COMMUNITY ASSOCIATION AS LANDLORD - WHO GETS THE RENT?

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

do not enterCan 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 .

See our easy to understand articles at:

TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Barb Van Stensel 06/03/2011 04:58 PM
  2. Gabe Sanders 06/09/2011 09:39 AM
  3. Kelly Willey 06/13/2011 05:23 AM
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Tags:
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Ambassador
1,723,125
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Richard,

We work mostly with condos, and we see it here. We also see blanket receivership in condo-hotels, another interesting twist of the way the Associations can collect rents

Jun 01, 2011 04:45 PM #1
Rainer
482,918
Chandler Real Estate Liz Harris, MBA
Liz Harris Realty - Chandler, AZ
#ChandlerRealEstateAgent

In Arizona, I believe we do "rent garnishments" in a similar capacity as going "wage garnishments."

Jun 01, 2011 04:46 PM #2
Rainmaker
281,288
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Jon - how far are you from St. Joe?

Jun 01, 2011 04:50 PM #3
Ambassador
2,358,341
Fred Griffin, on leave of absence from ActiveRain
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Richard, I did not take time to read the entire bill...

   Will this affect a change in the Written Disclosures Prior to Sale in F.S. 718, 719, and 720?

  Thanks.

Jun 01, 2011 05:00 PM #4
Rainmaker
592,907
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

God protect us from such ignorant legslators and HOA demigods!

Bill

Jun 01, 2011 05:01 PM #5
Rainmaker
281,288
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Fred - the bill only addresses issues pertaining to "bulk purchasers" and their liability and exemptions - not individual sellers.

Jun 02, 2011 01:08 AM #6
Rainmaker
1,518,812
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Almost seems scary to rent a condo or any place with an association. Loos like the tenant may possibly suffer in this as well. Does this create a legitimate right to break a lease then if a tenant is denied access to common amenities?

Jun 02, 2011 01:10 AM #7
Rainmaker
4,797,528
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Great info Richard.  This is becoming a big issue in some of our locations and something I need to read carefully.

Jun 02, 2011 01:23 AM #8
Rainmaker
1,026,171
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Seems like some of these condo associations do get carried away.  Often times someone will get behind 3-4 months and owe say $800 in dues but then it gets turned over to collections and the bill turns into $4000 for attorney fees and such.  It begins an endless downward spiral which typically cannot be negotiated.  They seem to hold firm on their numbers.  I am glad though that they are able to recoup some of their loss from these tenants.

Jun 02, 2011 01:43 AM #9
Rainer
11,701
Cyd Weeks
Palmcoasting.com Real Estate Corp - Palm Coast, FL
Realtor Palm Coast, Fl

Thank you Richard.  I guess this particular association with regards to the elevators may end up being the 'test case'.  There are going to be issues, I would assume, if someone is handicapped or has the inability to climb the stairs due to breathing problems or weight issues.  I can hear something like.. discrimation ringing through the halls.   Should it happen I'll certainly report in the outcome.

I've added a new addendum to the leases where condos are concerned... if the tenant is made aware in advance they can decide yea or nay and I'm out of it.  :)   I also have an addendum to the management agreement where the landlord has to sign that they are up to date, understand should they fall behind what can happen and again the management company  to be held harmless.  

It's a muck out there.   I think I'll get a t-shirt with that printed on it.  

Enjoy and thank you again for the blog!

 

 

Jun 05, 2011 03:07 PM #10
Rainmaker
281,288
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Gary -

If the tenant is entitled to the common elements as part of the lease rights (it is an assigment of the rights of the owner) and because the owner stops paying and the tenant loses those appurtenant rights, I do think it is a breach of the lease by the owner / landlord.

Jun 06, 2011 04:22 PM #11
Anonymous
Ron

Can a HOA require the Homeowner that leases get Social security numbers and a drivers license copy and number along with have the tenant fill out a application that they can deny. Also if you do not provide an application to them can they (HOA) evict someone (tenant) from a single family home (not condo) in the gated development? Or restrict access to any of the common areas even though the homeowner is up to date with their fees and dues etc. just because they did not have them approve the renter? They are not the owner how can that be enforcable or even legal if you have paid them in full all monies. they have no legal right to this information do they?

Apr 10, 2013 03:50 AM #12
Rainmaker
281,288
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Ron

I have seen even in my own HOA the association do things that are NOT in the declaration of restrictions and covenants - so you have to read what are the powers of your particular association.

For example, the stated requirements for a renter or buyer in my association is the providing to the association the copy of the deed to the new owner and an address for the new owner.  There is no renter provision at all.  But, the HOA has been collecting a fee for transfers from buyers of $250 (not authorized) and a rental application approval form with all the objectionable information and an application fee.  Go figure.

It's all in the docs - so read them.  If they can approve a buyer or renter, then the information they are requiring is normal.

Good reading!

Apr 10, 2013 10:15 AM #13
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Richard Zaretsky

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