I'm In Foreclosure, Who Cares About the HOA Dues!
Many Florida homeowners have the misconception about their HOA Dues. They think they are exempt from liability to their condominium or homeowner association if they are also in foreclosure. Unfortunately, many people learn too late that condominium and homeowner associations are well-protected under Florida Law.
Florida's Condominium Act is codified in Chapter 718 of the Florida Statutes, and Florida's Homeowners' Association Laws are codified in Chapter 720 of the Florida Statutes. The two Chapters referring to HOA Dues and liabilities are very similar.
Pursuant to Florida Statute 718.116(1)(a), "A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner." The Homeowner Association has an identical provision located at 720.3085(2)(a). Accordingly, the homeowner is liable for all assessments simply by virtue of his ownership of the house or condominium unit.
Both Acts limit the liability of a first mortgagee that acquires title to the property through foreclosure for the unpaid assessments, to the lesser of: (a) the assessments due during the 12 months preceding foreclosure; or one percent of the mortgage debt. See Florida Statute 718.116(1)(b) and Florida Statute 720.3085(2)(c). Many homeowners misinterpret these statutes to provide that it is the homeowner's or foreclosure purchaser's liability that is limited, however both statutes are clear that it is only the lender's liability that is limited, and only if the lender included the association as a defendant in the foreclosure case.
Homeowners Association / HOA Dues
Finally, both Acts give the homeowners association the authority to record a lien and/or sue for money damages for the homeowner's failure to pay the assessments of HOA dues. "The association may bring an action in its name to foreclose a lien for assessments in the manner a mortgage of real property is foreclosed and may also bring an action to recover a money judgment for the unpaid assessments without waiving any claim of lien." (emphasis added). Florida Statutes 718.116(6)(a) and Florida Statute 720.3085(5). These laws completely destroy the myth above - that a homeowner can ignore unpaid condominium or homeowner assessments while in foreclosure. To the contrary, the association can sue for a money judgment, which lawsuit will proceed to garnishment faster than any bank foreclosure.
For all of these reasons, we always advise homeowners in financial distress to continue to pay their association dues, if affordable. This has the added effect of keeping neighbors and neighborhoods happy, helps with the cooperation of the association, and prevents unnecessary litigation which only further complicates an already stressful situation.