|Florida bill seeks to keep legal fees at bay|
Courtesy of The News-Press
Published March 7, 2012
Feelings run high in the managed-community industry as Florida House bill 319 works its way through the state Legislature.
One provision of the bill would clarify that condo and homeowners’ associations could sue lenders only for back assessments -- not the legal fees and other costs associated with a lawsuit.
That's provoked an angry response by the lawyers and collection agencies that say the bill would in effect bar most suits to recover assessments -- it wouldn't be worth the cost in most cases.
But other law firms say the opposite: associations run the risk of retribution from the banks because there's no basis in law for collecting anything but the actual assessments.
Neither side pulls its punches when discussing the current law.
"Why in the world are we passing legislation that further limits the banks' liability?" asked Aaron Gordon, in-house counsel with Tampa-based LM Funding, which sometimes uses lawyers to collect from banks.
"If you spend legal fees to go after them, you don't know if you'll get your money back or not," he said. "You could end up with nobody enforcing any assessments because it doesn't make financial sense.
But proponents are equally as committed to their defense of the bill and the current law-- which they say was never intended to permit collection of anything but assessments.
Agencies like LM Funding who represent associations could ultimately get their clients into financial trouble, they say.
"It's being abused by a few opportunists who have no regard for the rule of law," said Joe Adams, Fort Myers-based managing shareholder of statewide real estate law firm Becker & Poliakoff.
Adams, who helped draft the current law, said its intent never was to allow fees and costs to be collected.
Associations are risking a lot by using the services of law firms and collection agencies that go after other fees, he said. "A bank can come back and say, 'We overpaid the amount you received at closing. Now we want a refund.' "
Mark Benson, a Fort Myers-based expert in property management, real estate broker and certified county court mediator, said it's tough for an association manager to choose a dog in this fight.
"Policy aside, it's hard to tell ahead of time whether a particular one (association) will benefit" or be harmed if the bill passes, he said.
Regardless, Benson said, "There is a workaround on this."
He recommends that associations get a personal judgment in the courts against the person who is delinquent on his assessments.
"If the association takes title as quickly as possible, it can foreclose out the owner and rent it out for the two or three years the bank takes to foreclose," Benson said.
Bill White, a Naples-based property manager and South Gulf Coast Chapter of the Community Association Institute who's worked on the issue, said the institute hasn’t taken a position on the bill.
"It depends on which group you think is right" on what the law actually means, he said.
The institute tried to take a middle road by suggesting an amendment that would cap legal fees at $5,000 but it wasn't adopted, White said.
The state House of Representatives passed HB 319 last week but the Senate hasn't acted and its version of the legislation doesn't include the controversial provision.
White said the institute mainly wants what's best for condo and homeowners' associations.
"We are in favor of whichever reduces the association's bad debt by the greater amount," he said.