Ignorance is not bliss

Watch out ... You may face foreclosure!

By Neal McCulloh

Probably the single biggest reason that association litigation occurs is due to lack of knowledge and/or information. This may be a surprise to some as generally one would expect that the parties would have made one another aware of their respective positions prior to any lawsuit being instituted. However, for one reason or another, this either does not occur or one or both of the parties ignores the information. This really is not so surprising. Consider how few people have actually read the association documents and/or the materials which are furnished to unit owners by both associations and developers.

The problems created by lack of knowledge may best be described by example. Consider assessment collection cases. It is not uncommon for an individual to interpose a defense that the association has no right to assess, collect assessment, lien or foreclosure on a unit. Such a defense is maintained despite the governing documents and in the case of condominiums, Florida Statute 718.

Why?  Probably because of lack of knowledge. 

 Additionally, it is not uncommon for a unit owner to withhold assessments because he believes that the association is failing to properly maintain the common elements. However, even if the association is failing to perform this duty, the general law and most documents will not excuse the owner from paying his or her assessments. This is not to suggest that such a unit owner would not have a separate cause of action against the association for its failure to maintain the common elements. That does not constitute a valid ground for withholding assessments. Therefore, if a unit owner wished to litigate the responsibilities of the association, it should be a separate unit. Unit owners may presume that they have the right to withhold payment as a means of compelling an association to act, or as a setoff for service that they should be, but are not receiving.

Of course, at some point associations typically demand payment. When the unit owner withholds payment, the association customarily and properly turns the matter over to its attorney for collection. At this stage the cost to the unit owner has increased significantly. This is due to attorney fees and costs which now are generally recoverable from the owner either by statute and/or the association's documents. Hopefully, the unit owner's problem will be conveyed to the law firm early on so that it can be explained that the assessments, costs and attorney fees are recoverable despite the unit owner's claims. Even after such an explanation, unit owners often refuse to accept this answer or fail to investigate the issue. Thus, a foreclosure suit is often necessary. Fortunately, the property is rarely sold. However, the cost to the unit owner by this foreclosure stage can be very significant. This is compounded by the fact that the fees and cost can greatly exceed the amount of delinquent assessment. Consider the fact that the amount of delinquent assessments involved with a homeowner association is often less than $100.

All the ramifications of foreclosures are beyond this article. Suffice it to say that in this arena all parties concerned have a real need to appreciate what is involved, the risks and the duties of the parties.**

Neal McCulloh is an attorney with Clayton and McCulloh in Orlando. He is also president of the Mid-Florida Chapter of community Associations Institute.

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