Stories to keep you connected and informed.
99¢ per month. Save 90%.

Condominium has options to recover unpaid assessments owed by deceased owner

Ryan Poliakoff
Condo Q&A
Ryan Poliakoff

Dear Poliakoffs,

Our small community (40 units) has a unit that was owned by an elderly woman who died with no relatives or heirs.

She had a reverse mortgage with the bank; a neighbor and friend who was also a realtor who had control of the unit has died (and his business partner went to court and got control of the unit); no one is paying the fees; and the bank isn't cooperating, as they don't seem to care if the unit sells or not. 

We need to know if there is anything that we can do to get someone to pay the delinquent fees.  

Signed, A.P.

Dear A.P.,

Your community is in a difficult situation.  If the bank forecloses and takes possession of the unit, it will wipe out most of the unpaid assessments due to the safe harbor law.  But, if it just sits there and lets the unit languish, you could be without assessments for an extended period. 

You have two principal options. 

If there is a bank foreclosure case, your attorney can ask the court to move the case along and not let it just sit forever in the court system.  Your goal is to get a new owner into the unit, at which time, whether a bank or otherwise, they will have to begin paying assessments.  Essentially, you are trying to stop the bleeding and move on to a productive owner. 

If there is no bank foreclosure, and if the unit is lease-worthy, your best option may be to quickly foreclose on the unit (it seems unlikely the business partner would put up much of a defense to protect a unit subject to a reverse mortgage), and then lease out the unit, indefinitely, until the bank decides to take action.  In that scenario, the association will own the unit, subject to the bank lien — but the bank may not actively foreclose on the unit for a very long time.

A third option, if you are a condominium, is found in Section 718.111, Fla. Stat.  The statute says that, if no one appears to have resided in the unit for two consecutive months and if the association is unable to contact the owner of the unit (and it this case, the ownership of the unit may be stuck in limbo), you can declare the unit “abandoned” and petition a court to appoint a receiver to lease the unit to pay back the amounts owed and the costs of going-forward maintenance. 

That way, you would avoid having to go through the foreclosure process, and you could simply allow the receiver to manage the unit for you for an extended period of time (years, if needed). 

The negative is that you will ultimately earn less money from the rental, as the receiver needs to be compensated — if you just go ahead and take title, the unit is yours to manage and rent until someone else were to take possession.

Dear Poliakoffs,

I own a condo that I lease to a tenant.  

The condominium documents and three-member board (there are 37 total condos in the small complex) states that I, as an owner cannot vote (or serve on the board of directors) because I do not live in my unit.  

The bylaws allow leasing.  Is this legal?  Can the board limit owners from being able to vote or serve on the board due to leasing their units? 

Signed, K.D.

Dear K.D.,

The provisions in the governing documents preventing you from serving on the board due to the leasing of your unit is likely invalid and superseded by the Condominium Act, which states, at Section 718.112, Fla. Stat., that a unit owner may declare themselves as a candidate for the board, and which section further provides for specific situations in which that unit owner would be ineligible to serve. 

These provisions take precedence, and the Division of Condominiums has held that residency requirements for board service are not enforceable.

As for voting, FS. 718.106, Fla. Stat. establishes that certain rights are appurtenant to every unit and cannot be removed from the unit.  They include the membership in the association, with the “full voting rights appertaining thereto.” 

So, again, this provision would very likely supersede any residency requirement for voting found in the governing documents.  Further, while condominium declarations are given a broad presumption of validity, provisions in declarations are unenforceable when they are found to be contrary to public policy. 

Voting is an inherent and essential right in a condominium, and while I have not had the opportunity to research the issue, it is very hard for me to believe that a court would uphold a provision that effectively disenfranchises a unit.
