Saturday, June 12, 2010

Big changes for condos on July 1

The new Distressed Condominium Relief Act signed into law by Governor Crist on June 1 will take effect on July 1. There are provisions within Senate Bill 1196 that will have a significant impact on almost all Florida condo associations. Some highlights of the Act are;

Lenders liability for past due assessments in foreclosure

Lender's (First Mortgagee) liability for unpaid assessments when acquiring title through foreclosure or deed-in-lieu after July 1, 2010 is increased to the lesser of 12 months unpaid assessments or 1% of the mortgage debt. This is an increase from the lenders' current 6 months liability and a welcome aid for troubled associations with multiple foreclosures.

Association's right to collect rent from delinquent units

If a condominium-unit owner is more than 90 days delinquent in paying monetary obligations to the condominium association, the bill authorizes the condominium association to require that the condominium-unit owner's tenant, in lieu of paying rent to the unit owner, pay the rent directly to the condominium association to cover a unit owner's delinquent monetary obligations to the condominium association. This will put a halt to the all-too-common practice of unit owners collecting rent while not paying condo dues (and often not
making mortgage payments as well).

Delinquent owners banned from the pool.
In addition to authorizing fines, a condominium association is authorized to suspend the right of a unit owner to use the common elements, common facilities or other association property until such unit owner has paid the required assessments (maintenance), as well as suspend the voting rights of the delinquent unit owner. This applies to any "monetary obligation" that is more than 90 days delinquent. It also extends to the unit owner's tenants, guests and invitees.

Fire Sprinkler System

The bill states that a condominium association cannot be required to retrofit its fire sprinkler system before the end of 2019 (instead of 2014). The association may still vote to forego retrofit. Buildings of less than four stories with exterior walkways providing egress are exempt.

There are several other provisions but these are the ones that will apply to the greatest number of associations in the Cocoa Beach and Cape Canaveral area. A complete synopsis of the bill can be read at Donna DiMaggio Berger's excellent
condo law blog.

"Sometimes not getting what you want is an amazing stroke of luck."_________the Dalai Lama


  1. tommyfudster said ....

    "the lesser of 12 months unpaid assessments or 1% of the mortgage debt."

    Are you sure this will be a big relief? Say an association has HOA's of $500 per month and an owner is 12 months in arrears or $6,000 and his mortgage is $400,000. The lesser figure is $4,000 or $1,000 more than the old law. However, if the mortgage debt is under $300,000, the HOA will get less than under the old law.

    I do like the rent provisions though.

    Suspending rights to common areas might not pass the sanity check and may hurt the rent provisions if the result is a tenant can't use the common areas and has grounds to break his lease.

    Beware the do gooders in Tallahassee!!!

  2. The 1% limit was part of the old law (6 months or 1%) as well. Any increase, no matter how small, is welcome news to associations. Additionally, owners with small mortgage balances are typically not the ones defaulting.

    About the common area rights; once the association starts collecting the rent and the past due amount is satisfied, access will be restored to the tenant. That gives a tenant incentive to want the association to collect the rent rather than the deadbeat owner.

  3. As someone who is looking for a winter rental in Cocoa Beach, I am concerned about the effect that this law may have on our rental experience. Is there a database we can check that would list units in arrears so that we avoid the possibility of committing to a unit and being denied use of common areas? Is there any possibility under the law that the amount of the rent can be increased without notice to include the amount of the assessment? What protections do renters have under this law? Thanks for any insight you can offer.

  4. Well, thanks for sharing this update. I am well informed. Keep posting.


  5. Anonymous, Probably the easiest way to calm your fears is to ask the owner for a contact number or email for a board member or association representative so that you can check for delinquency. Of course, you'll have to do that just prior to your visit rather than months in advance. The association cannot increase rent for the term of the rental agreement in the event that they exercise their right to collect rent from tenants in units more than 90 days delinquent.

    Even before this law, tenants were in danger of being evicted in the case of foreclosure even though they may have been current on rents. It is prudent in these times for tenants to check out their prospective landlords just as closely as the landlords are checking them. It is probably much more relevant for long term tenants than seasonal. Crazy times.

  6. Well, I just wish that with this changes condos would be more better. Anyway, thanks for sharing.


  7. Everybody's inn for a change.. at least change for the better. Well, if you plan to have condo just be sure you can afford it.