Article Courtesy of The Daily
Business Review
By Awilda Esteras
Published
September 3, 2020
The new opinion, which comes in a unanimous decision
by all 11 judges of the Fifth DCA, redefines the term “consumer debt”
under the FCCPA with its finding that obligations to pay condominium
assessments may be considered debts under the FCCPA.
In an unexpected decision reverting from more than
two decades of case law, Florida’s Fifth District Court of Appeal
reconsidered its position on the question of whether condominium
association fees qualify as debts under the Florida Consumer Collection
Practices Act. The new opinion, which comes in a unanimous decision by
all 11 judges of the Fifth DCA, redefines the term “consumer debt” under
the FCCPA with its finding that obligations to pay condominium
assessments may be considered debts under the FCCPA.
The appellate court’s decision in Williams v. Salt Springs Resort
Association reversed the lower court’s ruling that dismissed the case in
favor of the association and its property management company. In
Williams, an association and property management company were sued after
publicly posting a list of names of more than 100 delinquent unit owners
along with the balance due by each owner. Williams, one of the owners
whose name appeared on the list, filed a class action complaint against
the association and the property management company asserting the public
posting of “deadbeat lists” to enforce the collection of consumer debt
amounted to a violation under the FCCPA.
The lower court was not swayed, as the Fifth DCA’s 1997 opinion in Bryan
v. Clayton had settled the matter with its finding that condo fees do
not meet the definition of a consumer debt under the FCCPA.
After the defendants prevailed based on the 1997 ruling, the appellate
court reviewed all the facts and decided to reconsider its position.
The appellate court found that for the FCCPA to apply in this case, the
plaintiff’s payment obligation must arise from a money, property,
insurance or services transaction which is primarily for personal,
family or household purposes.
“The purchase of a condominium is unquestionably a property transaction,
and Williams alleged her condominium purchase was of residential
property for personal, family, or household reasons,” the Fifth DCA
concluded. It further reasoned that because the association’s bylaws
require Williams to pay annual assessments, the obligation arose from
the purchase of her unit. “Williams has sufficiently alleged that her
condominium assessment arises out of a consumer transaction to purchase
property, and that her ongoing obligation to pay assessments is a
‘consumer debt’ under the FCCPA.”
Essentially, the entire Fifth DCA decided that the time had come for a
careful review of its 23-year-old decision. The court recognized that
other state courts and even the federal courts have since ruled that
association fees do indeed meet the definition of a consumer debt under
other similar statutes.
“Our considered decision to recede from Bryan is informed by over 20
years of other courts’ detailed analysis of the FCCPA and the FDCPA’s
plain language,” the opinion concludes. “For example, the Sixth and
Tenth circuits followed Newman’s reasoning in concluding a condominium
owner’s payment obligations arise in connection with the condominium
purchase transaction, pursuant to condominium bylaws and state law, and
are therefore ‘debt’ under the Fair Debt Collection Practices Act.”
By reversing the circuit court’s decision and remanding the case back
for further proceedings, associations have been put on notice to begin
abiding by the FCCPA in their collections practices and avoid such
expressly forbidden tactics as the publication of a list of delinquent
unit owners in an attempt to shame them into compliance.
With this recent ruling, associations and property management firms that
run afoul of the FCCPA in their collections tactics can now potentially
face class action lawsuits leading to significant legal liabilities and
costing hundreds of thousands of dollars. Community association boards
of directors and property managers should consult with highly qualified
and experienced association attorneys to conduct complete reassessments
of all their collections procedures and protocols. For many communities,
standard new clauses in all their debtor communications and other new
additions to their procedures will be immediate necessities, and other
long-term changes will also be in order.
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