Got Rent? Going After Delinquent Owners’ Rental Income

Its 2012 and for most associations, their biggest challenge this year, as with past years, will be delinquencies in their community and the all-important “accounts receivable” column on their balance sheet.  For many associations, even more irksome than a unit owner continuing to reside in the community without paying assessments is that same delinquent owner renting out their property and deriving income from it.

Fortunately, the Florida legislature recently acknowledged this circumstance and codified amendments to Florida Statutes 718 and 720 (Condo and HOA, respectively, see “Useful Links” tab above) empowering associations to send demand letters to tenants of delinquent owners, requiring that they immediately begin tendering their monthly rent payments directly to the association instead of the owner of the property.  Of course, a key element to the success of this program has been the threat of eviction.  In addition to providing an association with the right to demand rent payments from tenants of delinquent owners, the applicable statutes (specifically, 718.116 and 720.3085) also allow the association to evict those tenants who refuse to comply.  Since the word “eviction” generally strikes fear in the heart of most tenants, especially those who are able to pay their rent and generally like where they reside, it is this attorney’s experience that tenants who receive a demand letter often contact the association very quickly to arrange for the paying of their rent.

The tenant rent demand letter serves as a low cost way to generate an influx of payments which will reduce an association’s assessment arrearages and  accounts receivable.  Because of the low cost and high success rate, it is this attorney’s recommendation that any Florida condominium or homeowners association ensure that their attorney is using this valuable tool on their behalf.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

The Magic Words

Photo: The Grand Condominium

“As amended from time to time”

These words may not have quite the same ring as “abra cadabra,” but for condominium associations in Florida their impact might as well be “open sesame.”  In March of 2011, the Supreme Court of Florida issued a ruling in the case of Cohn v. The Grand Condominium Association, Inc., 62 So. 3d 1120 (Fla. 2011) regarding the application of amendments to the Florida Statute 718, more commonly known as the Condominium Act.  The Supreme Court determined that a condominium association is subject to amendments to the Condominium Act that came into existence after the condominium’s inception only if the declaration of condominium states that it is subject to provisions of the Condominium Act/Florida Statue 718, as amended from time to time.  If this specific “as amended from time to time” language is not found in the declaration of condominium, then the provisions of the Condominium Act/Florida Statute 718, as they existed at the time the declaration was recorded, are the statutory authority that govern the association.

In practice, this can have significant ramifications.  For example, say an association is tendered an offer by a developer that would net each owner well in excess of the market value of their units if they agree to terminate the condominium.  Lets assume that this particular association came into existence in the 1970s or 1980s and has a declaration of condominium which lacks the requisite “from time to time” language.  Lets also assume that this declaration, like others from that era, has a provision for termination stating that in order to terminate the condominium, 100% of the owners must consent.  Well, in recent years Florida Statute 718.117 was amended to allow for such an optional termination if only 80% of the owners approve the plan (provided that no more than 10% reject the plan).  While this statutory change serves to significantly lower the voting hurdle for a voluntary termination, our hypothetical association would not be able to rely on it because this amendment came well after the declaration was recorded and the declaration does not have the magic “as amended from time to time” words.

Lesson: Check to make sure your declaration of condominium has the “as amended from time to time” language; it is preferable that your Association be able to change with the times, unless of course you have a particular affinity for bell bottoms, big hair or grunge rock.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999