Condominium associations have a slightly heavier hammer to wield against delinquent owners who rent out their units -- and now associations are being nailed with new court challenges.
Wading back in to a perennial battle between condo associations and owners, the 2011 Legislature affirmed that associations have the authority to collect full rental amounts from delinquent units that have been leased out by absentee owners.
"House Bill 1195 clarified that the full rent can be demanded, not just the [back-due] assessments. It's a more aggressive approach," said Donna DiMaggio Berger, a Fort Lauderdale attorney who specializes in condominium law.
This year's legislation built on last year's rent-collection law, which enabled associations to demand that rent payments go directly to them.
But in a state with tens of thousands of condo associations struggling with record foreclosure and delinquency rates, the battle over cash flow and personal property rights is intense and not always clear cut.
Now a Fort Myers condominium association and its management company have been sued by a corporation which owns eight units in the Windsor West Condominium community.
"TCR Holdings Inc. bought the units back in 2002 with the intention to rent them out. However, the company soon became delinquent on the properties, failing to pay the association while still maintaining tenants in the units," Berger relates.
When the condo association used the 2010 legislation to collect rent from the tenants, TCR filed suit on April 29 in the U.S. District Court in Fort Myers claiming that the rent-collection statute is unconstitutional.
It is unclear if the 2011 bill will put associations on any firmer footing, and Berger predicts that more legislative repair will be needed next year, no matter what the courts decide.
"Depending on how the cases are interpreted, this may require a 'demand-for-rent' committee so that complaints of due process are addressed," said Berger, a partner at the firm of Katzman, Garfinkel & Berger and head of the Community Advocacy Network, which represents more than 3,000 community associations.
Berger and other attorneys representing condo associations see "mounting frustration out there when [delinquent] owners are expecting neighbors to pay for their unpaid assessments."
In one of the more extreme cases, a condo association in Coral Springs seized two units and turned them into rental properties while the owner was in default.
Claudia Pinchasson has filed a lawsuit complaining that the association illegally took possession of her condos. Now she wants all the rent on the two units -- about $10,000 -- given to her, the Wall Street Journal reported this week.
Association officials said Pinchasson has wracked up more than $12,000 in unpaid dues and fees at the Spring West community.
Around the state, especially across South Florida, condo associations complain that slow action by banks is exacerbating the situation.
"The banks are letting these [struggling] properties sit, and it's killing the associations," Steven F. Cohen, of A&N Management in Boca Raton, told the Journal.
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Reach Kenric Ward at kward@sunshinestatenews.come or at (772) 801-5341.
