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Special Assessments Levied After Recording the Claim of Lien for HOA and Condo Associations
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Special Assessments Levied After Recording the Claim of Lien for HOA and Condo Associations

September 2, 2014 Community Association Industry Legal Blog

Reading Time: 4 minutes

The Florida Condominium Act provides the process for a condo association to file a foreclosure action for recovering a unit owner’s unpaid assessments.  That process includes sending the required statutory notices to unit owners and recording a claim of lien for those unpaid assessments in the county’s official records.  Once those pre-suit actions are satisfied an association may move forward with a foreclosure action if a unit owner has not paid the past-due amount owed.  The common assumption and practice has been that the recording of the claim of lien secured all past-due assessments and all future assessments incurred by the unit owner up to the entry of the final judgment of foreclosure.  However, a recent court ruling states otherwise.  In Losner v. The Australian of Palm Beach Condo Ass’n. Inc., the court held that certain assessments levied after recording the claim of lien cannot be included in the final judgment amount.  No. 4D13-1669 (Fla 4th DCA, June 11, 2014).  This Blog post will analyze that case and what it means for condo associations seeking to protect their interests and budget.

In Losner, the condo association recorded a claim of lien and subsequently filed a foreclosure action against the unit owner for unpaid assessments.  Id.  The association, per its declaration, levied quarterly regular assessments.  After recording its claim of lien, however, the association levied two special assessments.  When seeking the final judgment of foreclosure, the association included the two special assessments in the final judgment order.  Id.  The trial court entered that judgment for the full amount the association claimed was owed and the unit owner appealed.  The appellate court, in finding for the unit owner, overturned the trial court and remanded the case back to the lower court for it to correct the final judgment by excluded the two special assessments from the judgment balance.  Id.

In its opinion, the appellate court quoted from Section 718.116(5)(b), Florida Statutes:  “The claim of lien secures all unpaid assessments that are due and that may accrue after the claim of lien is recorded and through the entry of the final judgment.”  (Emphasis added.)  The association argued that this statute gave it the right to include in its final judgment all assessments levied after recording the claim of lien, including the two special assessments. The appellate court focused on the word “accrue” and disagreed with the association’s interpretation.  Id.  The court explained that the legislature’s use of the word “accrue” refers only to regular assessments that are already scheduled to be levied according to an association’s declaration and validly passed annual budget.  See Id. (“[T]he word accrue references assessments already made before a claim of lien is filed, but coming due afterwards, but it does not refer to additional assessments for other purposes, such as separate assessments that are assessed against an owner after the time the complaint to foreclose on a claim of lien is filed.”)  The court ultimately held that the association was permitted to include all quarterly regular assessments that came due prior to the entry of final judgment but not the two special assessments.

The court’s issue with the association attempting to include special assessments was that the association failed to plead any basis for included special assessments in a final judgment.  Id.  The court explained that to include special assessments in a final judgment where the plaintiff did not plead special assessments, and the defendant had no opportunity to dispute those special assessments, would violate the defendant’s due process rights.  See Id.  (“Adding assessments not naturally accruing from assessments pled in the complaint violates due process because the owner does not have notice to prepare a defense.”)  In short, the court ruled that it was improper to “piggyback” unpled special assessments on top of those claimed in the claim of lien and the foreclosure complaint.  Id.  The lesson here is that associations must ensure that, in its foreclosure actions, it properly pleads for the inclusion of any additional special assessments that may subsequently be levied in its final judgment amount.

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