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Condos and HOAs Follow Different Budgeting Rules,” by Becker

Condos and HOAs Follow Different Budgeting Rules,” by Becker

  • Posted: Jan 04, 2024
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Condos and HOAs Follow Different Budgeting Rules

Joseph E. Adams / Becker

 

Q: Our association will be holding its annual budget soon. After receiving the notice for this meeting, I called our association manager to ask how and where I could obtain a copy of the proposed budget. I was told that a copy of the approved budget would only be provided to the members after the budget meeting. In other words, the proposed budget would not be provided to the members in advance of the budget meeting at which the proposed budget would be considered and adopted. Is this right? I cannot help but feel very apprehensive about the contents of the proposed budget, considering the fact that it has been made unavailable for review in advance of the meeting? (P.M., via e-mail)

 

A: The answer to your question depends on several factors, including whether your association is a condominium or homeowners’ association.

Chapter 718 of the Florida Statutes, the Florida Condominium Act, requires that at least 14 days prior to the meeting where the board will consider the budget, the association must mail, hand deliver, or electronically transmit (to those unit owners who have consented in writing to receive electronic notice) notice of the meeting along with a copy of the proposed budget. The notice of the meeting must also be posted on the condominium or association property at least 14 days in advance of the meeting.

For associations managing a condominium with 150 or more units, these materials must also be posted on the association’s website or make such documents available through an application (app) that can be downloaded on a mobile device

By comparison, Chapter 720 of the Florida Statutes, the Florida Homeowners’ Association Act, only requires 48 hours posted notice of the budget meeting and requires the notice to state that assessments will be considered. There is no requirement that the notice be sent to the owners, and there is no general website posting requirement for HOAs in Florida.

The Homeowners’ Association Act also requires the associations to provide each member with a copy of the annual budget, or a written notice that a copy of the annual budget is available upon request at no charge, within 10 business days of the board adopting the annual budget. There is no requirement for homeowners’ association to send the members the proposed budget in advance of the budget meeting.

Therefore, for condominiums, the proposed budget needs to be sent out 14 days in advance, but the adopted budget does not need to be sent to owners. For homeowners’ associations, it is the opposite, the budget is sent or made available to the owners after adoption but is not required to be circulated before the meeting. Notice procedures are also more relaxed in the HOA context. This is probably one area where the two statutes should contain the same procedures, as this does create some confusion, especially at this time of year when budgets are the main order of business.

There are other important differences between condominium and homeowners’ association budgeting procedures, specifically regarding reserves. In general, all condominiums must present reserves with the budget based on a statutory list of required items, and these reserves must be “fully funded” unless the owners have voted to waive or reduce the full funding of reserves. Conversely, in homeowners’ associations, there is no general statutory requirement for reserves and the provisions of the governing documents are usually determinative.

From your description, it sounds like you are a member of a homeowners’ association. The procedures you describe do not violate the Homeowners’ Association Act. Of course, any additional procedures or requirements of your community’s governing documents need to be followed. The proposed budget is also an “official record” and you are also legally entitled to require the association to produce it for your inspection, and if you choose, copying. The association generally has 10 working days to respond to official records inspection requests.

Joseph Adams is a Board Certified Specialist in Condominium and Planned Development Law, and an Office Managing Shareholder with Becker & Poliakoff. Please send your community association legal questions to jadams@beckerlawyers.com. Past editions of the Q&A may be viewed at floridacondohoalawblog.com.

 

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Florida Legislature to Pass Law Prohibiting Associations From Charging Estoppel Fees

Florida Legislature to Pass Law Prohibiting Associations From Charging Estoppel Fees

  • Posted: Jan 02, 2024
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YOUR ASSESSMENTS ARE ABOUT TO GO UP AGAIN

Act Now Before It IS Too Late!

Of all the subjects I never would have thought I would be writing to you about, it is this: the Florida Legislature is dangerously close to passing legislation that prohibits a Florida community association from charging a fee for the preparation and delivery of an estoppel certificate!!! The text of Senate Bill 278, along with its companion House Bill 979, fully prohibits condominium and homeowners’ associations from being able to charge the requesting party a fee for the preparation of the estoppel certificate. But, however, the professional who assists the association prepare and issue the estoppel, such as the management company and attorney, will now charge the association and not the party who requested the estoppel. This year’s legislative session starts very early, on January 9th. Your legislators need to hear from you that you do not want them to support these bills because they will cause financial harm to your association.

Why should community associations be stuck with the bill for the estoppel? This bill will fully shift the financial responsibility for the estoppel from the buyer or seller right on over to the association. In other words, the association still has to pay its agents, be it the management company or attorney, etc., to prepare the estoppel. At times it takes a lot of work, coordination and effort to timely issue the estoppel, let alone all of the liability that comes along with its issuance.

Since when in the United States of America can the legislature require any of us work for free? Well, it may sound like that because the buyer or seller will not have to pay for the estoppel but we all know in reality, nothing is free. This draconian fee shifting legislation could in a great many cases, if not all, act to increase every homeowner and condominium unit owner’s assessments who live in the community. Preparing estoppels can take significant time, most, especially, if there is a long history of nonpayment associated with the account. Also, existing violations must be taken into account in the estoppel certificate, etc., If the math is wrong, the issuer of the estoppel could end being financially responsible for the shortage, and they could be subject to, amongst others, Federal Fair Debt Collection Practice Act claims due to a mistake. Therefore, there is significant time involved in gathering all of this information, ensuring it is correct, and then issuing the estoppel within the required 10-day business day legislative timeframe. To make a long story short, management companies will have to increase their fees charged to the associations to offset their inability to charge the fee to the requesting party for the estoppel, and thus, every member of your association will have to pay more.

As to any rumors of rare abuse by those charging excessive estoppel fees, there are already safeguards built into the existing legislation which provide for summary legal proceedings that can be brought to compel compliance with the existing estoppel legislation and its financial cap. It even provides for prevailing party attorneys fees.

If you hear that objections to this legislation from management companies and attorneys are because they do not want to lose revenue such is not the case at all. It’s really quite simple: This legislation will fully shift the responsibility for the estoppel fees, from that of the requesting party, to all the owners that already live in the association’s community and who have nothing to do with the transaction at all.

As this is holiday season, if this passes into law, what a horrible gift that would be. To prevent this legislation from becoming law, please reach out to your legislators and let them know that you object to Senate Bill 278 and House bill 979.

HERE is a link to the SB 278.


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Tune Into Condo Craze And every Sunday At 11:00 a.m. Find us on our YouTube channel for our live shows.

Tune Into Condo Craze And every Sunday At 11:00 a.m. Find us on our YouTube channel for our live shows.

  • Posted: Jan 02, 2024
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Tune Into Condo Craze And every Sunday At 11:00 a.m. Find us on our YouTube channel for our live shows.

Subscribe to our YouTube channel 

 

 WE WILL TAKE YOUR CALLS AND ANSWER YOUR CONDO AND HOA QUESTIONS THROUGHOUT THE HOUR. CALL US AT 877-850-8585 DURING THE SHOW.

TAKING YOUR CALLS ON WHATEVER TOPIC YOU NEED ANSWERS TO OR WHATEVER YOU NEED TO GET OFF YOUR CHEST.

*OUR LAST SHOW ON 850. AFTER 15 YEARS – WE ARE LEAVING 850 WFTL AND GOING STRAIGHT TO YOUTUBE

 

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Join KBR for “Covenant Enforcement for HOAs and Condominiums”. Managers will receive one CEU in the OPP category. Dec. 13th at 11:30am, live on Zoom.

Join KBR for “Covenant Enforcement for HOAs and Condominiums”. Managers will receive one CEU in the OPP category. Dec. 13th at 11:30am, live on Zoom.

  • Posted: Dec 13, 2023
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Join KBR for “Covenant Enforcement for HOAs and Condominiums”. Managers will receive one CEU in the OPP category. Dec. 13th at 11:30am, live on Zoom.

Register NOW.

Covenant Enforcement for HOAs and Condominiums

Dec 13, 2023 11:30 AM 
Description
Course #: 9630145
Instructor: Kerstin Henze, Esq.
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VIDEO: Community Association Elections | Q&A Webinar | Kaye Bender Rembaum

VIDEO: Community Association Elections | Q&A Webinar | Kaye Bender Rembaum

  • Posted: Nov 14, 2023
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Community Association Elections | Q&A Follow-up Video Webinar | Kaye Bender Rembaum

KBR Attorney Allison L. Hertz returns to answer some of the audience questions from her CE credit Elections webinar. This video is for informational purposes only and is not to be considered as legal advice.

 

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ELECTIONS, INSURANCE, AND A SENSELESS DEATH

ELECTIONS, INSURANCE, AND A SENSELESS DEATH

  • Posted: Nov 14, 2023
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ELECTIONS, INSURANCE, AND A SENSELESS DEATH
This season, more than any other of late, the issue of condominium election ballot verification reared up. The condominium election process is unique and very regulated. In addition to many other requirements, ballots are to be placed in an inner plain and unmarked envelope which is to be placed inside a larger envelope which must, as per Florida law, contain the unit owner’s name, address, unit number and signature. As part of the election process, this information is later verified against the associations’ membership records to ensure that only the unit owner, or the unit owner’s designated voter, cast their ballot. It is the plain inner envelope that guarantees anonymity.

Given the sheer volume of units in many condominium communities, which translates to the number of ballots that can be received, the process of tabulating the ballots can take hours. To speed things up, some condominium communities prefer to verify the outer envelope information in advance of the election ballot tabulation that takes place during the annual members’ meeting. That said, and what may come as a surprise to some, is that you cannot just start verifying the outer envelopes. If you do, then your entire election is subject to challenge. Tampering with the election materials creates an inescapable cloud over the entire election process from which there is no escape, but a new election. It is so simple to avoid, too.

 

Section 61B-23.0021, of the Florida Administrative Code, details the verification process as follows: “Any association desiring to verify outer envelope information in advance of the meeting may do so as provided herein. An impartial committee designated by the board may, at a meeting noticed in the manner required for the noticing of board meetings, which shall be open to all unit owners and which shall be held on the date of the election, proceed as follows. For purposes of this rule, “impartial” shall mean a committee whose members do not include any of the following or their spouses: 1) Current board members; 2) Officers; and 3) Candidates for the board. At the committee meeting, the signature and unit identification on the outer envelope shall be checked against the list of qualified voters. The voters shall be checked off on the list as having voted. Any exterior envelope not signed by the eligible voter shall be marked ‘Disregarded’ or with words of similar import, and any ballots contained therein shall not be counted.” Now you know how to have your cake and eat it, too. Just follow the simple procedures to verify the outer envelopes and you can be home in time for the 10:00 P.M. news.

 

Once you are elected to the board, make certain the directors’ and officers’ liability coverage is in place. In most instances, a board member’s duty is to exercise their reasonable business judgment. They can make decisions that later turn out great or bad, but so long as they acted reasonably under the circumstances, and without malicious intent, the association’s insurer typically stands by their coverage obligations. Noteworthy is that, as related to procurement of insurance, a condominium board member’s statutory duty as set out in s. 718.111(11), Fla. Stat, is one of “best efforts”. Casualties of all sorts can occur at any time. For example, just look to the recent tragedy that led to the death of Trayvon Martin.

 

Friends, family and clients are all asking, will George Zimmerman’s homeowners’ association be sued? Yes, most likely it will. That is one deep pocket not likely to be missed. We could also see intentional tort claims brought against the individual directors by the victim’s family. If such claims are victorious, then it’s the individual directors who are liable, not the association’s insurer. Under the circumstances, as reported thus far, a finding of individual board member liability is not unlikely.

The more difficult question to answer is whether the HOA will have liability for its actions or failures to act? Was the association, based on the acts of its boards (both past and present) negligent or grossly negligent (reckless disregard that rises to such a level so as to appear to be an almost willful violation of the safety of others)? If so, the insurers would likely fight to pay only their fractionalized share of the association’s blame. This is referred to as “contributory negligence” where each culpable party pays their share of the blame. You might also hear about some court activity where the plaintiffs try to force the association to suffer its judgment separate from the other defendants. Doing so could create opportunity for larger settlements and judgments. Think of it this way, would you rather receive just $1,000 from 10 people, or have 10 people each give you $1,000?

 

In many ways, suing a homeowners’ association is like suing a successful, well capitalized corporation. Without proper insurance coverage in place, a judgment against your association would also be your next special assessment. Make sure your association’s insurance professional is made aware of all activities taking place in your community, from watch committee activity to use of the clubhouse by private organizations. Crime and accidents occur everywhere, at any time, when you least expect it and without notice. Advance planning is your only defense.

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Want to take part in the decision making, step up, and run for the board. Learn about Boards how they function and How to Run Decision Making Meetings.

Want to take part in the decision making, step up, and run for the board. Learn about Boards how they function and How to Run Decision Making Meetings.

  • Posted: Nov 14, 2023
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Everyone has something to say about the Boards Decisions, but not many want to become a board member!

When an owner approaches me to complain about the decisions of the board of directors at his or her association is;  The First Question I ask is- “did you attend the meeting that decision was made at?” The Second Question is- “have you considered running for the board so that you can be part of the decision-making process?” All too often the answer to both questions is no. If you want to understand why your board makes the decisions they make and possibly influence those decisions the best way to do this is to attend the board meetings and comment on items you have knowledge or concerns about on the agenda. Want to take part in the decision making, step up, and run for the board. – by Royale Management Services

 

The vast majority of business decisions are made in meetings. While small decisions are made in all kinds of meetings, the more important decisions often get their own dedicated meetings.

There are different types of group decision making processes, and care should be taken to choose a process that best matches the situation. A decision making process can include group activities like information gathering and sharing, brainstorming solutions, evaluating options, ranking preferences, and voting on the final options. Below are the most effective ways of running decision making meetings.

 

Primary Goals for Decision Making Meetings

Goals for a decision-oriented meeting can vary a little based on the type of decision being made, but they are always centered on coming to a consensus about a future plan. It is important to remember that the goal of these meetings also includes planning how to best execute the decision that has been made.

Make the best possible decision

If a decision making process is flawed and dysfunctional, the decisions will be bad.

By involving a group in making a decision you can rely on collective intelligence; knowledge beyond what is possible with individual decision makers. Because each participant has unique information and perspectives, combining group information leads to more informed decisions. However, it is important to use meetings designed specifically for group decisions efficiently, to not waste the group members’ time.
If all planning decisions were made by one person, not only would the choices be uninformed, there would also be little unity around team goals and direction.

Planning for execution

When individuals feel that their opinion has been considered in the group planning, they are more likely to embrace the decisions and work to carry out those goals.

Most discussions of decision making assume that only senior executives make decisions or that only senior executives’ decisions matter. This is a dangerous mistake.

Participatory decision making leads to increased team productivity and likelihood of goal execution, because team members feel ownership and responsibility for the decisions made.
Addressing both short term and long term goals at your decision making meetings is a great way to make sure team members leave with a direction and know the next steps. The short term plan can be as simple as outlining action items and assigning tasks. In the long term it could mean setting a timeline of general dates and milestones. Initial planning can be an effective way of aligning the group and cementing the decision that was made.

 

 

Key Roles in Decision Making Meetings

The participants in decision making meetings may play different roles. Understanding the distinctions between these levels of involvement is a useful way of holding members accountable for their role in implementing decisions.

Meeting leader

In order to avoid getting off topic it is recommended that one person be in charge of guiding the direction of team negotiation. In addition, it can be helpful to use some elements of status update meetings in order to have meeting attendees present and be held accountable for research into the decision being made.

Those with authority to carry out the decisions

For decision making meetings it is particularly important to include all relevant persons with authority to carry out the decision. If decisions are made without including the relevant people, it can often be very challenging to implement the resulting decision.

In some cases, it can be useful to dedicate one leader of a team to be a representative for that group. Often, this job is given to someone in a senior position, but it can be fulfilled by anyone capable of accurately reporting information on behalf of a group. If this method is used, the representative should be prepared to report back to the team the consensus that was reached. Without this information exchange, the group unity that should have been a result of the group meeting is lost.

Note taker and process observer

Decision making meetings can often get derailed or become ineffective for a variety of reasons. To counter this, it can be helpful to include a note taker and process observer. These roles should be filled by people not directly involved in the decision so they are not biased toward any particular opinion. A note taker records what was suggested and decided throughout the meeting while a process observer records how those decisions were met. Incorporating these roles can lead to a lasting group understanding as well as ability to improve decision making meetings in the future.

 

Common Challenges in Decision Making Meetings

Making group decisions can be hard. Making good group decisions is even more challenging. However, good decisions is what can make or break your project or even your company or career. Being aware of the most common challenges in decision making meetings will move you closer to facilitating successful group decision making.

Incomplete information and narrow perspectives

An important aspect of collective decision making is to incorporate a broad spectrum of opinions and ideas, and through group collaboration converge these into a best possible solution. This process is easier said than done. Getting to a solution often involves dealing with a lot of conflicting agendas and opinions which are not easily resolved.

Identifying the best possible solutions

Another classic challenge of the decision making meeting is knowing what possible options are worth further consideration and discussion, and which options to discard early. Time is often wasted discussing possibilities that are not even among the most likely or best choices.

 

 

How to Host a Successful Decision Making Meeting

Decision is the spark that ignites action. Until a decision is made, nothing happens.

A great decision making meeting effectively incorporates all participants, benefiting from the knowledge and experience they bring to the process. Giving all relevant parties the opportunity to participate in the decision making process increases the quality of the decision, adds to the collective understanding and support of the outcome, and ensures successful implementation.

Consider all relevant information

We want as much relevant information as possible to go into the group decision process. This means involving as many stakeholders as practically possible to provide input when it comes to defining the problem area, come up with possible solutions, and evaluate options.

Generate and evaluate possible solutions

Identify and agree on solution requirements before starting to brainstorm potential solutions. Then, invite to brainstorm solutions with an open mind, focusing on the issue rather than the person presenting the idea. Use the solution requirements to evaluate the various suggestions, identifying the top ideas for further consideration.

Get everyone on board

The secret of change is to focus all of your energy, not on fighting the old, but on building the new.

One of the most important aspects of decision meetings is to create unity around the decision that is created. When each participant feels their opinion has been fully considered as part of the decision making process they are more likely to feel ownership of the decision, even in cases when it is not the outcome they hoped for.

 

 

Better Decision Making Meetings with Technology

Collaborative technologies today like Zoom and a good website where owners can read and voice their opinion on subjects that will impact them are being used to make group decision processes easier to manage, more efficient, produce better solutions, and improve execution of decisions.

 

Easily include and engage all key stakeholders for more complete information

Using smart device-based participation levels the playing field and provides an efficient way to share information and reach group consensus. The unruly nature of decision making meetings is easily structured with Zoom and a good Website for your association, because participants are presented with real-time visualizations and group opinions as the discussion moves forward.

 

Quickly tap into the group’s knowledge and expertise

Having participants use Zoom and a good Website for your association to evaluate options will help focus on the task at hand. Collecting decision preferences automatically, rather than manually, speeds up the process. Not only does that mean less time spent on interpreting where a group stands but it also allows for more people to be involved in the process at the same time.

For example, conducting a brainstorm with a large group of participants using whiteboards, flip charts, and post it notes can get messy. When people are contributing one by one it takes a considerable amount of time. The Zoom and a good Website for your association everyone can brainstorm, this activity lets group members submit ideas concurrently, via their own smart devices and computers making sure to accurately record and organize all inputs. This saves time for everyone involved, no matter how large the group is

 

Real-time visualizations of options and opinions focuses the discussion

Zoom and a good Website for your association are well suited to measure group opinions. In the case of an extended discussion it can be helpful to take multiple snapshots of opinions, as they can change over the course of the conversation. Taking a quick group poll, ranking, or evaluation after an initial conversation will clearly identify where the group feels their time is best spent. This allows the discussion to stay centered on the most important and relevant issues. The group will be able to use these baseline opinions as a jumping off point for focused conversation, establishing a common ground and sense of unity which will set the stage for successfully reaching a decision.

 

Engaged inclusion of stakeholders generates buy-in and better execution

Unfortunately, just organizing a group decision making meeting does not necessarily assure that each person in the room will leave feeling that they have been heard. Using Zoom and a good Website for your association ensures each person gets to contribute on an even scale. Because, participants can literally watch their voice be factored into the results. Playing an active part in the decision making process generates a sense of ownership and responsibility for the results, which in turn ensures active participation in carrying out the plan.

 

 

Adding to this: COVID-19: Technology and Social Distancing by Becker Lawyers.

COVID-19 has introduced new challenges to the way we meet and work together in our communities. Many of our daily community association activities include in-person interaction, from regular meetings to conduct association business to elections and other membership votes. Social distancing, the new normal, has necessitated a change to our behavior. While we continue to learn more about the COVID-19 virus and how it is spread, we do know that limiting in-person interaction can greatly reduce risk. Modern technology is a powerful tool to help reduce the transmission of the virus and allow us all to continue with our normal community association business. The following are a few options to consider as your association works to reduce risk in your community.

Voting

A standard election or membership vote often involves voting on a paper ballot. In addition, other types of voting events also include meeting in person, either to cast a ballot or participate in an annual meeting. At this time, we don’t know exactly how long the virus lasts on surfaces, but experts do believe it can be transmitted by touching surfaces. While social distancing and other guidelines now require we limit group activities and avoid public gatherings, there are a number of technologies that allow voters to participate in elections and cast membership votes safely from the comfort of their own homes.

Online voting is a Florida approved option and is a powerful tool to ensure association members can easily participate without the risk of exposure to the virus from in-person meetings or via voting materials. If you have an upcoming election or other membership vote, consider adding online voting to your process to avoid the need for physical materials and in-person participation.

Association Documentation

Community associations are required to provide access to association documents in the form of document inspection requests, a common practice that is sure to continue even during these uncertain times. We expect COVID-19 to affect the normal course of business for at least the next few months, especially as we continue to avoid in-person meetings and handling physical materials.

Instead of requiring in-person document inspections, consider posting your association documentation to your community website. Community association website software offers tools to upload association documentation and share links via email. These tools also allow you to easily post all Florida required association materials to a password protected area of your association’s website, facilitating ease of access and satisfying document inspection requests. These tools are simple to use and are cost-effective methods to continue to support your membership while helping to stem the transmission of the COVID-19 virus.

Association Communication

As we have seen, communication during an uncertain time is crucial. Your community association website is an instrumental channel to quickly and effectively communicate with your association membership. By posting official notices on how your community is managing the outbreak, your website provides a quick and centralized mechanism to ensure your association is apprised of the latest information. We all rely on websites for information and entertainment, and we will likely spend more time online now that our out of home activities are limited. Take this opportunity to direct your membership to your association website for the latest community updates.

We are all facing the challenges COVID-19 has introduced. Social distancing, cancelled activities, and the overwhelming amount of information only adds to the stress of this evolving situation. Technology can be a powerful equalizer, enabling us to work together in safe conditions and keep lines of communication open to all.

 

 

 

 

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HOW TO COLLECT WHAT’S DUE?  By Eric Glazer, Esq.

HOW TO COLLECT WHAT’S DUE? By Eric Glazer, Esq.

  • Posted: Oct 23, 2023
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We are already starting to see an uptick in the amount of owners falling behind on paying their assessments to their association.  It is wise for an association to know how the collections process works in for the board to put in place a policy that works best for the association.

In both condos, Co-ops, and HOAs, the procedure is the same.

  1. To start, the association must first deliver a thirty day written notice of late assessments to the unit owner which specifies the amount owed the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees.
  2. If the owner fails to bring their account current, the association must then provide the delinquent unit owner with another letter which is a 45 day notice of its intent to file a lien and its intent to foreclose its lien. The association can demand attorney’s fees, interest and late fees in this letter.
  3. If the owner fails to bring their account current, the attorney can record a lien and threaten to foreclose on the lien if their account is not brought current within 45 days.  The association can demand attorney’s fees, interest and late fees in this letter.
  4. If after 45 days the owner still fails to bring their account current, the association may file a foreclosure action in court.

Keep in mind that because the unit owner must receive a 30 day letter, a 45 day letter and another 45 day letter, it takes a long time to bring a delinquent owner into court.  That is why associations may need to rethink their collection process and start it a little earlier.  If not, by the time it gets to court, the owner may by 9 or 10 months delinquent.

Especially in condominium buildings, things are about to get tough.  There are now mandatory inspections, mandatory repairs, mandatory fire sprinkler or ELSS installation, a tremendous rise in insurance and the inability to waive reserves.  Stay on top of your collections.


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Eric Glazer

Eric Glazer graduated from the University of Miami School of Law in 1992 after receiving a B.A. from NYU. He has practiced community association law for three decades and is the owner of Glazer and Sachs, P.A. a five attorney law firm with offices in Fort Lauderdale and Orlando.

Eric is Board Certified by The Florida Bar in Condominium and Planned Development Law.

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