By Michael J. Gelfand, Esq. / Published May 2021
What happens if a claim of lien contains the wrong assessment amount? Does it matter if the mistake is tiny or an insignificant amount? Must the error be larger, significant, and make a difference?
Recently, the implication of a claim of lien overstating in the amount of unpaid assessments was addressed by a Florida appellate court in a manner that would impact condominium as well as homeowner associations. In Pash v. Mahogany Way Homeowners Association Inc. 46 Fla. L. Weekly D 247 (Fla. 4th DCA, January 27, 2021), the facts indicate that the association sued an owner to foreclose its claim of lien alleging the owner failed to pay homeowners association assessments. The association sent a demand letter asserting that three quarters of assessments at $113 per quarter was due, plus costs, interest, and attorney’s fees.
However, the association then recorded a claim of lien against the property showing the amount of assessments due as $370 per quarter, over three times larger than the demand letter. When the association filed its complaint to foreclose, the assessment amount was corrected to reflect the demand letter’s $113 per quarter.
The owner defended against the foreclosure, arguing that because the association overcharged the amount of the assessments due, the association failed to comply with express text of the Homeowners’ Association Act, Section 720.3085(1)(a), Fla. Stat. (2018), which requires a claim of lien to include “the assessment amount due.” The owner also disputed whether the association provided the owner budgets and notice of assessment amounts due in a timely manner. The association agreed that it made a mistake in calculating the assessments on the claim of lien but argued that it corrected the mistake when it filed its lien foreclosure action. The trial court granted summary judgment for the association.
Although the Florida appellate court reversed the summary judgment for the association, the reason was not based on the mistake in the claim of lien. The court explained that the Declaration required the association to provide each homeowner with an annual budget setting forth the quarterly assessments and written notice with the due dates. Because the association failed to provide proof that it complied with these requirements, the court found that genuine issues of material fact remained to be resolved.
As for the mistake in the claim of lien, the court found that the mistake did not invalidate the claim of lien. “Nothing in §720.3085(1)(a) suggests that the claim must be free of error for it to serve as an otherwise valid claim of lien,” the court stated. “[W]e do not interpret §720.3085(1)(a) as invalidating a claim of lien simply because it contains a mistake or overstatement in the amount of unpaid assessments.” In other words, just because a claim of lien contained an error in the amount of the assessments, it does not mean that the claim of lien is invalid.
The decision not to invalidate a lien because of an error corrected by the time of filing suit appears practical, especially considering how easy it is for a mathematical error to pop up! Nevertheless, there may be a limit to a court’s patience, dependent upon the circumstances. A limit to providing an association the benefit of the doubt may occur if an owner suffers a loss because the owner relied upon an association’s inaccurate lien communications. It is noted that this seemingly practical ruling was not unanimous; one judge issued a vigorous dissent raising the prospect of other courts weighing in!
The decision is also notable for reversing a foreclosure when an association failed to prove compliance with the assessment adoption process required by the governing documents, specifically in this case delivery of the budgets and of the amounts due. Thus, associations, homeowners and condominiums, should confirm compliance with their governing documents’ budget and notice processes.
The best course of action is to ensure that association ledgers correctly reflect the amount owed. Demand letters and claims of liens should also properly reflect the assessment amounts.
Sometimes an association must immediately access a unit, possibly to investigate a water leak or just perform reoccurring pest control. What happens if an owner denies access to their unit? Can an association proceed immediately to court to seek an injunction ordering the owner to allow access, or must the association first engage in alternative dispute resolution processes, a step that takes time and adds expense?
In a ruling that could affect Florida homeowners as well as condominium associations, a Florida appellate court recently ruled that in a dispute between a unit owner and a condominium association, a court action could proceed with the association’s request for an injunction to access the unit. The facts in Aquarius Condominium Association Inc. v. Goldberg, 46 Fla. L. Weekly D 246 (Fla. 4th DCA, January 27, 2021), indicate that the association filed a petition for mandatory nonbinding arbitration in the Department of Business and Professional Regulation to secure access to an owner’s unit for maintenance and repairs. However, the same day that the petition was filed, the association also requested that the arbitrator abate the arbitration, or place on hold the petition, so that the association could seek an injunction in court in order to immediately access the unit. The arbitrator granted the request to abate the arbitration for three months.
Thereafter, the association sued the unit owners for an injunction to compel access to the unit, alleging that the association needed to access the balcony for a 40-year recertification of the condominium property. The unit owners denied access, claiming that the balcony had already been demolished. The parties mediated the dispute, resulting in a settlement agreement.
After the association filed a motion to enforce the settlement agreement, the owners filed a motion to dismiss the case, arguing that the parties had not engaged in statutorily non-binding pre-suit arbitration before the association filed its lawsuit. The trial court granted the motion and dismissed the case.
The Florida appellate court disagreed and reinstated the case finding that the trial court had jurisdiction. “Nonbinding arbitration pursuant to section 718.1255 was a condition precedent to the filing of suit, not a matter of jurisdiction,” the court stated. “Having failed to raise the noncompliance with a condition precedent, as well as their continued litigation, they have waived it.”
The appellate court explained that the requirement of a “condition precedent” can be waived. Here, the association did file for non-binding arbitration before filing the lawsuit, although the arbitration was abated while the association sought the injunction in court. The owner’s response to the lawsuit did not challenge the association not completing arbitration, which constituted the waiver allowing the lawsuit to proceed.
This decision is significant because it shows that a Florida condominium association which needs to immediately access a unit may be able to sue an owner who denies access without first engaging in nonbinding arbitration which could possibly delay the access. Notably, the Florida Homeowners Association Act mandates pre-suit mediation for which the rationale of this decision may also apply.
Michael J. Gelfand, Esq.
Senior Partner, Gelfand & Arpe, P.A.
Michael J. Gelfand, Esq., the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar Board Certified lawyer in Condominium and Planned Development Law and in Real Estate Law, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is a past Chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at firstname.lastname@example.org or (561) 655-6224.