Are the Declarations of Covenants, Conditions & Restrictions the only enforceable restrictions?

A unique question from a reader was received this week and I thought it would be interesting to share. A 1987 case, Young v Tortoise Island Homeowners Ass'n Inc., was about a homeowner wanting to install a roof that the HOA did not approve. There was nothing in the Declarations (CCR's) prohibiting the roof. While the court sided with the homeowner and allowed the roof, the court pointed out a very interesting rule of law. The court commented restrictions can be enforced that ARE NOT in the Declarations when there is a "unified scheme" in the community and the homeowner should know that variations are not allowed. The court stated that had the community had homes with only one type of roof (let's use a flat roof as an example), then the homeowner is on notice that no other types of roofs are allowed. This comes up occasionally with chain link fences. If you do not see a chain link fence in your neighborhood then you are on notice chain link fences are not allowed even if they are not mentioned in the Declarations.

Mobile Homeowner Associations

One of my favorite legal websites is www.avvo.com, where readers can post interesting questions.  Today a reader asked me about how to form a homeowners association for mobile home parks, which are voluntary associations under Fla. Stat. 723.  Here's my answer:

There is a special statute for mobile home park lot tenancies, Fla. Stat. Chapter 723. You can organize a HOA, which is voluntary and different from a HOA under Chapter 720 for homes on owned lots. You would need a majority of the members to approve having the HOA represent their interest and it's really a good thing, especially when those lot rent increases come in every year. The Department of Business and Professional Regulations and the Federation of Mobile Home Owners both have materials to help you organize. There are sections of the Florida Administrative Code that also govern the parks and supplement the statutes. You can also partner with other associations in other parks for help. I know most of the associations are willing to be helpful. Check outwww.fmo.org for the Federation of Mobile Home Owners and DBPR's website for the statutes, rules and other materials:http://www.myfloridalicense.com/dbpr/lsc/index.html.

Buying a Foreclosed Property

The most frequent question I am asked lately concerns the unpaid assessments on a foreclosed property being sold by a bank.  Anyone buying a foreclosed property must really do their homework and not only check county records for liens, but check with any homeowner or condominium association to find out the balance of unpaid assessments.  This debt is not extinguished in a foreclosure.

Condominium associations and homeowner associations have a continuing lien that runs with the land.  The safe harbor provisions of Fla. Stat. 718.116(1) (for condominiums)  and 720.3085(1) (homeowner associations) apply to the banks only and not any third party purchasing from the bank.  The balance of the assessments is due and payable by any buyer.  You can go after the previous owner for the debt, but chances are they do not have sufficient assets to pay.

There is one thing you can do.  Insist on an itemized statement with no lump sums.  This is one area that is subject to over billing practices because the previous owner is not around to dispute the debt.  There is disagreement in the legal profession on whether or not legal expenses for the association defending the foreclosure can be attached to the debt, but until someone has a lot of money to litigate this issue and then possibly appeal the decision, the only recourse against these fees is to ask the association to consider waiving them.

Your Mortgage Trust May No Longer Exist

If your mortgage is held in a securitized trust (the Plaintiff is a trustee) you should search the Securities & Exchange Commission website using their EDGAR database.  The lastest discovery in foreclosure defense is that the trust may no longer exist!  If the trust does not exist, the bank cannot be a trustee.

To find out if your mortgage trust has been dissolved, find the name of your trust in the database and then click on the links to the documents that have been filed.  If the trust has filed a form 15-15D there is a good possibility it no longer exists because this form is used to suspend financial reporting requirements.  You will need to submit an inquiry to the SEC to determine if the trust still exists because there are other reasons for filing the form, but it is definitely worth the trouble if you can get the foreclose dismissed because the Plaintiff Bank lacks standing and capacity.

Estoppel Scams

Buyer Beware -- especially if you purchase at a foreclosure auction.  The latest scam is to inflate amounts due for past due assessments by claiming excessive fines, attorneys fees for the mortgage foreclosure work and excessive costs for collections.

The HOAs are protected because the debt runs with the land.  While you can collect the past due assessments from the previous owner, you are liable for any assessments currently due. Whether or not you able to collect from the previous owner is always a challenge.

This does not mean you are completely without defenses. There is a new trend for HOAs to lump on all kinds of charges to run the bill up and many may or may not be legal. The problem is it could easily run way more to fight them.

You should pay them a reasonable fee ($75-$125) for an estoppel and demand an itemized accounting of all charges (no lump sum amounts). By law they have 15 days to provide this or you can file summary proceedings in court.

Demand any fines be documented with proof of notice that the owner was notified of a covenant violation and an independent fining committee met and voted to impose any fines. This is one of the most abused items.

There are no court cases on point, but I argue legal fees for the HOA as a named defendant in a mortgage foreclosure are the costs of doing business. No where in the Florida Statutes or the Rules of Civil Procedure do I find any authority for a defendant to pass on the costs of litigation to a co-defendant without a court order. HOA attorneys do this anyway. Because they are entitled to attorneys fees for the collection of past due assessments without a court action filed, they believe the statute gives them the right to pass on all attorneys fees without court action. I disagree!

Check if the HOA is allowed to charge late fees and what the maximum interest they are allowed to charge. This information is in their Declarations and Bylaws. Many overcharge!

Florida Friendly Landscaping - It's the Law!

July 1, 2009 the Florida Legislature enacted a new law, Fla. Stat. 720.3075(4)(a) and (b), which makes it unlawful for any association to prohibit the implementation of Florida Friendly Landscaping. Florida Friendly landscaping is defined as any landscaping that conserves water and reduces the use of pesticides, herbicides and fertilizers.

Despite this wonderful new law some association attorneys are still demanding owners plant St. Augustine grass, which is not Florida Friendly in most locations, especially Central Florida.  These overzealous attorneys claim that while the associations cannot prohibit Florida Friendly Landscaping, they are entitled to regulate it and can still require a percentage of the lot be sod.  While the statute does not address the need for owners to  submit applications to their Architectural Review Boards (or committees), good common sense would suggest the application be completed and submitted.  This does not, however, give the association the right to deny the landscaping and to suggest the association can regulate and require certain grasses and percentages of the lot to be sod goes against the very clear meaning and wording of the statute.

The Florida Friendly Landscaping website, which is hosted by the University of Florida and the Southwest Florida Water Management District, have an interactive database.  You can select the type of plant according to the amount of sun, water, soil type and salt content of the soil.

The website also has a list of plants and their requirements for growth.  For example, Bermuda grass and Bitter Panic grass on the only two grass listed for dry conditions. St. Augustine grass is listed as requiring wet soil. Other grasses, such as Zoysia, Centipede and Lopsided Indian requrie moist-dry conditions.  This clearly establishes St. Augustine does not conserve water and landscaping companies recommend watering St. Augustine grass four times a week!

The problem with the association attorneys is they are counting on you not spending the money on huge legal bills to fight for your rights.

The Lien and Foreclosure Process in Florida

The association is required to give notice to the homeowner prior to filing the lien by sending two copies of the notice, one by regular mail and one by certified mail, that includes the amount due and the deadline for payment. For HOAs this is 45 days and for condos this is 30 days. If you missed payments, the lien will include the assessments, interest, attorneys fees, and if the governing documents allow, late fees. Once you are turned over to an attorney for collections any payments are applied to all the fees first and assessments last. 

After the lien is recorded the association must then go through the same process to foreclose before filing to foreclose on your home. Once you receive a summons, you have 20 days to file an answer and affirmative defenses or a motion to dismiss. The association will file a motion for summary judgment, which means there are no disputed facts and the association should get your home without a trial. 

DO NOT ATTEMPT TO HANDLE THIS WITHOUT AN ATTORNEY. Your best option is to negotiate a payment plan or file Chapter 13 bankruptcy to put this in a 5-year payment plan. Chapter 7 will not save the home. 

If you missed any payments, fighting over the amount with the association is useless in almost all instances because it will generate attorneys fees that you are liable for and must be paid to keep your home. The courts will award the attorneys 100% of their attorneys fees if you are at fault, even if it's a small amount and their numbers are wrong. 

The courts are facing having their funding cut thanks to the foreclosure cases clogging up the dockets. In many cases good case law is being ignored to move the cases out of the courts and owners are being denied justice and due process because of budget concerns. This has changed the owners slim chance to virtually no chance, but that's my personal opinion.