Trial Courts Have Post-Judgment Jurisdiction to Determine the Amount of Past-Due Assessments Owed to a Condo Association and any Attorneys’ Fee Award
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Recently, Florida’s Third District Court of Appeal issued a ruling that laid to rest any doubt as to whether a trial court has the jurisdiction to determine the amount of association dues owed to a condo association in a foreclosure action and the amount of attorneys’ fees to be awarded to the prevailing party in such an action. The case was Ocean Bank v. Caribbean Towers Condominium Ass’n, Inc., 2013 WL 4081702 (Fla. 3d DCA 2013) and the answer is, yes—the trial court has the jurisdiction to determine both amounts under the Florida Statutes. In fact, this case stands as a stark warning to Florida’s condo associations: Don’t push too hard for fees that are not justified under the Florida Statutes or you may be on the hook for all of the other party’s attorneys’ fees in defending that unjustified position.
Ocean Bank brought foreclosure actions against two unit owners for defaulting on the mortgage. The unit owners were also not paying their monthly condo assessments, which added to thousands of dollars in monies owed to the association. The bank obtained foreclosure judgments and purchased the units at the foreclosure sales. Ocean Bank v. Caribbean Towers Condo Ass’n, Inc., 2013 WL 4081702, 1 (Fla. 3d DCA 2013).
What proceeded to happen upon the bank taking title to the units after the foreclosure sale is what led to this action. The condo association, in complete disregard for current Florida law, demanded from the bank the total amount of past-due assessments owed by the previous unit owners. Section 718.116(1)(b), Florida Statutes, caps a first mortgage holder’s liability for past due assessments at the lesser of either (1) one percent of the original mortgage, or (2) the past-due assessments for the prior 12 months only. This is more commonly referred to as the Safe Harbor provision under Florida’s condominium statutes. The condo association ignored the Safe Harbor provision and demanded the bank pay $8,835.93 for past-due assessments on one unit and $20,233.14 on the other. These amounts were nine times and thirteen times the respective statutory maximum on each unit. Ocean Bank, 2013 WL 4081702 at 1.
The association recorded claims of liens on each unit for these unlawful amounts, which forced the bank to delay its closings on the units and ultimately led to the bank filing post-judgment motions against the association in the foreclosure action, requesting the court to enforce Florida’s Safe Harbor protection and to award it attorneys’ fees. Id. The association took the position that since the foreclosure action had concluded, the trial court lacked jurisdiction to decide these issues and to award attorneys’ fees post-judgment. The trial court agreed with the association and the bank appealed to Florida’s Third District. Id.
Florida’s Third DCA agreed with the bank. It stated that Section 718.303(1), Florida Statutes, “clearly [allows] the prevailing party in disputes between unit owners and condominium associations to be awarded attorneys’ fees.” Id. at 2. The Third District continued by stating that the trial court, even though the motion was made post-judgment, was the correct forum for the bank to seek rulings on the past-due assessments at attorneys’ fees. Id.
Regarding the claim of prevailing party attorneys’ fees in actions between unit owners and associations, the Court observed that the bank did not obtain title to the units until after the foreclosure action and sale concluded; therefore, the bank could only make such a claim via post-judgment proceedings for events occurring after the bank became the record title holder. Id. Stated another way, “the Bank could not have sought fees as a unit owner under section 718.303(1) before the Bank purchased the units. Thus, the Bank properly raised the issue of attorneys’ fees only after it arose.” Id.
The court found that the association was not justified in clouding the titles to the units by placing a lien on the properties for more than the banks owed under the Florida Statutes. As a result, Florida’s Third District held that, “the Bank was entitled to its attorney’s fees incurred in successfully prosecuting its claim that the Association’s assessments were capped at the statutory maximums mandated by section 718.116(1)(b).” Id.