Florida renters could be forced to pay for deadbeat unit owners

New state law allows condo and homeowners associations to demand

rent from tenant when owner/landlord fails to pay fees

Article Courtesy of The Sun Sentinel

By Daniel Vasquez

Published August 27, 2010

  

Getting locked out of his rented South Florida condominium was Zach Smith's first clue something was terribly wrong. The condo association disabled Smith's security key card and electronic garage door opener one day this summer, cutting access to the Hallandale Beach complex and his $900-a-month, furnished one-bedroom unit.
  
The lock-out, Smith soon learned, was in response to his landlord, the actual unit owner, falling behind in condo association maintenance fees. And what happened to him could happen to anyone in Florida renting within a shared condo or homeowners community as a result of newly-passed laws.
   
Smith's unfettered access to his condo and service to his security key card and garage door opener were restored after he agreed to pay his rent to the association while it collects back payments from his landlord. "I was advised my landlord was behind in payments so I would have to pay my rent to the association," said Smith, 31, an analyst with a local energy company. "I understand as long as I pay the association I can stay."
     
Smith's landlord, who asked not to be identified, said she has no problem with the new state law. "I know a lot of people don't like it, but it is helping us get current with our association," she said. "The law serves its purpose." Diego Leon, property manager for The Hemispheres Condominium Association, which governs Smith's complex, said about a dozen delinquent owners have made arrangements to allow the association to collect rent from tenants. "We are basically enforcing the law and doing what it takes to collect on these bad debts," Leon said. "And it's helping." 
  
New state laws now allow condo and homeowners associations to demand rent money from tenants of owners in arrears with the association. Refuse to pay and you could face eviction.
  
These pay-or-go powers are provided under the Florida Distressed Condominium Relief Act, signed in June by Gov. Charlie Crist to help cash-strapped associations cope with widespread delinquencies caused by the recent bad economy and real estate market.
   
When multiple owners stop paying, associations must cut back on services (lawn, security, garbage) and/or raise assessments for the owners who already pay maintenance fees.

"This is a huge problem prevalent in most condo and homeowners communities," said Roberto Blanch, an attorney with Siegfried, Rivera, Lerner, De La Torre & Sobel, which represents associations, owners and tenants in Broward, Palm Beach and Miami-Dade counties. Often, he said, delinquent owners "are investors who bought during the boom, rented out their units and are still collecting rent but not paying their maintenance fees." 

Nobody tracks how many Florida owners are in arrears with condo and homeowners associations, but experts say most shared communities suffer revenue losses caused by deadbeat owners, including many investor owners who choose not to pay mortgage or association fees in response to the bad real estate market but still want their rent money.

The new laws not only help associations get their hands on that money they also protect tenants from facing repercussions, including eviction or law suits instigated by their landlord for paying the association instead of the owner.
  
To protect owners, the law also prohibits associations from collecting more money than is owned the association by a delinquent owner. For example, if a tenant owes $1,000 a month for rent and the owner is only behind $500 in maintenance fees, the association may only collect $500 in rent.
 
Critics say the new laws have flaws. For example, wording of the provisions make it unclear whether associations may only collect rent to pay off debts incurred after the law took effect on July 1 or for debts incurred prior as well.
 
And associations must cover legal and courts costs to evict a tenant. And after that, the delinquent owner is not obligated to rent out their unit, ending the rental money stream that potentially existed for the association before the tenant was evicted.
 
For Smith, the law seems to be working out fine so far. He said his landlord accepts the fact that he must pay the association. "And I have no problem giving my rent money to the association, I pay someone either way," he said. "I just want to keep living here."

COMMENT:

Mr. Smith will not be so happy any more when the bank kicks him out on short notice.

I always have to wonder about the big "specialized" law firms. First they push badly written bills and then they come up with their own interpretation, because they don't like what the new statute says! Don't forget, the actual statute says: "FS 718.116(11) If the unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association, the association may make a written demand that the tenant pay the future monetary obligations related to the condominium unit to the association, and the tenant must make such payment." What's so difficult to understand about the word "FUTURE"?

In short: The actions and demands of the association are sure not in compliance with the wording of FS 718. Neither is locking the renter out without warning. The manager and the law firm should know better! The attitude: It's just a lowly tenant -- we can treat him like dirt!

Every renter in such a situation shouldn't pay anybody for two months to recover security deposit, and then move out. Evicting somebody takes longer! No renter should be the pawn in the fight between association and owner. Lots of great rentals available without such nonsense!


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 www.sunsentinel.com/condoblog. You can also read his consumer column Mondays in Your Money and at www.sunsentinel.com/vasquez.

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