Get 2 months of free community web site hosting from Community123.com!
Tuesday, June 18, 2019
Get 2 months of free community web site hosting from Community123.com!
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Mix and Match Fines and Assessments in Florida?
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
GeorgeS21
(Florida)

Posts:1227


06/06/2019 9:09 AM  
Hi All,

I keep uncovering things I don’t understand and haven’t seen before - would appreciate your thoughts.

My current neighborhood (300 plus single family properties with recorded CCRs and.a PM) (not the voluntary HOA one I have a rental in and have posted so much about), has a process, administered by a property manager, wherein fines are levied (there is a hearing/fines panel per Florida 720), and if not paid become payable with the PM. When assessments are due, assuming the assessment is received, the assessment first pays off the fine, then becomes a lienable account payable.

Ex: Fines at $25/day grow to $600 and are not paid. When the $600 annual assessment is due and paid, the $600 reduces the $600 fine to $0, then the $600 that isn’t paid (the original fine) becomes lienable.

I may not have explained this well, but I think you get the point.

Apparently, this has worked for many years.

Thoughts?
SheliaH
(Indiana)

Posts:2518


06/06/2019 9:28 AM  
If it's effective, what's the problem?

We don't have fines in our community (because case law in this state doesn't allow it - yet), but when people owe delinquent assessments, the payments work in a similar way. the money is applied to the oldest account first, starting with the collection costs and attorneys fees, followed by the late fees and finally the original amount owed. rinse and repeat for the second oldest account and so on. Homeowners receive an itemized list on what's owed so if they pay the entire amount in one shot, that takes care of it.

All of this is money due to the association, so if people don't want to pay fines, they need to comply with the community rules and pay their assessments in full and on time. Our collection policy is sent to homeowners every year so they should understand how this works. This is also why HOAs who assess fines should have an appeals process when fines are assessed - it could allow for the fine to be suspended until the dispute is settled (if it goes in the homeowner's favor, the money could be refunded or credited to his/her account towards the assessment)
BarbaraT1
(Texas)

Posts:171


06/06/2019 9:33 AM  
So they apply any payments received to fines first, making the assessment delinquent, so they can lien for the unpaid assessment. It's certainly a way to generate income from fines. I wouldn't call it ethical.

Texas has a priority of payments statute disallowing this practice.
GeorgeS21
(Florida)

Posts:1227


06/06/2019 6:31 PM  
We have a Fines Committee and abide by all Florida Statute ... however, this practice surprised me because I had not considered it reasonable.

I want it to be legal and ethical.

This is Florida specific - I can’t find any priority process.
RichardP13
(California)

Posts:3595


06/06/2019 7:30 PM  
In California, we have a procedure in which payments are applied to. It is also built into our software.

Barbara calls it unethical, I call it, HIGHLY unethical. But, it's Florida and I can't do anything about it.

This is how California does it:

Civil Code §5655. Priority of Assessment Payments.
[Old: Civil Code §1367.1(b)]

(a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.

(b) When an owner makes a payment, the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it.

(c) The association shall provide a mailing address for overnight payment of assessments. The address shall be provided in the annual policy statement.

Been there, Done that
GenoS
(Florida)

Posts:2960


06/06/2019 9:06 PM  
GeorgeS21, there is a priority of payments received that's spelled out in FS 720.3085 (3)(c).

"Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment. A late fee is not subject to the provisions of chapter 687 and is not a fine. The foregoing is applicable notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The preceding sentence is intended to clarify existing law."

With the exception of saying a late fee is not a fine, there's no mention of fines at all. So if an owner makes a regular assessment payment but also owes for an unpaid fine my take is that the priority order in the statute must apply and if there's anything left over then perhaps it could be applied toward any fine(s). We'd probably ask our attorney before doing that for the first time.

I have seen plenty of CC&Rs that attempt to do an end-run around the statutory fining process by claiming that "fines" become "assessments" after a time. I think that's not legal but I'm no lawyer. As far as I know the issue hasn't been litigated. Or if it has I haven't seen any case citations or rulings.

The fining statute in FS 720.305 says, "A fine of less than $1,000 may not become a lien against a parcel. In any action to recover a fine, the prevailing party is entitled to reasonable attorney fees and costs from the nonprevailing party as determined by the court." Again, not a lawyer, but to my pea brain that's saying a fine of $1,000 or more may become a lien, but for anything less than $1,000 it can't be re-defined into some sort of "assessment"; collection must be pursued as with any other civil matter in court. What's typical is that unpaid fines sit there on the account and are settled when the property is sold. An astute buyer won't close on a property after being informed there are outstanding debts for which he could be held liable. Florida is one of those states where a new owner is jointly liable with the previous owner for outstanding moneys owed.
GeorgeS21
(Florida)

Posts:1227


06/07/2019 5:50 AM  
Geno,

Also, a bit different, but related issue - "720.305 (2) The association may levy reasonable fines. A fine may not exceed $100 per violation against any member or any member’s tenant, guest, or invitee for the failure of the owner of the parcel or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association unless otherwise provided in the governing documents. A fine may be levied by the board for each day of a continuing violation, with a single notice and opportunity for hearing, except that the fine may not exceed $1,000 in the aggregate unless otherwise provided in the governing documents. A fine of less than $1,000 may not become a lien against a parcel. In any action to recover a fine, the prevailing party is entitled to reasonable attorney fees and costs from the nonprevailing party as determined by the court."

This has always been a bit confusing for me ... couple of causes for the confusion (btw, our docs specify $25/day and a max of $1000):

1. What if there are two separate fining issues - so, each day $100 is accrued on each fine, so that at day six the TOTAL becomes $1200 - and is over the $1000 limit in 720.305 (2)?
2. In the case of a single fining issue - "...may not EXCEED $1000 in the aggregate ..." so, this means $1000 maximum ... and if $1000 it is greater than "A fine of LESS than $1000 may not become a lien..."

To be clear, my interest in this is to abide by Florida Statute, and at next levels down to abide by the HOA's CCRs, R&Rs, and Bylaws. By doing it top down, I was hoping to avoid those tendencies to be "creative" by doing things like using assessments to pay fines and then liening for the assessment.

I have been on this Board for a year, but, I am increasingly finding that the Board and officers depend on the PM to such a great extent they don't think or research themselves ... so, when the PM says it is in Florida statutes the Board tends to just roll over and agree because they don't want to do the work to actually know.
EdC5
(Florida)

Posts:83


06/07/2019 6:32 AM  
Posted By RichardP13 on 06/06/2019 7:30 PM
In California, we have a procedure in which payments are applied to. It is also built into our software.

Barbara calls it unethical, I call it, HIGHLY unethical. But, it's Florida and I can't do anything about it.

This is how California does it:

Civil Code §5655. Priority of Assessment Payments.
[Old: Civil Code §1367.1(b)]

(a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.

(b) When an owner makes a payment, the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it.

(c) The association shall provide a mailing address for overnight payment of assessments. The address shall be provided in the annual policy statement.




In Florida it is just the opposite (Chapt. 720.3085 (3)(b)): Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment. A late fee is not subject to the provisions of chapter 687 and is not a fine. The foregoing is applicable notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The preceding sentence is intended to clarify existing law.

Edward J Cooke, CMCA, LCAM
GenoS
(Florida)

Posts:2960


06/07/2019 12:36 PM  
Posted By GeorgeS21 on 06/07/2019 5:50 AM
This has always been a bit confusing for me ... couple of causes for the confusion (btw, our docs specify $25/day and a max of $1000):

1. What if there are two separate fining issues - so, each day $100 is accrued on each fine, so that at day six the TOTAL becomes $1200 - and is over the $1000 limit in 720.305 (2)?
2. In the case of a single fining issue - "...may not EXCEED $1000 in the aggregate ..." so, this means $1000 maximum ... and if $1000 it is greater than "A fine of LESS than $1000 may not become a lien..."

To be clear, my interest in this is to abide by Florida Statute, and at next levels down to abide by the HOA's CCRs, R&Rs, and Bylaws. By doing it top down, I was hoping to avoid those tendencies to be "creative" by doing things like using assessments to pay fines and then liening for the assessment.

I have been on this Board for a year, but, I am increasingly finding that the Board and officers depend on the PM to such a great extent they don't think or research themselves ... so, when the PM says it is in Florida statutes the Board tends to just roll over and agree because they don't want to do the work to actually know.

Some of it is confusing to me, too. And we just went through the exact same scenario with our property manager. The board figures he knows what he's doing and they just go along with it. I should say went along with it because we got rid of the first PM we've had in over 20 years after only 5 months this year. We're back to being self-managed. Mis-managed is more like it.

The plan was to have the management company be "the bad guy" where violations were concerned. Now we have to do that ourselves, too and that's not going to be pretty. We've been trying to get a fining policy and procedure in place for almost 3 years now. The proposed amendment to our CC&Rs authorizes fines up to $500 a day may be levied with a maximum of $5,000 in the aggregate.

For us, with 100 homes and about 25 part-time residents, my thinking has evolved to the point that I don't think the statutory fining requirements will ever be feasible here. A few of us like-minded individuals got together a few weeks ago and we couldn only identify 2 likely candidates for a 3-person fining committee.

Scenario 1: I foresee a fining committee upholding a fine against one homeowner and then there will be no fine against a different homeowner with the exact same violation simply because it wasn't possible to get enough volunteers together to be on the committee a few months later.

Scenario 2: The same as 1 except that the second fining committee votes against the fine for the second homeowner.

Two homeowners with identical violations. One gets fined, the other does not. Isn't that selective enforcement? In these cases the board tried to fine both equally but the fining committees were flaky and inconsistent. The board would have to deal with any backlash from that. The statute doesn't even remotely begin to address some of these hypothetical problem cases.

OK too long already
JohnC46
(South Carolina)

Posts:8347


06/07/2019 1:15 PM  
I was under the impression there were very few states that allowed an association to apply dues payments to any outstanding fines before applying it to dues. This would mean a lot in SC as we cannot foreclose for unpaid fines but we can for unpaid dues.

When I asked our lawyer about this (a major HOA law firm), he said he was unaware of anyone in SC trying such (applying dues to fines) and he would not like to test it in court unless being paid for the test. We dropped the conversation.
GenoS
(Florida)

Posts:2960


06/07/2019 8:01 PM  
I'm just gonna leave this PDF here. It's a 1-page excerpt from the CC&Rs of another HOA in my county. I'm pretty sure Article X, Section 4 runs afoul of Florida law. It's from 2009 and there have been no amendments to these CC&Rs so it's current. These things just don't get challenged in Florida, at least, and this is one example of many HOA CC&Rs I've come across that try to get around the restriction that a fine may not become a lien.

Attachment: 1671118271.pdf

GeorgeS21
(Florida)

Posts:1227


06/07/2019 8:09 PM  
Geno,

I agree - they imagine they have power far in excess of Florida statute.
JohnC46
(South Carolina)

Posts:8347


06/08/2019 10:22 AM  
Our Covenants grant the HOA a Lien:

All assessments....and other charges including fines, etc.....shall be a charge on the land and shall be a continuing lien upon the lot against which each assessment is made in favor of the Association and the Association shall be entitled to file a document evidencing such lien in the land records of the county in which the lot is located.

By signing/agreeing to the Covenants your grant the HOA a lien.

GenoS
(Florida)

Posts:2960


06/08/2019 11:55 AM  
A lien exists in Florida for unpaid assessments. The only question is whether to record it or not when an owner falls behind. Virtually every HOA has the power to lien for non-payment of assessments. It's the one power that gives the association any teeth. It's also what makes it relatively "easy" for associations to obtain loans.
GeorgeS21
(Florida)

Posts:1227


06/14/2019 8:04 PM  
Thanks, All.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Mix and Match Fines and Assessments in Florida?



Get 2 months of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement