Q: I recently bought a condominium. A few months after I took title, I got a bill from the association for past due assessments, including what was termed a special assessment for repairs to the building that had been completed prior to my purchase. There was also a charge for interest and late fees. Do I have to pay these charges and assessments?
A: Florida has comprehensive statutory provisions addressing condominiums in Chapter 718 of Florida Statutes, known as The Florida Condominium Act. The Act goes into great detail with respect to assessments and liability for payment of assessments.
A unit owner is personally liable for all assessments which come due while he or she is the unit owner. In addition, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. That liability makes it important for purchasers to confirm with a condominium association the status of assessments, prior to closing, to avoid inheriting an unpaid bill.
Assessments cannot be avoided by waiver of use or enjoyment of any common element, such as the pool, or by abandoning the unit for which the assessments are made. If assessments are not timely paid, they bear interest at the rate provided in the declaration of condominium. If no interest rate is provided, interest accrues at 18 percent per year.
The association may charge an administrative late fee in addition to interest, not to exceed the greater of $25 or five percent of each delinquent installment. The fee may only be charged if the association’s declaration or by-laws provide for the late fee.
If an owner makes partial payment, the association may continue with collection action, although the owner is given credit for the payment. Payments received by the association must be applied first to any accrued interest, then to any administrative late fee, then to any costs and reasonable attorney’s fees incurred in collection, and last to the delinquent assessment. Efforts to avoid some of these charges by noting on the check “payment in full” or otherwise are unsuccessful, as the statute states that the mandatory application of payment is applicable without regard to any restrictive endorsement, designation or instruction placed on or accompanying a payment.
The condominium association has a lien on each condominium parcel to secure payment of assessments. The lien is perfected by recording in the clerk’s office, much like a mortgage. After recordation, the lien acts like a mortgage, except that its effective date is retroactive to the date the original declaration of condominium was recorded. That makes the assessment lien a “super” lien, taking priority over other liens, except first mortgages which are given special treatment by statute. The lien secures all assessments, attorney’s fees, interest, costs and late fees, including after accruing assessments.
A recorded lien is valid for one year from date of recording. If suit is not filed to foreclose the lien during that time, the lien expires and, according to The Florida Division of Land Sales, Condominiums and Mobile Homes, after the lien expires, a new lien cannot be recorded for the same assessments. That does not mean the owner does not owe the assessments, it only means that the condominium association no longer has a lien that can be foreclosed against the property for those assessments.
First mortgage holders have limited liability for past due assessments when they acquire title by foreclosure or by deed in lieu of foreclosure. By statute, a first mortgage holder’s liability for assessments coming due prior to the date it acquires title is limited to the lesser of one percent of the original mortgage or the six months of assessments coming due just prior to acquisition of title. This limited liability is intended to encourage lenders to loan money secured by condominiums and maintain marketability of condominium units.
When a buyer steps into unpaid assessments, the buyer may have a claim against the previous owner even though the buyer will owe the assessments to the association. Other factors may impact the buyer’s ability to obtain reimbursement or contribution for assessments, but generally a buyer will not be able to avoid liability to the association.
The facts of your case emphasize the need for legal advice when purchasing real property. And, as with all legal matters, the current assessments situation should be reviewed with an experienced attorney to determine your rights and obligation with respect to the association, your seller and possibly others.
William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney. Questions for this column can be sent to William G. Morris. Email email@example.com, or by fax, (239) 642-0722.