The Anatomy Of A Collection File

One of the largest legal issues facing community association boards around Florida is the collection of delinquent assessments.  The first step is to adopt a collection policy using the board’s rule making authority.  Before you adopt such a policy, you need to review your governing documents to find out when an assessment is late (i.e. after 10, 15, or 30 days).  You cannot take step one in your policy until you have passed this threshold.  You also need to discover whether you have authority to charge late fees and interest and at what rates.  Then, we turn to the Florida Statutes.  Both the Condominium Statute (718) and the HOA Statute (720) have collection procedures which mirror each other.

STEP ONE – NOTICE OF LATE ASSESSMENT (NOLA) – 30 DAYS

STEP TWO – INTENT TO LIEN (ITL) – 45 DAYS

STEP THREE – RECORD LIEN & SEND INTENT TO FORECLOSE (ITF) – 45 DAYS

STEP FOUR – ASSESSMENT LIEN FORECLOSURE LAWSUIT

The association reviews the official records of the County to determine whether there is a pending first mortgage foreclosure.  The absence of a first mortgage foreclosure is usually a good indicator that proceeding with an assessment lien foreclosure is warranted.  You also want to make sure there is no pending bankruptcy.  There are some scenarios where you may want to file an assessment lien foreclosure even if there is a pending first mortgage foreclosure.  Here are the stages of an assessment lien foreclosure lawsuit:

1. File the lawsuit and serve on owners and occupants. You have 120 days to obtain service of process.
2. Once service is obtained, defendants have 20 days to answer or file a motion to dismiss.
3. Once there is an answer and the case is at issue you conduct discovery and prepare for motion for summary judgment.
4. Most of these cases are resolved at the hearing on the motion for summary judgment. There must be 40 days between the filing of the motion for summary judgment and the hearing.
5. If the summary judgement is granted, the court will award you a final judgment of the delinquent assessments, interest, costs and fees and set a sale date about 30 to 60 days out.
6. At the foreclosure sale, a third-party bidder will submit a winning bid above the judgment amount or the Association takes title.

 

OTHER KEY STATUTORY PROVISIONS

• Interest capped at 18%
• Late fees capped at the greater of $25 or 5%
• Partial payments – applied first to interest, then to late feeS, then to any costs and fees, and lastly to the delinquent assessments. This applies notwithstanding any restrictive endorsement.

TENANT DEMAND LETTER – You can demand that tenant pays rent to the association until the debt is satisfied..