A Structured Process must be followed in dealing with Delinquent Unit Owner Accounts
Delinquent Account Processing Summary
|11||Charge Late Fee (After grace period)||------|
|15||Send Late Notice||Notice of Late Assessment|
|Approx. day 45||Attorney Turnover||------|
|After 45th day||Notice of Intent to Record a Lien||Notice of Intent to Record a Claim of Lien|
|45 days after Intent to Record Lien letter||File Lien||Intent to Foreclose|
|Board Decision||Begin Foreclosure Procedures||------|
|Within 45 days after Intent to Foreclose filed||Unit Owner Contests the Lien||Contest of Lien|
|After Lien Satisfied||Association Receives Full Payment for Lien Amount||Unit Lien Release|
User accounts become delinquent when a condominium owner fails to pay fees due the Association in a timely manner (as specified in the bylaws). The following fees are charged to the unit owner by the Association:
- Regular quarterly assessments (maintenance fees) to meet budgetary requirements for maintaining and operating the Association and funding reserves. Budgets must be adopted, and maintenance fees published, at least 14 days prior to the start of the Association’s fiscal year, which is January 1st. These fees are payable in advance in 4 equal installments on the first day of each quarter (January 1st, April 1st, July 1st, and October 1st.)
- Special or emergency assessments to address budget shortfalls and non-budgeted expenditures. These fees require a minimum of 10 days’ notice and are to be paid in the manner required by the Board as specified in the notice.
- Assessments for maintenance or other services furnished for the benefit of an owner and charged to the owner.
- Late fees, fines, interest on delinquent accounts, attorney fees, damages and penalties charged to a specific owner.
Delinquent Account Processing Detail
Account Becomes Delinquent (on day 11)
Most condominiums allow a 10-day grace period in the payment of quarterly maintenance assessments. Per FL Statute §718.116(3), Assessments and installments on assessments which are not paid within this grace period bear interest at the rate provided in the declaration, from the due date (generally the 1st day of the quarter) until paid. The rate may not exceed the rate allowed by law, and, if no rate is provided in the declaration, interest accrues at the rate of 18 percent per year. If provided by the declaration or bylaws, the association may, in addition to such interest, charge an administrative late fee of up to the greater of $25 or 5 percent of each delinquent installment for which the payment is late.
Any payment received by an association must be applied first to any interest accrued by the association, then to any administrative late fee, then to any costs and reasonable attorney’s fees incurred in collection, and then to the delinquent assessment. The foregoing is applicable notwithstanding any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment.
Late Notice (On day 15)
On approximately the 15th day of the quarter, association with a 10-day payment grace period will send a Late Notice to each owner who was charged a $50.00 late fee. This letter tells the owner the full amount that is due, including late fee(s) and interest, and it informs them that “full payment must be received by the Association Office within the next 30 days, or their account may be referred to an attorney”.
Per FL Statute §718.121(5) An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed the association and provides the unit owner an opportunity to pay the amount owed within 30 days without the assessment of attorney fees. The notice of late assessment must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, must also be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing as required by this subsection. A rebuttable presumption that an association mailed a notice in accordance with this subsection is established if a board member, officer, or agent of the association, or a manager licensed under part VIII of chapter 468, provides a sworn affidavit attesting to such mailing.
The Notice of Late Assessment form, as defined in the FL Statutes, is shown on the Forms page of this website.
Turnover to Attorney (On Approximately day 45)
When an account becomes approximately 45 days delinquent, the Treasurer, or Association staff member, will make collection calls, warning the owner that their account is ready to be turned over to the attorney and as a result, additional attorney fees and costs will accrue. Unless a firm payoff commitment is received from the delinquent owner, the account will be turned over to the attorney for collection.
The turnover process consists of the bookkeeper emailing the attorney, providing an account ledger showing all delinquent monies owed – maintenance fees, late fees, interest, and any other charges/fees. At this time the Association and Bookkeeper will cease direct communication with the owner regarding their account and monies owed. Future conversations will be between the attorney and owner.
Stage #1 Demand Letter (After 45th day of delinquency)
After an account is over 45 days delinquent, the attorney will send, via certified and regular mail return receipt requested, a Stage 1 (Intent to Lien) Demand Letter to the owner, demanding payment of all delinquent amounts plus attorney fees and costs. The total sum due is to be paid to the attorney’s office. The Demand Letter gives the owner 45 days to either pay or dispute the amount due. Otherwise, the attorney will file and record a Claim of Lien.
Per FL Statute 718.121(6), "No lien may be filed by the association against a condominium unit until 45 days after the date on which a notice of intent to file a lien has been delivered to the owner by registered or certified mail, return receipt requested, and by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, by first-class United States mail to the unit address. Delivery of the notice shall be deemed given upon mailing as required by this subsection."
The Notice of Intent to Record a Claim of Lien form, as defined in the FL Statutes, is shown on the Forms page of this website.
Stage #2 Demand Letter (45 days after Stage #1 Letter)
At approximately 90 days of delinquency and after 45 days from when the Stage #1 letter was sent, if payment is still not received, the attorney will file a claim of lien with the County and send a Stage 2 (Lien Filed) Demand Letter to the delinquent owner. To assure that all monies due the Association are included and to account for any partial payments made directly to the Association, the attorney will request an updated ledger from the Association’s Bookkeeper. The Stage 2 letter shows all monies due the Association (based on the updated ledger) and all attorney fees and costs to date. It notifies the owner that a Claim of Lien will be filed against their condominium unless they quickly settle their account.
Per FL Statute §718.116(5)(b):
An Intent to Foreclose (Delinquent Assessment) form, as defined in the FL Statutes, is shown on the Forms page of this website.
The alleged delinquent unit owner can contest the lien by sending to the Association the Notice of Content of Lien form, as shown on the Forms page of this website.
Liability for paying association assessments during transfer of ownership is determined by whether the new owner is the association, first mortgagee, or another owner:
Unit Owner: A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, 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. The person acquiring title shall pay the amount owed to the association within 30 days after transfer of title. Failure to pay the full amount when due shall entitle the association to record a claim of lien against the parcel.
Association: If the association acquires title to a delinquent property through foreclosure or by deed in lieu of foreclosure, a present unit owner’s liability for unpaid assessments is limited to any unpaid assessments that accrued before the association acquired title. An association that acquires title to a unit through the foreclosure of its lien for assessments is not liable for any unpaid assessments, late fees, interest, or attorney’s fees and costs that came due before the association’s acquisition of title.
First Mortgagee: The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee’s acquisition of title is limited to the lesser of:
- The unit’s unpaid assessments which came due during the 12 months immediately preceding the acquisition of title, or
- One percent of the original mortgage debt.
Consequences of Delinquency
Condominium owners who are delinquent in meeting their monetary obligations are impacted as follows:
- Per FL Statute §718.303(4), “If a unit owner is more than 90 days delinquent in paying a fee, fine, or other monetary obligation due to the association, the association may suspend the right of the unit owner or the unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid in full.”
- Per FL Statute §718.303(5), "an association may suspend the voting rights of a unit owner or member due to nonpayment of any fee, fine, or other monetary obligation due to the association which is more than $1,000 and more than 90 days delinquent. Proof of such obligation must be provided to the unit owner or member 30 days before such suspension takes effect."
- Per FL Statute §718.112(2)(d)2, “A person who is delinquent in the payment of any assessment due to the association is not eligible to be a candidate for board membership and may not be listed on the ballot. For purposes of this paragraph, a person is delinquent if a payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation."
- Per FL Statute §718.112(2)(n), “A director or officer more than 90 days delinquent in the payment of any monetary obligation due the association shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law.”
- Per FL Statute §718.116(11)(a), “If the unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association, the association may make a written demand that the tenant pay to the association the subsequent rental payments and continue to make such payments until all monetary obligations of the unit owner related to the unit have been paid in full to the association. The tenant must pay the monetary obligations to the association until the association releases the tenant or the tenant discontinues tenancy in the unit.”
Liens: General Information
Section 718.121 of the Florida Statutes provides specific information regarding liens against the association or its members:
- No liens of any nature are valid against the condominium property as a whole except with the unanimous consent of the unit owners. Liens may arise or be created only against individual condominium parcels.
- Labor performed on or materials furnished to a unit may not be the basis for the filing of a lien against the unit or condominium parcel of any unit owner not expressly consenting to or requesting the labor or materials.
- Labor performed on or materials furnished for the installation of a natural gas fuel station or an electric vehicle charging station may not be the basis for filing a lien against the association, but such a lien may be filed against the unit owner.
- Labor performed on or materials furnished to the common elements are not the basis for a lien on the common elements, but if authorized by the association, the labor or materials are deemed to be performed or furnished with the express consent of each unit owner and may be the basis for the filing of a lien against all condominium parcels in the proportions for which the owners are liable for common expenses.
- If a lien against two or more condominium parcels becomes effective, each owner may relieve his or her condominium parcel of the lien by exercising any of the rights of a property owner under chapter 713, or by payment of the proportionate amount attributable to his or her condominium parcel. Upon the payment, the lienor shall release the lien of record for that condominium parcel.
- No lien may be filed by the association against a condominium unit until 45 days after the date on which a notice of intent to file a lien has been delivered to the owner. (See Stage #1 Demand Letter).
Release of Lien
If the condominium owner pays the total amount due, including unpaid assessments, late fees, interest and attorney fees/costs, then Palm Beach County is notified to release the lien and a Unit Lien Release letter is sent to the owner.
The Unit Lien Release form, as defined in the FL Statutes, is shown on the Forms page of this website.