Tuesday, September 29, 2009

Can a blanket receivership order comfort your struggling community?

There has been widespread media coverage of blanket receiver orders designed to assist communities struggling with high delinquencies while investor owners continue to collect rent with no intention of ever paying the association; these investor owners' goals, quite simply, are to collect as much rent as possible before foreclosure.

To my knowledge, the Association Law Group obtained the first blanket receiver order in Miami-Dade County allowing a Receiver to collect rents from all units in foreclosure. Since that time associations and their attorneys have gotten even more creative. My law firm, Katzman Garfinkel Rosenbaum (KGR) obtained a "first of its kind" order in Seminole County for the Villas at Lakeside Condominium Association. Citing the words "Extraordinary times call for extraordinary measures", the Order Granting the Association's Petition for Appointment of a Receiver to Collect Rents from Certain Tenants was drafted by KGR attorney Stuart Zoberg and provided for the following:

1. The Receiver has the power to demand and collect rents from any tenants who occupy units within the Condominium where the owner is delinquent, in whole or in part, in the payment of regular or special assessments;

2. Any owner whose rents have been collected by the Receiver can file for relief from the Court to request that his or her home be exempted from the Order if good cause is shown as to why such relief should be granted;

3. The Receiver is appointed for the sole purpose of collecting rents on delinquent units. The board will remain in control of the association's affairs;

4. The Receiver cannot attempt to collect rents until notice of the Order and the Petition is properly mailed or delivered to the owner;

5. No owner, tenant, occupant or employees of the former can interfere with the Receiver's efforts to collect rents pursuant to the Order. Anyone so interfering is subject to monetary sanctions, eviction of the tenant or occupants and ultimately incarceration for failing to comply with a Court Order;

6. If the Receiver determines that the occupant or owner or tenant is not cooperating or being truthful about the amount of rent being paid, the Receiver may demand fair market value for the rental of the unit;

7. The Receiver must file a bond to secure the performance of his or her duties and must maintain a separate accounting for each home for which rents are collected under the Order; and

8. The Order continues in full force and effect securing rents from currently delinquent units and those units that become delinquent in the future until either the Receiver or the Association requests that the Order be stopped or the Court decides on its own that market conditions no longer require its existence.

If your community is struggling with an unusually high number of delinquencies while at the same time there are investor owners collecting rents, a blanket receivership order drafted in the manner discussed above might be just the thing to provide you with a little comfort.

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