The “Real” Truth About HB 319
HB 319 is a bill sponsored by Rep. George Moriatis which could result in HIGHER COSTS to you, the homeowners in Florida. While some powerful special interest groups are telling legislators that their amendment is a simple technical change to the law, you need to know the true FACTS and how this potential change could result in irreparable harm to your community association. Please take a few minutes to review these FAQs –- and learn how YOU can take action to put a stop to the banks putting more charges on you. |
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See the economic impact this bill will have on an association
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Read what a 3,000-unit community says about
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Q: What is HB 319?
Q: Who does this bill impact?
Q: What is being discussed in Tallahassee?
Q. What do some attorneys representing community associations have to say about this proposed bill?
Q: What is the “safe harbor” provision?
Q: Is the “safe harbor” provision different for Coops or HOAs?
Q: Do banks also have to pay for the costs of collection in addition to the safe harbor amount?
Q: Can you show an example of how the “safe harbor” provision works?
Q: How does HB 319 change the safe harbor provision?
Q: Why are Rep Moraitis, Becker and Poliakoff’s C.A.L.L., and the banking lobby trying to change the safe harbor provisions?
Q: Why not leave the law as is and allow these collection firms and attorneys recover the most money possible for their association clients?
Q: Is this another bank bailout?
Q: Why not change the law so that banks have to pay their fair share?
Q: What is the Legislature doing to help associations?
Q: So what can I do to help protect Florida homeowners versus the Banks?
Q: What is HB 319?
A: HB 319 is a bill which is being considered by the Florida legislature right now, sponsored by Rep. Moriatis and the Community Association Leadership Lobby (C.A.L.L); created by Becker & Poliakoff, as well as banking industry lobbyists.
HB 319, in its current form, will result in higher costs for you because the bill requires responsible homeowners to pay for the costs of collection of maintenance fees from delinquent homeowners. Current law states that such costs must be paid by the delinquent owners or the banks that loaned the money to the unit.
In addition, this bill, if passed, will remove all pressure for the banks to ever foreclose and take title to the units, requiring the good paying homeowners to cover the shortfalls caused by delinquent unit owners for years to come.
A: This bill impacts Condominium Associations (governed by F.S. 718), Cooperatives (governed by F.S. 719), and Homeowner’s Associations (governed by F.S. 720). If you or someone you know lives in any one of these types of communities, this bill impacts you.
This bill is especially hard on senior citizens who live on fixed incomes and cannot afford the added expense of paying legal fees and other burdensome costs due to defaulting unit owners.
Q: What is being discussed in Tallahassee?
A: This video segment of a Florida Judiciary Committee meeting on Feb. 22, 2012, includes discussions by:
Mauri Peyton (Peyton Bolin PL)
Cynthia Henderson (Lobbyist)
Alex Moskovitz (AFS)
Q. What do some attorneys representing community associations have to say about this proposed bill?
A: Here are a few independent letters (in PDF format) from law firms that specialize in community association law.
Mark E. Adamcyk; Managing Partner, Goede & Adamcyk (read letter)
Association Law Group (read letter)
Q: What is the “safe harbor” provision?
A: The safe harbor provision of the law limits the amount of money that can be properly collected from a bank that forecloses on a unit. This is a special exemption the banks already receive.
Current law plainly states that the “safe harbor” provision or “statutory cap” or “stat cap” only applies to “unpaid assessments,” the provisions do not provide for any limitation to other amounts that are properly due from a unit (See Florida Statute 718.116(1)(b)).
Q: Is the “safe harbor” provision different for Coops or HOAs?
A: The “safe harbor” provision is essentially the same for HOAs. However, current law does not have a “safe harbor” provision for Coops. One of the consequences of the proposed amendment to HB 319 is that Coops will have to pay – for the first time ever – substantial fees that have always been paid by banks. This is a terrible burden on those who can least afford it.
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Q: Do banks also have to pay for the costs of collection in addition to the safe harbor amount?
A: YES. The statute is very clear as written. The safe harbor provision only applies to the “unpaid assessments,” as specifically written in the statute. The statute did not intend to limit the association’s ability to recover the costs of collection (including interest, administrative late fees, cost and reasonable attorney fees incident to collection), which is why they are not mentioned within the “safe harbor.”
The association has to be able to maintain its ability to collect assessments for the health and welfare of the association and the unit owners, and that includes being able to recover the costs of protecting its own interests. In addition, the “safe harbor” only provides for a dollar amount to be paid. The dollars received still must be applied to the outstanding ledger as required by statute 718.116(3) (a different section), which requires application to the collection costs first. There are collection agencies and attorneys across Florida who have successfully closed thousands of cases that follow the statute as written for their association clients.
This pending legislation is nothing more than the banks’ attempt to “change” the law at the direct expense of community associations. They are hoping that communities and their owners will simply lay down while they work hard to change the rules for their own benefit.
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Q: Can you show an example of how the “safe harbor” provision works?
A: YES. Here is an actual example of how the “safe harbor” provision works --- Let’s say a condominium unit has:
• An annual assessment of $3,200
• A $220,000 mortgage, and
• The bank doesn’t take title until the unit has been delinquent for 18 months (a short period in current market conditions).
As a result, the unit may have:
• An outstanding balance of $4,800 in assessments
• $684 in accrued interest,
• $450 in late fees, and
• $1,800 in other collection costs and attorney fees.
The bank will owe the association $2,200 (1% of the original mortgage) of unpaid assessments upon acquiring title plus $684 in interest, $450 in late fees, and $1,800 in other costs and attorney fees. Under current legislation, the association would receive $3,334 ($5,134 less the $1,800 it would owe for collections).
The proposed legislation of HB 319 would further protect the banks by limiting what they must pay to associations upon taking title to all amounts. This would mean that your association would bear the full cost of protecting your rights.
Under the new legislation, the association would receive only $400 ($2,200 less the $1,800 it would owe for collections). Hence, the association would be nearly $3,000 worse off with this new amendment being proposed while the banks would have won the lottery.
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Q: How does HB 319 change the safe harbor provision?
A: HB 319 significantly changes the law that has been in effect for 20 years so that it will now specifically state that the bank is
no longer responsible for the costs of collection. This change will cost the good paying homeowners millions of dollars and limit their ability to protect their rights and collect their assessments. In addition, since the bank’s liability on a delinquent unit would be capped, the bank has even more reason to
delay their foreclosure, requiring the association to cover the maintenance fees on the delinquent units for years to come; further prolonging the difficult financial situation associations are already in. If successful, this change would represent a
major shift in public policy requiring current homeowners to pay the collection costs instead of the delinquent party.
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Q: Why are Rep Moraitis, Becker and Poliakoff’s C.A.L.L., and the banking lobby trying to change the safe harbor provisions?
A: This section of the law was never an issue before the housing bubble burst. If someone fell behind on their payments, the bank would foreclose, sell the property at auction, and the association would be paid in full. After the bubble burst, banks were faced with the repercussions of their own indiscretion (which are well documented).
Some community association law firms began to find themselves inundated with collections cases. Consequently, they let them sit idly by while their associations financially suffered. As those law firms tried to figure out how to service their clients, resourceful businesses around the state began to directly address a community association need.
Collection businesses have been very successful, so successful in fact that the banks and some large law firms want to put them out of business. Clearly, banks want to cut their costs, unfortunately, capping and cutting their fees doesn’t mean the bills get paid.
If the provision in HB 319 becomes law, it is a triple loss to the consumer:
1) Banks will no longer have the pressure from outside businesses that are collecting on delinquent owners at a greater speed and efficiency.
2) The community associations must still pay for the costs associated with maintenance fees for this unit the entire time. Depending on the association, this may include paying the insurance to protect the delinquent units (and therefore the banks’ collateral), electricity, air conditioning, landscaping, property management, and many other ancillary services.
3) If the banks further cap the fees on delinquent units, someone will have to make up the difference…sadly for the residents of a community association; it will be you, the innocent good paying owners instead of the bank.
These groups working together would rather the total amount the bank has to pay when they foreclose be capped to protect banks at the expense of Florida homeowners. That is anti-association and pro-bank.
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Q: Why not leave the law as is and allow these collection firms and attorneys recover the most money possible for their association clients?
A: That would be the smart thing to do as the association and consumers benefit from the current law.
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Q: Is this another bank bailout?
A: YES. This is a way for the banks to greatly reduce their liability at the direct expense of Florida residents. Right now, the amount banks have to pay on the “unpaid assessments” is capped. If the bill becomes law, the “total amount due” will be capped. This modification would further remove incentives for the banks to foreclose to taking title. Instead, they will continue to reset judgment hearings or push taking title until the day before they intend to sell the property to a new owner. In so doing, they are just going to keep kicking the can down the road.
Unfortunately, the association will be paying the costs associated with maintenance fees for this unit the entire time. Depending on the association, this may include paying the insurance to protect the delinquent units, electricity, air conditioning, landscaping, property management, and many other ancillary services. The real rub is the association is required by law to maintain expensive property insurance on the banks units, protecting the banks collateral and the association has to keep paying for that insurance until the bank decides they are ready to take the unit back.
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Q: Why not change the law so that banks have to pay their fair share?
A: This is a great idea. We agree with the need for legislators to further protect community associations and their residents. Leaving the law as currently written is one option. Changing the safe harbor amount (for example, from the current 12 months or 1% instead to 24 months or 2%) is another option. Requiring banks to pay maintenance fees during pending foreclosure actions is another option. However, in any option, the association’s ability to recover its collection costs should be preserved; otherwise, the responsible members are going to have to pay these collection costs.
If a unit owner doesn’t pay maintenance fees to the association, the association has a fiduciary duty to protect its interests and commence collections action. The truth is, banks are not paying their fair share now; they require associations to pay many out of pocket expenses such as insurance in order to protect the BANK’S assets. If the legislature wants to make changes to the law, they should consider requiring banks to pay more…not less.
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Q: What is the Legislature doing to help associations?
A: The change to the safe harbor provision needs to be removed from the bill. It’s currently not in the Senate version of the bill, however, Rep. Moriatis, C.A.L.L., and the bank lobby are pushing hard to get it added. Then, the focus needs to shift to making the banks foreclose faster or pay more.
Q: So what can I do to help protect Florida homeowners versus the Banks?
A: See the below CALL TO ACTION.
Through a last minute maneuver, HB 319 by Rep. George Moraitis is closer to becoming law. WE STILL HAVE TIME to stop the devastating changes to the "Safe Harbor" law. We need every Florida Senator to stand firm on your behalf and resist the powerful special interest groups lobbying right now in Tallahassee. Please send an e-mail to every Senator URGING them to reject HB 319 and ACCEPT SB 680 with no amendment to the SAFE HARBOR law. In three quick steps, you can send a powerful message to the forty Senators who will be voting on this important bill in the next few days.
Step One
Copy and paste the e-mail addresses for every Florida Senator in the "to" field of your e-mail.alexander.jd.web@flsenate.gov; altman.thad.web@flsenate.gov; benacquisto.lizbeth.web@flsenate.gov; bennett.mike.web@flsenate.gov; bogdanoff.ellyn.web@flsenate.gov; braynon.oscar.web@flsenate.gov; bullard.larcenia.web@flsenate.gov; dean.charles.web@flsenate.gov; detert.nancy.web@flsenate.gov; portilla.miguel.web@flsenate.gov; dockery.paula.web@flsenate.gov; evers.greg.web@flsenate.gov; fasano.mike.web@flsenate.gov; flores.anitere.web@flsenate.gov; gaetz.don.web@flsenate.gov; garcia.rene.web@flsenate.gov; gardiner.andy.web@flsenate.gov; gibson.audrey.web@flsenate.gov; haridopolos.mike.web@flsenate.gov; hays.alan.web@flsenate.gov; jones.dennis.web@flsenate.gov; joyner.arthenia.web@flsenate.gov; latvala.jack.web@flsenate.gov;lynn.evelyn.web@flsenate.gov; margolis.gwen.web@flsenate.gov; montford.bill.web@flsenate.gov; negron.joe.web@flsenate.gov; norman.jim.web@flsenate.gov; oelrich.steve.web@flsenate.gov; rich.nan.web@flsenate.gov; richter.garrett.web@flsenate.gov; ring.jeremy.web@flsenate.gov; sachs.maria.web@flsenate.gov; simmons.david.web@flsenate.gov; siplin.gary.web@flsenate.gov; smith.chris.web@flsenate.gov; sobel.eleanor.web@flsenate.gov; storms.ronda.web@flsenate.gov; thrasher.john.web@flsenate.gov; wise.stephen.web@flsenate.gov
Step Two
Copy and paste this message into your e-mail - or write a personal message urging Senators to REJECT any amendments to the SAFE HARBOR LAW.
Dear Senators:
I am one of 4.5 million people living in a condominium or homeowner association in Florida.
PLEASE do not make it harder and more expensive for us to collect from delinquent condo and home owners. Keep SB 680 by Senator Bogdanoff FREE from another BANK BAILOUT.
The Safe Harbor amendment included in the house bill is a controversial CHANGE to the law that transfers the costs of collection away from the banks that caused this mess to the good paying homeowners struggling to maintain their homes.
This bad amendment will result in the banks prolonging foreclosure INDEFINATELY, and could cost homeowners HUNDREDS OF MILLIONS, wreaking further havoc on Florida's economy.
PLEASE OPPOSE any Safe Harbor changes to SB 680 that would allow banks to put more charges on us.
Sincerely,
Once you make your voice heard in Tallahassee, take the next step and tell your neighbors and friends about this bad bill. Please email your network, post on Facebook and Twitter, and call your friends, relatives, and neighbors, and ask them to send a message to Florida Senators who will be voting on this bill. PLEASE ACT TODAY.
There is not much time left to act – however, your personal action on this important matter can help stop this bad bank bailout.
For media inquiries, please contact...
Kathy Mears
850.251.4466 (Cell)
Kathy@on3pr.com