One can hardly read a newspaper or watch a television newscast lately without being reminded about the historically high number of foreclosures burdening consumers and lenders throughout Florida and the United States. What is often conspicuously not reported is the enormous burden being born by those owners in community associations who are left to make up the difference for those owners who have stopped paying their share of maintenance assessments or have abandoned their properties entirely. The expenses associations have to pay remain the same, but the number of people paying has been reduced. Often, the paying owners who are left holding the bag for the non-paying owners are also in fragile financial condition and are struggling to keep their homes. Florida is also struggling with an over-burdened and underfunded court system which has caused a slowdown in the processing of mortgage foreclosures. To make matters worse, so-called "mortgage defense attorneys" are slowing the system down even further and some mortgage holders are intentionally slowing down their efforts and allowing their foreclosure cases to languish to avoid paying the operating costs of the mortgaged properties.

Attorneys who represent community associations have employed a number of novel ideas to try to persuade mortgage holders to pursue their claims more vigorously to keep the process moving at a rate that will conclude the process in a timely manner to minimize the burdens on the associations. Among the ideas which has been employed by association lawyers is to file a motion that asks the court to order the mortgagee to proceed with its foreclosure and, as a sanction for failing to do so, be responsible for paying the maintenance on the unit. In many instances where courts have agreed to grant the associations' motions, the mortgagees have picked up the pace of their foreclosure process to the benefit of the associations. It hardly seems like a lot to ask - either pursue your foreclosure or pay the association that is maintaining the property that secures your loan for its expenses.

Yesterday (December 2, 2009), the Third District Court of Appeal, the appellate court that hears appeals from Miami-Dade County trial courts, put the kibosh on one of the few effective tools an association had to make a mortgagee proceed with its foreclosure when the court ruled that Florida trial courts lack the legal authority to compel a mortgagee to pay the maintenance on a condominium unit when the mortgagee has not pursued its foreclosure with diligence. In this case, the condominium association was joined as a junior lien holder by a mortgagee on a unit in the condominium in February, 2008. For a variety of reasons (in fairness, not all of which were the fault of the mortgagee), the case was not concluded within one year and, in February, 2009, the condominium association asked the court to order that the mortgagee proceed with its foreclosure within 30 days or bear the obligation for maintenance for the unit. The court entered the order and the mortgagee, U.S. Bank, as trustee, appealed the order to the appellate court. The Third District Court of Appeal held that the mortgagee was not contractually obligated to pay maintenance assessments on the unit and its liability for maintenance assessments would only arise if it acquired title to the unit pursuant to the Condominium Act. The Court held that the trial court had no authority to expand the mortgagee's liability for condominium maintenance before it takes title. The Court acknowledged that, even though the trial court may have been attempting to apply equitable principles here, it exceeded its authority since the limits of a mortgagee's liability for assessments is limited by Florida Statutes. Though this case involved a condominium association, since the provisions of Chapter 720 that apply to homeowners associations' assessments are similar to those of the Condominium Act on this issue, it is likely that this case will apply to homeowners associations who are similarly burdened by slow moving foreclosure actions.

This case is a reminder that community associations need to diligently pursue collection of their delinquencies as soon as they arise so that as much may be collected before the owner defaults on his mortgage or decides to abandon the parcel. Unless relief is provided by the legislature to make mortgagees liable for a greater portion of delinquent assessments, the tried and true methods employed in an aggressive collection program pursued by coordinating with the Board, management and association legal counsel remain the association's best hope of keeping delinquencies manageable.

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