It’s the Law: Rules also apply to homeowner associations

Q: I hear there are new laws requiring homeowner associations to give more warning to property owners before filing suit against them. Is this right?

A: The 2007 legislature adopted two new mandates with respect to association action against unit owners. The first requires that the association and a homeowner use mediation to try and settle a dispute prior to suit. Pre-suit mediation is mandatory for disputes involving change to a parcel or common areas, covenant enforcement, amendments to association documents, disputes regarding meetings of the board and committees, membership meetings (not including election meetings), and action to official records of the association.

Mandatory pre-suit mediation does not apply to collection of assessments, fines or other financial obligations or any action to enforce a mediation settlement agreement. An owner or the association may also proceed with a request for an emergency temporary injunction without first complying with pre-suit mediation. Except for the attorneys, persons who are not parties to the dispute may not attend the pre-suit mediation without consent of all parties.

The statute requires that an aggrieved party serve on the responding party a written demand to participate in pre-suit mediation, and provides a form to be used. The form explains that mediation is a process by which a third party attempts to help the parties reach an agreement. The notice must also list five certified mediators and provide the other party to select any one of them to mediate the dispute.

Mediators usually charge an hourly rate. The notice explains that the parties will share the costs of mediation equally and that an average mediation requires three to four hours.

If the party receiving notice does not respond, fails to agree upon a mediator, fails to make payment of fees and costs within the time established by the mediator or fails to appear for the scheduled mediation, it operates as an impasse to the mediation and the other party is then entitled to proceed in court and to seek an award of the costs and fees associated with the mediation. If a party fails or refuses to participate in the entire mediation process, that party is barred from recovering attorney’s fees and costs in subsequent litigation relating to the dispute.

The legislature also added new requirements to lien filings. Homeowner associations cannot file liens for unpaid assessments unless a written demand for past due assessments and other amounts owed to the association is provided to the property owner by the association.

The written demand must (a) provide the owner with forty-five days to make complete payment, including any attorney’s fees and costs associated with the preparation and delivery of the demand and (b) be sent by registered or certified mail, if the owner’s address is within the United States, or by first class mail if outside of the United States. If the owner does not pay within forty-five days, the association can proceed with its lien and lien foreclosure.

After the owner is served with the foreclosure summons and complaint, the owner has another new right courtesy of the 2007 legislature. The owner can make a qualifying offer to pay all amounts due plus interest within sixty days. If the property is not then subject to mortgage foreclosure, tax certificate sale or bankruptcy, the offer stops the foreclosure for the time period during which payment is to be made. If the owner defaults under the agreement, the association can proceed with foreclosure. The owner can only make one qualified offer during any foreclosure action.

The recent statutory amendments are mandatory and provide significant new rights to property owners. For a complete understanding of how the recent amendments and other provisions of the Homeowner Association Act impact a particular situation, you should consult with an experienced attorney.

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William G. Morris is a lawyer with offices at 247 N. Collier Blvd., Marco Island. The column is not intended to be legal advice for specific circumstances. General questions can be sent by e-mail to wgmorrislaw@earthlink.net or by fax to (239) 642-0722. Read other columns at http://www.wgmorris.com.

© 2008 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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