Board Asks What It Can Do About Late Payments

Q: We have a condominium unit owner who has not paid dues in over a year. We would like to suspend their legal rights until they are paid up. May we do this? (M.L., via e-mail)

A: Section 718.303(4)of the Florida Condominium Act (the “Act”) provides that where a unit owner is more than 90 days delinquent in paying a fee, fine, or other monetary obligation due to the condominium association, the condominium association may suspend the right of the unit owner (or the unit’s occupant, licensee, or invitee) to use common elements, common facilities, or any other association property until the fee, fine, or other monetary obligation is paid in full.

However, this opportunity to suspend use rights does not apply to limited common elements intended to be exclusively used by that unit (for example, a storage locker assigned to the subject unit), the common elements needed to access the unit, utility services provided to the unit, parking spaces, or elevators.

Section 718.303(5) of the Act also allow the Association to suspend voting rights when an Owner is more than 90 days delinquent in the payment of any fee, fine or other monetary obligation. However, the delinquent amount must be more than one thousand dollars, and the owner must have been given “proof of such obligation” at least 30 days before the suspension takes place.

The general notice and hearing requirements of the Act do not apply to use right or voting suspensions imposed for delinquencies. However, the law does require that the suspensions be approved at a duly noticed meeting of the board and that the owner and other appropriate parties be given notice of the suspension by mail or hand delivery.

In addition to suspension of voting and certain use rights for non-payment of assessments, Section 718.112(2)(d) of the Act provides that if a person is delinquent in the payment of assessments on the date that candidacy notices are due (generally the 40th day before the annual meeting), that owner may not submit their name into nomination to run for the board. Further, pursuant to Section 718.112(2)(p) of the Act, directors who become delinquent in the payment of any monetary obligation due the Association, are deemed to have “abandoned” their board seats creating a vacancy to be filled according to law.

The statute also contains other miscellaneous rights that may be impaired due to financial delinquency. For example, Section 718.116(4) of the Act provides that if the declaration grants the association the right to approve leases, approval may be denied if the unit is delinquent on assessments at the time approval is sought.

As a general matter, however, a delinquent owner does not lose his or her legal rights other than as is authorized by the statute, and perhaps to some limited degree, the condominium documents for the association. For example, while these issues have never been explored in the Florida appeals courts to my knowledge, I do not think an association could prevent an owner from exercising records inspection rights due to assessment delinquency.

Particularly in smaller associations, a single delinquency can have an economic impact on all owners, and multiple delinquencies can be crippling. We saw this after the 2008 real estate meltdown. Therefore, it is not surprising that owners and board members in communities become concerned, and sometimes even angry, when others do not pay their share.

In addition to understanding what the association can and should do with delinquencies, it is equally important for the association to understand what it cannot or should not do. Debt collection is a highly regulated matter at both the state and federal level. There are a variety of statutes intended to protect consumers from perceived abuses, and some severe penalties for violation.

Some of these laws apply only to debt collectors, but some apply directly to the association as well. For example, the publication of “deadbeat lists” is generally considered a violation of state statute. My advice is to work with the association’s legal counsel to develop a written uniform collection policy which will be applied to all delinquencies, on a consistent basis, and without running afoul of the law.