Florida condos get new tool for collecting fees

A new law offers a stark choice for South Florida condo renters living
in units owned by people who are behind on their maintenance fees: Fork
over the rent money to the association, or face eviction.

The ``Distressed Condominium Relief Act,'' signed by Gov. Charlie Crist
on June 1 and active as of Thursday, gives condo associations the right
to demand renters in delinquent units to pay rent directly to the
association rather than to unit owners. While the law offers
protections for renters who comply, those who don't could face

It's the latest development in an ongoing saga
between cash-starved condo associations, and investor-owners who have
stopped paying condo maintenance fees since the market crashed.

Omar Ibrahem, who moved out of a rental last year because its owner
went into foreclosure, said he hadn't received any notices about the
new law at the unit he rents on Miami's Brickell Avenue.

``I haven't heard or haven't received any notices that they are
pursuing delinquencies,'' he said. But after his experience last year,
he plans to monitor the situation carefully.

After years of
penny pinching and legal maneuvering to collect maintenance fees from
sometimes-recalcitrant condominium owners, condo associations are
looking to the new law to help increase cash flow.

Renters, who
have flocked to condos by the thousands in areas like downtown Miami
and South Beach since the crash, are suddenly in the spotlight. Many
have been living in modern buildings with a slew of amenities, often
unaware that condo owners had stopped paying the fees that fund them.

Beginning this month, some renters will receive letters asking them to
fork over rent money directly to condo association boards. Unit owners
will not be allowed to take any action against renters who pay a
portion or all of their rent to the association.

``It gives the
tenants more peace of mind,'' said Jon Mann, owner of Five Star
International Realty in Miami. ``They can pay the association a portion
of their rent and they know they won't be kicked out.''

lawyers and homeowner association members say the law's wording isn't
completely clear. The most hotly debated point is whether or not
associations can collect payment for past due fees that have accrued
over time, or only for monthly assessments due after July 1.

recommendation to my clients is to act conservatively, because this law
is brand new,'' said Lisa Magill an attorney at Hollywood-based Becker
& Poliakoff, a large condo association law firm.

But many
condo boards, severely strapped for cash, are taking the more
aggressive position, said Bill Worrall, corporate vice president of
property management company The Continental Group.

``Practically, the association will collect 100 percent of the rent until the account is brought current,'' said Worrall.

For example, a renter paying $1,000 a month for a condo unit that is
$5,000 behind on monthly fees might be asked to turn over his entire
rent check to the condo association for five months, and then hand over
a portion of his rent to cover fees for the remainder of the lease.

Delinquency rates have surged in recent years as the economy has tanked
along with home values, leaving some investors acting in bad faith and
the newly unemployed unable to pay maintenance fees.

investors, who have opted to ``strategically default,'' or
intentionally abandon a mortgage along with associated fees, often do
so in bulk, leaving a trail of foreclosures and a gaping hole in many
condo association budgets.

The maintenance fees -- which
typically range from about $300 to more than $1,000 per month-- are
crucial for associations, which are responsible for maintaining pools,
roofs and amenities. As a result of the rise in delinquencies,
associations have been forced to cut back on services, utilities and
even insurance coverage. Some have had to file for bankruptcy.

Actually implementing and enforcing the new law may be difficult since
many overwhelmed condo associations have not kept track of rental
units. Also, condo owners may try to convince renters to ignore the law
by offering incentives like decreased monthly rent, said Amir Isaiah,
director of receivership and fiduciary services for Miami accounting
firm Kaufman, Rossin & Co.

The new law ``is a great step in
the right direction but it doesn't really get us there,'' Isaiah said.
``Tenants and unit owners -- as you've seen with our housing crisis --
are not afraid to break the law.''

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