The Florida legislature certainly isn’t winning friends and influencing people with the new homeowners association legislation that is being bandied about in Tallahassee. This column gets it’s share of comments about pending legislation, and normally chooses to either publish a brief description of the bill, or simply leave it in the inbox for later. However, HB 319 is quite another matter.
The West Palm Beach HOA Examiner has received comments on the legislation from attorneys, debt collectors, and mortgage brokers all across the state, and none of the feedback received has been good.
In the interest of equal time, I call upon the “experts” in the field to email me and describe the positive parts of the legislation. There must be something good about it, right? Of course, it there are any other negative comments, those are welcome as well.
Recently, Mr. Joel Just, the president of Red Rock Financial Services, with offices in Las Vegas, Nevada and Plantation, Florida, emailed me with his own comments about the bill.
“Legislators generally do their best to help their constituents, drafting numerous bills each session in an effort to address important issues and increase our quality of life. Unfortunately, these actions often have unintended consequences.
Such is the case with proposed legislation dealing with foreclosures and the ability of homeowner associations (HOAs) to collect outstanding debt. HB 319 enables HOAs to collect outstanding assessments and fees from the buyer of a foreclosed property.
HB 319, as currently proposed, requires that a “unit owner, regardless of how the unit owner acquired title, including, but not limited to, by purchase at a foreclosure sale” is responsible for all outstanding assessments, including costs and fees associated with that debt. Banks that foreclose, however, are given a free ride to skirt their obligations as the owner of the foreclosed property.
Of course, the buyer of the foreclosed property is free to sue the previous owner to recover the past due assessments and fees, but chances of a successful outcome for the buyer are slim.
If a bank happens to foreclose on a property, thus becoming the owner and acquiring the title, what is their liability? According to the proposed legislation, “only the unit’s unpaid common expenses and regular periodic assessments that accrued or came due during the 12 months preceding the acquisition or one percent of the original mortgage debt.”
Add it all up and you get a win for the banks and a loss for HOAs and their collections companies and attorneys who are trying to recover costs associated with recouping unpaid assessments.
Many HOAs are facing difficult times as more homeowners stop paying their monthly assessments along with their mortgage. This leaves the other homeowners in the community who do pay their bills holding the bag. In many cases, HOAs are discontinuing amenities or raising assessments to cover the loss. To combat this, HOAs are forced to take a stronger stance in collecting the dues all homeowners promised to pay.
HOAs are increasingly hiring collection agencies and attorneys to collect on past due assessments. And just like any organization trying to collect its debts, these efforts costs money.
Why should banks be any different from individuals in paying these fees?
It is imperative that the Florida Legislature take into account the effects this bill has on individual homeowners and buyers and vote against any attempts to penalize neighbors who are doing the right thing” Mr. Just concluded.
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