The Third District Court of Appeal has completed its second review of the issues involved in the controversial decision from 2013 regarding “joint and several” obligations of owners for unpaid assessments. (This decision involves only condominiums in light of changes made to Chapter 720 of Florida Statutes in 2013.) In Aventura Management, LLC, v. Spiaggia Ocean Condominium Association, Inc., Case No. 3D13-1437, March 5, 2014, the appellate court was presented with what it considered to be the same issue previously decided in Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc, 105 So. 3d 637 (Fla. 3d DCA 2013) (identified by the Court in its decision as “Spiaggia I“).
In Spiaggia I, the Court decided that when a third party purchaser was the successful bidder at a lender foreclosure sale on property that was owned by the association due to its own foreclosure of unpaid assessments, the association, as an owner in the chain of title, was jointly and severally liable for the unpaid assessments with the new owner. The result of this decision meant that in such circumstances, the association could not recover any prior assessments from the new owner. This also precludes recovery of any interest, late fees, attorney’s fees and costs associated with the property.
Spaggia I sent the case back to the trial court for completion. However, after further proceedings, the trial court then concluded that the new owner would have to pay all past due assessments in full and then bring a court action against all former owners for contribution. That decision was appealed, which was considered by this case.
In this most recent version of Spaggia, the Court has reiterated its prior conclusion that under present statutory provisions, in a condominium, a third party would owe only from and after the date it took title. The Court cites to its most recent decision in Park West Professional Center Condominium Association v. London (see our discussion of Park West in Legal Morsels at: http://kbrlegal.com/appellate-court-tries-to-clarify-prior-ruling-in-spiaggia-case-involving-issue-of-joint-and-several-liability-under-the-statute/) to conclude that “joint and several liability” only applies to the obligations of the immediately prior owner of the property. In this case, the Court states that Aventura Management is jointly and severely liable only with Spiaggia for sums that came due after Spiaggia took title, and “cannot be held liable for the unpaid assessments of the original owner.” It further stated that Spiaggia could pursue the former owner that it foreclosed for the previously accrued sums.
While it provides an answer to this case, the holding of the Court seems to be missing the point that when an association forecloses for unpaid assessments and is the successful bidder at the foreclosure sale, almost all of the judgment amount typically remains unsatisfied and owing to the association. This is because the minimum bid at a foreclosure sale is $100, which is made by the association, as the plaintiff in the case. If no other party bids on the property, only $100 of the judgment amount has been satisfied by the foreclosure sale. The remaining portion is referred to as the “deficiency judgment” and remains collectible. Since Spiaggia I concluded that the lien remains on the property after the foreclosure sale if the sale does not fully satisfy the judgment, the full amount remains with Spiaggia, as the prior owner. As such, Aventura Management would then have “joint and several” liability for these sums. Unfortunately, the result of this decision does not resolve this issue.
There is currently proposed legislation pending that could assist in resolving this issue in future. However, until such a change in legislation occurs, or there are additional court rulings on this issue, the ruling of this case is the law in Florida.