FLORIDA COMMUNITY ASSOCIATION COLLECTIONS GUIDE

Welcome to Florida

With over 48,500 condos, HOAs and co-ops, the state of Florida has the second-highest number of common interest realty associations in the country, exceeded only by California. According to CAI, An estimated 9.5 million Florida residents live in a community association.

So, it's not surprising that Florida is also one of the better-regulated states when it comes to community association collections. And while regulation can be good, it can also be confusing at times.

Unlike other states with a single set of laws to govern community associations, Florida has a unique set of laws for each association type (Condos, HOAs, and Co-Ops.) They don't always match. Sometimes they even conflict. Maybe a lot of times.

Even your association type may not be what you expect! for example, your townhome association may be either an HOA or a Condo, but if your community association has mobile homes, it may be a co-op.

All that is to say, before you read anything on this page about the laws governing Condo and HOA collections in Florida, make sure you have read the governing documents for your association. It really does make a difference!

In addition to the Federal and State laws restricting collection practices, The Statutes for your community association type will dictate collection procedures, requirements and restrictions.

As a general rule, neither your management company or board members should attempt to make contact with delinquent homeowners in an attempt to collect the debt, beyond the initial courtesy letters. You need an attorney or a licensed collection agency to collect on your behalf.

FL Condo Collections Guide

Board Member’s Guide to Condo Collections In Florida

Does your board end up writing off large sums of bad debt each year? If so, you need a better approach to collections for your community association!

This guide will provide some insight as to what a board of directors can do to protect the property that you have volunteered to govern.

Florida Collection Laws

Yes, aside from the Federal Fair Debt Collection statutes Florida has its own laws regarding collections. The law provides a list of prohibited practices at §559.72. The Florida law provides for the right of consumers to sue an offending party or parties for the greater of actual damages or $1,000, plus costs and attorneys fees.

Although Florida is a Homestead State, debts owed to HOAs and Condos are considered as consumer debts. HOAs can foreclose on a property. To understand the laws better for Florida HOAs please refer to Florida §720.3085 and for Condos 718.116. Also, you may be guided by your own governing documents.

No, but that does not mean that a management company cannot be in violation of the collection statutes. Collections are heavily regulated and anybody who attempts to collect debts should know what they are doing. Specifically in Florida a Management Company and an association got itself into deep water as a result of the court determining that they were acting as debt collectors. See the case in the United States Court of Appeals for the Eleventh Circuit Agrelo v Affinity Management

An HOA can collect as much as is legally owed to them in fees, violations, special assessments, administrative costs, and legal fees.

As long as money spent is in the budget and/or approved by the board of directors it can be spent on any improvements or maintenance that is required by the association.

An association should always try their very best to to contact a delinquent owner to advise them regarding what is owed. Every owner is entitled to see their ledger and know how much they are owed. An owner may request their ledger at any time and a HOA should be very willing to provide it to them.

Once a property has gone through probate and the court has decided who is the owner all the past due fees are due and payable to the HOA unless the governing documents have a provision that says the debt rolls over to the association.

First let us distinguish between a bank foreclosure and an association lien foreclosure. 

A Bank Foreclosure requires the lender (and it does not have to be a bank to pay the association the lessor of 12 months or 1% of the first mortgage amount). This is known as Safe Harbor or the Statutory Cap. Some may call this a super lien but in reality it is not the association’s lien that is partially in front of the bank’s/lenders lien it is hard coded in the statutes 720 & 718.

Also in the case of Bank foreclosure if the bank brings the property to an auction and there is a surplus the association has a right to petition the court for the amount that is owed to them from the surplus funds.

Finally, a bank foreclosure does not extinguish the debt that is owed to the association and the association has the right to pursue the old owner in court for a monetary judgment to recover this debt. It may not be a secured debt but it is surely collectible unless the governing documents say that the debt owed to the association rolls over to the association.

Foreclosure should be the last desperate attempt to recover the association’s money. An HOA should consider a merit based collection agency to recover it’s delinquent money before moving to put people out of their homes.

The old fashion way is to have the management company send a few courtesy letters to a delinquent owner and then send the file to the attorney for collections. Some boards of directors and managers will tell you that “it has always been done this way” but “the times they are a changing.”  HOAs can add a new link to the “value chain” in its operations by sending delinquent owners to merit based collection agencies who specialize in collections for HOAs and Condos.

The best way to handle collections for HOAs is to engage the owners and be armed with all the information you can acquire. Know the equity in the unit, read and understand the governing documents, find out where the owner is and then begin to engage in the collection efforts.

Once again, this is a very heavily regulated industry so this should be done by professional and licensed companies. Once you engage with an owner and work with them you would be surprised to see that most of them will cooperate and come to the table.

It’s not 2008 where nobody had equity in their properties and were willing to lose them because they had no value. People will pay and for the most part people want to pay. You just have to ask them and work with them.

By post petition assessments we are talking about a bankruptcy and the answer is absolutely yes. The board of directors has a fiduciary duty to collect these assessments and if the individual is not in bankruptcy there is nothing legally stopping them from the collection of delinquent assessments.

Some attorneys are of the opinion that the statute of limitations may apply (five years) others do not. However, some attorneys believe that each missed assessment constitutes a new cause of action on the entire balance thereby tolling the debt.

No. An owner is an owner no matter what state they come from. There is no difference between an out of state owner from a collections perspective.

A HOA and Condo must be a properly registered corporation and up to date on all of their state and federal filings.  If a HOA or condo has not had legally noticed budget meetings that could make collections more difficult so it is important that a community association be properly governed.

Yes, one must look to the governing documents to see if the association can charge late fees. If the governing documents are silent on late fees then they cannot charge them. However, there is also a limit on late fees. Late fees up to the greater of $25 or five percent of the past-due installment can be charged in Florida.

Regarding late interest if the governing documents are silent the association can charge the maximum allowed by law which is 18% as of the writing of this document. If the governing documents prescribe a late interest rate then that is the maximum a HOA or Condo can charge.

If the file has not gone to the attorney it is advisable to contact the manager or treasurer of the association to get a copy of the delinquent ledger. Then review the ledger and if you can prove that you made payments that were not applied advise the management company.

If the file has been sent to a collection agency the law requires that the collection agency give the debtor 30 days to dispute the debt and just as mentioned above

How The Future Collects

Secure Delinquencies

Traditionally a board of directors will have their management company send a delinquent file to an attorney for collections. The question is: Are attorneys collecting or merely foreclosing on your neighbors property? Are you receiving checks from your attorney from delinquent owners or titles to properties that you have to then monetize?

HOA collections should be about recovery, not punishment. At Axela Technologies we keep our eyes on the prize, and our only goal is to recover every cent that is owed to your association, period.

Advanced Technology

Collections is traditionally an outdated industry, relying on phone calls and threats to get the job done. At Axela, we believe that ethical collections is not only possible, but necessary if we are to succeed.

So we have brought our collections operation into the modern age with email, SMS, transparent reporting, and recorded calls our clients can review online. On the back end, our process relies on information gathering and prediction algorithms that help us determine the best way to approach each individual case, making sure we have access to all the facts.

Human Connection

Delinquent homeowners are real people with genuine problems that need to be addressed. We never forget that we are dealing with people’s homes and their very lives. 

Even in this digital age, the value of a real live human being cannot be underestimated. We combine our advanced technology with a human touch to construct a resolution that serves both the homeowner and the association. We do this by engaging them, listening to them, and helping them get on the right track. It’s good for the membership and great for your community association.

Why AXELA?

Axela Technologies provides no cost and no risk collections for community associations using best practice collections strategies, advanced proprietary technology, and highly trained customer service representatives. We are licensed in the state of Florida and compliant with the Fair Debt Collections Practices Act (FDCPA).

We are a specialized collections service which means a great deal in the community association industry. Understanding the nuances of how people fall behind in their maintenance fee payments and how to resolve their issues is a science and an art. At Axela Technologies we have what it takes to “move the needle” and recover 100% of what is owed to the association and the best part is that we are totally merit based. IF WE DON’T RECOVER YOUR MONEY WE DON’T GET PAID. A pretty simple concept but a bold promise at the same time.

Our proprietary software is second to none and we have the ability to keep the management and board of directors informed in real time 24/7. Our system never sleeps. The technology is fantastic and is only equaled by the people who will service your delinquent members and work with them to resolve their delinquency issues.

Schedule A Personalized Walk Through

In your free demonstration of Axela Technologies customer portal, you'll see how the process works for a delinquent owner and the transparency Axela provides into the collection process, with every action from our collections team being logged and documented for your review.