New law shifts association fees from homeowner to renter
PONTE VEDRA BEACH, Fla. – July 19, 2010 – Under a new Florida law, homeowner association boards can go after renters for association fees when the homeowners fail to pay up.
The law has been attracting attention in Ponte Vedra Beach and elsewhere in the Beaches area because so many housing developments have homeowner associations.
“Associations are hemorrhaging,” said real estate attorney Barry Ansbacher, who represents the Marsh Landing homeowner association in Ponte Vedra Beach. “It’s not an isolated case anymore; there’s nobody that hasn’t been touched by this.”
Property owners are traditionally responsible for paying the fees, usually collected monthly or quarterly, to the associations. The fees are typically used to pay for common area maintenance in a residential development, legal and safety issues and enforcement of the covenants, conditions and restrictions set by the developer.
The law, which took effect July 1, says homeowner associations must notify renters that their payments should be paid directly to the association, not to a landlord who has failed to pay the organization.
Homeowners associations govern a subdivision, condominium or planned community. Some associations have lost thousands of dollars because of non-payment. That negatively impacts the upkeep of the community and future home values, said Anna Marks, president of May Management Services, a property management company in Ponte Vedra Beach.
“Their [associations’] job is to protect the asset of the community; if they can’t do this, then property values go down,” she said. “The associations need to be prepared for when the economy turns.”
Joe Ankiewicz, a senior client accounting manager for May Management, said the issue has been ongoing for about two years.
“There are some communities struggling to pay their bills on a week-to-week basis,” he said. “It’s gotten to the point where the Legislature had to come up with a statute.”
If the tenant is ordered to make a payment to the association, it counts as rent credit. The tenant pays the remaining balance to the landlord. For example, if a lease agreement calls for the renter to pay $600 a month including $100 association fees, traditionally they would have paid the whole amount to the landlord. Now, under the law, the tenant would pay the landlord $500 and the association $100.
When a renter is required to pay the association directly, they should keep a copy of the notice from the association seeking payment, as well as cancelled checks and/or receipts. If the landlord demands the entire $600, the tenant should send them copies of the documents and receipts showing their payments to the association.
“If the landlord files an eviction, it’s very important that the tenant doesn’t sit back and assume the payment to the association will protect them; they need to answer the eviction lawsuit,” Ansbacher said.
Typically, landlords who are not paying their mortgage are also not paying their association dues, officials said. Before people rent from a homeowner, they should seek documents showing that they are up to date on their mortgage payments and association dues.
“A prudent tenant raises the question whether the mortgage and association dues are current before signing the lease,” Ansbacher said.
Janice O’Connell, president of Amelia Mortgage in Nassau County, said delinquent owners can also affect bank financing for future owners looking to buy into the community.
“If the delinquency is more than 15 percent in [association] dues, then you can’t get a loan on the project no matter how great your credit score is,” she said. “This just happened to one of my clients two days ago.”
How much people pay monthly or quarterly depends on the community’s size and amenities, Marks said.
“It’s all over the board,” she said. “It could be low to extremely high.”
Also under the law, a tenant is not required to pay the association more than what they pay in rent. The law helps the tenant if they are doing what they’re supposed to do while the landlord isn’t, officials said.
“This cuts both ways, to avoid the association from having to foreclose the unit if the tenant is in place they can pay,” Ansbacher said.
Ponte Vedra Beaches Coalition member Clara Cowan said it’s about time the Legislature helped struggling associations by giving them some tools to work with. The coalition is a group of homeowner associations.
“Everybody’s struggling right now and that includes [associations],” she said. “Associations have bills to pay. When people don’t pay their bills, they are left in a lurch.”
Many questions about the bill remain unanswered, including whether associations can charge for the notice they issue to tenants and what their rights are if the owner files for bankruptcy, Ansbacher said.
“Any time you have a new law, you have people getting a feel for it,” he said.
If an association isn’t paid, they can file a lien on the house and foreclose on the property.
The bill doesn’t address mortgages, which means that a tenant can still be evicted if the homeowner fails to pay the mortgage holder.
Copyright © 2010 The Florida Times-Union, Jacksonville, Shakaya Andres. Distributed by McClatchy-Tribune Information Services.