In recent years, community associations across Florida have encountered difficulties in collecting assessments and other outstanding amounts from delinquent homeowners. Often, the delinquent units are leased to third-parties as a source of income for their owners despite the owners’ non-payment of amounts owed, which can be especially frustrating for a community association. Although tenants are not obligated to pay amounts owed by their landlords under most community associations’ governing documents, the Florida Legislature has provided both Chapter 720 Homeowners Associations and Chapter 718 Condominium Associations with multiple statutory avenues to intervene and recover rent directly from the tenants.
Both Florida Statute § 718.116(11), applicable to condominiums, and Florida Statute § 720.3085(8), applicable to homeowners associations, allow an association to demand that any tenant residing in a unit which is delinquent in “any monetary obligation due to the association” pay rent directly to the association instead of to the owner/landlord. After a statutorily compliant demand is made, the tenant has fourteen days to pay rent to the association for the current rental period. If the tenant has already made payment of rent for the current rental period to his or her landlord prior to receipt of the association’s demand, the statute requires the tenant to furnish evidence of having made the payment and provides that rent shall become due to the association as of the next rental period. If no response is received to the demand for rent, the Association may issue a three-day notice to pay the rent or vacate pursuant to Florida Statute § 83.56(3), Florida’s landlord-tenant law. If payment is not received after the three-day notice period provided by § 83.56(3), the Association may bring suit to evict the tenant as if it were a landlord, and may recover any attorney’s fees and costs incurred. Importantly, both § 718.116(11) and 720.3085(8) allow the association to demand payment of rent without first taking additional steps, such as recording a claim of lien or bringing suit against the owner, and are often among the first actions to collect unpaid assessments that we recommend to our clients.
In the event that the association brings suit against a delinquent owner for foreclosure and the unit is leased during the pendency of the foreclosure, the association gains an alternative option beyond making a demand for rent to the tenant. Specifically, § 718.116(6)(c), for condominiums, and § 720.3085(1)(e), for homeowners associations, both entitle the association to seek Court appointment of a receiver to collect rent from the tenant, with the costs of the receivership being recoverable against the non-prevailing party in the foreclosure suit. After judgment is entered in the foreclosure suit, § 718.116(6(c) and § 720.3085(1)(e) become more expansive and allow, but do not require, the Judge presiding over the case to enter an order requiring the unit owner to pay reasonable rent to the association until such time as the property is sold at judicial auction.
The determination of which provision for the recovery of rent is most beneficial to the association should be made on a case-by-case basis. For instance, although the association may be entitled to evict the tenant for failure to pay rent after demand is made, a better approach may be to proceed with suit against the owner and seek appointment of a receiver pursuant to § 718.116(6)(c) or § 720.3085(1)(e) to collect all amounts. Knowledgeable counsel can be crucial to ensuring compliance with the statutory provisions discussed in this article and ultimately the success of efforts to recover rent.
If your association is struggling with collection of delinquent assessments, the Community Associations practice group of Shumaker, Loop and Kendrick, LLP is ready to discuss these and other collection options available to you on a complimentary basis.