Appellate Court Extends Association Protection Relative To Third Party Purchasers

Kaye Bender Rembaum is pleased to announce another appellate court ruling in favor of a client of the Firm, which is beneficial to all community associations in Florida.  In its decision published on March 15, 2017, the Fourth District Court of Appeal has further confirmed and clarified that the lien of the association contained in the recorded declaration is sufficient to allow the association to pursue an independent foreclosure action when a lender foreclosure case is pending.  In Fountainspring II Homeowners Association, Inc. v. Veliz, Case No. 4D-3408 (Fla. 4th DCA March 15, 2017), the Court was presented with a situation similar to what it had recently decided in Jallali v. Knightsbridge Village Homeowners Association, Inc., Case No. 4D15-2036 (Fla. 4th DCA Jan. 4, 2017) (reported by us after the original decision in October 2016 at http://kbrlegal.com/4th-dca-corrects-prior-ruling-clarifies-limited-application-quadromain-decision/), involving an association that had been pursuing a foreclosure for unpaid maintenance assessments which had been challenged by the homeowner over a technical jurisdictional issue in the lower court.

In Fountainspring II, the property in question was purchased by a third party at the Association foreclosure sale.  That purchaser held the property for over two (2) years, had it occupied by a tenant, and never paid assessments to the Association.  Before the Association commenced its own collection against the new owner/third party purchaser, the lender foreclosure case that had been pending when the Association completed its foreclosure case (allowing the new owner to take title to the property) concluded, and a foreclosure sale took place which resulted in title to the property being taken away from the third party purchaser.  The third party purchaser then went back to the trial court in the Association foreclosure case to claim that the Association should have brought its claim in the lender case rather than in a separate case as had been done (this was some time before the Jallali decision was published).  The trial court granted that motion and the appeal of that decision followed.

In reaching its decision, the appellate court reiterated that the claim of lien of the association related back to the recording of the declaration of covenants, which predated the mortgage.  As such, the Association had a prior recorded lien interest which did not require the Association to bring its claim in the lender foreclosure case.  By this conclusion, the principle of Jallali that involved the former owner of the property has been extended to include third party purchasers as well.