Revisiting Association Collections Strategies in Light of COVID-19’s Ongoing Economic Impacts

Revisiting Association Collections Strategies in Light of COVID-19’s Ongoing Economic Impacts

By Jonathan S. Goldstein & Rebecca Newman Casamayor / Published March 2021

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The year 2020 was financially difficult for many, and its detrimental impacts could last through 2021, if not beyond. While there is hope on the horizon in the form of vaccinations and eventual herd immunity, it will undoubtedly take time to restore financial stability.

     Many community associations have suffered or will suffer a loss of expected revenue as their individual members struggle to pay monthly assessments. Unsurprisingly, there has been an increase in delinquencies, likely to be accompanied by an increase in bank foreclosure filings and bankruptcies. This has, in turn, led to an increase in debt collection efforts.

     These forces create a looming risk that associations will again have to start writing off significant “bad debt.” While these challenges threaten to echo certain aspects of the last financial crisis, COVID-19 realities are very different, and in some cases require different solutions. For example, because of COVID-19, further eviction and mortgage foreclosure moratoriums are likely, reopening amenities may involve increased expenditures because of reopening requirements, and the housing market thankfully has not collapsed at time of writing.

     The following are some examples of issues that associations should review when determining if their collections strategies need updating: 

  • Does the association have a clear and evenhanded collections policy?
         Collections policies can address things like whether, when, and how a delinquent owner will receive a past-due reminder; when an owner’s account will be referred to the association’s legal counsel; if and how the association can charge late fees under its governing documents; when assessments may be accelerated for the remainder of a fiscal year; whether and when the association will seek to suspend voting or common element use rights for delinquent owners; and whether and when the association will seek to collect rent from a tenant when the landlord owner is delinquent.
  • Is it advisable (and possible) to amend the governing declaration to bolster the association’s collection rights?
         Sometimes an association may not realize that its own governing documents are working against it. This often comes up when a mortgage is foreclosed against a property within the association, and the association expects to be entitled to the statutory “safe harbor” (i.e., §718.116(1)(b) or 720.3085(2)(c), Fla. Stat., as applicable), but the declaration actually says that the mortgagee owes nothing to the association. Similarly, when a third-party bidder takes title after a foreclosure of the first mortgage, the current statutory framework provides for the association to be paid all past due assessments of the prior owner, but some associations’ governing documents may provide the opposite. This can potentially be remedied through a declaration amendment, which should be coordinated with legal counsel, as it will require specific votes and approvals from owners and possibly also mortgagees.
  • Does the association have authority to demand that a tenant’s rent be paid directly to the association rather than to the owner?
         Chapters 718 and 720 both provide a mechanism for an association to collect rent from a tenant to pay down the owner’s debt, after which the tenant goes back to paying the landlord owner directly. Arguably some associations do not have this statutory power to collect rent based upon the absence of “Kaufman language” to bring their declaration in line with the substantive provisions of Chapter 718 or 720 “as amended from time to time.” In that case, the association should consider whether it would benefit from amended declaration provisions providing the power to evict as attorney-in-fact for the landlord and/or a uniform lease addendum furnishing such powers.
  • Should collections efforts be coordinated with another association? 
         Many owners in condominium associations have a master association which is also owed assessments. Collections efforts can be coordinated between a master and subassociation to try to streamline the efficiency and effectiveness of the proceedings; however, it is important to keep in mind that one association’s debt may have priority over the other. Statutory changes over the years have provided that a junior association that acquires title is not liable for the unpaid accrued assessments of the senior association. However, there are still practical and legal issues to consider should one association foreclose before the other.
  • What moratoriums are placed on evictions and foreclosures, either locally or at the federal level through executive orders or possible legislation?
         It should be noted that some prior moratoriums on foreclosures applied only to institutional lenders and federally backed mortgages, and ultimately it was clarified that associations were excluded. If future moratoriums also exclude associations, this could provide the association with an opportunity to take title to a property through foreclosure and rent it to pay down the debt owed, with a delay before a first mortgagee could eclipse the association’s proceedings or title. Correspondingly, if eviction moratoriums are extended, associations planning to acquire title and rent the property may be stymied by delays in obtaining possession.
  • What is the potential value of the collateral, and are there outstanding taxes? 
         Unlike the housing market crash in 2009, properties currently facing foreclosure might still have equity (which could change). This reality may make it more palatable to foreclose on a property, or to wait while a lender forecloses, based upon the greater likelihood of a foreclosure sale to a third party. Additionally, these market dynamics suggest that fewer debtors are giving up on properties “underwater,” and those debtors therefore have far more incentive to prevent a foreclosure. Finally, outstanding taxes should be monitored to prevent bad debt arising from a tax deed sale.
  • If the association acquires title to the unit, will a subsequent purchaser be liable for the prior owner’s debt?
         Depending on what version of the statutes applies and where in Florida an association is located, there are various potential ramifications in relation to the previous owner’s debt if an association acquires title to a unit. While statutory amendments have provided that the association can recover the previous owner’s debt from a future owner but not debt accruing during its own period of ownership, these changes will not always apply, depending on a particular association’s governing declaration. Accordingly, associations should consult with counsel regarding the strategic implications of acquiring title if another foreclosure is pending or expected.

     Although many board members understandably do not want to sue their neighbors, the fact remains that associations must carry out their duties. In addition to collection of assessments from owners, it should be noted that associations also have options for saving money to make up for budget deficits due to COVID-19, including seeking membership approval to waive or reduce future funding of reserves, or to use reserve funds for other purposes. Further, associations should consider whether there is any federal relief available, whether it makes sense to borrow funds given currently low interest rates, and whether there are opportunities for other revenue (with proper authority under the governing documents, and in consultation with an accountant), such as monetization of websites and rentals or leases of things like parking spaces, storage units, docks, etc. The association’s board should reach out to its accounting team and legal counsel to discuss its collections and economic strategies. 

Jonathan S. Goldstein

Partner, Haber Law, P.A.

     Jonathan S. Goldstein is a Partner with Miami-based Haber Law, P.A. Goldstein’s practice areas include condominium and homeowners association (HOA) law, construction litigation, and commercial litigation. He can be reached at

Rebecca Newman Casamayor

Senior Associate, Haber Law, P.A.

     Rebecca Newman Casamayor is a Senior Associate with Miami-based Haber Law, P.A. She is an experienced commercial litigator with expertise in representing condominium and homeowners associations as well as general and business litigation matters.. She can be reached at For more information on Haber Law, call (305) 379-2400 or visit
     This article is for informational purposes and is not intended to be and should not be taken as legal advice.