Who’s on First? Condominium Unit Owner Joint and Several Liability for Delinquent Assessments After Foreclosure
The First District Court of Appeal decision in Coastal Creek Condominium Association, Inc. v Fla Trust Services, LLC, Case No. 1D18-1457 (Fla. 1st DCA, July 16, 2019) addressed whether a current condominium unit owner is jointly and severally liable for delinquent assessments accruing during the ownership of a remote owner. Having found that the joint and several liability extends to a delinquency accruing during the remote owner’s ownership of the unit, the Court’s decision conflicts with the holdings of the Third District Court of Appeal, potentially setting up a review by the Supreme Court of Florida.
The original unit owners, the Levraeas, were foreclosed by their lender and Homes HQ, LLC (“Homes HQ”) acquired title on June 13, 2016, as the successful bidder at the foreclosure sale. Thereafter, Homes HQ transferred the property by quit claim deed to FLA Trust Services, LLC (“FLA Trust”). The Levraeas are the “remote” owners as their ownership is separate from the FLA Trust by a least one intervening owner (i.e., Homes HQ).
After FLA Trust’s acquisition of the unit, Coastal Creek Condominium Association, Inc. (“Association”) recorded a lien and sought to foreclose the unit for nonpayment of assessments.
In the foreclosure, the Association sought both the assessments accruing during FLA Trust’s ownership of the unit, and those accruing during the Levraeas’ original ownership, and Homes HQ’s ownership of the unit.
The Association and FLA Trust filed competing motions for final judgment with differing interpretations as to the joint and several liability provisions in Fla. Stat. §718.116(1)(a). FLA Trust argued that their joint and several liability only extended for the time period that Home HQ owned the property, which was June 13, 2016 through July 26, 2016, and not to the period when the unit was owned by the Levraeas. The trial court agreed and entered judgment for FLA Trust. The Association appealed.
On appeal, the First District Court of Appeal framed the issue as whether:
… pursuant to section 718.116(1)(a), the present owner of a condominium unit is jointly and severally liable with the previous owner for unpaid assessments that came due during the ownership of both the previous owner and the original owner (as contended by the Association) or only for unpaid assessments that came due during the ownership of the previous owner (as argued by FLA Trust and found by the trial court).
The Court focused on the following statutory language: “[a]dditionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title,” concluding that the phrase “the previous owner” pertains to the person with whom the present owner has joint and several liability – not to the period of ownership during which the present owner is liable for unpaid assessments. The Court determined that the phrase “all unpaid assessments that came due up to the time of transfer of title” supports that interpretation. If the Legislature intended to limit the present owner’s joint and several liability to unpaid assessments to only those that came due during the previous owner’s ownership, it could have simply said, “a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due during the previous owner’s ownership.”
Unlike the 2013 version of the statute that was relied upon by the Third District Court of Appeal in Aventura Mgmt., LLC v. Spiaggia Ocean Condo. Ass’n., Inc., 105 So. 3d 690 (Fla. 3d DCA 2014), the 2017 statute was amended to provide that the term “previous owner” does not include an association that acquires title and that “[a] present unit owner’s liability for unpaid assessments is limited to any unpaid assessments that accrued before the association acquired title to the delinquent property through foreclosure or by deed in lieu of foreclosure.” Based on this new statutory language, the Court reasoned the only reasonable interpretation was: “when the previous owner is the association, the present owner is liable only for unpaid assessments that accrued before the association acquired ownership; that is, during the original owner’s ownership.” More specifically, the present owner is liable for unpaid assessments that came due during the ownership of the remote owner, but not for unpaid assessments that came due during the Association’s ownership. Consequently, FLA Trust was found to be jointly and severally liable for delinquent assessments during Homes HQ ownership and that of the remote owner.
The liability of a subsequent purchaser after a foreclosure is complicated. Both statutory and documentary provisions can alter the outcome. Associations should be careful when determining post-foreclosure liability for delinquent assessments. Working with your community association’s legal counsel on these issues is strongly recommended to ensure your association is collecting the maximum allowed by law.