Appeals Court: Distressed Property Buyer Can Seek Declaratory Judgement of “No Liability” for Unpaid Assessments

On January 3rd, 2019, the Fifth District Court of Appeal for the State of Florida ruled that a distressed property buyer has the right to seek a declaratory judgement stating that it has “no liability” for unpaid HOA assessments—even though it no longer owns the property in question.

In the case of Real Estate Solutions Home Sellers (LLC) vs Viera East Golf Course District Association, Inc., the appeals court determined that property buyer has the legal standing despite its sale of the property. Here, our Miami commercial litigation attorneys provide a brief overview of the ruling from the appeals court.

Case Review: Real Estate Solutions Home Sellers (LLC) v. Viera East Golf Course District Association, Inc.  

Background 

Real Estate Solutions Home Sellers (RESHS) is a company that purchases foreclosed upon and otherwise distressed properties. After renovating and remodelling them, RESHS then sells those properties on the open market.

In the summer of 2017, RESHS purchased a Brevard County home in a foreclosure sale. Notably, this home was located within the community operated by the Viera East Golf Course District Association. Similar to other homeowners’ associations (HOAs), Viera East requires individual owners to pay ongoing fees (assessments) to help support the common interests of the company. If assessments are not paid on time, Viera East can obtain a lien on the property. 

Legal Issue 

The home purchased by RESHS was bought in a foreclosure sale. One of the issues with this home is that the previous owner had stopped paying assessments. As a result, the HOA (Viera East) had placed a lien on the property. When RESHS purchased the home, it argued that the previous lien did not survive the foreclosure—meaning it no longer owed those past due assessments. Viera East argued the opposite, filing a claim against RESHS for $19,032.64 in delinquent HOA fees. 

Decision 

As this dispute was ongoing, RESHS then sold the property. It then argued that it was no longer a party to the case. It was not responsible for the initial missed payments and it no longer owned the property that was linked to the past due HOA assessments. RESHS sought a declaratory judgement to this effect.

However, its claim was dismissed for lack of standing. On appeal, RESHS argued that the trial court made a mistake. It noted that the legal theory pursued by Viera East ownership was irrelevant—and, therefore, their company was still forced to deal with potential uncertainty. The appeals court agreed, finding that RESHS had the standing to seek a declaratory judgment. The court reversed the decision and remanded the case.

Contact Our South Florida Commercial Litigation Attorneys for Immediate Assistance

At Pike & Lustig, LLP, our Miami business lawyers have experience handling a wide range of commercial disputes, including those involving property foreclosures and unpaid HOA assessments. To get more information about what we can do for you, please call our Miami law office today. We have additional office locations in West Palm Beach and Palm Beach Gardens for your convenience.

Resource:

5dca.org/content/download/546180/6154744/file/183569_1260_01032020_08151343_i.pdf

https://www.turnpikelaw.com/florida-construction-law-what-is-an-implied-warranty/