Today I have a post that comes from my review of recent opinions published by the Florida Courts on lender issues. Often times in a foreclosure action there is an association (homeowners, condominium, or otherwise) named as a defendant because of past due assessments or the association’s other claim of interest to the property. If there are unpaid assessments owed to the association, and the lender takes title to the property through a foreclosure sale, the lender is liable for the unpaid assessments that came due prior to its acquisition of title. However, in such a situation, the lender’s liability for unpaid assessments is capped at the lessor of the unpaid assessments for the 12 months immediately preceeding the acquisition of title or 1% of the original mortgage debt. (Fla. Stat. 718.116(1)(b); 720.3085(2)(c)). Sometimes, after the lender takes title, a dispute arises between the lender and the association over the amount of the assessments. If the lender has to take the dispute to court to get a resolution, the most cost effective thing to do is to file a motion in the existing foreclosure action. This way, the lender will avoid the filing fees for filing a new lawsuit against the association and the attorneys fees and costs for preparing a new and independent lawsuit against the association.
In a case recently heard on appeal by Florida’s Third District Court of Appeal, a lender tried to do precisely what I recommend above, and filed a motion in the existing foreclosure action to determine the amount of assessements owed to an association. The trial court denied the lender’s motion, and the appellate court affirmed. So why did the courts deny the lender’s request for relief? In this case, the lender’s final judgment of foreclosure did not expressly reserve the court’s jurisdiction to determine the amount of unpaid assessments owed to the association. The courts held that neither the finding in the final judgment of foreclosure as to superiority of the lender’s lien, nor the general statement in the final judgment that allowed the court to enter further orders that are proper, was sufficient to give the court jurisdiction to decide the issue of amount of unpaid assessments.
So what’s the upshot? As a lender, make sure you final judgment of foreclosure includes a specific and express reservation of the court’s jurisdiction to determine the amount of any assessments owed to an association, or else the lender could find itself in the unfortunate position of having to file a separate lawsuit (and incur the expense of filing that separate lawsuit) to litigate the amount of assessments with the association.
To see the full opinion of the Third District Court of Appeal, follow this link: http://www.3dca.flcourts.org/Opinions/3D13-1672.pdf
My practice includes the representation of financial institutions, banks, insurance companies, business owners and other corporate clients. I have a growing and focused practice dedicated to helping financial institutions navigate the complex and expanding area of government regulation and compliance with federal and state laws. This includes working with financial institutions to prepare best practices policies, procedures, and forms, as well as advising financial institutions as to avoiding litigation. When necessary, I will also represent those same institutions in court. I enjoy keeping current with the news and issues that affect banks and financial institutions in their business, and sharing that information along with my thoughts on the issue from a legal perspective based upon my experience.
My firm, Zimmerman, Kiser, & Sutcliffe, P.A.* is a full-service law firm located in Orlando, Florida. Established in 1984 and consistently recognized as one of the largest firms in Central Florida, our firm maintains a respected reputation within the southeast U.S. business and legal community. Our more than 30 attorneys provide comprehensive legal representation in an extensive range of practice areas including corporate, tax, real estate, litigation, banking and financial institutions, structured finance, bankruptcy & creditors’ rights, estate planning & probate, and workers’ compensation.
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