COMMUNITY ASSOCIATION AS LANDLORD - WHO GETS THE RENT?
Florida Keys short sale sellers need to read this informative article by one of Florida most skilled real estate attorneys.
Although the law permits the condo association to attach rents, we are not yet seeing this happen in the Florida Keys.
However, I believe it is only a matter of time as many Florida Keys property owners have been renting their property for many months, collecting rents and not paying condo fees or mortgage payments.
Kelly
Can a community association declare itself the "landlord" of a rented unit or home if it is not getting paid its assessments? In Florida it can and it may keep 100% of the rents to apply against all the delinquent assessments on that unit /home. This is a clarification of the prior 2010 law that opened up a statutory method for associations to stop providing services to delinquent owners when the owner is collecting rent yet not paying the association.
July 1st Effective Date:
The 2011 Legislature passed HB 1195 in May (which will go into effect on July 1st after signature by the Governor) and it clarifies several newly created powers associations did not previously have. Under the 2010 version there was a legitimate argument that the association could only collect the assessment delinquencies that occurred after the "notice" to the tenant to pay the rent to the association instead of the landlord. And there was the question of how much of the rent was to be paid to the association if the monthly assessment was less than the amount of the rent.
The clarification bill amends the 2010 law by allowing the full amount of the rent to be paid to the association instead of the owner-landlord, and allowing the association to keep collecting the rent until all of the assessments (no matter when incurred) for the unit are brought current.
What Is Included In the Rent?
If a owner-landlord is to pay for certain amenities (like water or gardeners or pool service), under the new law, the owner-landlord must pay out of pocket as the association does not have these obligations (unless they are provided to all unit / homeowners as part of the services included in the assessments). Obviously then, there is also no rent going to pay any mortgage. The utility issue is going to be problematic for tenants as there is no provision for the association to have the obligations of a landlord - only the remedies. So I can see a problem with "set-off" for a tenant reducing the rent because the tenant paid the utility directly, leaving less than the full amount of the rent to pay over to the association. One of my clients had exactly that problem (it was the water bill) that the owner was to pay but was not. The tenant paid the water bill monthly and submitted the monthy rent LESS the water bill and also provided the receipt. This arrangment worked for that particular situation, but not all associations may treat such arrangement the same way.
The mechanics for collecting the rent by an association remain pretty much the same as explained in COLLECTION OF DELINQUENT ASSESSMENTS THRU RENT - POWERFUL TOOL FOR FLORIDA ASSOCIATIONS.
Use of Common Areas and Amenities
The legislation also clarifies the issues of denial of amenities and what is and what is an amenity that can be denied to an assessment delinquent owner (or the tenant). The new law says that, "This subsection does not apply to limited common elements intended to be used only by that unit, common elements needed to access the unit, utility services provided to the unit, parking spaces, or elevators." Also there can be no restriction on limited common areas used specifically by the unit.
Cyd Weeks - an ActiveRain member, brought up a situation where a condo association is changing elevator access to require an "access card". Access cards can of course, be turned off by a central computer that controls the cards. Besides non-residents are denied access to floors (it is a 4 story building), so non-paying residents could also be excluded - although they can still take the stairs. The legislation requires that access to the units not be denied and specifically includes elevators as an access method. Would denial of access to elevators but giving the stair access a sufficient alternative? I am not certain whether is imaginative board worked on this solution prior to the word "elevator" being included in the new law, but I am sure we will be hearing more on that in the future!
Copyright 2011 Richard P. Zaretsky, Esq.
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Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.
Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 email: RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com Website www.Florida-Counsel.com .
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