Q: We have an owner in our condominium community who refuses to pay the current monthly assessment. Each month, she sends a check based on our budget from 2 years ago. She says she has not received a copy of the proposed budget 14 days ahead of time for the past two years as she is supposed to.
Our board has proof that these materials were mailed to her and postmarked before the 14-day deadline. The notice was also posted 14 days before the meeting.
She states that if we impose a late fee, she wants a hearing before the board. How would you recommend dealing with this problem? (P.G., via e-mail)
A: Unfortunately, I have seen these matters of “principle” (or ego) devolve into massive legal battles (and attendant legal fees) over a relatively modest sum in dispute. Judges are unhappy that cases like this take up valuable court time, and both parties are well advised to avoid that being where this dispute is resolved.
Although the owner is not entitled to a hearing for the board to impose a late fee, perhaps she just wants to be heard. I would suggest asking to meet and see if this can be resolved, perhaps by waiving the late fees with some kind of settlement agreement (that your attorney should prepare) stating that a legal dispute is being settled. I would recommend that the meeting be held with less than a quorum of the board. Otherwise, the meeting would have to be open to other owners. Discussing delinquent assessments or individual owner finances in an open board meeting should be avoided whenever possible, as various debt collection practice laws could further complicate the matter.
If the matter cannot be amicably settled, the association really has no choice but to pursue collection. Although the money initially invested would not be recoverable from the owner, it would be wise to involve your counsel. The first thing that needs to be done is to verify the “proof of notice.” The Florida Condominium Act requires that proof of notice of a budget meeting be documented by an affidavit, which is an affirmation made under penalty of perjury.
If the affidavit exists and the mailing address used for the owner is correct, I assume your counsel will advise you to proceed. You must follow the “application of payment” law, where payments made on delinquent accounts are first applied to outstanding interest, late fees, attorney’s fees, and costs, and then to the delinquent assessment amounts.
Interest is charged at the rate provided in the declaration of condominium, which may not exceed the maximum permissible by law. If the declaration is silent, interest is calculated at 18 percent annually. If authorized by the declaration or bylaws, an administrative late fee may be charged. The late fee may not exceed twenty-five dollars, or 5 percent of each delinquent installment for which payment is late.
The association may ultimately file a lien and foreclosure lawsuit to collect assessments that have been appropriately levied. The foreclosure judgment includes principal assessments, interest, late fees, costs, and reasonable attorneys’ fees as determined by the court. However, several steps must be taken before you reach that point.
The first step is to provide the owner with what I call a “courtesy notice,” which is a requirement added to the law a few years ago. The purpose of this notice, which must be provided at least 45 days before further action, is to give the owner a chance to “pay up” before attorney fees can be added to the amounts claimed. The notice must follow a form outlined explicitly in Section 718.121(5) of the Florida Condominium Act. If the courtesy notice does not result in payment in full, the matter should be referred to legal counsel for further action.
The association may also consider other remedies. Sections 718.303(4) and (5) of the statute allow the suspension of voting and amenity use rights for delinquent accounts. The suspension must be done at a properly noticed meeting of the board. As with the imposition of the administrative late fee, the owner is not entitled to a hearing prior to these actions being taken.
Voting and use rights may only be suspended if the delinquency is over 90 days past due. There must be more than 1,000 dollars due to suspend voting rights. Delinquent owners may also not stand for election to the board, and board members who become delinquent are deemed to have abandoned their office.