Use Of "Blanket Receivership" By Florida Condo Associations In Struggle To Stay Afloat Continues; Rent Skimming, Deadbeat Landlords Left Furious

In Tampa, Florida, The Tampa Tribune reports:

• Each month, Judd Tyler, the president of his townhome association, discovers his community doesn't have enough money to pay all of its bills.(1) So the townhome board took action. It is among the first in the area to obtain a court order to force delinquent landlords to turn over rent payments to them. [...] The court order, signed late last month, grants what's called a blanket receivership. It requires many of the tenants to pay their rent to a court-approved, third-party receiver instead of the landlord. In fact, it's against the law for the landlord to collect rent until all past-due fees and legal costs are paid.

• The blanket receivership method is catching on, and at least 25 other associations in Florida are using them. Legal experts expect many more to follow suit. In some cases, associations are owed hundreds of thousands of dollars. "When a good idea begins to work, others tend to follow," said Peter Dunbar, a Tallahassee lawyer and former Bay area legislator.

***

• The blanket receivership method is spreading through the legal community, although it is unclear how many associations have asked for or received such an order. Ben Solomon, at attorney with Association Law Group in south Florida, said his firm came up with the new legal tool by "reinterpreting" existing statues. [...] With the blanket receivership method, a homeowner's association can file one petition to cover every unit with past-due assessments, as long as the association has already filed for foreclosure. "It's affordable for the condo association because one petition covers all the units that qualify," Solomon said. "Every time the association files another foreclosure, it's eligible for receivership."

• Solomon said his firm wasn't sure how judges would interpret their petitions and have been pleased so far. Landlords, however, are furious to learn about the court order. One even tried to have the decision overturned.

For more, see Some deadbeat landlords must forfeit rents to condo associations.

Go here for other stories on blanket receiverships.

(1) Reportedly, more than half of the 84 unit owners are stiffing their association out of the $300 monthly maintenance fee.

Battle Against Rent Skimming Florida Condo Investors Intensifies As Blanket Receivership Court Orders Become Broader In Scope

The South Florida Sun Sentinel reports on how the fight being waged by condo associations across South Florida and the state by seeking court-ordered, blanket receiverships against deadbeat investor/unit owners continues to heat up:

• The first blanket receivership order was petitioned by the Association Law Group and signed in March by a Miami-Dade County judge on the behalf of the Oaks at Miami Gardens. Since then dozens have been signed or are pending in county courts throughout South Florida, as well as Orange and Seminole counties, attorneys say.

• And as the practice spreads throughout the state, the blanket receivership orders also seem to broaden in scope. Last month, [professional receiver Seth] Heller was appointed as the receiver in Seminole County for an Orlando condo association, the first blanket receivership order outside South Florida. The order provides receivers like Heller with more authority compared to previous receivership orders granted in South Florida, including the authority to collect money from rent-paying tenants as well as those who don't pay rent but live in a unit owned by an investor in foreclosure (blanket receiverships are not used for owner-occupied units).

• Whether a relative or friend of the investor, a non-rent paying tenant could be ordered by Heller to pay fair market rent to be turned over to the association. The Orlando order also now allows receivers to collect rent the moment an investor is delinquent, no 30 or 60 day late notices from the association necessary. And the order specifically reminds tenants that they could face jail and contempt of court charges for not complying with a receiver's order and not appearing in court to explain why.

For the story, see Condo associations turn to receivers to fight deadbeat investors (New weapon in the fight against delinquent owners).

310-Unit Condo Conversion Complex Struggles To Stay Afloat; Considers Using "Blanket Receivership" To Grab Rents Away From Deadbeat Owner/Landlords

In Miami, Florida, The Miami Herald reports:

• Dealing with an ongoing crisis, the company that manages cash-strapped Mirassou Condominium wants to start a blanket receivership system to collect association fees from deadbeat owners.(1)(2) [...] As budgets continue to worsen in South Florida condo associations, Mirassou's situation underscores the consequences communities are facing when unit owners enter foreclosure and discontinue paying association fees. Those fees normally cover flood and hazard insurance, maintenance, utilities and garbage collection.

• By law, South Florida condominiums are required to have master hazard and flood insurance, which covers common areas and the exterior of the buildings. But Mirassou doesn't have any. The hazard insurance expired six months ago and the flood insurance expired in July, residents are saying. [...] When a community association has no insurance, owners cannot sell or rent their property.

For more, see Mirassou Condo seeks new system to collect owners' fees (A troubled Northwest Miami-Dade condo development seeks a new strategy to collect payments from delinquent owners).

In a related story, see The Miami Herald: South Florida condo conversions collapse.

Go here for other posts on the problems plaguing the Mirasou condo conversion complex.

(1) According to the story, if the court approves and appoints blanket receivership at Mirassou, a third party or "receiver'' could ask tenants for their rent, and leave the deadbeat landlord out of the equation, [attorney Angelica] Young said. The receiver would file a report with the court every quarter. Florida's Third District Court of Appeal reportedly ruled in favor of this strategy last month to help community associations collect rents and fees from delinquent owners. At least 18 condo associations in Miami-Dade and Broward counties use blanket receivership, the story states.

(2) Reportedly, out of the 310 units in Mirassou, 172 are in foreclosure.

Florida Appeals Court OKs "Blanket Receivership" In Condo Association Battle Against Rent Skimming Unit Owners, Deadbeat Investors

In Miami, Florida, the South Florida Business Journal reports:

• Condominium associations faced with increasing delinquencies now have an appellate court ruling that backs their right to appoint receivers to collect rent on delinquent condo units. Florida’s 3rd District Court of Appeal recently validated the use of "blanket receivership," which has been used by at least 18 condo associations in Miami-Dade and Broward counties. Blanket receivership allows a court-appointed receiver to collect rent directly from tenants when their units are in foreclosure.

• The appellate court denied an appeal from a condo unit owner at the Village at Dadeland, who protested the appointment of a receiver because he said he was not given proper notice. According to motions filed by the condo association, the [targeted] unit owner owns 17 condos at the Village and was delinquent on his association fees, even though he allegedly received rental income from the units. The condo association had filed foreclosure actions against the 17 units.(1)

• “The court decided unanimously to deny the unit owner’s petition. This will put an end to him collecting rent while being under foreclosure,” said Ben Solomon, a member of the Association Law Group of North Bay Village, which has handled several receivership appointments for condo associations.

For more, see 3rd DCA upholds use of condo receivers.

(1) According to the association’s court responses, it was facing extreme financial hardship because 267 of the 410 condominium units were 60 days or more delinquent in the payment of maintenance assessments, the story reports. The delinquency reportedly totaled $863,063, preventing maintenance of the common property.

Blanket Receiverships Coming To Florida's Treasure Coast?

In Stuart, Florida, TC Palm reports on another financially strapped condominium association being screwed over by rent skimming, deadbeat landlords who are pocketing rents paid to them by their tenants and refusing to pay the monthly maintenance fees for their units:

• The Whitemarsh Reserve Homeowner’s Association in Martin County is now facing this grim scenario with some of its owners, who are under foreclosure by the association, owing it more than $10,000 in delinquent fees. So its members are following the lead of dozens of other associations across the state and trying a new legal approach to solve this problem.

• The Whitemarsh association is the first on the Treasure Coast to ask a judge for a court order to force delinquent landlords to turn over rent payments to the association. The association filed a petition [...] seeking what’s being dubbed as a “blanket receivership.” If approved, this would require tenants of these delinquent landlords to pay their rent to a court-approved, third-party receiver instead of the landlord. The association itself would not be in receivership, only those units that are under foreclosure by the association and occupied by a tenant paying rent.

***

• In the past, solving this problem would have been cost-prohibitive for most associations because the receivership approach was used mainly on a unit-by-unit basis, [association attorney Ben] Soloman said. But the [Miami Beach-based] Association Law Group pioneered the group, or “blanket,” approach allowing a receiver to collect rent on an ongoing basis from all owners who fail to pay maintenance fees. “It’s not a new law, but we’ve reinterpreted the existing law to get a practical remedy for our clients,” he said.

• More than 11 different lower courts across the state have approved this method, granting blanket receiverships to more than 30 associations. And one of Florida’s appellate courts also has upheld this method.(1)

For the story, see Homeowners association first in area trying to force those delinquent in paying fees to turn over rent instead.

Go here for other stories on blanket receiverships.

(1) Reportedly, the first of these receiverships was granted in March to a condo association in Miami Gardens. Officials said in the first month of the receivership program, that association more than doubled its monthly income. By 60 days, it was restored to its regular assessment receivable level.

Deadbeat Landlord/Condo Converter Ordered To Turn Over Title To 15 Units After Pocketing Rent, Stiffing Association Out Of $175K In Maintenance Fees

In Miami, Florida, The Miami Herald reports:

• A South Florida condominium converter who was renting out units but ducking his maintenance fees has been ordered to turn over ownership of 15 units to the condo association, plus rent checks that had been improperly collected. Facing possible jail time for contempt of court, developer Robert Wolfarth, the managing member of the Village at Dadeland Associates, agreed to hand over title to the units in about 90 days. He also was ordered to pay the association $11,700 in rent owed under a blanket receivership established in June.(1) [...] Once the condo association gets possession of the units, it plans to continue renting them out and using the money to pay off Wolfarth's old debts -- that is until Wolfarth's mortgage lender comes calling.

Reportedly, Wolfarth was collecting rents from his units while dodging more than $175,000 in maintenance fees.

For more, see Condo converter ordered to turn over 15 units to association (A condo converter must turn over 15 units to the condo association because he failed to follow a court order).

In a related story, see Condo associations turn to receivers to fight deadbeat investors (Condo associations across South Florida and the state are increasingly turning to court receivers - appointed by a county circuit court judge to collect rents and profits of lands involved in a dispute - to save them from deadbeat investor owners.).

(1) Under a blanket receivership, a judge appoints a single custodian to collect rents from all tenants living in units subject to foreclosure by a condo association. Such receiverships are a relatively new legal tool being used by associations to collect maintenance fees. The order against Wolfarth, issued Aug. 27, demonstrates how effectively they can be used, said attorneys representing the Village at Dadeland Condo Association.

Fight Against Rent Skimming Condo Investors Advances As Recent Florida Court Ruling Permits Blanket Receivership W/out Need To File Foreclosure Action

In Miami, Florida, the South Florida Business Journal reports:

• South Florida businesses and attorneys are developing new tools for homeowner associations struggling with unpaid fees and foreclosures. The latest developments are a legal precedent that allows associations to collect rents immediately when a landlord fails to pay association fees, and a property management company that advances loans to struggling condos with no risk attached.

• Attorney Stuart Zoberg, of Katzman Garfinkel Rosenbaum, won a ruling for his client, Nirvana Condominium Association in Miami, allowing it to collect rents for unpaid fees as soon as a landlord unit owner falls behind. It’s an evolution of the limited “blanket receivership” tool that took hold in local courts last year, where receivers can collect rents directly when a unit is in foreclosure. But, in the new ruling, associations are not required to wait for a foreclosure action.

Source: New tools arrive for struggling homeowner associations.

Blanket Receiverships Come To Daytona Beach In Fight Against Deadbeat, Rent Skimming Condo Owners Stiffing Associations On HOA Fees

In Daytona Beach Shores, Florida, The Daytona Beach News Journal reports:

• At the peak of the area's housing boom four years ago, Chicago native James Dolan bought a unit at the nine-story Oceanside Inn here when it converted from a hotel to a condo-tel. [...] But, since then, the housing bust has cost him plenty. The owners association recently passed its second special assessment, on top of monthly maintenance fees, to make up for other owners who are in foreclosure or walked away and are not paying their fees.

***

• The frustration is widespread. So, the owners association, the inn's hired management firm and a local attorney sought and won a rare legal ruling that should help them recover the $154,000 owed by 23 of the building's 123 owners. Circuit Court Judge Richard Graham recently approved the appointment of a "blanket receiver" for the Oceanside Inn. It's the first such ruling in the 7th Judicial Circuit, attorney Jason Harr said.(1)

• "It's groundbreaking in this district. It's been approved in other districts, but it's never been asked for and the court has never approved it here prior to when we did it," he said. "It's given a life preserver to the association that was in dire straits. There are some owners who owe as much as $16,000."

For the story, see Condo associations gain weapon to collect fees from deadbeats.

Go here for other posts on blanket receiverships.

(1) The story states that the blanket receivership order allows the association to include all delinquent units in one filing, and that similar blanket receivers have been approved in just a few Florida jurisdictions. "It's up to each judge to interpret the statutes in each case," one lawyer said. "But, it's a new strategy, a new argument, novel and it is catching on."

Condo Association Trend Seeking "Blanket Receiverships" In Attempt To Avert Financial Disaster Begins To Take Hold In Central Florida

In Central Florida, the Orlando Sentinel reports:

• Condominiums in Central Florida are cutting back on things like tennis-court lights and are seeking help from the courts because so many condo owners are abandoning their fast-depreciating units and refusing to pay required maintenance fees. "It's a major crisis right now," said Bill Raphan, a supervisor with the state Division of Condominiums.

• Desperate condo associations are starting to seek court-appointed receivers — a trend that started in South Florida but has spread to this part of the state. It's a sign of how dire the situation is, said Donna Berger, executive director of the Community Advocacy Network, a nonprofit group representing more than 1,500 condo and homeowner associations. "The current economic downturn and foreclosure crisis have placed many associations on the brink of disaster," she said.

***

• Last week, state Circuit Judge Alan A. Dickey appointed Seth R. Heller and Co. to collect fees at the Villas. More than 60 percent of the 294 unit owners are delinquent, with individual tabs of as much as $11,000 for some owners of multiple units. Total unpaid fees: $720,000. If those condo owners or their tenants don't pay up soon, they will be held in contempt of court and at some point could face arrest. "Without this order, the association was really facing financial collapse," said Fort Lauderdale lawyer Stuart Zoberg, who represented the Villas board. "And all along you have these landlords laughing, because they are collecting rents, and they still siphon off as much money as they can from their renters without paying association fees."

For more, see Condos sic judges on owners for back fees.

In a related post, see Florida Appeals Court OKs "Blanket Receivership" In Condo Association Battle Against Rent Skimming Unit Owners, Deadbeat Investors.

Florida HOAs Begin Looking To "Reverse Foreclosure" Tactic To Stick Lenders With Title To Unwanted, "Upside Down" Condos

In Miami, Florida, The Miami Herald reports:

• Revenue-starved condominium and homeowners associations struggling to keep the taps running and the lawns mowed have found a novel way to squeeze money from units that don't pay what they owe. It's called a reverse foreclosure, a tool that can force banks to pay association maintenance fees when unit owners don't.

***

• Here's how a reverse foreclosure works: When a home or condominium owner stops paying the mortgage, the bank files a notice of foreclosure to safeguard its stake. After that, some banks deliberately delay the process of taking back the property. They take their time because, if it's like most South Florida properties, the delinquent unit is worth less than the outstanding mortgage. In the lingo of the trade, such units are "upside-down.'' Banks are in no rush to have upside-down properties on their books.

• Delaying foreclosure can be a nightmare for homeowner and condo associations. When people stop paying the mortgage, they invariably stop paying their maintenance fees. As long as a foreclosure is in limbo -- and the process can take years if a bank wants to slow things down, associations say -- unpaid maintenance fees pile up.

• Under a reverse foreclosure, the association files its own foreclosure notice and takes title, which is its right after the homeowner stops paying maintenance fees. The association can't sell because of the bank's lien. But it can renounce its claim on the property in court and ask the judge to give the title back to the bank. Then the bank has to pay the fees. It's a hardball tactic, but condo and homeowner associations say they have been forced to resort to it because the Legislature, beholden to lenders and their lobbyists, refuses to make the banks take over the units and cover the unpaid bills.

For more, see Desperate condo, homeowner groups given new way to grab overdue fees (A new maneuver called reverse foreclosure helps condo and homeowner associations collect badly needed overdue maintenance fees).

In a related story, see Blanket receivership: Another way to get someone to pay overdue fees (Blanket receiverships are still another new method to give condos desperate for maintenance money a chance to collect what is owed).

Struggling SW Florida Condominium Association Seeks Blanket Receivership Appointment In Effort To Stay Afloat

In Naples, Florida, the Naples Daily News reports:

• Some renters and foreclosed-on squatters at South Bay Plantation in East Naples may soon find red stickers on their front doors, warning that a receiver has been appointed for the struggling property and they have 48 hours to call. If they don’t, their locks will be changed. It’s a tactic the struggling 240-unit community’s new manager, S3 Association Management LLC of Davie, plans on using if Collier Circuit Judge Cynthia Pivacek grants South Bay Plantation Condominium Association’s emergency motion to appoint a receiver.

***

• South Bay Plantation’s motion details a dire situation: Of the 240 units, only 110 sold and now only 35 diligent homeowners continue to pay monthly HOA fees. [...] The development’s monthly operating costs and expenses total about $34,039, but the association is collecting only $17,000 and is owed roughly $158,000 in delinquent assessments. “The increased burden on those unit owners who have been sharing the financial burden could result in a domino effect, forcing unit owners who have been making timely payments to potentially become delinquent and also face foreclosure proceedings,” the motion says.

For more, see South Bay Plantation residents may get locked out of homes.

Struggling Florida Condo Associations Continue Requesting Court Orders For Blanket Receiverships In Effort To Stay Financially Afloat

In Palm Beach County, Florida, the Palm Beach Post reports:

• With 50 percent of its owners owing a total of more than half-a-million dollars in overdue maintenance fees, a suburban West Palm Beach condo association wants to seize control of delinquent units, bypass owners when it comes to rent collection and possibly even rent units through a third party. The move by the Palm Beach Grande Condominium Association(1) is a desperation measure as coffers dwindle to amounts unable to support the association through the end of the year, according to a petition filed in Palm Beach County Circuit Court.

***

• Since 2007, nearly 160 of Palm Beach Grande's 304 units have faced a foreclosure filing, according to Condo Vultures, a Miami-based consulting company. About $675,000 is owed Palm Beach Grande's association.

***

• Now, faced with hundreds of delinquent units, "blanket receiverships" are becoming more common. Recent court decisions in Miami-Dade and Broward counties have granted blanket receiverships, allowing a court-appointed representative to directly collect rents to pay off maintenance fees. [...] The new legal tool appears to be moving north with one Palm Beach County property management company saying it expects about five condo boards it represents to file receivership requests within the next 30 days.

For the story, see Condo association says half its owners are behind on a total of $675,000 in fees.

(1) Reportedly, Palm Beach Grande was a rental apartment complex until 2006 when it converted into a condo.