Article Courtesy of The Miami
Herald
By MONICA HATCHER
Published October 23, 2009
Condo owners behind on maintenance fees, beware:
Condo boards are becoming more aggressive in collecting delinquent fees.
One board even wants to try an untested strategy -- forcing renters into
empty units to pay off deadbeat accounts.
The board at the Jade Residences at Brickell Bay, a
luxury condo of 341 units, is asking a Miami-Dade judge for permission to
rent vacant units belonging to owners who aren't facing foreclosure but
are behind on fees, which pay for the basic needs of the building such as
water, power, insurance or even a new roof.
As the collection crises for condo boards deepens,
the forced-rental program is the latest example of associations becoming
pushier -- and more creative -- in their attempts to wring revenue from
delinquent homeowners and idle units.
There's no guarantee a judge will buy the notion of
forced rentals, though. On its face it seems to step on owners' property
rights.
"It would be breaking and entering,'' said Ben
Solomon, an attorney who helps condo associations in collection efforts
and thinks forced rentals are a bad idea. ``It would be short-sighted to
try to get a little extra income and be sued by a debtor for illegally
entering, renting out or otherwise using their unit.'
That view doesn't deter Guillermo Mancebo, a lawyer
with Siegfried, Rivera, Lerner, De La Torre & Sobel in Coral Gables,
who represents Jade. He said owners who don't pay their fees put
everyone's property at risk because gaping budget holes lead to
disruptions of critical services.
Jade, he said, is running a $100,000 deficit every
month because about 50 units are vacant and behind on fees. In the second
quarter, the average selling price for a condo at Jade was nearly
$604,000. Monthly association fees at such luxury buildings often exceed
$1,000.
`CRISIS'
"A lot of the judges now are understanding the
crisis condo associations are facing in the collection of maintenance
fees,'' said Mancebo.
Current renters in Jade already turn over rent
payments to the association when their landlords fall behind, dictated by
a lease addendum landlords must sign before renting their condos.
But Mancebo says Jade and other condos need help
with units that are lying fallow.
In Jade's petition, Mancebo is asking the court to
appoint a blanket receiver to manage the forced rental program. He's also
asking the court to include units not yet in foreclosure by the
association.
FAIRLY NEW REMEDY
That's a new and controversial twist on
blanket receivership, which is itself a relatively new collection remedy
being used by condo associations. Under a blanket receivership, a court
appoints an independent custodian to collect rents from all units whose
owners are behind.
But the law says the units under a blanket
receivership must be subject to foreclosure by the condo association,
according to Solomon, whose firm, Association Law Group,is credited with
first devising the blanket receivership principle.
In a court order last week, however, Miami-Dade
Circuit Court Judge Gisela Cardonne Ely allowed a blanket receiver for
Residences at the Falls condo to collect rents on units not in foreclosure
by the association.
Mancebo said the order was a major development
because it would save the Residences at the Falls tens of thousands of
dollars in legal fees to file foreclosures against delinquent units. It
could similarly save other cash-poor associations.
QUESTIONS
Solomon said the development was "terrible''
because the orders clearly are contrary to the law and put associations at
risk of being sued. But there are questions about whether the association
or the receiver might be liable.
"I can't blame a lawyer for trying to get the
best rights for the association, but if they are not rights afforded by
the law, the court order can be reversed,'' Solomon said. He added judges
were granting the blanket orders giving relief to condo associations based
on what they think is correct rather than what the law allows.
Chris Gallo, a resident at the troubled Buckley
Towers condo in North Miami Beach, was undecided on the question of forced
rentals but said one thing was for sure: ``When you sign onto a condo, you
promise to pay the fees, and when you don't, you're putting the
association in a place where they can't get the revenue to run the place
properly.''
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