Understanding the Changes for Collecting Delinquent Assessments

By Mary King, CAM / Published October 2021

The 2021 Florida legislative session resulted in substantial changes, updates, and improvements to the statutes that govern homeowners associations, condominiums, and cooperatives. One of the more significant legislative updates in Senate Bill 56 involves community associations’ delinquency management activities, and board members should take the time to understand the new requirements. 

     The new bill passed by the Florida legislature went into effect July 1, 2021, modifying the collection of delinquent assessment procedures. The bill impacts Chapter 718 condominiums, Chapter 719 cooperatives, and Chapter 720 homeowners associations (Subsection §718.121, Fla. Stat, §719.108, Fla. Stat. and §720.3085, Fla. Stat.) 

     Under the amended version of these statutes, associations may not demand or collect attorney’s fees related to a past due assessment without first delivering written notice to the unit owner. The notice must specify the amount owed, must give the unit owner an opportunity to pay without the assessment of attorney fees, and must follow a set format. A sample form of a proper notice of late assessment can be found in the amended statutes and is reprinted here. 

 

Notice of Late Assessment

RE:  Unit (____) of (name of association)

     The following amounts are currently due on your account to (name of association) and must be paid within 30 days of the date of this letter. This letter shall serve as the association’s notice of its intent to proceed with further collection action against your property no sooner than 30 days of the date of this letter, unless you pay in full the amounts set forth below:

                Maintenance due (dates) $_______

                Late fee, if applicable $_______

                Interest through (dates)* $_______

                TOTAL OUTSTANDING $_______

                * Interest accrues at the rate of _____ percent per annum.

     Associations are required to provide a delinquent owner with a 30-day notice known as notice of late assessment (NOLA), which gives the owner 30 days to pay any delinquent assessments, late fees, and interest without incurring attorney charges. If an association fails to provide the owner with this 30-day notice, the association will be prevented from recovering its legal fees and legal costs related to a past due to assessment (i.e., any expenses incurred in the collections/foreclosure process.) 

     The notice must be sent by first-class U.S. mail to the owner at their last address as reflected in the association’s records. If that address is not the unit address, a copy must also be sent by first-class U.S. mail to the unit address. The notice is deemed delivered upon mailing. A rebuttable presumption that the statement was mailed as required can be established by an affidavit executed by a board member, officer, or agent of the association.

     For condominiums and cooperatives, the notice of intent to record a claim of lien must now provide owners with 45 days (previously 30) to pay delinquent amounts owed before the recording of a claim of lien. This change aligns with homeowners associations’ legal requirements, which already allowed for 45 days. These changes will likely require your association to make significant changes to its collections policies and procedures, especially if the board has a written collections policy in place.

  For condominiums, the notice of intent to foreclose must now provide owners with 45 days (previously 30) to pay delinquent amounts owed before filing suit to foreclose a claim of lien. This change aligns with the homeowners associations’ legal requirements, which already allowed for 45 days. The association requires no action; the association’s counsel will automatically incorporate the new 45-day wait period.

What Changes Do Boards Need to Make?

  Sentry Management was closely monitoring the progress of this bill and quickly completed the modifications necessary to ensure we are complying with the new statutory requirements for all of the associations we manage in Florida. While the physical process of adding the NOLA to the assessment management lifecycle process is already in effect at Sentry, now is the time for boards to review their delinquency management or collections policy and begin updating the policy to include the new statutorily required processes. 

     Boards or their HOA management companies will need to mail the required NOLA to owners with a delinquent balance. Taking this statutorily required step will allow association boards to proceed with its delinquency process with limited delay. For example, Sentry’s process has been modified to include the NOLA as the second notice, after a friendly reminder, and is sent 10 days after the association’s grace period.

     Boards should consult with their association’s counsel before making any procedural changes to their enforcement or collection processes, which could require amendments to existing association policies and procedures. An excellent operating practice is to review your policies annually in conjunction with your budget, allowing for any updates that are not time-sensitive to take effect in the upcoming year. 

     The information contained in this article is provided for informational purposes only and should not be construed as legal advice. No recipient of this content should act or refrain from acting without seeking the appropriate legal or other professional advice.

Mary King

Regional Business Development Manager, Sentry Management

     Mary oversees Sentry Management’s business development team in Central Florida. She has spent the majority of her career in HOA and condominium association management as a licensed community association manager and is a past president of CAI’s Central Florida Chapter. She also spearheads many of Sentry Management’s charitable endeavors. For more information about Sentry Management, visit www.sentrymgt.com.