An Attorney Answers Questions About Condominiums

What does it mean to own a condominium and live in a community regulated by the Board of Directors? Well, there are many aspects to that question that I could answer with great authority since I have lived here for many years.  However, some questions are best answered by an attorney.  Fortunately there is one that answers your questions online.  Check out her website for some answers to interesting questions.

http://www.condonewsonline.com/Ask_Lawyer.htm

A Strategy For Our BOD To Consider Re Abandoned Properties

Thanks to Vera Biro for making us aware of the following article, which I have cut and pasted in its entirety (yes, a blatant copyright violation, I suppose) from the Sun Sentinel.  The article addresses a strategy that some condo associations are using to deal the problem of uninhabited units.

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October 05, 2010|Daniel Vasquez on condos, Sun Sentinel Columnist

After winning a lawsuit against Wells Fargo that claimed the bank purposely delayed foreclosure proceedings on a condominium unit for more than a year, a Pompano Beach condo association has been awarded title to the unit without owing a dime on the original $184,400 mortgage.

The case, brought by the Palm Aire Gardens Condominium Association, is being seen as a precedent that could pave the way for other condo associations facing similar foreclosure delays.

"Banks are delaying foreclosures and abusing the process and our association is struggling financially because of it, that's why we filed our lawsuit." said Palm Aire Gardens President Oscar Garcia. "Now we own the property free and clear of the mortgage, which gives us options to sell it or rent it."

Palm Aire's legal strategy is being dubbed "The Mortgage Terminator" by the Association Law Group, the South Florida firm that represents the condo complex and hundreds of others across the state.

"Many of our association clients are already starting to use it," said attorney Ben Solomon, of Association Law Group. "The only criteria is that the association has title to the unit through its own foreclosure process and the mortgage holder has not initiated foreclosure yet."

As a result of the Broward County Court judgment in its favor, Palm Aire legally owns the two-bedroom, two-bath unit at the center of the case and is free sell it, recover about $14,000 in the past maintenance and pocket any profit after paying attorney fees and property taxes.

Many condo and homeowners associations across Florida suffer financial losses caused by owners who stop paying mortgage and maintenance fees and then vacate the property after being foreclosed upon by the association or bank. In Florida, condo and homeowners associations and banks are allowed to file separate foreclosure actions on a property for unpaid maintenance and mortgages.

When that happens, associations are out past-due fees and current fees, since no homeowner pays monthly maintenance fees. And associations often can't sell such units, because they are typically worth much less than the original mortgage but still have a lien for the original loan amount hovering over it.

In many cases, say lenders, the foreclosure process can take up to two years due to court backlogs, and because some lenders prefer trying to work out a deal with the original mortgage owner in lieu of foreclosure.

“Some people accuse us of taking too long, some accuse us of going too fast," said Alex Sanchez, spokesman for the Florida Bankers Association. "But the answer is no, Florida banks are not stalling foreclosures to avoid paying condos and homeowners associations unpaid maintenance dues.

"Anyone who says that does not understand the banking industry nor the banking regulatory environment."

Sanchez said in many cases the prolonged foreclosure is due to the bank trying to help owners who find themselves in a financial bind due to the bad economy. "If you want to accuse us of taking our time to work with Florida families to keep them in their homes, then [we're] guilty as charged."

Sanchez added that he was not familiar with the Association Law Group's legal strategy and could not comment.

Solomon said his firm understands and appreciates any lender trying to forego foreclosure and work out a payment plan with a homeowner behind in mortgage payments, as long as the homeowner is still living in the condo or home. But he said his firm's Mortgage Terminator lawsuits are aimed only at lenders who forestall on units or homes that have already been vacated by the owners and are now owned by the association via its owner foreclosure filing. "There is nothing to work out with the borrower in these cases because the owner does not own or live in the unit anymore," Solomon said. "There is nothing to work out, the owner has abandoned the property."

In the Palm Aire Gardens case, the owner purchased the condo unit in January 2006, signing a mortgage contract for $184,400. By April, 2009, the owner had fallen behind in maintenance fees by 11 months, owing about $5,500 in regular and special assessments. At that time the association, as allowed by Florida law, filed a foreclosure lawsuit, winning a judgment in Broward County Court and taking title of it in January of this year. By then the owner owed more than $9,000 in unpaid maintenance fees. The lawsuit led to a foreclosure judgment based on the unpaid maintenance fees against the property in Broward County Circuit Court.

Had the bank filed a foreclosure against the original owner and completed the process, it would have owed about $5,800 for its share of unpaid maintenance fees on the unit as required by state law. In Florida, banks are liable for up to 12 months of unpaid maintenance fees or 1 percent of the original loan amount, whichever is less. On Aug.13, Broward courts issued a judgment in favor of Palm Aire Gardens, granting it full title without being on the hook for the mortgage.

"The bank has a right to go after the owner for the original amount," Solomon said, "But it cannot sue the association for that loan amount."

Wells Fargo did not respond to requests for comment.

The current value of the Palm Aire Gardens unit is about $32,500 — about $150,000 less than what is owed on the original mortgage.

"But because of our lawsuit we can either choose to sell now and recover what money we can," said Garcia, the Palm Aire Gardens president, "or just to keep it, rent it out for now and sell in better market down the road."

Solomon said his firm aimed to help the association financially by forcing the lender, Wells Fargo, to either foreclose on the loan and pay its share of unpaid maintenance fees or, instead, agree to release its mortgage and walk away. According to three court judgments already won by Association Law Group, including another issued last week on the behalf of Palm Aire Gardens, the bank cannot later try to collect on the original loan amount from the association.

Enter the Mortgage Terminator: The Association Law Group came up with its new legal strategy. "The desired result is that the mortgage holder can either release its mortgage and walk away from the property, which is what we have already achieved in both Miami-Dade and Broward counties," Solomon said, "or cause the lender to initiate their foreclosure and take title becoming the new owner of the property."

Another case: Solomon said his law firm filed a similar lawsuit against Citibank several months ago on the behalf of 7149 Bay Drive Condominium Association.

In that case the lender did not contest the lawsuit in court, leading to a similar judgment in Miami-Dade Circuit Court that awarded title to the association without the legal "encumbrance" of the original mortgage.

Daniel Vasquez can be reached at CondoColumn@sunsentinel.com or 954-356-4219 or 561-243-6686. His condo column runs Wednesdays in Your Money and at SunSentinel.com/condos. Check out Daniel's Condos & HOAs blog for news, information and tips related to life in community associations at SunSentinel.com/condoblog. You can also read his consumer column Mondays in Your Money and at sunsentinel.com/vasquez.

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Can "Dead-Beats" Use Common Area Facilities?

The following article was found on the Sun Sentinel's Condo Law section. It is about denying use of the common area to association members that do not pay their fair share of the common area maintenance fees.

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Should "Mrs. Smith" be able to use the pool if she hasn't paid her maintenance in a year?

Posted by Donna DiMaggio Berger, Esq. on August 25, 2009 08:30 AM

Hardly a day goes by that I am not contacted by a client asking whether or not certain common area and recreational use rights can be shut off for a chronically delinquent owner. The frustration that these board members, paying unit owners and property managers express is easy to understand. It must be difficult to share a spot by the pool with a neighbor who hasn't paid maintenance in nearly two years!

One of the reasons many people buy in common interest ownership communities is the recreational amenities that most people couldn't afford without a budget shared by many. Over time, people tend to forget all of the amenities that initially drew them to a particular community: tennis court, pool, clubhouse, guard gate, etc. When non-paying owners continue to use these facilities without contributing to their expenses and upkeep, the rest of the community naturally does a double take.

If you live in a homeowners' association, Chapter 720 does give the board the authority to suspend a delinquent owner's use rights and voting rights if the proper authority is provided in the declaration or bylaws. Many HOA's have amended their documents over the last few years to take advantage of this signficant tool.

Unfortunately, no such right exists for condominium boards. Last year, my firm drafted language for inclusion in two bills which would have given condominium boards the similar right to suspend use rights for delinquent owners. Sadly, that bill and every other community association bill failed.

When I am asked by a condominium board if they can make "Mrs. Smith" use the visitor entrance at the gate, stop her from using the pool or shut off her cable, I point them to Section 718.106 (3) of the Condominium Act which clearly states that a unit owner is "entitled to use the common elements in accordance with the purposes for which they are intended but no use may hinder or encroach unpon the lawful rights of other owners." At the time this language was written, the drafters could not have foreseen our current foreclosure crisis and the fact that it is not equitable to give such unfettered rights to owners who might not have paid their fair share of common expenses for quite some time.

The language we drafted last year will return next session. Please make sure your condominium communities support such change loudly and early. There is no justifiable reason that HOA boards should have this useful tool while condominium boards are deprived of same.

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General Contractors, Etc

I recently received an email from a General Contractor who expressed an interest in working in the TAJ community (I have included his email* at the bottom of this post). He was apparently referred by a TAJ owner I have want to say "good job" to that person who made the contact. The more we can get qualified workers interested in our community the more we can all benefit.

Because I was on the BOD during a time when building refurbishments were in full-swing, and because my wife is the Chief Financial Officer of a very successful General Contracting firm, I know that the daily workings of a construction project are a complicated business that requires the expertise of people with specialized knowledge. Those people include

• General Contractor, Architect, and Engineer with a state license and in good standing with the DBPR
• Office bookkeeper with knowledge of construction accounting
• Project Manager with construction knowledge and the will-power to argue with a GC (a seemingly juvenile, but none-the-less necessary part of every construction job I've ever witnessed)
• Accoutant with expertise in construction loans, financing, etc
• Attorney to oversee contracts and to aggressively pursue claims of poor performance (again, an oddly necessary part of doing business with GCs)
• An educated, interested, and involved owner (or group of owners) that actively participate and ensure that the other experts do their jobs

Click the following link Protecting the Association Against Unlicensed Contractors to go to an interesting article written by Thomas Code. In other places on that same website are other very informative articles about Condominium Associations and their legal responsibilities and limitations, like

• Are E-mails, Instant Messages (IM), & Twitter Transcripts "official" records of the Association? (Round 2)
• Protect the Association's Funds from Fraud or Theft
• Posting Debtor Lists to Collect Delinquent Condo & HOA Assessments
• Roof Leaks and the Statute of Limitations
• Indemnity and the Association

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Good morning. A friend of mine who resides in your community suggested I contact your Homeowners Association regarding your needs for an honest, efficient quality General Contractor to provide numerous construction services for the development. We would be very interested in speaking with a representative from your Association regarding any needs you may have and look forward to the opportunity to bid your work and provide you with excellent service.

Please check out our website. We anticipate hearing from you on how we can take the next step.

Sincerely,

LANE BIRNBAUM

Bluewater Construction Group Inc.

(954) 551-2911 cell

www.bwconstruction.us

Conflict of Interest?

I recently received the following email that raises a question about a possible conflict of interest for Anthony Titone, an attorney who is apparently wanting to represent the Association in some legal matters (see here). I have been told that there has been no response to the request for clarification from that attorney.

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From: Bryan Sklar [mailto:bdsklar@bellsouth.net]
Sent: Friday, June 13, 2008 5:32 PM
To: +1-9547493018@j2send.com; ajtpa@bellsouth.net
Cc: blindie@lawyers.com; inger13@aol.com; 'psychdrsteve'
Subject: Explanation of Anthony Titone - Possible Conflict of Interest
Importance: High

Mr. Titone:

I would appreciate an explanation and determination of how your representation of the Townhouses at Jacaranda is not a conflict of interest and a violation of the Florida Bar Code of Ethics. You have previously been involved – both as the plaintiff’s attorney and defendant’s attorney – in lawsuits with the Townhouses at Jacaranda. Specifically, you are the personal attorney of Daniel and Susan Vermut, as well as the Vermut’s businesses. Mr. and Mrs. Vermut have engaged your services in the past 5 years to sue the Association, and you were engaged by them to sue the Association.

The Association’s attorney, Ms. Beth Lindie (who I have included in this letter) has been the opposing attorney in these cases.

It appears to me that your continuing to represent Mr. and Mrs. Vermut, and their businesses – especially when Mr. Vermut was improperly appointed to the Board (according to the DBPR), and especially when the Vermut’s and their businesses continue to be represented by you in actions before and relating to the Association. Mr. Vermut has in public stated that you will not be charging the Association any fees – is this correct?

Under Article 4 of the Florida Bar Code of Professional Conduct – mainly 4-1 regarding Conflicts of Interest – your actions seem to be a violation of these canons. 4-1.8(b) states that “a lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client gives informed consent”, 4-1.7 states “a lawyer shall not represent a client if:

(1) the representation of 1 client will be directly adverse to another client; or

(2) there is a substantial risk that the representation of 1 or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

To me, it does not seem possible for you to represent both parties without violating the Code or Professional Conduct and ethical requirements of the Bar.

I would appreciate your written response no later than Friday, June 20, 2008 with regards to your actions and whether you believe you have a conflict of interest between your representation of the Association and the Vermut’s and their business interests (or any other unit owner of the Townhouses of Jacaranda).

Thank you for your prompt response.

Bryan Sklar
Unit Owner, Building 20 Unit 2 Townhouses at Jacaranda
8255 W. Sunrise Blvd.
#116
Plantation, FL 33322

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To see public records showing Titone as an attorney representing Vermut in legal actions against TAJ, click here or click on the image below to enlarge it.