Recent news accounts have reported on a court decision in an existing foreclosure case in Miami-Dade County, in which the judge has apparently appointed a Receiver for that particular community to collect rent from the tenants of the specific unit in that case, and included authority to pursue rents from any other units that are in foreclosure by that association. The Order gives the Receiver the authority to pursue units that are not the subject of the case in which the decision was made. This added authority is what is considered unique about the case. Unfortunately, in our opinion, the news reports on this topic have blown the situation a bit out of proportion with respect to whether such relief might be readily available to other associations. We advise our clients to be cautious in considering this approach.
It is important to be aware that the subject of the news report involves a Circuit Court case, which is not precedential to any other case, meaning it is not binding on any other judge. From our reading of the Order, it has created an issue for appeal which should be successful if brought by the parties in that case. It also raises defenses to other units that the Receiver may attempt to collect rent from in the future. In our experience, very few judges are willing to go beyond the parties that they have jurisdiction over, even under the general economic conditions that we are finding ourselves. The order also appears to indicate that before the Receiver can attempt to collect the rent on any other unit, that unit must be in the foreclosure process by the Association. These important distinctions have not been made clear in the reports that we have seen so far.
The existence of this decision by a Circuit Court judge in Miami-Dade really does not have the effect of “law” in that it is not binding on any other association or judge. The Florida Legislature has not enacted any new law on this topic. In our opinion, the chances of another Circuit Court judge issuing the same Order is not likely. However, please be aware that we are prepared to undertake the required action to seek a “blanket receiver” for a requesting Association if the Board wished to do so, with the understanding that the likelihood of a successful result is not great. While we would not have a problem having a Receiver appointed for the case that is in foreclosure, having one appointed with the authority to pursue units that are not involved in that particular case (i.e. blanket receiver) is not likely to happen. Additionally, it exposes the Association to additional expense.
Another option for the collection of rents which we have been recommending to all of our Association clients for many years is the use of a document which we call an “Authorization Agreement to Collect Rent.” The Authorization Agreement to Collect Rent form is to be used in the lease approval process, if the association has such approval within the governing documents. With the use of this Agreement, the association should be able to collect rents from any tenant that has such an Agreement in their file without any court involvement (or possibly any attorney involvement). This would be the most cost effective and efficient remedy for a Board of Directors to be pursuing to attempt the collection of rents from tenants residing in units owned by owners delinquent in their maintenance account.
Please contact us if you have further questions on this issue or would like to have an Authorization to Collect Rent Agreement prepared for your Association.