In OCEAN BANK vs. CARIBBEAN TOWERS CONDOMINIUM ASSOCIATION, INC., 38 Fla. L. Weekly D1726a (Fla. 3DCA 2013), the Florida Third District Court of Appeal held that a foreclosing bank was entitled to prevailing party attorney’s fees against a condominium association under section 718.303(1), Florida Statutes (2012). In this case, the Bank brought foreclosure actions against two condominium unit owners. The Bank named the Association as a defendant in the foreclosure actions because the Association had liens for unpaid assessments. The Bank ultimately obtained foreclosure judgments and subsequently purchased the condominium units at foreclosure sales.
Florida Claim of Lien
The dispute involved the Bank’s liability to the Association for unpaid assessments after purchasing the condominium units at the foreclosure sales. Section 718.116(1)(b), Florida Statutes (2012), capped the Bank’s liability for condominium assessments at no more than one percent of the original mortgage debt. Notwithstanding this statutory cap, the Association made repeated demands for payment of liens in excess of the statutory maximum.
The Bank filed post-judgment motions against the Association in the foreclosure actions requesting the enforcement of the statutory cap and an award of attorney’s fees against the Association pursuant to section 718.303(1), which provides that the prevailing party is entitled to attorney’s fees in disputes between unit owners and condominium associations. The trial court ruled in favor of the Bank for the statutory cap but did not award attorney’s fees. The Association argues that not awarding attorney’s fees was proper because the substantive motions raised issues not strictly within the four corners of the foreclosure pleadings.
Owner as Prevailing Party
The Third District Court of Appeal reversed the trial court and ruled that the Bank as the prevailing party should be awarded attorney’s fees. The appellate court reasoned that the entitlement to fees did not exist from the outset of the Bank’s foreclosure actions since it was not an owner at the time. However, the Bank properly raised the issue of attorney’s fees only after it arose; and the Association was provided notice and adequate time to decide whether to pursue its claim for a lien in excess of the statutory maximum, drop it, or settle it. Accordingly, the Bank was entitled to its attorney’s fees incurred in successfully prosecuting its claim that the Association’s assessments were capped at the statutory maximums mandated by section 718.116(1)(b).
Lessons Learned
Florida condominium associations are cautioned to revisit their lien claims to ensure that they do not exceed the statutory caps for the purposes of foreclosures and mortgage lenders. Further, condominium associations should learn that once a foreclosing party has taken over the property that they are deemed owners and litigation involving them could involve the award of attorney’s fees in the event the association loses the case.
Related Topics: Florida Real Estate Law; Florida Condominium Associations; Florida Claim of Lien
