BLG's Monthly Newsletter - April 2014

Case Law Update - Bermuda Dunes Condominium v. Bank of America

By Candice Gundel, Esq.

Bank of America pays Association in full for 4 years of past due assessments, fees, and costs.  On March 7, 2014 the Fifth District Court of Appeal in the State of Florida issued their opinion in Bermuda Dunes Condominium v. Bank of America.  The case centered on Bank of America’s liability for assessments to the Bermuda Dunes Condominium after the bank had acquired title to the unit through a mortgage foreclosure. 

 In Florida the purchaser of a property that is delinquent in assessments to the condominium or homeowners association is jointly and severally liable with the previous owner for the delinquent amounts.   The only exception to this liability is for foreclosing banks and requires that the bank meet specific criteria to qualify for limited liability.  Banks who acquired title to a property through foreclosure have aggressively demanded that they receive the benefit of the narrow liability exception that is commonly referred to as “safe harbor.”   This liability exception may reduce a bank’s liability to the lesser of 12 months of past due assessments or 1% of the original mortgage amount. 

 At Business Law Group, we have spent years fighting the banks to help community associations throughout Florida collect the maximum amount.  The opinion issued by the Court in Bermuda Dunes is the result of years of litigation and a significant win for condominium and homeowner associations throughout the state.

 In the Bermuda Dunes case, the mortgage on a property had been assigned multiple times and eventually foreclosed.  When the foreclosure was completed Bank of America acquired title to the unit and claimed they only had to pay a reduced amount under the limited liability exception, “safe harbor.”  However, according to the recorded assignments of mortgage Federal Home Loan Mortgage Corporation a/k/a Freddie Mac, not Bank of America, was the owner of the first mortgage. 

 Our firm recognized that Bank of America was not entitled to the limited liability exception and demanded payment in full.  Bank of America refused to acknowledge their full liability and our firm litigated the issue at both the trial court level and on appeal.  On appeal, the Court ruled that the Condominium Association was correct and that Bank of America had failed to prove that it was the owner of the first mortgage at the time of foreclosure.  Bank of America paid all past due assessments, interest, late fees, costs, and legal fees.

 What does the Bermuda Dunes case mean for your community?  When a bank acquires title to a property through foreclosure, your association may be able to collect more than the narrow liability exception, “safe harbor,” amount of 12 months past due assessments or 1% of the original mortgage.   Each case is unique and requires a legal professional to research and review the mortgage and mortgage foreclosure to determine the amounts the Association is entitled to collect.  The unit owner is jointly and severally liable for all amounts until they can prove otherwise.  Don’t let your community get bullied by banks, every penny counts.