Mortgage Foreclosures: Assessments Means Assessments, Nothing More

Mortgage Foreclosures: Assessments Means Assessments, Nothing More

By Michael J. Gelfand, Esq. / Published July 2016



By now, everyone should know that when a bank obtains title after a “normal” first mortgage foreclosure, an association is limited by statute as to what it can recover. But does this amount include attorney’s fees, interest, and costs? Clearly, the answer is no!

In yet another nail into the coffin of the “expansive” view of the “safe harbor” provision of the Homeowners Association Act, a Florida appellate court recently ruled that a lender which obtains title after its mortgage foreclosure is not required to pay anything more than delinquent assessments. In Catalina West Homeowners Association, Inc. v. Federal National Mortgage Association, 41 Fla. L. Weekly D 810 (Fla. 3rd DCA, March 30, 2016), two homeowners associations issued estoppel letters seeking to collect from FNMA after FNMA obtained a certificate of title in its foreclosure action, not only assessments, but late charges, violation charges, costs, and attorney’s fees.

FNMA challenged the associations’ estoppel letters by arguing that the amounts other than assessments violated the “safe harbor” protection of the Homeowners Association Act. The trial court granted judgment for FNMA, finding that the safe harbor provision barred the associations from seeking interest, late fees, attorney’s fees, court costs, and other charges.

The Florida appellate court agreed with the trial court’s decision and FNMA. The appellate court pointed out that the safe harbor provision provides that “the liability of a first mortgagee … shall be the lesser of … unpaid common expenses and regular periodic or special assessments” that came due during the past 12 months or one percent of the mortgage. The court notes that the plain language of the statute does not include amounts for attorney’s fees, costs, and interest. The court stated:

     Given the unambiguous language of the statute, we must conclude that if the Legislature intended to include attorney’s fees, costs, interest, or other charges as part of the first mortgagee’s liability, it would have included any one or more of those items in the safe harbor provision.

This case highlights the importance of properly preparing estoppel letters for a lender taking title to a parcel after the foreclosure of a mortgage held by the lender. Even though some pundits may still claim that an association can recover all of its attorney’s fees, costs, and interest, this is plainly not so. Moreover, if you follow that path, you will likely spend more money on appellate costs when the bank takes you to court.

Covenants: The Unintentional Consequences of Extinguishing Easements

It is not uncommon to find in community association declarations the granting of utility easements. What happens if an association amends its documents and the utility easement language is inadvertently omitted in the “new” documents?

Litigation follows! This led a Florida appellate court to recently address the issue of whether language omitted from an amended declaration extinguished an FP&L utility easement authorizing the installation of smart meters on the outside wall of a single-family residence. The facts in Blinn v. Florida Power & Light Company, 41 Fla. L. Weekly D 676 (Fla. 2nd DCA, March 16, 2016), indicate that in 2000, Blinn bought a residence which had eight electric meters affixed to the exterior wall of his residence. The meters were owned and maintained by FP&L, and the association owned and maintained the equipment supporting the meters.

The residence was subject to a declaration of covenants which included a perpetual utility easement. In 2007, the association recorded an amended declaration which replaced the original declaration, but the amended declaration did not include the utility easement language. FP&L replaced the electric meters with smart meters in 2011, but left the original supporting equipment on the wall. Thereafter, Blinn sued the association and FP&L for trespass.

After FP&L asserted it had a perpetual utility easement and acted under the authority of a tariff, Blinn dismissed FP&L from the lawsuit. Nonetheless, the trial court awarded FP&L attorney’s fees, finding that Blinn knew that there was an easement that gave FP&L the right to put up the meters.

The Florida appellate court reversed the trial court’s award of attorney’s fees. The court noted there was no record that FP&L was a successor or assign of an easement holder. The court also noted that there was an arguable issue that the original declaration easement did not survive the amendment. Finally, the court noted that FP&L failed to show that it was the owner of the utility easement. “The issue of whether FP&L had a utility easement that authorized the installation of eight smart meters on Blinn’s single-family residence was arguably supportable under the facts and law and was not frivolous,” the court explained.

This decision highlights the dangers of amending association documents without care. It is particularly important to take care against extinguishing easements unintentionally! Contact your association’s counsel if you have any questions regarding the existence of an easement if your documents have ever been amended.


Michael J. Gelfand, Esq.

Senior partner of Gelfand & Arpe, P.A.

Michael J. Gelfand, the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and how to effectively achieve those goals. Gelfand is a Florida Bar Board Certified Real Estate Lawyer, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is the 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 or (561) 655-6224.