A homeowner has fallen behind on his Association dues.  The Association proceeds with collections, getting as far as filing a complaint with the Court.

But then the homeowner’s mortgage lender comes along and files a complaint of its own.  Despite reports that portend the end of the foreclosure crisis, according to RealtyTrac’s most recent findings, the average foreclosure completed in the first quarter of 2015 took 975 days.  Now that the game has become more complicated (and potentially longer), should the Association continue to pursue the homeowners, or wait for the lender to complete its mortgage foreclosure and recover its assessments from the bank?

First, here is a little background.  The current statute that determines the liability of a lender for condominium association dues (Fla. Stat. Sec. 718.116(b) (1)) maintains that the “first mortgagee or its successors or assignees who acquire title . . . [are liable for the lesser of] . . . (a) the unit’s unpaid common expenses and regular periodic assessments which accrued during the 12 months [preceding acquisition of title]; or . . . (b) One percent of the original mortgage debt.”  The parallel statute for homeowner’s associations (Fla. Stat. Sec. 720.3085(2) (c) (1)) contains a similar provision.  Both provisions are commonly referred to as the “safe harbor.” 

As a general rule, the amount recovered by an Association in the safe harbor is less than that recovered if the homeowner were to simply pay what he owes the Association.  Clearly, if the typical scenario were this easy, most Association’s would prefer to collect their money from the homeowner.  However, there are other factors to consider. 

If the mortgage on the relevant property was recorded between July 1^st, 2007 and June 30^th, 2008, the Association is entitled to all amounts owed, not just the safe harbor.  This time period is called the “gap year” because the statute that was in place during 2007 did not provide for a “safe harbor,” as described above.  In addition, while a bank may move rapidly through a mortgage foreclosure (in as little as 3 months), it also may take *years* for a mortgage foreclosure to complete if the Defendant/Homeowner has hired an attorney to vigorously defend her case.  In such a situation, it may be preferable for the Association to complete its collection’s foreclosure, take title to the property, and rent it to a tenant during the pendency of the bank’s mortgage foreclosure as a means of recouping its past due assessments. 

These are but a few of the wrinkles that can make it difficult to determine the best course of action when the bank files a mortgage foreclosure during an Association’s foreclosure.  As always, it is best to consult an attorney to determine the best course of action.