Amendments to provisions of Chapter 720 of the Florida Statutes, recently signed into law by Governor Crist, address several issues of interest to homeowners associations, including receivership, delinquent assessments and liens, and the display of flags. The following is a brief summary of some of the legislation included in these bills, which take effect on July 1, 2008.

House Bill 1105 (Receivership). House Bill 1105 amends provisions of Chapter 720 of the Florida Statutes (as well as Chapter 718 and Chapter 719) to provide notification requirements and procedures relating to the appointment of a receiver to manage the affairs of an association.

Senate Bill 1986 (Delinquent Assessments; Liens). Senate Bill 1986 amends Florida Statutes Section 720.3085 regarding payment for assessments and liens.

• Liens. A homeowners association, when authorized by the governing documents, has a lien on each parcel to secure the payment of assessments and other specified amounts. Such lien is effective from and relates back to the date the original declaration of the community was recorded. As to first mortgages of record, however, the lien is effective from and after a claim of lien is recorded in the public records. The legislation establishes requirements for the validity of a claim of lien and identifies the assessments and other amounts secured by the claim of lien.
• Notice of Contest of Lien. A parcel owner may record a notice of contest of lien, in substantially the form set forth in the statute, to require an association to enforce a recorded claim of lien against the parcel within ninety (90) days after service of the notice upon the association. The lien becomes void if the association fails to file an action to enforce the lien within such period, subject to extension for delays arising from the filing of a bankruptcy petition.
• Foreclosure of Lien. An association may foreclose a lien for assessments in the same manner in which a mortgage of real property is foreclosed. Further, an association may recover a money judgment for unpaid assessments, as well as reasonable attorney's fees incurred in the action.
• Rent. The court may require a parcel owner who remains in possession of a parcel after entry of a foreclosure judgment to pay reasonable rent. If a parcel is leased during the pendency of a foreclosure action, a receiver may be appointed to collect rent, with the expenses of such receiver to be paid by the party who does not prevail in the action.
• First Mortgagees. The legislation limits the liability of a first mortgagee, or its successors or assigns, that acquires title to a parcel by foreclosure or deed in lieu of foreclosure for the unpaid assessments that became due prior to such acquisition to the lesser of the unpaid common expenses and assessments that accrued during the 12 months immediately preceding the acquisition of title or 1% of the original mortgage debt. This limitation applies only if the first mortgagee initially joined the association as a defendant in the foreclosure action filed against the parcel owner, subject to certain exceptions.
• Notice. The association is required to make written demand upon the parcel owner for payment of unpaid assessments before it may file a lien. The demand for payment must give the parcel owner 45 days following the date the demand is deposited in the mail to make payments for amounts due. Further, an association may not file an action to foreclose a lien until 45 days after the association has given the parcel owner written notice of its intent to foreclose the lien. Such notice may not be provided to the parcel owner until the passage of the 45-day period after mailing of written demand for payment. These time limitations do not apply if the parcel is subject to a foreclosure action or forced sale by another party or if the owner of the parcel is a debtor in a bankruptcy proceeding.
• Qualifying Offers. The legislation provides an additional limitation on when a parcel owner may make a qualifying offer to an association and specifies circumstances in which a qualifying offer may become void. In addition, a qualifying offer must be in substantially the written form set forth in the legislation.

Senate Bill 1378 (Display of Flags). Senate Bill 1378 amends Florida Statutes Section 720.304 with respect to a homeowner's display of flags. The legislation allows a POW-MIA flag of limited size to be displayed, in lieu of one of the flags of branches of the armed services. The bill further allows a homeowner to erect a flagpole no more than 20 feet high on such homeowner's parcel to display the United States flag (not larger than 4½ feet by 6 feet) and the official flag of the State of Florida or the United States Army, Navy, Air Force, Marines or Coast Guard, or a POW-MIA flag, which additional flag is equal in size to or smaller than the United States flag. The limitation that flags of the branches of the armed services may be displayed only on certain holidays has been removed.

For the full text of House Bill 1105, see http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_h1105er.xml&DocumentType=Bill&BillNumber=1105&Session=2008.

For the full text of Senate Bill 1986, see http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_s1986er.xml&DocumentType=Bill&BillNumber=1986&Session=2008.

For the full text of Senate Bill 1378, see http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_s1378er.xml&DocumentType=Bill&BillNumber=1378&Session=2008.

For Further Information

If you have any questions about this Alert or would like more information, please contact Jeffrey R. Margolis, Susan Pontigas, P.A., any other member of the Real Estate Practice Group or the attorney in the firm with whom you are regularly in contact.

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