Part II; Collection Procedures:

Once collection is being turned over to legal council (the association’s attorney), all inquires are made to legal council only. To avoid a conflict of interest, the association or the manager should never discuss the defaulting property owner issue with any members. After being advised that a particular unit owner is delinquent of assessments, from that day forward, all collections are handled through the association attorney’s office and not through the association or management.

After the initial “demand letter” was sent with no response, the next step is to file a “claim of lien”. Claim of lien does not mean a lawsuit has been filed against the property owner. However, community associations must file for the claim of lien in public records, in the same place and in the same manner as a deed or mortgage, before filing a foreclosure lawsuit.

At the same time the claim of lien is being filed, a certified letter is sent to the unit owner advising the claim of lien has been recorded.The certified letter is the second thirty (30) day notice. The second thirty (30) day notice informs the unit owners that a foreclosure is in process. Also included in the notice is the amount due, including interest, late charges, attorney fees and any other reasonable costs. Without sending this statutory thirty (30) day second notice, condominium and cooperatives would lose their ability to incur a judgment for collection costs and attorney fees. Second thirty (30) day notice does not apply for Homeowner Associations.

There are many steps taken before a judgment can order the clerk of courts, sell the unit at a public auction. After the claim of lien is enforced, the competing interests are considered. Only two superior liens take precedence,  real estate tax and first mortgage, if any. If the lien process was executed in a timely manner, the better chance their isn’t any second mortgages, federal tax liens, construction liens or judgment liens, which would take a superior position in line.

The fewer the encumbrances, the more the property is worth and easier to sell. By naming the holders of competing interests as defendants in a foreclosure lawsuit and by proving the association’s claim of lien will be superior to these subordinate (secondary) interests, the buyer at the foreclosure auction will take title subject to real estate tax, first mortgage and extinguishes down by superior to subordinate interests. 

Determination the order of superior to subordinate competing interests, the attorney will file a foreclosure complaint. After the unit owner is property served and any other defendants, the case can move forward. Delivery of the foreclosure complaint is called, “Service of Process”. The service of process is executed in a formal manner and has many restrictions.

If no technicalities arise and after the judge enters the judgment, a foreclosure sale is set. Twenty (20) to thirty five (35) days later, the foreclosure sale should be final, resulting in the association being reimbursed for all associated costs. Of course, the association could elect to buy the property. Or the defaulting owner owes more than the property’s worth. Before any business decisions are entertained, the association should always consult with their attorney. 

For relative posts see, “Developers are in Business too Make Money” and “Fining Procedures for Homeowners Associations” and lastly “Condominium & Homeowners Rules for Parliamentary Procedures”. If you are the select few who donate their time to serve your Association and/or a Florida Homeowner, you do not want to miss any new posts. Please subscribe to our community. Or our complimentary email services.