The Third District Court of Appeal of the State of Florida (3rd DCA) issued an opinion on January 23, 2013, in Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc.,Case No. 3D11-2545 (Fla. 3rd DCA 2013), which should serve as a red-flag to condominium associations in the collection of past due assessments, late fees, and interest that has accrued on a defaulted unit. In this case, the condominium association, Spiaggia Ocean, took title (subject to the first mortgage) of one of its defaulted units by foreclosing its lien on the unit. Then, the condominium association began renting out the unit. The Bank of New York, the mortgage holder, brought foreclosure proceedings against the owner of the unit and obtained a final judgment of foreclosure. Aventura Management, the successful third-party purchaser, obtained title to the unit during the foreclosure sale.
After the foreclosure sale, the condominium association attempted to recover past due assessments, late fees and interest that had accrued on the unit from Aventura Management pursuant to Section 718.116(1)(a) of the Florida Statutes, which states, “a unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner.”Aventura Management maintained the position that it was not liable for past due assessments. Aventura Management argued that the condominium association was an intervening owner between the prior owner of the unit and Aventura Management making the condominium association liable for the past due assessments of the prior unit owner. Aventura Management argued it only owed assessment fees from the taking of title onward.
The trial court ruled in favor of the condominium association, but the 3rd DCA agreed with Aventura Management and reversed the trial court’s ruling. As a result, Aventura Management was not held responsible for the payment of past due assessments, late fees and interest on the unit. The3rd DCA focused on the fact that Section 718.116(1)(a) of the Florida Statutes states, “a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title.” The 3rd DCA stated, “the plain language of the Statute does not state or suggest that an exception is to be made when the previous owner is the condominium association.” Therefore, the 3rd DCA’s ruling will now prevent condominium associations from collecting past due assessments, late fees and interest from a successful third party purchaser when the condominium association forecloses on its lien prior to the foreclosure sale.