Tag Archives: owed

FL: Department of Mars: Condo Association Forecloses BEFORE Bank

News items of national interest regarding Condominium and Homeowner associations, compiled by the Community Associations Network

Once upon a time there was a condo unit slipping into foreclosure. The owner had a $400,000 mortgage with SunTrust, a $180,000 second mortgage with CitiFinancial, and dues owed to the Condominium Association. SunTrust began foreclosure proceedings, but it was the Condo Association that came up with the goods.
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What happens to HOA when developer folds?

By Mike Huntermike_hunter

Attorney Michael Hunter specializes in community and condominium association law for the firm of Horack Talley

Question: We live in a condo subdivision planned for 56 units. The developer has fallen into financial difficulty and has only sold six units. There are now 16 completed units. The developer is renting the remaining 10 units. Even though the six homeowners are paying $155 monthly as association dues, the developer is not providing home maintenance. What legal recourse do we have? What would happen to our property if the developer declares bankruptcy or if all of the unsold property goes into foreclosure? Would the HOA, which only consists of six owners, be responsible for paying the mortgage on the clubhouse? Would we be responsible for paying property taxes on the unsold homes?

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Fair Debt Collection Practices Act and the Association

    The Fair Debt Collection Practices Act  (“FDCPA”) was enacted by Congress to combat “abusive, deceptive, and unfair debt collection practices.”  15 U.S.C. § 1692(a).  The FDCPA regulates the activities of debt collectors, defined as “any person who … regularly collects … debts owed … or due another.”

    Recently, the 11th Circuit Court of Appeals addressed the issue of whether a homeowners’ association and its property manager are considered debt collectors under the FDCPA.  In this unpublished case, a homeowner received a “Notice of Intent to File Lien” based on delinquent assessments along with a statement of assessments owed.  The homeowner demanded an explanation of the assessments and insisted that he had paid a portion of the owed amount.  The association mailed him a second notice with another statement of unpaid assessments to date. Two weeks later, the association filed a lien against the owner’s unit and a month after that, the association notified the owner of its intent to foreclose on the unit.  Subsequently, the homeowner brought suit against his association and property manager based on alleged FDCPA violations.

    The court determined that the association and its property manager were not debt collectors within the meaning of the act.  Rather, the association was a creditor and the property manager was acting as its agent pursuant to the “Management Services Agreement.”  The court also found that even if the association fell into the definition of debt collector, its actions in attempting to collect the homeowner’s past due assessments were not in violation of the FDCPA.  Specifically, the association met the act’s requirements concerning verification of debt when it was requested by the homeowner. 

    This site and any information contained herein is for informational purposes and is not to be construed as legal advice.  Seek a competent attorney for advice on any legal matter.  

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