Wednesday, October 30, 2013

Saving You Home From Foreclosure

The primary focus of our law practice is dedicated to helping homeowners save their homes, whether it is from a mortgage foreclosure or a foreclosure by a condo or homeowner association.

Mortgage foreclosure defense is an area of law which changes frequently.  As new issues with mortgages are discovered, defense attorney proffer new arguments in court and the judges rule on these new issues.  The condo and homeowner associations push for new legislation each year to try and resolve the issues they face from the mortgage foreclosures.

The single biggest mistake I see homeowners making is to not pay the association while the bank is foreclosing.  Many owners believe if the mortgage company is foreclosing, the association can't.  That is completely not true and the association can foreclose quickly because there aren't any defenses available to stall the process.

In recent years the federal bankruptcy courts in Florida have adopted a mortgage modification mediation program for owners to obtain loan modifications through a Chapter 13 bankruptcy.  I have come to realize this is not only a valuable tool to save the home, but makes the most sense.

Chapter 13 is a restructuring of debt which allows the debtor to retain assets and set up a repayment plan for those debts secured by the home (mortgages, assessment liens).  A Chapter 13 bankruptcy makes sense for a couple reasons:

1. While you are in foreclosure your credit is damaged.  The quicker you resolve it, the quicker you can build credit.

2. The stress of dealing with a foreclosure every day for years is not worth it.

3. Even if you have good arguments and a chance of winning your foreclosure case, there is always the risk you will not win.

I firmly believe the best option is to deal with it head on and resolve it now instead of re-living it day in and day out.

What are the drawbacks?  The biggest drawback is having the first monthly payment for the bankruptcy trustee.  If you're used to paying your bills each week, you now have to be ready to pay once a month.  There are ways to help make sure you can do this, either by setting up a step plan (lower payments the first few months) or strategically filing so you have a few weeks to save up the first payment.

There are other drawbacks.  Some people have a hard time handing their finances over to the trustee because they are used to being in control of their own money, but if someone has reached the point they are about to lose their home, letting someone else pay your bills could very well be a blessing.  I firmly believe the benefits outweigh the drawbacks.

Tuesday, October 29, 2013

You vs. the HOA

Typical HOA disputes in the State of Florida fall into two categories:

1)  Unpaid assessments, often with a lien and/or foreclosure by the HOA
2)  Covenant violation disputes, with or without fines, which can be a lien and/or foreclosure

***** Yes, the HOA can take your home for covenant violations if the unpaid fines exceed $1,000.00 ***

How do you stay out of the bull's eye of your HOA and not risk losing your home?  You need to know your rights and duties to protect yourself and your home.  It's not easy when we have created this monster that is a perfect storm for corruption because HOAs are not regulated by the state.

First, you need to know you cannot withhold payment of assessments under any circumstances.  It doesn't matter your HOA is not keeping up the community or even if the board of directors is illegal using the funds for their own personal use.  You are still required by law to pay the HOA.  One of the only defense to non-payment if the HOA files to foreclose is you actually paid and it was not credited properly to your account. This is difficult, if not impossible to prove, so the likelihood of defeating a foreclosure is slim.  The other defense, equally difficult to prove, is lack of notice of the assessment increase and/or the meeting to approve assessment increases.  The HOA is required to mail notice to each homeowner 14 days in advance and include in the notice an assessment increase is being considered.  If not, the meeting is improper.   Do not, however, withhold payment thinking you can win this.  Risking your home to make a point is not a good idea. Your best option to resolve this is to request a payment plan.  If the matter is has been turned over to the HOA attorney, and it has if there is a lien, deal with the HOA attorney and not the HOA directly.  You are wasting time and money if you don't work with the HOA attorney.  By law the HOA is entitled to all assessments, interest, late fees and attorneys' fees.  Any payments are applied to all non-assessment charges first and assessments last.  Sending a check directly to the HOA will have no effect except to increase attorneys' fees and you will continue to be past due.  If the HOA and its attorney refuse to give you a payment plan, consider a Chapter 13 bankruptcy.  A Chapter 7 bankruptcy will not save your home, but a Chapter 13 will.

If you don't receive a statement or invoice for assessments call the HOA or property manager to get one. Not receiving a bill for assessments does not relieve you of your duty to pay assessments.  There is no law requiring the HOA to inform you your account is past due.  They are only required to give you an intent to lien notice 45 days prior to filing a lien, which means you already have incurred other non-assessment charges and attorneys' fees, and another notice 45 days prior to foreclosing on your home.

Covenant violation disputes can end up having the same issues as non-payment of assessments when there are fines imposed that are unpaid.  The best way to resolve covenant violations is to contact the HOA and let them know of your intention to comply or resolve the situation.  

Any and all improvements to the outside of your home require an application to the Architectural Review Board or Committee (ARB or ARC) with few exceptions.  It's better to submit an application you don't need approval for than to find yourself in a war with the HOA.  

The HOA must send you notice of the violation and if they intend to impose fines, they must give you at least 14 days notice a hearing will be held before an impartial committee of at least three people to vote on imposing a fine.  Remember my earlier comment about corruption?  While the members of the fining committee cannot be board members, employees, or agents of the HOA, or their family, the HOA will recruit people who will do what the HOA wants and fine you.  Correct the violation quickly if you get this notice.

Finally, the best way to protect yourself is to get involved and get your neighbors involved.  Corruption is easy when no one is watching.  Since the State of Florida has yet to start watching, you and your neighbors should.  People are less likely to break the law if they think they will be caught.

HOAs and Contingency Cases

A more apt title might be "Why Lawyers Don't Take HOA Cases on Contingency."  

I am frequently asked to take HOA and condo cases on a contingency, but these cases are not the types of cases lawyers can litigate on a contingency, meaning you only pay the lawyer if you win.

Why?  There are no big money damages, that's why.  If they were I would be set for life.  HOA cases are ripe with corruption.  They are unregulated by the State of Florida.  History has shown us when you give people power without any checks and balances you set up the perfect storm for a corrupt dictatorship.  The HOAs, without any state regulation, will do what they feel they need to in order to have everyone follow their rules and restrictions. If you are the homeowner being victimized by the HOA for not being a good citizen and doing what you are told, you feel you have a good case worth a lot of money.  In reality, unless you have sustained physical injuries, you're not going to get a big settlement.

What's the case worth?  If you lucky enough to win, you will be reimbursed "reasonable" attorneys' fees and costs.  You will not get the full amount -- that is rare. Damages in these cases, which take 3 - 4 years to get to trial, sometimes longer, may get you a few thousand dollars, or in extreme cases more, but let's do the math.

Your case will cost $135,000 - $150,000 to litigate (more if the HOA misbehaves during the process and your attorney has to keep busy dealing with "HOA drama" during the case).  Even if you 90% of your fees back that's $121,500 - $135,000.  If you get even $20,000 in damages, this puts you at $155,000 with the lawyer getting 40% (if it goes to trial) or $62,000.  The lawyer will invest $150,000 for three to four years to receive less than half back.  Not a good business for the lawyers.  The HOAs know this, because their lawyers tell them, and their behavior goes unchecked because they know the likelihood of someone suing is slim.  

There are ways to protect yourself from being victimized, but you have to get involved and get your neighbors involved.  If the State of Florida will not keep watch over the HOAs, then it's up to the homeowners.  At least don't make it easy for them to run a dictatorship.

Sunday, October 20, 2013

Help Support the Regulation of Homeowner Associations in 2014

There are bills being drafted right now that would require, if passed, for the State of Florida to create a division within the Department of Business and Professional Regulation to regulate homeowner associations.  Please support the bill!  It is urgently  needed.  Contact your elected leaders and tell them you support the regulation of HOAs.