Central Florida Short Sales: Tenants in Florida Can Now Be Ordered to Pay HOA Fees!

Reserved for TLW

I was helping some people with this info jus this morning. I think its great because I personally know people collecting rent from their income properties that are in foreclosure and they are not paying HOA or mortgage and its not right. Its a great law and should be enforced nationwide.

not a bad thing for everyone else in the HOA.

should help keep values up!

It's hardly the tenant's fault that the seller is not paying HOA dues. I can see a lot of cases going to small claims court over this. If the tenant expects HOA to be paid (and arranges for it in the lease) they have a right to avoid such issues.

Bryant...Being in the Condo sales business myself, I found the article quite interesting. Keeping the common areas in good shape will indeed prevent the property values from artificially dropping. The home owners associations must maintain the common amenities and grounds for the people who do pay, and if tenants are paying rent it should be attached.

This could prevent some major problems in the resale arena due to HOA demands and collections which delay closings.  Wish NV would institute something like this.  Tenants would do some due diligence prior to renting (one would think) and the distressed HOAs won't become so cash strapped.

Very interesting....just read this myself and now I'm wondering how this will play out in actual practice.

Like the article states, landlords that don't pay HOA dues are typically in default on the mortgage as well. If the property was purchased as an investment, then the mortgage may contain a rider that allows the lender to collect rent monies directly from the tenant as well.

Other than look for another place to live, what's the tenant going to do when the HOA says pay us directly and the lender says pay us directly too?

The FAR lawyers need to step up and write a white paper on this one.

In a way, this new law is putting the HOA in first position and the landlord in second when it comes to disbursement of rental income. Seems like a viable solution to keep the overall community maintained and stabilize property values.

Bryant, I assume the tenants get to deduct the HOA fees they pay from the check they send to the landlord?

BB...

In a weird way, that makes some sense because the tenants are getting the benefit. I wonder if the tenant can then sue the landlord for the money?

Personally, I've always thought that the HOA fees *should* be paid by the tenant...directly to the HOA. A second check to the landlord. That way, they can better associate what their money is paying for, yes? Of course, the "total rent" is something that gets competed in the marketplace.

As long as the tenant's rent wasn't supposed to include the HOA fee I guess it's a good idea.

I own an investment property and that home does have a HOA paid annually. I don't collect the HOA at this time, but since my rents have gone down two years in a row due to the fact that there are so many rentals on the market, the next tenant who rents from me is going to have to pay it. As a landlord I am already in the hole a lot of money every month I can't afford to also pay for the HOA anymore. Or maybe charge at least half. They are getting part benefit now and I am getting part benefit when I sell because the neighborhood should be maintained. :)

BB,

No down side for the renter, as the article indicated the renter deducts that amount from the monthly payment. I was worried the renter might have to pay it on top of the normal rent...

Bet many states may move toward this!

HOA dues should be mandatory. Here in Texas, Homeowner's Associations have the right to place a lien on the property when dues are not paid.  However, if it's a rental property, the owner should be responsible to pay, not the tenant.

This enforced everyone to pay their dues, and helps to maintain property values.

I got a letter from my HOA telling me that they were going to aggressive pursue delinquent owners now because of this.  Frankly I am glad.  If they don't, my dues are going to significantly go up, and this isn't something I want to stomach.  I wonder if the banks can be considered as an owner and responsible for the foreclosured owner's share?

With many HOA's struggling, you will see them get more aggressive about the collectingof dues.  Some are even initiating forclosure proceedings themselves rather than waiting on the mortgage company.

I think it's smart. The tenants can just deduct it from their rent. Absentee deadbeats are a pain in the ass.

I see law suits just waiting to happen.

Bryant, This may be good news in the sense that the entire association may remain solvent.  It an HOA cert shows inadequate reserves it is very difficult to secure financing for a sale.  I have to presume the tenant will (legally) reduce their rent by the amount of the HOA payment.

Hi Bryant -- Without microanalyzing it, seems to be to be a good law on the surface.  After all, if tenants are enjoying the benefits of the community amenities, they should contribute to their upkeep and operation.

I live in an HOA and am on the Board of Directors.  I see the # of units that are behind in their dues, and it hurts the entire community.  When the dues aren't paid, the services must be reduced, or the reserves won't get funded.  If enough dues are lost, the remaining owners have to make up the difference by either a dues increase, or a special assessment (or both!)

Once a property is foreclosed, the lenders are responsible to pay the dues, but so many of them are delaying for months, or years before foreclosing, and then the delinquent dues are completely wiped out in the foreclosure.  In California, the HOAs have the right to foreclose when the dues are either 12 months or $1800 late, but when there is no equity, it doesn't pay for the HOAs to go to the trouble or expense to be in a 2nd or 3rd position. 

Since buyers have to qualify for mortgages based on the principal + interest + insurance + taxes + HOA dues, it would make sense for the HOA dues to be impounded and paid by the lenders, then we wouldn't have this problem!  In the mean time, I think the lenders should pick up all the dues after the earliest point in time that they could have foreclosed (121 days from first late payment.)

Bryant, thanks so much for posting something that happened in my own back yard and I didn't know about it :) That's what I get for going on vacation!

Seriously, this is a brilliant move which will help save communities from further devastation. Let's face it, many times the owner isn't paying the money to the bank either if it's a short sale.

Very wierd stuff. Congratulations on the featured post. Great job as usual.

BB - This news is very valuable for both snowbird investors and snowbird tenants.

Yep, thhis is, as far as I understand, the expected change to Chapter 718 Florida Statutes. And it is actively pursued already by condo associations here in Daytona area

Give them time.  The banks will figure this out and get a law passed that requires the tenantsto pay the mortgage first, leaving the HOAs sucking wind again.

It's like taking a taxi in the airport and before you get to your destination, you are required to pay for a maintenance stop at a mechanic's shop. . .they are overstepping their position by imposing this on tenants, that is my opinion.. . there has to be another way. . 

OK so I thought about all of this more since I posted this and I think I like it. It really does not affect the tenant. They are basically just being in ordered to pay part of their rent to another party. I would imagine that this needs to be a court order?

It should be interesting to see how this plays out.

As always I appreciate you guys stopping by and commenting. THANKS!

Well that is one way to keep the values of the properties up! A little creative but in these times maybe that is what needs to happen. After all the tenant is getting the benefit of the amenities!

Bryant - I wrote about this also - another can of worms to keep the attorney offices busy!

If the tenant is current in their rent payments and the owner is not paying the HOA dues, enabling HOA's to obtain a court order and having the tenant pay the portion of their rent directly to the HOA certainly makes sense to me.

Personally... I require all of my short sale sellers to keep their HOA's current to avoid problems at approval time in my listing agreements. Sometimes it's not always possible but if there are tenants paying... there is no excuse not to pay the HOA dues.

Bryant, I would assume this pertains to long term rentals and not short term "Vacation" rentals?

I think it is only fair since they are the ones enjoying the amenities.

Bryant - I see where the law came from, and it was not well-thought out.  What if the owner withheld dues for reasons unrelated to his ability to pay?  Great power was given with this law, and I think it can be abused. 

The law is very unclear and allows the HOA to much power, and to much discretion.  One thing I have learned is that when you allow five individuals alot of power via an HOA or COA, they typical abuse the power they're given under the law, and the power to sue and use HOA and COA fees are wasteful and are not in the best interest of the association.  For example, look at St. Johns County and the corrupt County Attorney, analogy, I know they are not an HOA or COA, but I needed to get it in somewhere...?

Lots of interesting comments on this subject. I think if the renter is advised upfront it's a good idea. The renter is taking advantage of all the amenities. However, if it's not in the rental agreement I see lots of litigation ahead! jay

It is my opinion that HOAs (and their management companies) have too much unchecked power already in Florida.  Just based on the things I've seen go on in the past couple of years in our area (one area HOA instituted a $1,000 fine if a car is parked in the street in front of your home during the late evening/overnight hours!!!).   What happens when YOU have a significant decrease in income....oh yeah...the normal person has to work to decrease their expenses to fit inside their budget.  I'd like to see HOAs and COAs try that instead of constantly raising the fees and implementing fines to others in the community. While something like this seems logical on it's face...I'm afraid it's just feeding the monster. 

Thanks for the post.  I am glad to see something is being done to help these Associations.  Florida has some beautiful Ccommunities but customers are very concerned about venturing into them; they are aware of some of the horror stories.

Hello...

Mr Wishy Washy. First you like it, then you don't. Stop behaving like a girl or I'll tickle your fickle :)

TLW...ROAR!

As a Florida tenant who is receiving demand letters from a Miami-area homeowner's association trying to collect all of my rent money based on the recently passed SB 1196, there are a few comments and observations I would like to make. There are several myths floating around the blogosphere which simply aren't true.

MYTH #1: TENANTS ARE SOMEHOW AT FAULT

People in this discussion keep talking about Florida tenants as if we were some kind of sleazy deadbeats. As if we intentionally choose to live in a house rented to us by someone who isn't paying their association fees, and that this is somehow benefiting us. Something I keep hearing people say, for example, is how unfair it is that we tenants get all of the great amenities when the homeowner's association dues aren't getting paid.

Something to think about is the fact that while my landlord may not be meeting his obligations to the homeowner's association, I for one am dutifully paying my rent every month on time. And I pay the same rent that I paid before he stopped paying his association dues, while actually would imply that I am paying for all of the community amenities now, just like I was before he stopped paying his dues -- even though I'm forbidden from enjoying any of them.

You could certainly argue that my beef ought to be with my landlord and not with the association. I agree. Be that as it may, I take offense at the notion that I'm getting something for free, because it just isn't true. Stop mischaracterizing me.

Please be it understood that we tenants are NOT responsible for this mess, nor are we in any way benefiting from our landlords refusing to pay our fees. We are victims of the landlord just as much as the homeowner association is. You can be mean to us, angry with us, or even spiteful to us as much as you want, but your anger is misdirected, and it isn't particularly fair.

...and it isn't giving us tenants much reason to want to go out of our way to go above and beyond the law to help you out. Which goes to my next point.

MYTH #2: TENANTS ARE IMMUNE FROM LANDLORD RETALIATION

The lawyer from the homeowner's association went out of his way to tell me that if I just go ahead and send them *all* of my rent money I will be completely immune from anything my landlord could try to do to me. Plus I'll get my community benefits back! And why would I want to pay my landlord anyway (continues the lawyer) because he is *such* a deadbeat -- when I can instead side with my neighbors at the friendly members of the homeowner's association?

But "immune from any claim from the unit owner" doesn't really paint a complete picture of the situation tenants are in. While my landlord may not be able to kick me out for sending my rent to the homeowner's association, there are other things he CAN do to me that would make my life less than pleasant.

For example, if my air conditioner breaks he has always in the past gone out of his way to have someone come over to fix it within just a couple of hours. The lease doesn't specifically require that, but he does it anyway. If there is an issue with the sink, or with another unit owner, or something else, he takes care of those things right away too.

Do you think I'm going to receive such great service from him if I side with the homeowner's association and stop sending him rent? And do you think the homeowner's association is going to step up and fix my sink, or my air conditioner, or whatever -- now that we're such great neighbors and friends?

Maybe they'll be OK if my family and I sleep in the community exercise room until the landlord gets around to fixing the air handler? I doubt it.

Or what about that beautiful mirror I have hanging in the hallway? My lease is pretty explicit about the fact that I'm not allowed to use wall anchors. Call me a criminal, but I did (otherwise it would have fallen down!) My landlord has not noticed and probably doesn't care, because he knows that I will properly patch the wall and put things back the way they were before I leave.

But...do you think it is possible that if I stop paying my rent he might for the first time see himself in my beautiful mirror and wonder how such a heavy object d'art could be supported with just thin nails? What do you think the chances are he won't try to use it as an excuse to try to evict me ? And maybe he might even notice a few other things I was doing wrong that neither I nor he ever gave a thought to before?

While he might not kick me out for not paying my rent, I have to imagine that having him for an enemy means that he will think of anything he possibly can to try to get me out of here as quickly as he can. How are my new friends at the homeowners association going to help me with that?

Which lead me to the last, most important reason that the "immunity" offered by the new law is fairly worthless. My lease expires in three months. What happens then? I can tell you right off the bat that my landlord will have no interest in keeping me in the unit if I'm not paying rent and *especially* if I've decided to throw my lot in with my new friends (and his new enemies) at the homeowner's association.

The only power the homeowner association has is to evict me. They can't do anything to make it possible for me to stay in my unit when my lease runs out, and I'm guessing -- based on their past treatment of me -- that they aren't going to help me find another unit. I'm especially confident that they aren't going to help cover any of my moving expenses when I undoubtedly have to leave in three months.

Which brings me to my final point.

MYTH #3: TENANTS ARE NOMADS

Homeowner associations and lawyers keep asking: "Why do you stay? Why do you want to live in a unit owned by a deadbeat?" And everyone else talks in such a way that you would think that tenants were all nomads who live out of suitcases that can easily be packed and unpacked at a change in the wind.

I've lived in my current unit for over five years. At the time I moved in (after being shown the place by a reputable real estate broker) my landlord wasn't a deadbeat. He was glad to have my family and I stay "as long as we liked" – a great situation for a family with two kids just starting middle school. We spent several thousand dollars to move all of our belongings to this unit, we registered the kids for school, and we've made friends in the neighborhood and community.

Moving isn't easy. For me to move -- to get everything ready to go, to find a new place, to hire movers, to pack everything up, move it, find a new place, unpack everything again -- is a major *ordeal*. I will have to take time off of work to do it. I will have to spend a lot of money to do it. It will be very unpleasant and expensive for me and my family.

...but not half as unpleasant as it will be for my kids, who will have to make new friends, maybe even have to go to a different school, and have their lives all turned around.

Most tenants are NOT nomads. Just like homeowners, they *live* where they live, and they have just as many materials goods (sometimes more!) as homeowners do. Moving is a terrible burden.

CONSEQUENCES FOR EVERYONE

My point is this: Associations are right now trying to push the new law as far as it will go. Despite the fact that the law pretty clearly says "future monetary obligations" and despite the distinct possibility that the legislature may have *intended* this law to apply only to new leases entered into *after* July 1st, associations are trying to use it as a panacea to collect all of their overdue assessments and dues without going through the regular debt collection procedures usually required by the law.

And while I feel very bad for the homeowner's associations, the way in which they are trying to manipulate and scare tenants is just plain wrong. They are making demands that many *unbiased* observers believe are NOT covered by the law (although we'll have to wait for a judge to rule on it to know for sure) under the assumption that they will get to keep any money they can collect now, so they should get as much as they can before it is too late. And they've deluded themselves into believing that the tenants – their neighbors – won't be harmed.

What they need to understand is the untenable position they are putting tenants such as myself in. Because this isn’t about whether or not I should follow the law (because I will) – associations are asking tenants to accept their *interpretation* of the law – one that will likely cause tenant to face severe indirect consequences. And I don’t have a lot of reason to think – or want to believe – that the homeowner’s association interpretation is the correct one – or more important, the one that a judge side with.

The homeowner’s association can try to evict me. But as I understand it in order to be evicted, the they are going to have to convince the judge that I have somehow violated the law by sending *only* the $300 association fee to them because (a) "future monetary obligations somehow include past due amounts; (b) the law applies to contracts entered into before the law went into effect; (c) the law isn't somehow unconstitutional and a violation of the property owner's due process rights. I don’t know much about the law, but it seems to *me* that proving all of that isn't going to be easy.

Someone asked whether a tenant such as myself would go to all of the trouble and expense? Wouldn’t it just be easier to move? Curiously enough, even if I wanted to move I can’t – I have a lease, and unless I’m willing to pay several months rent worth of penalties, I can’t leave.

But also consider this: if the homeowner’s association isn’t successful at proving the points above – if they fail with their bid to evict me – they have to pay all of my legal expenses. And I don’t plan to use a cheap lawyer.

Sure, it’s a gamble. But I, like so many other tenants, are being backed into a corner. If the homeowner’s association tries to evict me they better feel really good about their hand -- because the stakes are high, I don’t have to option to fold and I (quite literally) have a full house.

If it comes to this I imagine I probably won't be the most loved person at the community pool this summer…but frankly, my family and I haven't been *allowed* to use the community pool for quite a while now, so I think I’ll find a way to live with myself.

George, Thnak you for the well thought out and articulate response. It certainly sheds some light on this issue from a different vantage point. You make a very complelling arguement.

I really have nothing to add. Thanks

I think as usual the laws are all for the homeowner and the tenants have no legal rights.  I am in the middle of a situation where the landlord has not paid her HOA dues in almost a year.  We recieved notification from the HOA that we have to now pay them the rent directly and failure to do so would result in eviction.  So here we are paying them and not the owner and she is now refusing to fix any and all problems in this unit.  The air conditioning is broken, shower and sink are leaking and alot more and he HOA is telling us the owner has to fix this. Well she is refusing to do so.

So here we are stuck between a rock and a hard place as have paid our rent on time each month and we are getting nothing in return except being able to live in a discusting unsafe environment.

How is this fair for a tenant? Florida laws like this should be banned.

I've recently had my case against the HOA of our condo unit accepted by the ACLU, we are prepared to do battle with not only the HOA but the law itself.

Our rental agreement with our landlord is inclusive of certain bills, and the HOA to demanding full rental payment redirected from the landlord to them would result in the eventual loss of certain utilities, as our contract clearly stated aforementioned utilities would be paid and maintained so long as our rent is paid no later than the 5th of every month to the owner.

Every counsel we've spoken to on this subject believes this law is being abused, and puts tenants, who have the least involvement in the matter at the greatest risk of the 3 parties involved. Some have even deemed the HOA threatening tenants with eviction due to their landlord's failure to submit HOA fees is also teetering on harassment, especially if there has been no formal attempt to contact and collect from the landlord, prior to contacting tenants, beyond that of the typical monthly dues bill. To add insult to injury, and padding to our case, our HOA has not kept up with safety maintance of our complex, prior to our landlord's failure to submit HOA fees, opting to manicure the area's near their patios rather than fix faulty wooden railings rotted and eatin through by carpenter bees.

My condolences go out to any and all suffering HOA's and their members out there, but this aggressive pursuit to recoup fees from tenants who have nothing to do with the matter at hand will get you nothing but hours upon hours of wasted time and money in court, far beyond that of the back HOA fees.

Mike. Your post certainly puts this into a new perspective. Thanks for sharing your story

Richard Zaretsky just posted a good article about this issue from an attorney's perspective.

http://activerain.com/blogsview/1838728/collection-of-delinquent-assessments-thru-rent-powerful-tool-for-florida-associations

George, 

I want to know what happened. I am in a similar situation with my HOA. I started paying the association the entire rent in December 2010. My a/c went out. My landlord won't fix. I have been paying the association dues since so I can repair the A/c. The Association is filing for eviction even though the law states that  I only owe future monetary obligations. I have spent 39 days in Florida on the SUNNY side of a building with a pet without a/c. Today I was invited to their first HOA board meeting in 2 months and then a security guard denied my admittance to the meeting. I have no confidence that the property manager has forwarded any of my letters to the board. 

My lawyer says pay the assessments and not the rent to the HOA. I have already sent certified letters to my landlord and they are in default of my lease. The building wants me to move, the landlord wants me to move. I have a lease. I thought I had rights. 

Clearly I don't. 

I have a really busy job and don't have time for this. I have lived in this unit for almost 4 years and have never been late on a payment or had a single complaint. 

Are there any recent case laws where HOA's have won trying to evict tenants that have only paid assessment fees and not rent?

Please help!

Margaret

Margaret. This sounds like a terrible situation for you to be in. For peace of mind you should start looking for another place to live. I truly hope you get this sorted out.

What happens to a tennants last month's rent and security deposit when the situation starts to get ugly? I am in this situation and am demanding that the last months and security deposit be used first towards the HOA balance.  I dont see there is any guarentee coming from the HOA or owner/mortgage company that they wont be enforcing an eviction/foreclosure anytime soon and I dont want to risk loosing that money. Anyone had success with having their last months/sec used for the HOA balances?

Kristina. Any advance rents and escrow should be in an escrow account. Your lease agreement should specify where these funds are being held and what they can be used for. You need legal advice