Tuesday, September 8, 2009

Delinquent Owners With Tenants? Help May Be On the Way!

There is a growing trend in the association collection arena to file for a blanket order to appoint a receiver to collect rents on behalf of associations who have a number of delinquent owners with tenants. Basically, the associations are asking a Court to appoint a receiver to collect those rents and then remit them to the association in an attempt to recoup some of the past due assessments. The associations are attempting to plead this one time and to have the order “blanket” the community by securing rents from all owners who are currently delinquent or may become so in the future. This avoids the costs and time that typically would be involved with seeking this relief on a per unit basis.

It is important to remember that if such an order is granted, the rents are paid to a receiver who must then disburse those funds to the association. Not surprisingly, receivers cost money so there are costs involved for the association. Still the benefits to the association should a blanker order be granted can be significant for struggling associations.

There has been success in obtaining blanker receivership orders in Miami-Dade County. It remains to be seen whether this result will adopted by other jurisdictions around the State.

Generally, the association is the only party to these proceedings and the Judge issues an order directing all tenants to pay their rental fees directly to a Court-appointed receiver or face contempt of Court charges. The Association is further directed to serve a copy of the Order upon all owners and known tenants. Some Orders contain a further disclosure that anyone may challenge the entry of the Order through the filing of a Motion with the Court.

For those not well versed in legal matters, generally a party to a lawsuit has the right to appeal, but must first (although there are exceptions) wait until the trial court makes a final determination before appealing to a higher court. Everyone gets one appeal to a higher court as a matter of right without having to obtain permission from the higher court to hear the appeal. This promotes judicial economy so that multiple appeals are not heard on the same case although, again, there are certain exceptions.

Appeals before a case is over are called “interlocutory appeals”. Again, while there are exceptions, often these appeals are denied simply because the matter is not over yet or for other technical legal reasons.

In the recent and widely reported case of Village At Dadeland Condominium Association, Inc. (09-40773), the trial court judge approved the appointment of a blanket receiver for the entire community. This decision was appealed and the appellate court (3rd DCA Case No. 3D09-1784) refused to listen to the appeal while the trial court matter was still pending. The appellate court’s action is not a disposition on the merits of the lower court case and the trial judge’s decision to allow the appointment of a blanket receiver.

What does this all mean?

Well it means that the Appellate Courts have not yet validated the appointment of receivers for the collection of rents despite certain media reports to the contrary. This doesn’t mean it can’t be done, it just means that the matter has not yet been resolved. However, the growing trend of judges (especially in Miami) entering these orders is a good sign. If your association has a significant budget shortfall combined with a number of delinquent owners collecting rent from tenants, please talk to your association attorney about the costs and procedures involved with pursing a blanket receivership order for your community.

No comments:

Post a Comment