Some Cash-Strapped Florida Condo Associations Resorting To Rent Skimming For Badly Needed Funds?

In Miami, Florida, the Daily Business Review reports:

• Members of the board of The Grand condominium north of downtown Miami were increasingly frustrated as they waited for lenders to take over units facing foreclosure. Each month the units were in limbo was a month that desperately needed maintenance fees went unpaid.

• Finally, the board decided on an unorthodox solution: Be the first to foreclose on the unit, then find a tenant and recover some of the delinquent dues through rents — at least until the lenders take back the unit.

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• Miami attorney Dennis Bedard is advising condo boards he represents to foreclosure on units whose owners are behind on maintenance fees and begin renting out the condos. [...] So far this year, The Grand, a Bedard client, has foreclosed on and rented 12 of 810 condos in the high-rise building at 1717 N. Bayshore Drive.(1)

For more, see Condo Meltdown: Condo boards in quest of cash.

(1) It is quite common for an institutional mortgage to contain an "assignment of rents" clause, which basically says that any rent generated by the property pledged as collateral for a mortgage loan itself shall serve as additional collateral for said loan. While the condo association pocketing the rent and stiffing the mortgage lender in the way described in this story may not be liable on the promissory note for making the mortgage payments, it could nevertheless be violating the terms of the mortgage (ie. by extracting the rent collected from the condo unit, which, technically, is part of the loan collateral, and applying it for its own purposes).

Also, assuming that a mortgage lender could legally considered to be an"owner" of an interest in the property in that it holds a security interest therein, I wonder if a mortgage lender could attempt to invoke Florida's anti rent skimming statute, F.S. 697.08 against a condo association in this type of case.