A condominium association’s governing documents in conjunction with Section 718.116, Florida Statutes, are the genesis of the condominium association’s authority to impose and perfect assessment liens against individually owned units within the community. This four-part blog will discuss the condominium association’s right to lien, perfecting the condominium association lien, and collection practices for condominium associations. Part III of this blog will discuss the ins and outs of a condominium assessment foreclosure lawsuits.
A condominium association may bring an action in its name to foreclose a lien for assessments in the manner a mortgage of real property is foreclosed, and it may also bring an action to recover a money judgment for the unpaid assessments. The association is entitled to recover its reasonable attorney’s fees incurred in either a lien foreclosure action or an action to recover a money judgment for unpaid assessments. See 718.116(6)(a). Condominium lien foreclosure is not subject to the alternative dispute resolution proceedings found under Section 718.1255, Florida Statutes, which means that the parties do not have to engage in mediation or arbitration.
The first step in the foreclosure process is to determine whether the proper notices have been sent (see part II of this blog for information on how to properly perfect the condominium lien). Thereafter, the condominium association must determine the priority of its lien with a title search on the Unit and identification of the proper party Defendants. Every person or entity claiming an interest to the condominium property—and whose interest is inferior to the association’s lien—must be joined as a defendant if that person’s or entity’s right or interest is to be extinguished. If there are unknown tenants residing in the unit, then the names of said tenants may be identified as “John Doe and Jane Doe, tenants in possession” or “Unknown Tenant One and Unknown Tenant Two.”
Basically, a condominium lien foreclosure action is a lawsuit. If the unit owner does not respond, then the association can obtain a default and obtain the foreclosure rather quickly. If the unit owner defends and contests the lawsuit, then the association is engaged in contested litigation and will need to file motions and conduct discovery in order to prevail in the foreclosure.
As with any action to determine interests in real property, the foreclosing association should record a lis pendens. The recording of a lis pendens provides record notice to all of the pendency of a lawsuit affecting the real property. See 48.23(1)(a), Florida Statutes. As the recordation of an assessment lien is an item that affects title, the lis pendens is appropriate. The lis pendens will be recorded in the official records of the County where the property is located. The lis pendens will show up on any title search, thus preventing the Unit Owner from selling or transferring the property in avoidance of the assessment foreclosure action. Any transfer of title after the recording of a lis pendens takes subject to the pending lawsuit. The lis pendens must contain the name of the parties, the date of institution of the action and case number, the name of the court, the description of the property involved and a statement of the relief sought. See Form 1.918, Florida Rules of Civil Procedure (2014).
Condominium associations are entitled to plead in the alternative claims for money damages for the failure to pay assessments. 718.116(1)(a); Maya Marca condominium Apartments, Inc. v. O’Rourke, 669 So.2d 1089 (Fla. 4th DCA 1996). The additional count allows an association to still seek recovery of assessments if there is a technical defect in the lien. Additionally, the alternative count allows the association to recover a judgment if—in the middle of proceedings—a superior lienor such as a first mortgagee obtains title, rendering the association’s foreclosure claim moot. In any event, if a condominium association is named in a lender foreclosure because the unit owner is not paying his or her mortgage, then the association can crossclaim for money damages against the unit owner in the same lender foreclosure action. Regardless of who is bringing the foreclosure action, it is always good practice for an association to obtain the money judgment. The statute of limitations on damage claims is five years because the claim is based on a written instrument, the declaration. F.S. 95.11(2)(b) and not the condominium assessment lien.
Condominium association board members and managers should understand the assessment foreclosure process and timing in order to aggressively enforce collection of assessment liens. An association with a good property manager can develop and implement a strong collection policy and practice that is uniformly enforced.