Article Courtesy of The Naples Daily News

By Aaron L. Gordon, Esq.

Published March 14, 2013

With Florida’s real estate recovery just getting started, the battle between owners and banks continues at a fever pitch. 

Still desperate for monthly assessments, condominium and homeowners associations continually look for new revenue sources and strategies for cutting expenses while not compromising services. Frequently, the only alternative is to special-assess the reliable owners so that amenities and properties can be maintained. Another strategy has been to challenge the foreclosing banks under Florida’s Safe Harbor law, which can result in associations getting more than the statutory minimum from the foreclosing banks.

Equally desperate are the financial institutions whose portfolios of foreclosed units continue to swell. And with this growing number of foreclosures come large assessment fees due to the condominium associations. The big difference, however, is the power of the banking lobby in Florida.

We saw it last year with a bill introduced by Rep. George Moraitis, which in short would have further limited a bank’s financial liability resulting in increased financial responsibility on condominium owners. Moraitis represents District 91, which spans south Boca Raton to Hollywood along the ocean. His constituents are, for the most part, condominium owners. But his law firm represents banks in several capacities. Where were his loyalties and those of other legislators who supported this bill?

Fortunately, House Bill 319 never saw the light of day, but Moriatis has now introduced House Bill 1339 for the 2013 legislative session. It is critical for boards to beware and to begin questioning their state representatives about their allegiances to banks. This bill’s clear intent is to limit any additional bank liability. 

Moriatis is planning to add the following language to Florida’s Condominium Act as well as the other chapters that govern timeshares and homeowners associations:

“The first mortgagee or its successors or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure are not liable for any interest, administrative late fee, reasonable cost or attorney fee, or any other fee, cost, or expense that came due prior to its acquisition of title. This subparagraph is intended to clarify existing law.”

In other words, “Are your representatives voting for you or are they trying to preserve their re-election chances by making sure the bank lobby is squarely in their corners?” 

Without getting into the specifics of what may be, it is important for associations to understand the financial havoc this bill could cause with passage. 

The following are some of the high points of House Bill 1339 and what we perceive to be the motives of the sponsoring representatives:

* House Bill 1339 will further limit the financial liability of banks by limiting the amount of money associations can recover from delinquent banks, no matter how egregious their conduct was. How long did that bank let that unit or house sit vacant? This bill is trying to give them a bailout. 

* If associations can’t collect more than the minimum, it is likely that special assessments will be levied to good-paying owners as the only way to maintain property, amenities and services.

The practical effect of this bill would have been the transfer of wealth from community association’s members (residents) to banks. In short, it will be another “bailout” for the banks.

Quite frankly, it’s a mystery as to why legislators, who allegedly represent condo owners, are sponsoring a bill that will financially hurt their constituents. 

It raises interesting questions:
* Why would politicians make it easier for financial institutions to pay less and mandate that association residents pay more?
* Why not strengthen rather than weaken the provision for community associations by making more assessments recoverable from first mortgagees and subsequent purchasers?

Questions like these are the types that voters should be asking their legislators during 2013’s legislative session. This type of bill almost squeaked through last year, and if community associations aren’t vigilant it is likely to pass during the upcoming session.

The banking lobby is powerful, but a grassroots campaign spearheaded by community associations can keep bad provisions like those presented in last year’s legislative session from happening.