By Guillermo M. Mancebo, Esq.

The glut of new condominiums and homeowner associations in South Florida coupled with theCommunity Associations Now Using Aggressive, Little-Known Legal Maneuvers To Overcome Delays Caused by Delinquent Unit Owners, Bank Foreclosures economic recession and declines in housing prices have combined to create a “perfect storm” scenario for the region’s community associations. Regardless of whether the communities are new or old, luxury or affordable, beachfront or urban, all types of multifamily properties have been affected by the times, which have wreaked havoc on associations and the owners that they serve.

Due to the unprecedented numbers of residential foreclosures throughout South Florida, courts have become overwhelmed, and the system has slowed to a crawl. Foreclosure actions that traditionally have taken just six to eight months to complete now take one to two years. In many cases, the delays are exacerbated by the banks who are filing the foreclosure action against their borrowers, as they are able to avoid and postpone paying the monthly maintenance and association fees until the matter is finalized.

For the associations with a significant number of unit owners who are facing foreclosure and not paying their monthly maintenance fees, these prolonged legal proceedings and the delays resulting from the banks’ actions have become very problematic. Many of the associations and their attorneys believe that they have no other legal recourse but to let the system run its course.

However, there are other legal options and remedies that some associations are now pursuing to compel the banks as well as the individual owners to pay their association dues and avoid delays. For instance, attorneys at Siegfried, Rivera, Lerner De La Torre & Sobel, P.A. have assisted community associations to take a much more aggressive approach to avoid delays in the foreclosure process and collect assessments owed to the association.

In cases in which banks were creating delays to avoid taking ownership of units and paying monthly fees, many associations have successfully secured court orders based on legal arguments stating that by delaying claims and not pursuing them diligently, banks have failed to maintain the “clean hands” standard that is required by the court to maintain their foreclosure actions. In these cases, the banks have been forced to pay monthly association fees as well as the attorneys fees for the associations.

In addition to pursuing these actions against banks, a number of associations have elected to pursue claims against delinquent unit owners that go above and beyond the foreclosure claim for the title of the property. Unit owners have taken advantage of the delays in the system by using and even renting their residences without paying their monthly mortgage or association assessments for months and, in some instances, more than a year as the foreclosure process unfolds. Accordingly, many associations have elected to pursue claims based on breach of contract theories against owners who have become severely delinquent on their monthly fees. If affirmed by the courts, these claims may enable the associations to garnish funds in bank accounts and take possession of vehicles and other personal belongings of the delinquent unit owners.

By both pursuing claims against banks that are delaying the process and owners who are abusing the privileges of ownership without paying their share, associations may be able to avoid the shortfalls that lead to special assessments and fee-hikes for their unit owners. Of course, is should be noted that each case may present different circumstances; therefore, community association board members and management should consult with the association’s legal counsel to assist in identifying the best course of action to be followed for each particular case.