BLG Monthly Newsletter - November, 2015

Case Law Update - Venetian at Bay Park v. Fairhomes Quartz Property

by Candice J. Gundel, Esq.

In a recent appeal from the Hillsborough County Court the Appellate Division of the Hillsborough County Circuit Court reaffirmed that the plain language of a contract, in this case the Association’s Declaration, controls.

Fairhomes Quartz Property purchased a single family home within the Tuscany at Bay Park Homeowners Association at a mortgage foreclosure auction. Thereafter Tuscany at Bay Park demanded payment from Fairhomes pursuant to the Declaration and section 720.3085, Florida Statutes. As a third party purchaser Fairhomes is jointly and severally liable with the previous owner for the delinquent assessments due to the Association. Fairhomes refused to remit payment and Tuscany at Bay Park initiated a lien foreclosure action for entire delinquent assessment balance as well as other amounts secured by a claim of lien.

Under both the Declaration and section 720.3085, Florida Statutes, a first mortgagee who meets certain criteria and acquires title to a property via mortgage foreclosure is entitled to reduced “safe harbor” liability. Fairhomes alleged that as a third party purchaser at the mortgage foreclosure sale they were an intended beneficiary of the “safe harbor” limited liability and thus were not jointly and severally liable with the previous owners. The County Court agreed with Fairhomes and entered Final Judgment for “safe harbor.”

Tuscany at Bay Park appealed the County Court Final Judgment, arguing that the plain language of the contract controls liability for delinquent assessments. Both the Declaration and section 720.3085, Florida Statutes, provide for “safe harbor” liability only in limited situations to first mortgagees. Fairhomes conceded that it was a third party purchaser and not a mortgagee. On appeal the Circuit Court agreed with the Association and held that Fairhomes was NOT entitled to the “safe harbor” limited liability and instead is jointly and severally liable with the previous owner for the delinquent assessments. In doing so the Circuit Court followed a long line of trial and appellate courts holding that the plain and unambiguous language of the Declaration controls.

This case resulted in a positive collection event for the Association, however it should serve as a reminder that associations should carefully review and update their Declaration and governing documents to ensure they have the intended effect.