Many do not know that here in Florida there is a state law that caps the amount of community association dues that a lender who forecloses on a property must pay. The cap is the lesser of 12 months of accrued charges or 1 percent of the original mortgage debt.
It is reported that nearly 60% of the lenders who have foreclosed on properties are not paying the monthly maintenance or association fees or any other assessments due. This will lead to many of the communities having to raise their fees to a higher amount soon to cover the unpaid portions.
In some communities with high foreclosure rates this will become an extra burden on those are remaining in their homes. One wonders if it will eventually lead to such a burden that those homeowners will also begin to not be able to pay the additional fees. Will this cause a snow ball effect, leading to even more foreclosures?
A movement is on to get the Florida legislation to change this law before it becomes an even bigger problem. It is already expected to reach the millions of dollars statewide. A law firm in the Ft Lauderdale area which represents hundreds of communities throughout the state has started a petition asking the legislature to change the wording on the current law. They would like to see the law changed to just allow for a grace period after a bank forecloses. After the grace period the lenders would become liable for all further fees and assessments.
I am sure that the homeowners associations will be very glad when the 2009 session of the Legislature begins and that they may get some alleviation from this extra burden.
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