berger, managing partner of law firm Katzman Garfinkel Rosenbaum, and the executive director of Community Advocacy Network, said there are some bills -- notably those introduced by Rep. Julio Robaina, R-Miami, and Sen. Mike Fasano, R-New Port Richey – that try to hold lenders responsible for all past-due assessments and completely remove the cap on liability.

That will create another problem of concern to many: investment in the community.

“Many lenders will not want to lend in private community associations if they cannot easily determine the possible extent of their liability,” Berger said. “A statutory cap (six to 12 months) allows them to budget for those expenses.”

“Tinkering with the cap is probably not the answer. Giving them an incentive to move quickly to take title to delinquent properties or risk losing their cap is probably the better option,” Berger said.

“Senate Bill 998 (sponsored by Sen. Jeremy Ring, D-Margate) is probably the best option in this regard because it requires banks to foreclose within 12 months from filing their lis pendens or lose their statutory cap on liability,” Berger said. Lis pendens is a legal term referring to a pending or suspended lawsuit.

Also, Ring’s proposals don’t change the current liability cap.

Other bills do, and will be met with strong opposition, Berger said.

Tamela Wiseman, a former Naples City Council member who is a land-use attorney, has nightmares when she reads Robaina’s bill.

“Robaina’s bill (HB 1397) actually gives police powers to the state agency regulating condos. Scary!” Wiseman said.

Condos are currently regulated by the Florida Department of Business and Professional Regulation.

Jan Bergemann, a condo/homeowner law activist who is often at odds with law firms that represent condo and homeowner associations, loves Robaina’s bill.

“It contains the lien and foreclosure provisions (bank liability) pushed by the attorneys,” Bergemann said. “. . .HB 1397 is a comprehensive bill to help owners before many more of them are flat broke.”