OUTRAGEOUS LATE CHARGES

INCREASE NUMBER OF FORECLOSURES

An Opinion By Jan Bergemann 
President, Cyber Citizens For Justice, Inc.

Published January 29, 2011

 

For the sake of our legislators, I can only hope that they intended to protect owners against unreasonable charges, giving them a last chance to save their homes before losing it to unreasonable fees, when they created these provisions: FS 720.3085 (Homeowners' Associations) and FS 718.116 (Condominiums). CCFJ warned about the wording, pointing out the many loopholes the proposed wording left, making these provisions instead a legalization of outrageous costs, causing owners already fighting with serious financial problems to finally give up. But what do we, the lowly citizens, know if it comes to the income of attorneys and managers?

 

The wording in FS 720.3085 and FS 718.116 actually allows managers and attorneys to charge outrageous fees. 
  

Admittedly, these service providers are very inventive when it comes to find ways of adding more charges to their bills. I have seen very inventive charges (but for owners very costly charges) added to bills by management companies and attorneys.

  

We all know that a lot of owners are squeezing pennies to make ends meet. Many families have considered letting their homes go because of "underwater" mortgages. If families are trying to play catch-up, trying to pay unpaid dues, such LETTER FROM AN ATTORNEY [45-Day Warning Letter] will surely kill their best intentions. Unpaid annual dues in the amount of $204.75 turned into more than double the amount, already for the letter supposed to tell them that "a lien and a subsequent foreclosure may be authorized by the association and commenced unless the following amounts are paid in full within forty-five (45) days from the date of this letter."

 

If you look at these charges, please understand: These extra charges benefit the service providers, not the associations and/or the other owners. And remember: If the owners in arrears don't pay these charges and let the property go to foreclosure, these service providers still get the money -- paid for by the associations. These associations get more or less nothing if the bank takes the property at foreclosure sale. The statutes don't require banks and mortgage lenders to pay legal fees or other cost of collection, only "the lesser of 12 months of unpaid regular assessments immediately preceding the acquisition of title or one percent of the original mortgage debt." In reality that means that the associations, meaning the owners who are still paying dues, are stuck with the cost.

 

And in case that letter didn't completely scare the owners that are in arrears with payments and they are asking for a payment plan, then the amount due suddenly triples -- see: Response to Request to Pay in Installments. A $200.00 payment plan processing fee is added, about the same amount as originally owed.

   

Latest then some folks will say: "Thank you, but no thank you!"

 

Was that the idea when adding these provisions to the community association statutes -- making service providers get rich and more owners losing their homes?

  

It really doesn't help if families in financial distress are burdened with demands to pay amounts adding up to the double and triple what was actually owed -- just with the first serious reminder. All it does is make more families give up their homes. Shouldn't it be our goal to keep as many families in their homes as possible?

  
Why try to create all kinds of government programs to keep families in their homes -- trying to avoid foreclosures -- if we allow service providers to add unreasonable fees to the final warning, fees that may kill the good intentions of homeowners that try to catch up with their unpaid dues.

  

If we want to save the homes of quite a few families, we need to add language to these provisions, demanding that the warning letter is sent by certified mail to the owners -- without outrageous fees being added in the first place. This letter should contain the FINAL WARNING: If you don't pay -- or arrange for a payment plan -- your account will be turned over to the association attorney for collection, which could easily double or triple the amount actually owed!


    HOMEOWNERS' ASSOCIATIONS (FS 720.3085)

(3) (a)  If the declaration or bylaws so provide, the association may also charge an administrative late fee in an amount not to exceed the greater of $25 or 5 percent of the amount of each installment that is paid past the due date.

(4) (a)  Provide the owner with 45 days following the date the notice is deposited in the mail to make payment for all amounts due, including, but not limited to, any attorney's fees and actual costs associated with the preparation and delivery of the written demand.

 

    CONDOMINIUMS (FS 718.116)

(3)  Assessments and installments on assessments which are not paid when due bear interest at the rate provided in the declaration, from the due date until paid. This rate may not exceed the rate allowed by law, and, if no rate is provided in the declaration, interest accrues at the rate of 18 percent per year. Also, if provided by the declaration or bylaws, the association may, in addition to such interest, charge an administrative late fee of up to the greater of $25 or 5 percent of each installment of the assessment for each delinquent installment for which the payment is late. Any payment received by an association must be applied first to any interest accrued by the association, then to any administrative late fee, then to any costs and reasonable attorney’s fees incurred in collection, and then to the delinquent assessment. The foregoing is applicable notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment. A late fee is not subject to chapter 687 or s.718.303(3).

(6) (b)  No foreclosure judgment may be entered until at least 30 days after the association gives written notice to the unit owner of its intention to foreclose its lien to collect the unpaid assessments. If this notice is not given at least 30 days before the foreclosure action is filed, and if the unpaid assessments, including those coming due after the claim of lien is recorded, are paid before the entry of a final judgment of foreclosure, the association shall not recover attorney's fees or costs. The notice must be given by delivery of a copy of it to the unit owner or by certified or registered mail, return receipt requested, addressed to the unit owner at his or her last known address; and, upon such mailing, the notice shall be deemed to have been given, and the court shall proceed with the foreclosure action and may award attorney's fees and costs as permitted by law.

 


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