Monday, November 29, 2010

Three ways to kickstart a lender’s foreclosure action

Ask any community association board member what their #1 complaint is right now and the answer is likely to be the detrimental impact lenders’ delayed foreclosures are having on their communities. Waiting around for the banks to foreclose is not a viable option for community associations. Associations can move forward aggressively, take title to delinquent properties and rent them out for the months or years it takes the bank to finalize its own foreclosure action. However, if the unit or home is uninhabitable or if the association simply prefers to attempt to force a lender to complete the foreclosure rather than taking title, the association does have a few options.

Here are three methods an association can employ to speed that lender foreclosure along:

1. Set the lender foreclosure action for trial. If the judge orders the case to trial as requested by the association, the lender must try the case (which it often is not prepared to do) or the lender will negotiate a positive result with the association to avoid a trial. Regardless of what the lender chooses to do, if the judge orders the case to trial, the association usually benefits.

2. Move to dismiss the lender’s case for Lack of Prosecution. If the lender foreclosure action has been stagnant for ten months or more, the rules of civil procedure allow the association to warn the lender that if it does not move its case forward before the conclusion of a year, the association will move to dismiss the case for Lack of Prosecution. This tactic cannot be used after setting the case for trial. However, depending on the circumstances, it may be the better tactic as lenders often ignore such warnings and judges today tend to be more willing to dismiss for lack of prosecution. Moreover, if the lender files something to avoid the dismissal, then the association can set the case for trial as described in #1 above.

3. File a Motion for Sanctions. One final method to be deployed in the event the lender is not moving its foreclosure action forward it to file a Motion for Sanctions. Arguably, by leaving open a case the lender does not intend to prosecute, the lender and its attorney are acting in bad faith. If the Motion for Sanctions is successful, the association would be awarded monetary amounts from the lender and possibly the lender’s attorney as well and the lender would have to conclude the case or negotiate with the association.

Every foreclosure case presents a different set of circumstances and challenges but if you haven’t already discussed your various legal options with the attorney handling your community’s collection work, it is time to do so.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Tuesday, November 23, 2010

What do you have to be thankful for in your association?

Far too often we hear the horror stories associated with the community association lifestyle and tend to forget that there are some really great communities out there that didn’t get that way by happenstance. I have heard of communities undertaking various fundraisers to help neighbors in need as well as those that have fostered such a sense of community that grown children tend to return and start their own families there as well.

No community is perfect but many come very close to creating the sense of well-being that we all seek when we first head out on our search for a home. As for my own HOA, I am grateful for the following:
• That there are seven people who continue to donate their time each week to ensure that our assessments are collected, bills are paid, insurance renewed and common areas maintained, repaired and replaced as needed. I have served on the board before so I understand the time commitment related to these functions.

• That there are a number of widowed owners who remain in the community knowing that they feel included and their neighbors are happy to help out as needed.

• That we have directors who understand the concept of fiscal responsibility so that our reserves are fully funded and we are able to meet future needs. When Wilma hit, our beautiful oak canopy on our main street was decimated and our homeowners along that street were trapped until the roads were clear. The costs to clear away our debris and make repairs throughout the neighborhood exceeded $25,000 but our reserves made this a possibility without a special assessment.

• That the default greeting for most folks living in my community is a smile and a wave.

• That we use an email alert system that allows us to easily know what is going on in the community including the occasional alligator sighting!

• That we find reasons throughout the year to hold various holiday and special events to further foster a sense of community including owners opening up their homes for luncheons and other social gatherings.

• That we have vendors who diligently perform their services to make our community a nicer place to live.

As we all celebrate Thanksgiving this Thursday by giving thanks for a variety of things and people in our lives, have you ever given thought about the positive things in your community association? If there is not a lot to be thankful for in your community currently, have you given any thought as to what you and your neighbors can do to change that?

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Thursday, November 18, 2010

Common myths surrounding community associations!

I am fortunate to be able to go out and speak to various organizations about community association issues. Inevitably at these meetings, an audience member will make a statement or ask a question that adds to my list of common association myths that persist out there. Here are some that I have heard over the last few years and none of them are correct.

• The association president can only vote to break ties (This is true for the Vice President of the United States who also serves as President of the Senate and only votes to break ties; in a community association setting the President of the association has the same voting rights as every other board member).

• An insurance company will cancel you for filing a property damage claim. (It is illegal under Florida law for insurance companies to drop policyholders for filing claims. Specifically, Section 627.4133(3) provides: “Claims on property insurance policies that are a result of an act of God may not be used as a cause for cancellation or nonrenewal.”

• An association cannot foreclose on homesteaded property (This statement was actually made by a Florida licensed real estate broker at an open meeting. In fact, mandatory community associations have the same rights as banks have to foreclose on real property in Florida regardless of its homestead status).

• The board is required to adhere to Roberts Rules of Order. (While RRO is a well-established guidebook for parliamentary procedure, an association is not required under the common interest ownership statutes to use it for meetings. An association’s individual governing documents might require its use so please check your documents).

• If an attorney is present, the board can keep owners out of its meeting. (Some associations think having its attorney present means the entire meeting can be closed to the membership. In fact, the attorney must be present to discuss pending or proposed litigation and even then, the meeting must be properly noticed to the members with a line item revealing that it will be closed for the purpose of discussing proposed or pending litigation).

• A director may abstain from a vote if he or she doesn’t want to go on the record. (A director must have a true conflict of interest-a direct or indirect monetary benefit- to abstain from a vote, not just a reluctance to go on the record on a particular issue).

• The association attorney works for the board. (An association attorney’s client is the not-for-profit corporate entity or association which is naturally made up of the membership; the client is not the board or particular directors. As with any corporate representation, however, the attorney must take direction from a corporate head, in this case the board and in many instances, the authorized contacts for that board).

• Once a quorum is established it’s good for the duration of the meeting. (If the board notices that a quorum during board meetings or membership meetings no longer exists because of the departure of people, the meeting must be suspended or adjourned once that lack of a quorum becomes apparent).

• If you take a sprinkler opt-out vote and it does not pass on the first try you must install sprinklers. (There is no limit in the statute to the number of times an older high-rise community can vote to waive the sprinkler retrofitting requirement in their building. The vote must be taken by 2016 but it can be taken as many times as needed to attain successful opt out before then; it is not a one-time vote. The vote to opt back in to sprinkler requirements can only take place once every three years but the vote to opt out can take place as many times as necessary to achieve the majority approval prior to 2016.

As with most myths, they often spread quickly, do a lot of harm and take a lot of time to overcome. If you know of any other association myths out there, please let me know and to the extent you can now debunk the ones listed above, please do!

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Tuesday, November 16, 2010

Handful of vetoed bills subject to possible override!

There will be a Special Session following the Organizational Session currently scheduled for November 16th. Over 1/3 of the Florida Legislature is now comprised of newly-elected members so House Speaker-Designate, Dean Cannon, along with incoming Senate President Mike Haridopolos, have called for a meeting to discuss a handful of potential veto overrides, as well as discuss the principles the Florida Legislature will consider in drafting a proposal for future Medicaid reform.

The bills that were previously vetoed by Governor Crist which may be the subject of potential overrides are:
• HB 545-Residential Property Sales
• HB 981-Agriculture
• HB 1516-State-Owned Lands
• HB 1565-Rulemaking
• HB 5603-Department of Financial Services
• HB 569-Landfill
• HB 1385-Petroleum Site Clean Up
• SB 1842-Transportation Projects
• HB 5611-Review of Department of Management Services Under the Florida Government Accountability Act
In addition to discussing these bills, the Legislature will also e asked to evaluate the State’s Septic Tank program scheduled to be implemented on January 1, 2011 as well as a review of Florida’s HVAC and Solar Rebates program.

To view the actual Memorandum from Speaker-Designate Cannon to Members of the Florida House, please click the link below:

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Monday, November 8, 2010

Imagine what Medieval Covenants and Restrictions would look like!

How long do you think private community associations of one sort or another have existed?

The legal model actually dates back to feudal times in Western Europe. In medieval England, peasants were given land to cultivate in exchange for the ability to keep a small portion of the fruits of their labor for their own purposes. In addition to enriching the lord, these same peasants were also required to make promises to the lord to not use the soil in ways that were harmful to the collective use, thus creating a system of interdependent values that lives on in common interest ownership communities today.

The present-day American homeowners’ association and private residential community date back to the 1830s, when the concept was imported from London. Communities back then were often established with the less than honorable purposes of prohibiting certain religious activities, dictating racial makeup, and monitoring the way in which the land could be used. Thankfully, none of those purposes are sanctioned by law these days and the vast majority of communities have long since moved past the feudal system!

It is interesting, however, to learn more about how and why communities with private restrictions first emerged to best plan their future improvement and evolution.
Now, for your reading pleasure only, please try to imagine the following covenants and restrictions in that Medieval or Roman era community association:

• Horses and other livestock are not allowed to be kept in your hovel overnight.

• Legionnaire Banners may only be flown on Cesar’s birthday, Gladiator match days, or the week the Army returns from a campaign.

• All blood soaked bandages must be disposed of properly in the street sewer, not the common areas.

• All visiting Barbarians must be registered and carry their Barbarian ID’s at all times.

• No children under the age of 8 allowed in the cesspool without an adult.

• Begging not permitted in common areas between the hours of sunrise to sundown.

• All chariots must be parked on property you or your master owns.

• No carrier pigeon stands allowed on common areas.

• All meetings must be held at a Round Table.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

Monday, November 1, 2010

Note to the Banking Industry on refiling troubled foreclosure actions

Sun Sentinel Reporter, Paul Owers, recently wrote that South Florida leads the nation with more than 58,000 foreclosure filings in the third quarter. Mr. Owers writes that “the number of filings in Palm Beach, Broward and Miami-Dade counties rose 25 percent from the second quarter and 9 percent from the third quarter of last year.” On the same day, Sun Sentinel Reporter, Diane Lade, focused on the fact that banks must prove they own and hold the mortgage on a property if they expect a judge to grant them a foreclosure judgment. Up until now, many banks have been getting lucky in terms of their foreclosures despite missing, badly prepared and, in the worst cases, inaccurate or fraudulent documentation.

Attorneys General in all 50 states are now investigating the full extent of the “robosigning” scandal and the number of foreclosures that were consummated on the basis of faulty documents or procedures. We are also told that many banks are planning on refiling their foreclosure documents in the hopes of getting it right this time. In the interim, many of the properties that have been the subject of mortgage foreclosures are now being highly scrutinized by the real estate, legal and title insurance industries. Resales of these properties are becoming more difficult as problems are revealed.

Rather than spending thousands of dollars in reopening and refiling these actions, has our banking industry given any serious thought to taking the same amount such action would cost and simply putting that money in the pockets of the homeowners they displaced in exchange for a Quitclaim Deed to the property and a Stipulation to the Entry of a Foreclosure Judgment? Sure there is the chance that the bank won’t be able to find the owner or he or she will say “No”. In those instances, the bank can proceed with refiling a foreclosure action that would have otherwise been successful but for the shortcuts taken. Hiowever, for the folks who can be found, who had no defense to the foreclosure and who have given up all hope of ever getting those properties back, this money in their pockets could certainly help with relocation costs and would serve a more humane purpose than simply refiling.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.