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CONDO ASSOCIATIONS HAVE POWER

Florida's legislature has long considered regulation of condominiums an important part of governing. Florida's first Condominium Act was adopted in 1963. The original goal was to provide statutory confirmation for air right conveyances and bring a semblance of order to a blooming condominium industry. It did not take long for the legislature to decide there was a need to protect consumers. Over the years, the legislature has amended the Condominium Act almost every time it has been in session.

Protecting consumers meant more than making sure the buyer got a fair contract and could enforce rights against non-performing developers or pursue action for defective construction. Protecting the consumer turned increasingly to making sure condominium associations were functional. The goal was to ensure condominium owners would be members of associations that were run in an orderly fashion, following rules and observing at least a minimum degree of fairness to all owners. Close quarter living in a condominium required more rules than might be needed with the greater separation of single-family homes.

Early cooperative apartments failed financially as they were converted apartment buildings with a master mortgage encumbering the entire building. One enough owners failed to pay assessments, the master mortgage would foreclose and everyone lost their home. The legislature wanted to make sure that Florida condominiums did not face a similar result and if that effort continues to this day.

The Condominium Act includes substantial detail about budgets and assessments. It mandates notices to owner when budgets are adopted or when special assessments are to be considered. It also provides associations with a variety of powers to make sure the owners pay assessments. Most of those powers are found in Section 116 of the Act.

The Act makes a unit owner, regardless of how the owner acquires title, liable for all assessments that come due while he or she is the owner. The unit owner is also jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. There are some extra protections for foreclosing lenders, but the bottom line is a buyer better find out if any assessments are due or overdue at the time the buyer acquires title as the buyer inherits the assessments.

Assessments not paid when due bear interest at the rate provided in the declaration of condominium and, if no rate is provided, statute sets interest at 18% per year. The association can also charge an administrative late fee for the greater of $25 or 5% of each delinquent installment, if provided by the declaration or bylaws. The Act mandates any payment received from an owner be first applied to interest, then to administrative late fee, then to costs and reasonable attorney fees incurred in collection, and only after all of the foregoing are paid to the delinquent assessment.

The association has a lien on the unit to secure payment and it can foreclose that lien just like foreclosing a mortgage. The legislature was worried associations might rush to foreclosure against a unit owner that was in disfavor, so it mandated that notice a lien be sent to a unit owner at least 30 days before a foreclosure lawsuit is filed. After more than a decade of experience with that requirement, the legislature amended the Act to also require an association provide notice of its intent to record a lien at least 30 days before recording. It has always been hard for this writer to understand how a delinquent unit owner should require so much notice. But, the legislature sees things differently.

If the association's bylaws or declaration authorize the association to approve or disapprove unit leases, the association can refuse to approve a lease as long as the assessments for that unit are delinquent. If the unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due the association, the association may make written demand on the tenant to pay the association rent otherwise due to the unit owner and to continue to make the rental payments until all monetary obligations of the unit owner related to the unit and been paid in full to the association. The tenant is immune from any action by the unit owner related to payment of rent to the association instead of to the unit owner. If the tenant refuses or fails to pay rent to the association after written demand, the association can proceed with eviction just like any landlord.

Making sure associations are financially secure was not the legislature's only effort to bring order to condominium ownership. The legislature also wanted to make sure that owners follow the rules. It gave associations the power to levy fines. Originally, an association could only levy fines if its declaration or bylaws included the power to levy fines. The Act was amended to authorize all condominium associations to levy fines, even if the declaration or bylaws do not specifically authorize fines. A fine may be levied on the basis of each day of a continuing violation, not to exceed the cumulative total of $1000 per violation. The Board of Directors votes to impose a fine, but the fine is not effective unless the person fined is provided at least 14 days written notice and opportunity for a hearing before a committee of at least 3 members appointed by the board, who are not officers, directors or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee.

A fine is not a lien against the unit and some owners thumb their nose at the association when it imposes a fine. But, the fine can be reduced to judgment and all the association needs to do is pursue a judgment in Small Claims Court. The judgment can be a lien against a unit and the process of collecting can prove expensive for an owner.

The Condominium Act provides more options for an association seeking to enforce the rules. An association may suspend the right of a unit owner, tenant or guest to use the common elements or any other association property (except that needed for access, utilities and parking) for failure to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association. As with imposition of a fine, 14 day notice and opportunity for hearing must be provided by the association.

If the unit owner is more than 90 days delinquent in paying a monetary obligation due the association, the association may suspend right of the unit owner or the unit's occupant to use common elements, common facilities or any association property (except that needed for access, utilities and parking) until the monetary obligation is paid in full. No hearing is required for this suspension.

The Act even provides the association (and unit owners) right to seek injunctive relief for failure to comply with the Condominium Act, the declaration of condominium, the documents creating the association or the association's bylaws. Courts have held virtually any continued violation is sufficient for an injunction. One of the more interesting usages of injunction is when an association seeks to remove a tenant who has either been placed in a unit improperly or who has proven to be a nuisance. Both unit owner and tenant can face an action by the association requesting the court issue an injunction prohibiting continued occupancy by the tenant. This gives the association powers akin to those of a landlord to evict, albeit pursuit of an injunction is more cumbersome than landlord-tenant eviction.

As part of its effort to make sure statutory provisions will be carried out, the legislature also provided the prevailing party in these cases will be entitled to reasonable attorney's fees and costs.

Powers granted to condominium associations by the legislature are not the limit of association authority. Provisions in governing documents for a particular condominium can provide additional powers for both association and owners. The Condominium Act grants powers to associations the legislature feels are important, even when those powers may not be in governing documents. The statutory powers are substantial and grant associations a lot of enforcement tools.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.