Agenda 03/09/2010 Item #12B
Agenda Item No. 128
March g. 2010
Page 1 of 3
EXECUTIVE SUMMARY
.-
Report on pending foreclosure legislation.
OBJECTIVE: To provide the Board of County Commissioners with information on pending
legislation and a recent Florida case related to foreclosure and homeowner assessments.
CONSIDERATIONS: On February 23, 2010, under "General Communications," public
speaker Gina Downs requested the Board's support of pending Senate Bill 780 (and companion
House Bill 987). Commissioner Henning noted that a recent case out of Miami may be a better
solution to the problem. Following discussion, the Board directed the County Attorney to review
SB 780 and HB 987, the Miami decision, and other related legislative proposals, and provide
information for the Board to use in determining their position on the pending legislation.
SB 780 provides as follows:
"Section I. Any financial insti41~on that institutes a foreclosure proceeding against a residential
J2rQ.perty or has a foreclosure proceeding pending against residential I1!Qperty shall timely pay all
fees associated with or owed by that l2!:QPerty. including, but not limited to, homeowners'
association fees, maintenance fees, and I1!Qperty taxes. The financial institution shall pay such
~
fees accruing from the date on which the foreclosure action is initiated through the date on which
the foreclosure is finalized. This section applies:
(1) Retroactively to all foreclosure llroceedings pending as of the effective date of
this act.
ill To all foreclosure proceedings initiated on or after the effective date of this act.
Section 2, This act shall take effect upon becoming a law."
SB 780 changes current law by expanding the liability of the foreclosing institution to all
fees owed by that residential property from the time of the initial lis pendens to the time the
institution obtains title to the property. Under current law, a lender's responsibility for unpaid
condo assessments that become due prior to acquiring title is limited to the lesser of (I) the prior
6 months unpaid assessments; and (2) one percent of the original mortgage debt. (Section
718.116(l)(b), Fla. Stat.) In the homeowner's (non-condo) association setting, the lender's
responsibility for unpaid assessments that become due prior to acquiring title is limited to the
lesser of (I) the prior twelve months unpaid assessments; and (2) one percent of the original
mortgage debt. (Section 720.3085(2)(c), Fla, Stat.)
With respect to whether the Board ought to support adoption of this bill, from a legal
standpoint whether this increase in exposure constitutes an unlawful impairment of contract is an
,.-. issue that I leave to the Legislature to determine prior to its enactment. From a policy
standpoint, this legislation represents a forced transfer of wealth from financial institutions to
"-"-'~'~-~--~~'''-'-
, "".".ff"....._......
., -~.,..~.,...., ,.~,,~.,."
Agenda Item No. 12B
March 9, 2010
Page 2 of 3
Home Owner Associations, local governments, and others. Whether such a forced transfer of
wealth is appropriate is a legislative decision.
With respect to other bills, there are presently over 50 bills filed that address virtually
every aspect of foreclosure. Because of the volume and early stage of these bills, discussion of
all pending legislation relating to foreclosure would probably best be done later in the session, as
many of these bills will be "weeded out" or substantially amended.
Commissioner Henning noted a recent case out of Miami that might be very helpful to
the process. The case, HSBC Bank v. Keys Gate Community Association, (11 th Circuit from
Miami-Dade) involved a reverse foreclosure. In this case the Association obtained a partial
foreclosure judgment against itself, in favor of the bank, and requested that the bank be given
title (after all, they started the foreclosure). Thousands of units were involved, and as a result of
taking title, the bank became responsible for unpaid assessments on the units, along with legal
fees and other costs. Although this is a lower court decision, and therefore not binding
throughout the State, it is a significant decision, as it empowers an association to force a lender
to take title, triggering payment of unpaid assessments and responsibility for payment of future
assessments.
LEGAL CONSIDERATIONS: None. Whether to support proposed legislation is a policy
decision for the Board. - JAK
",,~.,
FISCAL IMPACT: None.
GROWTH MANAGEMENT IMPACT: None.
RECOMMENDATION: That the Board wait until later in the Legislative Session before
taking a position on this matter.
Prepared by: Jeffrey A. Klatzkow, County Attorney, and
JeffE. Wright, Assistant County Attorney
,~".
~.
Agenda Item No. 12B
March 9, 2010
Page 3 of 3
COLLIER COUNTY
BOARD OF COUNTY COMMISSIONERS
-
Item Number:
Item Summary:
Meeting Date:
12B
Report on pending foreclosure legislation.
31912010 9:00:00 AM
Prepared By
Jeff Klatzkow County Attorney Date
312120103:05:30 PM
Approved By
Jeff Klatzkow County Attorney Date
312120104:10 PM
Approved By
OMS Coordinator Date
County Manager's Office Office of Management & Budget 313120108:24 AM
Approved By
-, Leo E. Ochs, Jr. County Manager Date
County Managers Office County Managers Office 31312010 9:20 AM
.-
~1_.1fr<.\ ,,____..l_'T'__"-\T"_u__~\lCn. ....I_.._L 1\ "'''11\\1'''l '-'r"I.TnT'r'T A'r'T'ATJlro,TT"'TOT"T"oATl'T'\l-",'O\l
'"I ''"I 1'"1(\1 {).
.-.--,- -
,-,".,'-
,....~