Association Statutory Liens: A Powerful Tool for Securing the Payment of Past-Due Assessments
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Nothing in life is free, and that applies to living in a nice neighborhood as well. Whether it is a neighborhood of condominiums or single family homes, the cost of maintenance and upkeep often falls to those living within that community. And when an association is delegated the duty of maintaining the neighborhood, that association will charge its residents a periodic assessment, which is due usually monthly or quarterly. Such associations function best when all property owners contribute by making timely assessment payments.
A problem arises, however, when property owners fail to pay their assessments. That could result in the association lacking the necessary funds to maintain the neighborhood, which may ultimately diminish the property values of all residents. In an environment where home values are already depressed and many homeowners are underwater, delinquent assessments are something associations simply cannot tolerate. Thus, it is extremely helpful that the Florida Statutes have a built-in statutory remedy for both condominium and homeowners’ associations: Association Statutory Liens.
Section 720.3085, Florida Statutes, governs the filing of liens by homeowners’ associations (“HOAs”) against residents who are delinquent in paying assessments. The statute begins by declaring that, “When authorized by the governing documents, the association has a lien on each parcel to secure the payment of assessments. . . .” Fla. Stat. § 720.3085(1). Thus, to enjoy its right to enforce a statutory lien, HOAs must first ensure its governing documents grant it the authority to lien each parcel within the neighborhood. If so, the association is backed by Section 720.3085, Florida Statutes.
An HOA, however, must follow a few procedural requirements, outlined within the Florida Statutes, prior to filing its claim of lien against a delinquent homeowner. First, the HOA must provide the delinquent resident with a written notice of its intent to file a claim of lien against his or her property. Fla. Stat. § 720.3085(4). The HOA must also provide the delinquent resident with 45 days from the date the notice was mailed in which to make payment for all amounts due. Fla. Stat. § 720.3085(4)(a). After the 45 days have passed, and if the delinquent homeowner has failed to pay in full the debt owed, the HOA can then file its claim of lien.
The claim of lien itself must also meet a few statutory requirements. “To be valid, a claim of lien must state the description of the parcel, the name of the record owner, the name and address of the association, the assessment amount due, and the due date.” Fla. Stat. § 720.3085(1)(a). This statutory lien is valuable to associations because it not only allows the association to recover all unpaid assessments, but also interest, late charges, and reasonable costs and attorneys’ fees incurred by the association for collecting unpaid assessments. Id.
If the HOA files its lien in accordance with the Florida Statutes, it can then bring an action to foreclose on the property in the same manner in which a mortgagee forecloses on property. Fla. Stat. § 720.3085(1)(c). The Florida Statutes, however, require the HOA to complete a few additional procedural steps prior to foreclosing its lien. First, the HOA must provide the homeowner with a Notice of Intent to Foreclose Lien. Fla. Stat. § 720.3085(5). Second, after mailing the notice to the delinquent resident, the HOA must wait an additional 45 days before bringing the foreclosure action. Id.
The Florida Statutes also allow the homeowner to challenge the HOA’s lien by filing a Notice of Contest of Lien. Fla. Stat. §720.3085(1)(b). If the homeowner files that notice, the association then has only 90 days in which to file an action to enforce the lien. Id. If the HOA fails to enforce the lien within those 90 days, the lien is considered void. Id.
Section 718.121, Florida Statutes, governs the filing of liens by condominium associations. Many of the rules and procedures for condominium associations are the same as those outlined above for HOAs. For example, prior to filing a claim of lien against a condominium owner’s property, the association must first mail to the delinquent property owner a Notice of Intent to Lien. Fla. Stat. § 718.121(4). One difference for condominium associations is that they need only wait 30 days from the date its notice was delivered to the delinquent resident to record its claim of lien, not the 45 days required of HOAs. Id. Moreover, once the condominium association files its claim of lien, it need only wait another 30 days after delivering its Notice of Intent to Foreclose Lien to then bring a foreclosure action, not the 45 days required of HOAs. Fla. Stat. § 718.116(6)(b). A condominium association must also be cognizant of the fact that it needs to commence action to enforce its lien within one year of recording its claim of lien or else its lien is extinguished. Fla. Stat. § 718.116(5)(b).
For both HOAs and condominium associations, if the delinquent resident responds to any of its notices by providing payment in full for all unpaid assessments, interest, late charges, costs and attorneys’ fees, the association must file and record a satisfaction of the lien so that the lien no longer encumbers the property. See Fla. Stat. § 720.3085(1)(a); Fla. Stat. § 718.116(5)(b).
In Florida, not many entities are afforded the statutory right to lien upon a property owner’s residence. Thus, associations enjoy unique protections under Florida law in which they can enforce their right to receive payments via resident assessments. However, to take advantage of this statutory lien, associations must ensure they are strictly adhering to the required procedures outlined within the relevant Florida Statutes. Failure to follow the required procedures may result in an association’s lien being deemed invalid and its foreclosure action dismissed.