By Jose Vega – Bradley Arant Boult Cummings LLP

April 26, 2016

A significant opinion from the Florida Third District Court of Appeal further clarifies the extent of the Florida statutory homeowners association (HOA) “safe harbor.” In the end, entities that obtain title through judicial foreclosures are left satisfied while homeowners associations are left reeling from another nail in the safe harbor coffin.The Florida safe harbor rule limits the liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure to the lesser of 12 months of assessments or one percent of the original mortgage value. Whether the mortgagee is also liable for the homeowners associations’ attorney’s fees, costs, interest, late fees and fines has remained unsettled until now.

In Catalina West HOA and Old Cutler Lakes by the Bay Community Association v. Federal National Mortgage Association, borrowers entered into a mortgage loan with JPMorgan Chase Bank, N.A. Federal National Mortgage Association (“Fannie Mae”) later purchased the borrowers’ loan and after the borrowers defaulted on their loan, Fannie Mae filed a judicial foreclosure action. On February 6, 2013, Fannie Mae obtained a Final Judgment of Foreclosure, and on April 2, 2013, Fannie Mae obtained a Certificate of Title. On December 19, 2013, the homeowners associations each provided estoppel letters to Fannie Mae that included violation charges, costs and attorney’s fees. Read more: