Two recent Florida Appellate Court decisions offer hope for community associations plagued with zombie homes.
-By Joshua Gerstin, Esq.
Within the last decade, almost every community association has encountered the same problem, a lender forecloses on an owner and nothing happens for years. Either the owner vigorously contests the lender’s foreclosure, the lender simply does not move forward or both. While the lender’s case meanders through the courts, the association is left with a “zombie house”, an abandoned home lowering property values and/or an owner no longer paying his/her maintenance assessments. Until now, once a lender filed a foreclosure lawsuit a community association could do nothing other than sit and wait, sometimes for years.
In two recent Florida appellate court cases a vaccine for this zombie house problem was discovered, the community association’s “relation back” provisions in its Declaration. In Fountainspring II Homeowners Association, Inc. v. Veliz, Case No. 4D-3408 (Fla. 4th DCA March 15, 2017), and Jallali v. Knightsbridge Village Homeowners Association, Inc., Case No. 4D15-2036 (Fla. 4th DCA Jan. 4, 2017), the Courts ruled the association was permitted to begin its own foreclosure action after the lender’s foreclosure had already begun (and stalled). In addition to the Florida laws governing both condominium and homeowner associations, the Courts found the governing documents of each association to be a major factor in their decisions.
According to both the Fountainspring and Jallali cases, well-drafted “relation back” provisions in a community association’s governing documents allow community associations to foreclose on an owner after the lender foreclosure lawsuit has already begun. Although the association’s lien and foreclosure remains subordinate to the lender’s foreclosure, the association can drastically cut the effect and expense of a zombie home. Properly worded “relation back provisions” in a community association’s governing documents is another tool available to community associations struggling to keep costs down and property values up.
Please contact our office for an evaluation to determine whether your association’s governing documents have the necessary “relation back” provisions to benefit from these recent Florida court decisions.
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