What to Do When Served with Foreclosure: A Step by Step Guide

Step by Step Guide after service of foreclosure.

For Associations who have not been brought into the current foreclosure crisis, and even for those who have, the service of a bank foreclosure Complaint, (the document that starts a foreclosure action in Court) can be a troubling, scary and confusing event. Usually the foreclosing party will serve the registered agent of the Association as listed on Sunbiz.org. Occasionally, the foreclosing party will serve members of the board of directors, their family members, the Association’s attorney, non-homeowners, mail men and the occasional doormat.

 

Service by any person other than the registered agent of the Association should generally not be accepted. There are strategic exceptions to this which are outside the scope of this article.

 

So your Association has been served:

 

Step 1: After confirming that you have indeed received a foreclosure complaint, the process-server is supposed to advise you what they are handing to you, immediately fax and if possible email the complaint to your attorney/legal adviser.

 

Step 2: Always follow-up with a call to your attorney/legal adviser to confirm receipt of the Complaint. The reason for this follow-up call is two-fold.

 

First, it is imperative that the Complaint be received and reviewed as soon after service as possible. Florida has a 20 day time frame for answering foreclosure Complaints. If a responsive document or extension is not done within that time frame, the bank may default the Association. This can result in the Association not being able to request the maximum amount of delinquent assessments at the end of the foreclosure. Additionally, the Association will be unable to move forward with motions to compel or motions to dismiss should the foreclosure stall.

 

Second, you can then discuss the strategy on how to respond to the foreclosure. There are many different reasons to avoid filing a simple answer to complaint.

 

For Example: Is the Association foreclosing itself? If so perhaps it would be more favorable to Association to make the bank prove its foreclosure by aggressively responding to the Complaint.

 

Is the bank attempting to overstep the provisions of Florida Statute 720.3085 or 718.116? If so, a simple answer may trap the Association into a certain recovery at the end of the foreclosure.

 

Step 3: Schedule a follow-up for 20 days from the date of the foreclosure to confirm that action has been taken.

 

If valid service occurred on August 31, 2011. The Association has until September 20, 2011 to respond. The date of service does not count. Weekends do.

 

Step 4: Expect and request monthly updates regarding the status of the foreclosure.

 

Foreclosure actions have taken several years to conclude given the volume and skill with which they are being worked by the bank. If a short sale or bankruptcy comes into play, years spent waiting can cause serious difficulty for the Association. If more than 3 months pass without significant progress, consider inquiring whether a motion to compel or call to the bank is appropriate.

 

To read more about our firm’s legal services, including Association Foreclosures, please visit Association Assessment Attorneys, P.A. main website.

Assessment Collection 101: What every Florida Condo and HOA needs to know

Condo Collection and HOA Collection in Florida

Claims of Lien Secure the Association’s Interest in Delinquent Assessments. Detailed State Law Guidelines must be followed to ensure the validity of a Claim of Lien.

 

Efficient, fee conscious collection is often enough to provide the Association with payment. However, when collection efforts are not enough, a claim of lien, prepared by Association Assessment Attorneys, P.A., creates a public notice of an owner’s indebtedness to the Association.

 

There are many detailed requirements in the law, which vary between Condominium Associations and Homeowner’s Associations, which must be complied with to ensure the validity of a claim of lien. Once prepared by an attorney, a claim of lien allows the Association to pursue foreclosure against the debtor.

 

Association Assessment Attorneys, P.A. offers the following legal services to assist your association with assessment collection: collection letters, claims of lien, payment plans, quit claim deeds and tenant rent demands.

Firm Founder Robert Todd Publishes Article on Association Assessments

First Published The West Florida Wire Community Association Institute Magazine: March 2011 

 

Association foreclosure due to delinquent assessments

Non-payment of Association Assessments has become a significant burden for many communities. Whether it is a result bank foreclosure, intention or apathy, the situation has affected thousands of communities across the state. There is no vaccine, but there is treatment.

 

At first blush, taking action against a unit owner that is delinquent or worse, in foreclosure, seems counter-intuitive. Why add to the problem? Why throw good money after bad debt? The weight of these questions can seem insurmountable when the initial delinquency occurs. It is only after an Association experiences a protracted bank foreclosure or repeated promises to pay that go unfulfilled, that the importance of early action in a delinquency becomes evident.

 

What follows will be a general analysis of the fictional delinquency of Unit A and the benefits of aggressive action.

 

Unit A has missed its January 2011 assessment and in keeping with the appropriate governing documents and statute, the Association may legally secure a claim of lien against the property. Other than the owner who is months or even year’s delinquent in assessments, why secure a claim of lien against a property that has recently become delinquent? Beyond providing evidence to the world that your Association has an interest in the property, there is now the requirement to satisfy the newly placed encumbrance on the property should the property be transferred or sold. In addition, if Unit A’s owner is still residing in the unit and simply not making payments or the community is beginning to see a trend of delinquent payment, it may be of assistance to indicate the Association’s refusal capitulate in instances of non-payment to the community as a whole.

 

Generally, the majority of Association’s governing documents provide for the ability to foreclose on a claim of lien against a unit. This “nuclear” option provides the Association governing Unit A the option to pursue a fully fledged foreclosure against the unit, ask the Court to sell Unit A on the Court House steps and eventually take title to the unit in order to rent it out or potentially even be paid in full by a third party purchaser.

 

Unfortunately, properties are not always held free and clear of a note to a lending entity. Frequently, properties will have a first, second or maybe even a third mortgage encumbering them. Therefore, it is necessary to review the governing documents to determine what mortgages the Association can wipe out and what mortgages can wipe out the Association. The most common circumstance involves a first mortgage which is superior but that is all. This also creates a unique opportunity to bargain with secondary mortgages as to the preservation of their interest by satisfying the Association’s lien.

 

It is a recurrent misconception that upon taking title to a unit with a first mortgage that an Association needs to begin making payments to the bank in order to avoid becoming personally responsible for the mortgage. This is not the case. Upon taking title to Unit A in the above scenario the Association would be able to rent the Unit while securing only landlord insurance for unforeseeable events. One caveat however, although rare, a bank that is foreclosing may seek to have a receiver appointed to collect the rents paid directly to the Association.

 

Finally, while on the topic of a foreclosing first mortgage, why would an Association ever begin an Association foreclosure when the bank is already foreclosing? The simple answer is time. Time is a commodity banks squander. The foreclosure process has consistently taken banks eight to fourteen months to conclude. Many foreclosures take considerably longer while some are dismissed only to be reinstituted extending the process for years. It is during this time that a timely filed, aggressive Association foreclosure against Unit A would reap the rewards of a lucrative tenant and a non-aggressive Association would continue to accrue unpaid assessments. As you can see, what at the inception of a bank foreclosure did not make financial cents to the Association can become financial dollars when appropriately aggressive.

 

To read more about our firm’s legal services, including Association Foreclosures, please visit Association Assessment Attorneys, P.A. main website.

Cutting Cable Service for Delinquent Assessments

Cutting the Cable, a Dangerous Gamble

Payment of Assessments

Many Associations include some form of service, be it water, electric, cable, sewer or telephone to name a few. When Assessments go into arrears, it is easy for an Association to be tempted to consider terminating services provided for by Assessments. The logic is not unfounded. The direct benefit received by a delinquent owner can seem significantly greater when it is characterized by  70 channels of HD cable and high speed internet. As a result, many Associations consider the possibility of suspending access to utilities for delinquent owners. Of course, the expected result of such action is to create a strong desire for the owner to become current. After all, who can live without television and internet?

 

True utilities, Water, Electric, Sewer and Phone service should not be suspended due to non-payment of delinquent assessments. Florida Statute is specific in this instance. On the other hand, television and internet arguably fall into a gray area which some have chosen to exploit in an effort to recover assessments. It is not completely clear whether locally provided cable and internet can be defined as utilities.

 

The significant danger to exploiting this grey area is alack of knowledge as to how the unit owner is making their phone calls. As mentioned above, it is clear that telephone service is considered a utility.Voice Over IP services such as Vonage utilize internet provider resources rather than phone lines to place phone calls and are being utilized in greater numbers due to their relatively low price point.

 

If the Association were to suspend a unit owner’ s cable services, and said owner utilized a Voice Over IP service, the Association would undoubtedly terminate the owner’s telephone service. This could result in a very strong argument that the Association has cut a utility as prohibited by statute. To further complicate matters, liability exposure in the event of an emergency that occurs while phone service is suspended would be immense.

 

There are other ways to recover assessments that are equally as effective as cutting cable. For example, association foreclosures can be  successful in getting unit owners to pay as theproperty itself is in danger of being sold at foreclosure sale. For more information, please see the blog post regarding Association Foreclosures here.

 

To read more about our firm’s legal services, including Association Foreclosures, please visit Association Assessment Attorneys, P.A. main website.