New
state law might help reclaim fees The
state has enacted a new law that attempts to help community associations
collect past due bills, but not everyone is convinced the new measures
will work. |
Article Courtesy of The Miami Herald By Donna Gehrke-White Published August 21, 2010 Many community
associations throughout Broward have been struggling during the recession
after foreclosed homes were left vacant and some financially strapped
property owners quit paying their maintenance fees. Now the state
has stepped in to try to help; a new law allows both homeowner's and
condominium associations to deny nonpayers access to clubhouses, pools,
fitness rooms and other shared community property. It also stipulates that
foreclosing banks now will have to pay a year's worth of unpaid
maintenance bills or 1 percent of the original mortgage debt. Even more
controversial, the state allows associations to demand renters pay the
community fees that their landlords aren't paying, an attorney told a
packed Homeowner's and
condo associations now can directly bill renters for maintenance fees,
with the property owner getting any rent money left over, said Lisa
Magill, a partner in the law firm Becker & Poliakoff, which represents
many community associations throughout One tenant
recently balked "but ended up paying,'' said Florence Small of
Century Village. That's because
nonpaying tenants can be forced to move. The associations ``have direct
eviction rights,'' Magill said. "You have to think about it but if
they [renters] don't comply, you may evict. "There were
a lot of significant changes in the law after the dramatic downturn in the
real estate market when people stopped paying their bills,'' Magill said. "We are
pleased with the new laws as it has given greater opportunities to
associations to be more in control of their own destinies,'' said Luis
Paredes, president of the United Condominium Association of Hallandale
Beach. Those changes --
and even more -- are needed, said those at the Associations
have struggled, they said, to provide services while some owners ignored
or even refused to pay delinquent community association bills that have
grown to thousands of dollars. Banks are to blame too, many said. "The banks
are not doing what they are supposed to do,'' said Roberta Nazinovitz of "This is a
very big issue,'' said Magill, who added she has heard complaints that
banks have sat too long on foreclosed property, which has denied
communities a chance to collect maintenance fees from new owners. NEW LAW
A START The new law,
which took effect last month, doesn't cover all the problems but it is a
step in the right direction, Magill said. Some grass-roots
activists cautioned that the new law will not help associations collect
that much money. Banks escaped from paying much of anything, and some
parts of the law won't actually bring in cash, said Jan Bergemann, founder
and president of the grass-roots nonprofit Cyber Citizens for Justice.
Take the new law that bans delinquent owners from using community
facilities. "Sounds
great but doesn't put any money in the coffers,'' Bergemann said. However, the new
law in some cases will require foreclosing banks to pay more in unpaid
condo fees. The old law had a cap of foreclosing mortgage holders paying
either six months of "unpaid common expenses and regular periodic
assessments'' or 1 percent of the original mortgage, whichever was the
lesser amount. Now the new law requires banks to pay the lesser of up to a full year's unpaid condominium fees or the 1 percent of the original mortgage. Homeowners associations already had the one-year rule. For condo
associations, that extra six months can mean hundreds or even thousands of
dollars more, Magill said. For example, a
foreclosed home with an original $250,000 mortgage has accumulated two
years of unpaid fees of $200 a month -- or $4,800. The new law would
require the lender to pay the association $2,400 for a year in back fees
instead of the old law's $1,200. Questions remain
over how many homes the new law covers. "For example, does the law
only affect first mortgages entered into after July 1, 2010, or does it
affect existing first mortgages as well?'' a Becker & Poliakoff
newsletter questions. Magill said the
new law is also unclear or vague in other areas, such as what unpaid fees
are included in the new provision that allows associations to demand
tenants pay for their past-due landlords. The new law only
says the tenants will pay for "future monetary obligations.'' If
"past-due obligations'' are not included, then it will "blunt
the effectiveness of the new law and is not consistent with the intent of
the new law,'' according to the Becker & Poliakoff newsletter. The law firm's
Community Association Leadership Lobby tracks new laws and lets more than
4,000 community associations know about the changes. LAW HAS
LIMITS The new law is
clear on some aspects. Associations can't demand more than what the renter
is currently paying for rent while property owners must give tenants rent
credit for what they pay the association. The law also
clears the way for condo associations to suspend the voting rights of
owners who are more than 90 days delinquent in paying. Those who haven't
paid bills in the last three months can't serve on their condo or
homeowners association boards. They also be
denied access to "common facilities or any other association
property.'' When people pay, they can vote again and have access to tennis
courts, gyms, pools, clubhouses and other community property. However, the new
law says that associations can't deny the nonpayers parking spaces,
utility services or "common elements that must be used to access the
unit.'' Nancy Marquez,
president of the French Villas Condominium Association in She said one
owner in her complex owed the association more than $10,000; yet, he was
collecting rent from a tenant. So the
community's attorney suggested that the association require all owners who
rent units out to sign an agreement that allows the association to collect
unpaid fees from the renter. The
association did and began collecting fees from the delinquent landlord's
renter. The landlord protested, Marquez said, “but the attorney showed
he had signed and so we got the money.'' |