Condo advocates decry banking lobbyists' influence

Article Courtesy of Forum Publishing Group

By 

Published June 5, 2009 

Despite pleadings from unit owners, state legislators failed to produce any relief for condo associations in the form of new foreclosure reform during the most recent legislative session.

With so many units in foreclosure, condos are having difficulty coping with a decline in the association fees owners are paying. Several legislators spoke about providing help to condos at the beginning of the session but ended up focusing on the state budget, a move condo association attorneys and advocates cite as proof no one was willing to stand up to banking lobbyists in Tallahassee.

"There was discussion of it, but it never made it to vote on the floor," said Ken Direktor of the law firm Becker & Poliakoff. "The voters should be aware this was presented and no one [sponsored] it."

Assessment collection and mortgage liability are the two main issues with which owners hoped to receive help. Banks are only required to pay the association the lesser of 1 percent of the original mortgage amount or six months of association fees – proof, association leaders say, that bankers drag their feet taking titles.

"I think we'll come back with it next year, but so will the banking lobbyists," Direktor said. "Some communities have up to 50 percent not paying. How can you go on?"

Some condos have had their electricity and water shut off due to financial hardship.

Julio Robaina, a prominent figure in condo law during his career as a state representative, hoped to increase a lender's liability for late payments for up to two years while offering incentives for those who initiate a foreclosure, but his bill failed. Other bills would have increased lender liability to the lesser of 12 months of past-due fees and special assessments or 20 percentage of the mortgage. Lenders would lose the cap protections if they failed to pay the association with 30 days of taking title.

In a survey by the Community Association Leadership Lobby, conducted in January and February, 90 percent of the 1,589 participants said first mortgagees should pay more after they obtain title through foreclosure, and more than half complained about the number of vacant homes in their communities. Lisa Magill, president of CALL, wrote in a blog during the height of the legislative session in February that "from the community association's perspective, lenders are insulated from falling home prices while bills for insurance, property maintenance, management and other expenses must be paid."

One respondent to the CALL survey complained about community associations receiving "the short end of the stick," while elected officials "give in to the demands of the lobby groups of the banking industry."

"Florida has always been the leader in condo law," Direktor said. "There was nobody with the political will to take on the banking lobbyists."

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