Condo Associations Put 'Hammer' Down on Renters
New law gives HOAs the power to collect from tenants, or boot them out
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7 comments
In coastal communities like this one, Singer Island, the 'condo bill' is much talked-about.
Senate Bill 1196, signed into law Tuesday by Gov. Charlie Crist, empowers condo associations to collect rent money directly from tenants in units of delinquent owners.
The bill, sponsored by Sen. Jeremy Ring, D-Margate, and Rep. Ellyn Bogdanoff, R-Fort Lauderdale, was sought by associations plagued by rampant vacancies and dwindling cash flows.
"It's a doomsday scenario when you have unit owners who aren't paying their mortgages or fees, but are getting rental income," said David Muller, an attorney specializing in community association law at Becker & Poliakoff in Sarasota.
Donna DiMaggio Berger, a managing partner at the Fort Lauderdale law firm of Katzman Garfinkel & Berger, said the expanded authority under the new law gives associations a much-needed hammer.
"If the tenant fails to pay the monetary obligations demanded by the association, the association may stand in the shoes of the landlord and sue for eviction under Chapter 83 of the Florida Statutes," Berger said.
Furthermore, she added, "The tenant does not have any rights to vote in an association election or to inspect the books and records of the association by virtue of paying the monetary obligations demanded by the association."
Critics of the legislation say it goes too far by superimposing associations into private-party contractual agreements and slaps undue financial obligations on renters.
What's more, they say such far-reaching power could end up backfiring by making associations liable for property damages, personal injuries, etc.
Berger, who helped write portions of the omnibus bill, acknowledges that the renter legislation walks a fine legal line.
"It gives rights, but not all the responsibilities (to associations)," she said. "The last thing you'd want is for the association to be on hook for liability."
"There are enforceability challenges," she admits.
Muller said associations should be on solid ground as long as they follow the new law.
"It's statutory now. By following the procedures in the bill, (associations) will always have that to fall back on," he said.
"At the end of the day, when (association) budgets aren't funded, they have to assess everyone. This will avoid higher assessments."
Berger cites court decisions upholding associations' right to get aggressively into the rent-collection business.
"Some have gotten court orders to collect rent, even if a unit is not in foreclosure. As long as you can demonstrate a need, you can go right after that rent. Some have done so without even a demand letter," she related.
The key for condo associations, Berger said, is to get a court-appointed receiver or at least have a full-service property-management company.
"Can you imagine trying to collect on 40 delinquent properties?" she asked.
Though not authorized in this year's bill, some associations have directed receivers to recruit renters to fill vacated or foreclosed units.
Given the parade of condo "clean-up" bills that move through the Legislature each year, increasingly aggressive tactics are possible as long as Florida's foreclosure rates remain high.
For associations, Berger advised, "The ability to take away someone's home is quite a big hammer. Each HOA board will have to ask itself whether it is just to use such a big hammer."
Tenants, meanwhile, will want to be extra mindful of the financial status of their units' owners before signing a lease agreement.
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Reach Kenric Ward at kward@sunshinestatenews.come or at (772) 801-5341.
Comments (7)
4:24PM JUL 31ST 2010
As a Florida tenant who is receiving demand letters from a Florida homeowner's association trying to collect all of my rent money based on the recently passed SB 1196, there are a few comments and observations I would like to make. There are several myths floating around the blogosphere which simply aren't true.
MYTH #1: TENANTS ARE SOMEHOW AT FAULT
People in this discussion keep talking about Florida tenants as if we were some kind of sleazy deadbeats. As if we intentionally choose to live in a house rented to us by someone who isn't paying their association fees, and that this is somehow benefitting us. Something I keep hearing people say, for example, is how unfair it is that we tenants get to benefit from all of these great amenities when the homeowner's association dues aren't getting paid.
Something to think about is the fact that while my landlord may not be meeting his obligations to the homeowner's association, I for one am dutifully paying my rent every month on time. And I pay the same rent that I paid before he stopped paying his association dues, while actually would imply that I am paying for all of the community amenities now, just like I was before he stopped paying his dues.
You could certainly argue that my beef about this should be with my landlord, and not with the association. And it is. The part I have an issue with is the general assumption that I'm somehow getting something for free.
Please be it understood that we tenants are NOT responsible for this mess, nor are we in any way benefiting from our landlords refusing to pay our fees. We are victims of the landlord just as much as the homeowner association is. You can be mean to us, angry with us, or even spiteful to us as much as you want, but your anger is misdirected, and it isn't particularly fair.
...and it isn't giving us tenants much reason to want to go out of our way to go above and beyond the law to help you out. Which goes to my next point.
MYTH #2: TENANTS ARE IMMUNE FROM LANDLORD RETALIATION
The lawyer from the homeowner's association went out of his way to make it clear to me on the phone that if I send them *all* of my rent money I would be completely immune from anything my landlord could ever try to do to me. Plus I'll even get my community benefits back! And why would I want to pay my landlord anyway, when he is *such* a deadbeat -- when I could instead side with my neighbors at the benevolent homeowner's association, which is so nice and kind?
But "immune from any claim from the unit owner" doesn't really paint a complete picture of the situation tenants are in. While my landlord may not be able to kick me out for sending my rent to the homeowner's association, there are other things he CAN do to me that would make my life less than pleasant.
For example, if my air conditioner breaks he has always in the past gone out of his way to have someone come over to fix it within just a couple of hours. The lease doesn't specifically require that, but he does it anyway. If there is an issue with the sink, or with another unit owner, or something else, he takes care of those things right away too.
Do you think I'm going to receive such great service from him if I side with the homeowner's association and stop sending him rent? And do you think the homeowner's association is going to step up and fix my sink, or my air conditioner, or whatever -- now that we're such great neighbors and friends?
Maybe they'll be OK if my family and I sleep in the community exercise room until the landlord gets around to fixing the air handler? I doubt it.
Or what about that beautiful mirror I have hanging in the hallway? My lease is pretty explicit about the fact that I'm not allowed to use wall anchors. Call me a criminal, but I did (otherwise it would have fallen down!) My landlord has not noticed and probably doesn't care, because he knows that I will properly patch the wall and put things back the way they were before I leave.
But...do you think it is possible that if I stop paying my rent he might for the first time see himself in my beautiful mirror and wonder how such a heavy object d'art could be supported with just thin nails? What do you think the chances are he won't try to use it as an excuse to try to evict me ? And maybe he might even notice a few other things I was doing wrong that neither I nor he ever gave a thought to before?
While he might not kick me out for not paying my rent, I have to imagine that having him for an enemy means that he will think of anything he possibly can to try to get me out of here as quickly as he can. How are my new friends at the homeowners association going to help me with that?
Which lead me to the last, most important reason that the "immunity" offered by the new law is fairly worthless. My lease expires in three months. What happens then? I can tell you right off the bat that my landlord will have no interest in keeping me in the unit if I'm not paying rent and *especially* if I've decided to throw my lot in with my new friends (and his new enemies) at the homeowner's association.
The only power the homeowner association has is to evict me. They can't do anything to make it possible for me to stay in my unit when my lease runs out, and I'm guessing -- based on their past treatment of me -- that they aren't going to help me find another unit. I'm especially confident that they aren't going to help cover any of my moving expenses when I undoubtedly have to leave in three months.
Which brings me to my final point.
MYTH #3: TENANTS ARE NOMADS
Homeowner associations and lawyers keep asking: "Why do you stay? Why do you want to live in a unit owned by a deadbeat?" And everyone else talks in such a way that you would think that tenants were all nomads who live out of suitcases that can easily be packed and unpacked at a change in the wind.
I've lived in my current unit for over five years. At the time I moved in (after being shown the place by a reputable real estate broker) my landlord wasn't a deadbeat. He was glad to have my family and I stay "as long as we liked" – a great situation for a family with two kids just starting middle school. We spent several thousand dollars to move all of our belongings to this unit, we registered the kids for school, and we've made friends in the neighborhood and community.
Moving isn't easy. For me to move -- to get everything ready to go, to find a new place, to hire movers, to pack everything up, move it, find a new place, unpack everything again -- is a major *ordeal*. I will have to take time off of work to do it. I will have to spend a lot of money to do it. It will be very unpleasant and expensive for me and my family.
...but not half as unpleasant as it will be for my kids, who will have to make new friends, maybe even have to go to a different school, and have their lives all turned around.
Most tenants are NOT nomads. Just like homeowners, they *live* where they live, and they have just as many materials goods (sometimes more!) as homeowners do. Moving is a terrible burden.
CONSEQUENCES FOR EVERYONE
My point is this: Associations are right now trying to push the new law as far as it will go. Despite the fact that the law pretty clearly says "future monetary obligations" and despite the distinct possibility that the legislature may have *intended* this law to apply only to new leases entered into *after* July 1st, associations are trying to use it as a panacea to collect all of their overdue assessments and dues without going through the regular debt collection procedures usually required by the law.
And while I feel very bad for the homeowner's associations, the way in which they are trying to manipulate and scare tenants is just plain wrong. They are making demands that many *unbiased* observers believe are NOT covered by the law (although we'll have to wait for a judge to rule on it to know for sure) under the assumption that they will get to keep any money they can collect now, so they should get as much as they can before it is too late. And they've deluded themselves into believing that the tenants – their neighbors – won't be harmed.
What they need to understand is the untenable position they are putting tenants such as myself in. Because this isn’t about whether or not I should follow the law (because I will) – associations are asking tenants to accept their *interpretation* of the law – one that will likely cause tenant to face severe indirect consequences. And I don’t have a lot of reason to think – or want to believe – that the homeowner’s association interpretation is the correct one – or more important, the one that a judge side with.
The homeowner’s association can try to evict me. But as I understand it in order to be evicted, the they are going to have to convince the judge that I have somehow violated the law by sending *only* the $300 association fee to them because (a) "future monetary obligations somehow include past due amounts; (b) the law applies to contracts entered into before the law went into effect; (c) the law isn't somehow unconstitutional and a violation of the property owner's due process rights. I don’t know much about the law, but it seems to *me* that proving all of that isn't going to be easy.
Someone asked whether a tenant such as myself would go to all of the trouble and expense? Wouldn’t it just be easier to move? Curiously enough, even if I wanted to move I can’t – I have a lease, and unless I’m willing to pay several months rent worth of penalties, I can’t leave.
But also consider this: if the homeowner’s association isn’t successful at proving the points above – if they fail with their bid to evict me – they have to pay all of my legal expenses. And I don’t plan to use a cheap lawyer.
Sure, it’s a gamble. But I, like so many other tenants, are being backed into a corner. If the homeowner’s association tries to evict me they better feel really good about their hand -- because the stakes are high, I don’t have to option to fold and I (quite literally) have a full house.
If it comes to this I imagine we probably won't be the most loved family at the community pool this summer…but frankly, we haven't been *allowed* to use the community pool for quite a while now, so I think we’ll find a way to live with ourselves.
MYTH #1: TENANTS ARE SOMEHOW AT FAULT
People in this discussion keep talking about Florida tenants as if we were some kind of sleazy deadbeats. As if we intentionally choose to live in a house rented to us by someone who isn't paying their association fees, and that this is somehow benefitting us. Something I keep hearing people say, for example, is how unfair it is that we tenants get to benefit from all of these great amenities when the homeowner's association dues aren't getting paid.
Something to think about is the fact that while my landlord may not be meeting his obligations to the homeowner's association, I for one am dutifully paying my rent every month on time. And I pay the same rent that I paid before he stopped paying his association dues, while actually would imply that I am paying for all of the community amenities now, just like I was before he stopped paying his dues.
You could certainly argue that my beef about this should be with my landlord, and not with the association. And it is. The part I have an issue with is the general assumption that I'm somehow getting something for free.
Please be it understood that we tenants are NOT responsible for this mess, nor are we in any way benefiting from our landlords refusing to pay our fees. We are victims of the landlord just as much as the homeowner association is. You can be mean to us, angry with us, or even spiteful to us as much as you want, but your anger is misdirected, and it isn't particularly fair.
...and it isn't giving us tenants much reason to want to go out of our way to go above and beyond the law to help you out. Which goes to my next point.
MYTH #2: TENANTS ARE IMMUNE FROM LANDLORD RETALIATION
The lawyer from the homeowner's association went out of his way to make it clear to me on the phone that if I send them *all* of my rent money I would be completely immune from anything my landlord could ever try to do to me. Plus I'll even get my community benefits back! And why would I want to pay my landlord anyway, when he is *such* a deadbeat -- when I could instead side with my neighbors at the benevolent homeowner's association, which is so nice and kind?
But "immune from any claim from the unit owner" doesn't really paint a complete picture of the situation tenants are in. While my landlord may not be able to kick me out for sending my rent to the homeowner's association, there are other things he CAN do to me that would make my life less than pleasant.
For example, if my air conditioner breaks he has always in the past gone out of his way to have someone come over to fix it within just a couple of hours. The lease doesn't specifically require that, but he does it anyway. If there is an issue with the sink, or with another unit owner, or something else, he takes care of those things right away too.
Do you think I'm going to receive such great service from him if I side with the homeowner's association and stop sending him rent? And do you think the homeowner's association is going to step up and fix my sink, or my air conditioner, or whatever -- now that we're such great neighbors and friends?
Maybe they'll be OK if my family and I sleep in the community exercise room until the landlord gets around to fixing the air handler? I doubt it.
Or what about that beautiful mirror I have hanging in the hallway? My lease is pretty explicit about the fact that I'm not allowed to use wall anchors. Call me a criminal, but I did (otherwise it would have fallen down!) My landlord has not noticed and probably doesn't care, because he knows that I will properly patch the wall and put things back the way they were before I leave.
But...do you think it is possible that if I stop paying my rent he might for the first time see himself in my beautiful mirror and wonder how such a heavy object d'art could be supported with just thin nails? What do you think the chances are he won't try to use it as an excuse to try to evict me ? And maybe he might even notice a few other things I was doing wrong that neither I nor he ever gave a thought to before?
While he might not kick me out for not paying my rent, I have to imagine that having him for an enemy means that he will think of anything he possibly can to try to get me out of here as quickly as he can. How are my new friends at the homeowners association going to help me with that?
Which lead me to the last, most important reason that the "immunity" offered by the new law is fairly worthless. My lease expires in three months. What happens then? I can tell you right off the bat that my landlord will have no interest in keeping me in the unit if I'm not paying rent and *especially* if I've decided to throw my lot in with my new friends (and his new enemies) at the homeowner's association.
The only power the homeowner association has is to evict me. They can't do anything to make it possible for me to stay in my unit when my lease runs out, and I'm guessing -- based on their past treatment of me -- that they aren't going to help me find another unit. I'm especially confident that they aren't going to help cover any of my moving expenses when I undoubtedly have to leave in three months.
Which brings me to my final point.
MYTH #3: TENANTS ARE NOMADS
Homeowner associations and lawyers keep asking: "Why do you stay? Why do you want to live in a unit owned by a deadbeat?" And everyone else talks in such a way that you would think that tenants were all nomads who live out of suitcases that can easily be packed and unpacked at a change in the wind.
I've lived in my current unit for over five years. At the time I moved in (after being shown the place by a reputable real estate broker) my landlord wasn't a deadbeat. He was glad to have my family and I stay "as long as we liked" – a great situation for a family with two kids just starting middle school. We spent several thousand dollars to move all of our belongings to this unit, we registered the kids for school, and we've made friends in the neighborhood and community.
Moving isn't easy. For me to move -- to get everything ready to go, to find a new place, to hire movers, to pack everything up, move it, find a new place, unpack everything again -- is a major *ordeal*. I will have to take time off of work to do it. I will have to spend a lot of money to do it. It will be very unpleasant and expensive for me and my family.
...but not half as unpleasant as it will be for my kids, who will have to make new friends, maybe even have to go to a different school, and have their lives all turned around.
Most tenants are NOT nomads. Just like homeowners, they *live* where they live, and they have just as many materials goods (sometimes more!) as homeowners do. Moving is a terrible burden.
CONSEQUENCES FOR EVERYONE
My point is this: Associations are right now trying to push the new law as far as it will go. Despite the fact that the law pretty clearly says "future monetary obligations" and despite the distinct possibility that the legislature may have *intended* this law to apply only to new leases entered into *after* July 1st, associations are trying to use it as a panacea to collect all of their overdue assessments and dues without going through the regular debt collection procedures usually required by the law.
And while I feel very bad for the homeowner's associations, the way in which they are trying to manipulate and scare tenants is just plain wrong. They are making demands that many *unbiased* observers believe are NOT covered by the law (although we'll have to wait for a judge to rule on it to know for sure) under the assumption that they will get to keep any money they can collect now, so they should get as much as they can before it is too late. And they've deluded themselves into believing that the tenants – their neighbors – won't be harmed.
What they need to understand is the untenable position they are putting tenants such as myself in. Because this isn’t about whether or not I should follow the law (because I will) – associations are asking tenants to accept their *interpretation* of the law – one that will likely cause tenant to face severe indirect consequences. And I don’t have a lot of reason to think – or want to believe – that the homeowner’s association interpretation is the correct one – or more important, the one that a judge side with.
The homeowner’s association can try to evict me. But as I understand it in order to be evicted, the they are going to have to convince the judge that I have somehow violated the law by sending *only* the $300 association fee to them because (a) "future monetary obligations somehow include past due amounts; (b) the law applies to contracts entered into before the law went into effect; (c) the law isn't somehow unconstitutional and a violation of the property owner's due process rights. I don’t know much about the law, but it seems to *me* that proving all of that isn't going to be easy.
Someone asked whether a tenant such as myself would go to all of the trouble and expense? Wouldn’t it just be easier to move? Curiously enough, even if I wanted to move I can’t – I have a lease, and unless I’m willing to pay several months rent worth of penalties, I can’t leave.
But also consider this: if the homeowner’s association isn’t successful at proving the points above – if they fail with their bid to evict me – they have to pay all of my legal expenses. And I don’t plan to use a cheap lawyer.
Sure, it’s a gamble. But I, like so many other tenants, are being backed into a corner. If the homeowner’s association tries to evict me they better feel really good about their hand -- because the stakes are high, I don’t have to option to fold and I (quite literally) have a full house.
If it comes to this I imagine we probably won't be the most loved family at the community pool this summer…but frankly, we haven't been *allowed* to use the community pool for quite a while now, so I think we’ll find a way to live with ourselves.
7:36AM JUN 2ND 2010
This is the most bizarre and frustrating law...can't figure out what the legislature was thinking. Since my landlord is in bankruptcy, I have been harrassed by the local HOA. Quite frankly, they are a bunch of mindless, lawless idiots. I have NO CONTRACT with them and fail to see how they can blame tenants for landowners problems. Good luck with the litigation and liability that will come with this law!! Since when does an HOA have legal priority over a MORTGAGE LENDER OR TAXES on a property? Ridiculous & Republican...the deadly duo.
6:43PM JUN 2ND 2010
Homeowner Associations are on high alert these days. A Florida court wiped away delinquent HOA fees along with mortgage debt on some recent foreclosure case. Prior to this bust and that ruling, HOA's would let their few delinquent accounts ride-until there was a change in ownership. The HOA fees would be settled at closing-thus they were fairly safe that the other homeowners would not suffer from deadbeat homeowners failure to pay fees.
With the amount of uncollected fees mounting up, and with banks letting people stay in their homes longer without taking foreclosure action-the bad debt issue is much bigger for HOA's. Some see tripling of their uncollected accounts in the last 2 years.
If HOA's in Florida are not keeping up with unpaid fees-they may get left holding the bag in a foreclosure action. People who live in homes without paying the mortgage-need to be pressed to pay the operating costs at least. That includes the utilities and the HOA fees to maintain the grounds.
With the amount of uncollected fees mounting up, and with banks letting people stay in their homes longer without taking foreclosure action-the bad debt issue is much bigger for HOA's. Some see tripling of their uncollected accounts in the last 2 years.
If HOA's in Florida are not keeping up with unpaid fees-they may get left holding the bag in a foreclosure action. People who live in homes without paying the mortgage-need to be pressed to pay the operating costs at least. That includes the utilities and the HOA fees to maintain the grounds.
6:43PM JUN 2ND 2010
Homeowner Associations are on high alert these days. A Florida court wiped away delinquent HOA fees along with mortgage debt on some recent foreclosure case. Prior to this bust and that ruling, HOA's would let their few delinquent accounts ride-until there was a change in ownership. The HOA fees would be settled at closing-thus they were fairly safe that the other homeowners would not suffer from deadbeat homeowners failure to pay fees.
With the amount of uncollected fees mounting up, and with banks letting people stay in their homes longer without taking foreclosure action-the bad debt issue is much bigger for HOA's. Some see tripling of their uncollected accounts in the last 2 years.
If HOA's in Florida are not keeping up with unpaid fees-they may get left holding the bag in a foreclosure action. People who live in homes without paying the mortgage-need to be pressed to pay the operating costs at least. That includes the utilities and the HOA fees to maintain the grounds.
With the amount of uncollected fees mounting up, and with banks letting people stay in their homes longer without taking foreclosure action-the bad debt issue is much bigger for HOA's. Some see tripling of their uncollected accounts in the last 2 years.
If HOA's in Florida are not keeping up with unpaid fees-they may get left holding the bag in a foreclosure action. People who live in homes without paying the mortgage-need to be pressed to pay the operating costs at least. That includes the utilities and the HOA fees to maintain the grounds.
3:04PM JUN 2ND 2010
Well, FL Renter ... you pose the question "Since when does an HOA have legal priority ...?" Since June 1, 2010. Would have thought that would be an easy one for you to figure out. But, since you are a renter, with no vested interest in the property, this doesn't sit well with you. Too bad!!! Your landlord is one of a growing number of deadbeat investor/owners who has gamed the system at the expense of all the other financially responsible resident owners. And now the law gives US access to YOUR rent to pay HIS obligations. What do you care who gets the money - as long as you have a nice home to live in. You say those "mindless, lawless idiots" who make up the HOA have been harassing you. Why? Have you not been behaving yourself, obeying the Rules and Reg's that came with your lease agreement? Probably not, based on my extensive experience in this business. But you do have a remedy: MOVE! Get out while the gettin's good and the HOA will find another quality tenant to take your place. Oh, and one more thing. Since you have interjected a political overtone to your renter's dissatisfaction (uncalled for by any stretch of the imagination) I would make book on the assuption that you are another secular progressive liberal who just ain't gettin his way, and needs a place to whine and someone else to blame. Give it a rest. The free ride is over.
1:48PM AUG 24TH 2010
From a responsible unit/full time home owner in a condo in FL. Thank you for saying it so WELL. I can't afford another 25$ assessment or any for that matter any, then I will have to move too. I am already in the hole about 150$K if I had to sell my home today.
6:53PM JUN 26TH 2010
so this new law forces me to break the lease agreement? Because the contract i signed said i should pay the lease money to the owner/management co. and if i don't i would be evicted. then if i do pay the HOA the owner wont any part of the mortgage they owe and then the owner, who probably already is, defaults on his/her mortgage. Then the bank will foreclose and sell it? at which time i'm free because there's a clause in the Lease for sale of the condo or will the HOA take the unit back. Does that count as a 'sale'?
