When an owner is delinquent in assessments, most Associations enforce their declarations and proceed with collection efforts. A critical step in this process is to file a lien against the property of the delinquent owner. This lien will advertise to the public that the Association has a claim on the subject property and provides the Association with an avenue to foreclose on the unit. After the Association sends its initial demand letter and provides the owner the required 30 day (COA) or 45 day (HOA) notice of intent to place a lien, it should immediately proceed with the filing of the claim of lien. Along with the filing of the lien, another demand lender must be mailed to the delinquent owner giving 30 day (COA) or 45 day (HOA) notice of intent to foreclose on the claim of lien. Once the required time frame elapses, the Association will typically proceed to file a foreclosure action.
Once the lien has been recorded in the public records, Section 718.116(5)(c) (COA) and 720.3085(1)(b) (HOA), Florida Statutes, provides a path for the owner to dispute the Association’s claim of lien by filing a Notice of Contest of Lien. Similar to the Association’s lien, the filing of this Notice must be recorded in the public records of the county where the property is located. This Notice will state the book and page number where the Association’s claim of lien is recorded and requires that the association’s foreclosure action must be filed within 90 days. Once the Notice of Contest is filed, the Clerk of Court will send a copy to the address of the Association by certified mail, return receipt requested and, upon mailing, the 90days to file a foreclosure action begins to run.
The consequence for the Association of the filing of this Notice is that the amount of time to file a foreclosure action on the claim of lien is reduced to 90 days. Typically, a claim of lien filed by a Condominium Association is valid and enforceable for a one year period, while a claim of lien for a Homeowners Association is valid for five years. For an owner who believes the Association wrongly filed the claim of lien, this statutory provision expedites the process and provides an opportunity for the owner to appear before a Judge with the goal of removing the encumbrance on the property. The Association may also view a Notice of Contest of lien as a benefit as it can enforce the lien immediately without having to wait for the expiration of the 30 day (COA) or 45 day (HOA) notice of intent to foreclose on the claim of lien. Moreover, the Association can view a Notice of Contest of Lien as an opportunity to ensure that the ledger, lien, and all other preconditions to initiating litigation are in order. It is also important to recognize that the 90 day period will be extended if the Association is prevented from filing a foreclosure, which can occur if the owner files for bankruptcy protection.
The filing of a Notice of Contest of Lien is a rare occurrence because most liens are not recorded until it is verified that the debt is owed so there is no ability to contest. Nevertheless, in the scenario where the Association does not file a foreclosure action within 90 days of the filing of the Notice of Contest of Lien, the lien will be deemed void. Once the lien is considered void, if a delinquency remains, the Association will have to start the collection process anew and send out the initial demand letter giving the owner 30 day (COA) or 45 day (HOA) day notice of intent to place a lien on the property.
I have included below the actual statutory notice to contest a claim of lien. Be aware that if you do contest a lien and the lien is valid, you will only speed up the foreclosure against your property!
NOTICE OF CONTEST OF LIEN
TO: (Name and address of association)
You are notified that the undersigned contests the claim of lien filed by you on , (year) , and recorded in Official Records Book at page , of the public records of County, Florida, and that the time within which you may file suit to enforce your lien is limited to 90 days following the date of service of this notice. Executed this day of , (year) .
Signed: (Owner or Attorney)