Courtesy of The Orlando Sentinel
An Opinion By Aaron Gordon
Published March 10, 2016
It was John Kenneth Galbraith who once said, "Nothing is
so admirable in politics as a short memory." It appears as though our
Legislature is suffering from a mild case of amnesia when it comes to the
recovery of the real estate industry.
House Bill 1357, sponsored by Rep. Mike LaRosa, R-Polk County, is making its
rounds in Tallahassee, both as a stand-alone bill and in the form of various
floor amendments. In fact, there was an effort to amend a portion of House
Bill 1357 on to another bill awaiting a final vote on the House calendar as
recently as last Friday morning. However, that amendment was withdrawn on
While LaRosa appears well intentioned in his aim to protect his constituency
from a perceived wrong, the application of his bill will severely limit a
community association's ability to govern and collect past due assessments
and ultimately harm those whom he is intending to help.
House Bill 1357 would result in placing new restrictions on an association's
ability to collect past-due assessments, a situation from which many
community associations are just starting to recover after the great real
estate downturn of the last decade. Many advances have been made during
recent years, resulting in the ability of an association to responsibly and
efficiently pursue delinquent unit owners. If this bill were to pass, it
would make the collection process more cumbersome and time-consuming and
risk budgets not being met, large special assessments and ultimately, a
decline in property values.
It's hard enough for volunteer boards to collect monthly assessments. Why
make it harder?
Let's take a look at some of the bill's proposed regulations that could
hamper an association's ability to govern and collect efficiently:
The bill proposes a formal collection policy be adopted and circulated to
owners. This is a redundant requirement. For associations to collect their
assessments the authority to do so must be contained in the association's
governing documents, which all unit owners are subject to.
The bill will require the association to offer delinquent owners a six-month
payment plan. Associations operate on an annual budget. If an association
chooses to assess monthly, it has already given a unit owner a 12-month
payment plan. If the owner didn't pay, why should the association be
required to offer another payment plan?
In a truly confusing part of the bill text, it would require an association
to give a 30-day notice to a delinquent homeowner if the association intends
to use a third-party collection vendor. Why would we put limits on an
association for retaining a vendor as important as a collection agency or
The bill would require at least six months of assessments be delinquent
before foreclosure or transfer-of-lien proceedings can commence. Then a vote
by the board of directors is required to start the process. This would let a
delinquent owner thumb his nose at the board for six months at a time before
the board could realistically do anything of consequence to the owner.
The bill would also require the largest associations to maintain websites
with a wide range of digital records that are accessible to all owners. This
would require additional expenses to make sure that associations are in
With real estate prices increasing and vibrant sales in some markets the
norm, it seems that for many the crisis in the not-too-distant past is a
vague memory. One of the major causes of the crash was the inability of
associations to collect monthly assessment, which are the lifeblood of
communities throughout Florida.
Without these needed funds, associations could not implement budgeted
maintenance and repairs such as landscaping, painting, roofing, paving and
more. When that was the case, many boards went to their owners, requesting
special assessments to cover the shortfalls in the interests of maintaining
House Bill 1357 will further hamper these efforts to collect funds from
owners who legally agreed to pay when they purchased a home in that
community. As an industry, we have made great strides, and to limit or
hamper these efforts could be damaging to what remains, a delicate recovery.
Aaron Gordon is
general counsel for LM Funding America Inc., a Tampa-based specialty finance