In what constitutes great news for community associations in Florida, the Fourth District Court of Appeals has clarified its prior ruling from 2012, U.S. Bank National Association v. Quadomain Condominium Association, Inc., which has been causing problems to community associations in collecting delinquent assessments. The Quadomain holding addressed the situation in which at the time that the association is ready to file a foreclosure case, there was already a pending lender foreclosure, requiring other existing unrecorded claims to only be brought in that lender foreclosure case, as opposed to filing a separate law suit. As a consequence of that decision, many trial courts have been extending the application of that case to limit the ability of community associations to pursue delinquent assessment claims, often resulting in an inability to collect at all, leaving associations without a remedy. Since the Quadomain decision, it has remained the opinion of this Firm that the application of that decision should be limited to the specific facts of that case and a broader application of the case in community association foreclosure matters was legally improper. Based upon our opinion, the Firm continued to pursue the legal issue as an appeal with the Fourth District Court of Appeals and, as a result of our appeal, the Court has now resolved the over-extension of the principles set forth in Quadomain in its decision in Jallali v. Knightsbridge Village Homeowners Association, Inc.
In Jallali, the delinquency of the homeowner occurred over 3 years after the lender filed its foreclosure against the homeowners. The association foreclosure was filed in a separate law suit and proceeded through a final judgment. Prior to the foreclosure sale being held, the homeowner filed a motion in the lower court to vacate the final judgment and dismiss the case due to the failure of the association to file its claim in the lender foreclosure case, in accordance with Quadomain. In that the Quadomain holding had been interpreted by many lower court judges to require the association to bring its claim within 30 days of the lender filing a document in the Public Records, known as a lis pendens, it would have been impossible for the association to have made its claim in the lender case since it has not yet accrued. The lower court in the Jallali case actually agreed with our position and denied the motion and the homeowner appealed to the Fourth District Court of Appeal.
Initially, the Appellate Court reversed the lower court, improperly applying the Quadomain principles, which would have eliminated any possible recovery for the association and made no logical sense. However, after our Firm filed a Motion for Rehearing to reconsider that decision, the Court reversed itself and clarified the extent of the Quadomain case, significantly limiting it. The Court clearly stated that the recorded declaration of covenants, and/or declaration of condominium constitutes a “prior recorded interest” that in essence removes the issue from the requirement to file the claim in the lender case set forth in Quadomain. The Court also expressly recognized the impossibility of complying with the prior requirement when the delinquency does not occur within the 30 day window of the lender filing. The Court further clearly stated that the Statute at issue, as well as the decision in Quadomain were intended to protect the interests of the lender, not to other parties, such as the homeowner here.
Our Firm is proud to have obtained this ruling which is one of the most important pro-association decisions made by an appellate court in Florida in many years, and eliminates what has been a significant impediment in the collection process for all associations.