Located within most associations’ governing documents are provisions that benefit mortgage holders including, typically, provisions that make association liens inferior to first mortgage liens. Often these provisions state that foreclosure sale purchasers are not responsible for paying assessments that came due before such purchasers obtain title. In contrast, the Florida Statutes affecting both homeowners’ associations and condominium associations contain provisions that can be interpreted to hold foreclosure sale purchasers—including foreclosing lenders that obtain title—responsible for the payment of at least a portion of assessments which were not paid by a home’s previous owner.
Ordinarily, when an association’s governing documents conflict with the state statutes, the statutes should be followed. However, an exception to this general rule applies when the governing documents have provided contractual rights which would be impaired if later-enacted statutes are followed. In such cases, the governing documents control and the statutes are not applied.
In order to make sure that your association will be able to take advantage of statutory changes making purchasers responsible for the payment of assessments that were not paid by a home’s previous owner, associations are encouraged to review their governing documents with their legal counsel and to, where necessary, amend them to incorporate the assessment collection and lien rights found within Florida Statutes. Doing so is more important for homeowners’ associations than for condominium associations because, while the condominium statute (Chapter 718) has contained purchaser assessment liability provisions for decades, the homeowners’ association statute (Chapter 720) was silent on purchaser assessment liability until July 1, 2007. Accordingly, purchasers at mortgage foreclosure sales arising from mortgages given in homeowners’ associations before this date, including foreclosing lenders, have successfully argued that, in the absence of an amendment incorporating the statute, they are not responsible for paying assessment balances left over from a home’s previous owner.
Several recent appellate cases have reviewed foreclosure purchaser liability issues in homeowners’ associations, and, notably, many of these cases have turned on whether or not the homeowners’ association involved had amended its governing documents to incorporate the assessment liability statutes that it was attempting to enforce. In contrast, condominium associations have not recently been the subject of such cases. Nevertheless, it is still possible for condominium associations that have not amended their governing documents to be challenged on purchaser assessment liability, and condominium associations which are amending their governing documents for other reasons are encouraged to consider including an amendment adopting Chapter 718’s collections provisions.
Before deciding whether or not to attempt to amend your association’s governing documents, it is important to consult with your association’s legal counsel to confirm that doing so would be beneficial and to ensure that the association’s actions meet the requirements of law.