1. The U.S. District Court for the Southern District of Florida clarified that interest, late fees, collection costs, and attorneys’ fees are not considered “common expenses” or “regular periodic assessments” for which first mortgagees are liable under Florida’s Safe Harbor provision.
2. The case arose when unit owners failed to pay their assessments to the association and their mortgage, leading to a dispute between the first mortgagee and the association over past-due amounts owed under the Florida Statutes.
3. The Florida Condominium Act and the Florida Homeowners’ Association Act provide protection to first mortgagees who take title to association property through foreclosure on the previous property owner. This protection, known as the Safe Harbor, limits the liability of the first mortgagee to the lesser of unpaid common expenses and regular periodic assessments during the prior 12 months or one percent of the original mortgage debt. 1. The Safe Harbor calculation for past-due assessments should only include the principal past-due assessment amount.
2. Additional charges and fees such as interest, late fees, collection costs, and attorneys’ fees associated with past-due assessments are to be excluded from the Safe Harbor calculation.
3. The court’s decision was based on the plain language of the Florida Statutes, which defines common expenses and regular periodic assessments.
4. Individualized charges assessed against one delinquent unit owner, such as interest, late fees, collection costs, and attorneys’ fees, do not fall under the definition of common expenses.
5. The additional charges were not mandatory but contingent upon unpaid assessments, and therefore do not fall under the definition of “regular periodic assessments.” – Fines and additional charges for unpaid assessments are not considered common expenses, but individual charges designed to punish or induce compliance.
– The court’s decision applies to both condominium associations and homeowners’ associations because the Safe Harbor provisions found in both Acts are nearly identical.
– Once a first mortgagee takes ownership of a property at a foreclosure sale, they are not responsible for interest, late fees, collection costs, and attorneys’ fees charged to the unit prior to gaining title. However, once they become the owner, they are responsible for all additional charges incurred due to their failure to pay assessments.
https://www.jimersonfirm.com/blog/2014/04/additional-charges-unpaid-assessments-collectible-floridas-safe-harbor-provisions-condominium-homeowners-association-acts/
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