REMBAUM'S ASSOCIATION ROUNDUP | The Community Association Legal News You Can Use

561-241-4462    |    9121 N. Military Trail, Ste. 200   |   Palm Beach Gardens, FL 33410

Category: Material Alterations

Posted on

Not all Expenditures Can Be Collected from Delinquent Owners as Part of the Collection/Foreclosure Process – Why Not?

It is clear that Florida’s community association collection/foreclosure legislation allows associations to foreclose an owner’s home for nonpayment of assessments. However, not all of the monies expended by an association fit into the definition of an assessment. For example, let’s say that an association has a right to correct a deficiency on an owner’s lot, but the declaration of covenants at issue does not support converting the money spent into an assessment. In that event, the monies expended by the association would have to be recovered as part of a breach of contract action rather than as part of an assessment/foreclosure action. Sometimes, however, the declaration will provide that the monies expended can be treated as an assessment. If that is the case, then before those expenditures can be included as a part of the collection/foreclosure process, the board would need to convert the expenditure into an assessment against the noncomplying owner. (As to how that is done, you can discuss it with your community association’s attorney.) Florida’s collection/foreclosure legislation also provides for recovery of certain costs incidental to the collection/foreclosure process, but recovery of such cost must be rooted in a statute or by contract (i.e., the declaration of covenants).

Let’s look at the fee charged by a management company for sending the notice of late assessment letter, often referred as a NOLA letter, as required by Florida Statute, and determine whether it is a recoverable cost in an association’s collection/foreclosure action and whether including the NOLA fee as a part of the association’s collection/foreclosure proceedings violates the Federal Fair Debt Collection Practices Act (the Act).

The Act was passed into law because of abundant evidence of the use of abusive, deceptive, and unfair debt collection practices. It does not matter whether a debt collector used their best efforts to comply with the Act. Only strict compliance matters when it comes to the enforceability of the Act against a debt collector. Clearly, the association is not considered a “debt collector” pursuant to the Act and, for the most part, neither are management companies, with this caveat: the pendulum may swing in the future to the notion that management companies are, in fact, debt collectors. It seems that at least for the time being they are shielded from the Act. However, what is patently clear is that an attorney who provides collection/foreclosure services to assist their association clients with delinquent assessments is certainly considered a “debt collector.” Therefore, the attorney must be vigilant when reviewing the delinquent owner’s account ledger to ensure that the items set out in the ledger can lawfully be included in the association’s collection/foreclosure action. A recent case reminds us of this fact.

On February 4, 2025, in Glover v. Ocwen Loan Servicing, Case no. 23-12578 & 12579 (11th Cir. Fla. 2025), the 11th Circuit of the Federal Court of Appeals found that Ocwen as a debt collector violated the Fair Debt Collection Practices Act when it charged consumers an optional fee when making expedited mortgage payments because the loan servicer charged an amount that was not expressly authorized by the agreement creating the debt or permitted by law. The takeaway from this case is that a debt collector can only collect debts that are authorized by law or by contract with the debtor.

It was only several years ago that the Florida legislature enacted into law the requirement that an association assessment debtor must be provided the NOLA correspondence from the association providing the debtor a final opportunity to pay their delinquent assessment debt prior to turning the matter over to the association’s legal counsel to commence collection/foreclosure proceedings where fees and costs accrue against the debtor. See S. 718.121 and S. 720.3085, Fla. Stat.

Management companies are typically tasked with preparing and sending the NOLA letter on behalf of the associations they manage before turning the file over for collections to the association’s attorney. In this regard, a management company that is charging such a fee but has not amended its contract with the association to provide for charging the fee for the notice of late assessment would be wise to consider amending its contract with the association they represent to provide for this charge. Doing so would ensure that the management company, even though it may not be considered a “debt collector,” would have a solid basis for charging the fee because it would be based on a contractual obligation charged to the association. This is important because the NOLA, as mandated by Florida Statutes, does not at all provide for the recovery of a fee in regard to sending such a letter. So, while management companies may not be considered a “debt collector” today, this could change in any new case at any time. Why take the chance?

Now, let’s analyze whether the attorney who is collecting the past due assessment debts for the association can include the management company’s NOLA fee paid by the association to the management company in the collection/foreclosure action against a delinquent owner. Keep in mind, as we go through the analysis, that the “debt collector” (in this case, the attorney) can only collect debts authorized by contract or by law, and also remember that the relevant laws governing the NOLA letter do not provide for a specific cost recovery for the management company sending of the notice of late assessment letter. Thus, at a minimum, there should at least be a contractual obligation that the association pay the management company for sending the NOLA letter. But that may not always be the case even though it is the better practice.

Part and parcel with the collection/foreclosure process is the recording of an association assessment lien. To be valid, such a claim of lien must state the description of the parcel, the name of the record owner, the name and address of the association, the assessment amount due, and the due date. The claim of lien secures all unpaid assessments that are due and that may accrue subsequent to the recording of the claim of lien and before entry of a certificate of title, as well as interest, late charges, and reasonable costs and attorneys’ fees incurred by the association incident to the collection process.

So, while the relevant statutes do not provide for the association to be able to recover a fee for the sending of the NOLA letter, it certainly should be considered a “reasonable cost incurred by the association incident to the collection process,” most especially when the fee charged for sending the NOLA letter is a contractual obligation between the association and the management company.

There even exists an argument that, even if the management contract between the association and the management company does not provide that the association is responsible to pay the management company for the preparation and sending of the notice of late assessment, it is still considered a “reasonable cost”; but when you plug in the holding of the aforementioned case, the collection of the cost associated with the NOLA letter by the debt collector (i.e., the attorney representing the association), the better practice is to ensure that the contract between the management company and the association contains a provision that the association is responsible to pay the management company a reasonable fee for each such notice of late assessment letter sent.

Perhaps now you have a better understanding of why, at times, the association’s collection/foreclosure attorney cannot include a particular line item on the delinquent owner’s account ledger in the collection/foreclosure action. If you have any questions regarding the collection/foreclosure process, most especially which charges can and cannot be included, please be sure to discuss them with your association’s attorney.

Posted on

Are Changes to Association Landscaping a Material Alteration That Requires a Vote of the Owners?

Are Changes to Association Landscaping a Material Alteration That Requires a Vote of the Owners?

If you live in a community association, especially if you serve on the board, you may already be familiar with the term “material alteration.” In Sterling Village Condominium Association, Inc., v. Breitenbach, 261 So. 2d 685, 687 (Fla. 4th DCA 1971), the Court defined the term material alteration as follows:

[T]o palpably or perceptively vary or change the form, shape, elements, or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance.

Generally, an association’s declaration provides the manner in which material alterations to the common elements and common areas are to be accomplished and the necessary percentage of the unit owners required to approve material alterations, if any. In a homeowners’ association such decisions are left to the discretion of the board of directors unless the governing documents provide otherwise. As to condominium associations, absent a provision in the association’s declaration providing otherwise, section 718.113(2)(a), Florida Statutes, provides in relevant part that 75 percent  of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced.

Appellate courts have even carved out exceptions to situations where a material alteration requires a vote of the membership when the material alteration and resulting special assessment are necessary for life safety reasons. In fact, courts often provide boards of directors great deference due to the operation of the business judgment rule. For example, in Tiffany Plaza Condominium Association, Inc. v. Spencer 455 So. 2d 454 (Fla. 2nd DCA 1982), without the required vote of the owners, when it was otherwise required, the board of directors opted to construct a rock revetment wall in the sand between the condominium’s seawall and the mean high tide line. The area in question was part of the association’s common elements since it owned the land from west to east all the way to the mean high tide line. Owners who were unhappy with the association’s unauthorized assessment sued the association. The association defended itself on the basis that the rock revetment was not an alteration or improvement of a common element but rather was part of the maintenance, repair, and replacement of a common element that the association had responsibility for under several provisions of the declaration, its bylaws, and statutes. While the trial court agreed with the plaintiff owners, the Second District Court of Appeal reversed the trial court decisions and held that:

If in the good business judgment of the association, alteration or improvement of the beachfront by addition of a rock revetment would protect the beach from damage and the necessity of subsequent repair or replacement then that cost should also be borne equally by all unit owners.

With the foregoing in mind, let’s examine landscaping alterations and whether making landscaping changes to a condominium’s common elements constitutes a material alteration requiring a vote of the unit owners. The Florida Division of Condominiums, Timeshares & Mobile Homes (the “Division”) has published arbitration decisions from which we can glean an answer. (It is important to note that these arbitration decisions only provide limited guidance. Such decisions do not create precedent in any way, not even for the Division and certainly not for any appellate court. But, they do provide guidance. It is also important to note that when examining issues of community association law, when there is not a developed law on a particular issue, both condominium associations and homeowners’ associations tend to rely on each other’s body of law.)

In Girsch v. Whisper Walk Section E Association, Inc. (Arb. Case No. 97-0305), an owner challenged the board’s decision to replace a hibiscus hedge with a ficus hedge on the basis that a material alteration resulted. The arbitrator ruled that the foregoing was not a material alteration and stated, in pertinent part, that:

Board decisions regarding what shrubbery to plant or how to replace existing shrubs particularly implicate the business judgment decision of the board and rarely grow to the dimensions necessary to implicate the provisions of the documents or statute regarding material alterations to the common element… Moreover, changes apparent in a garden setting are not interchangeable with the types of decisions typically regarded as requiring compliance with section 718.113(2), Florida Statutes…Changes to foliage may appear dramatic to the observer, but rarely would the function and use of that portion of the common elements be appreciably altered to an extent deemed material. These considerations, combined with the realization that there is less of a legitimate expectation of the status quo in the area of landscaping, which may be transient in a given case, suggests that this area is one particularly ill-suited for material alteration analysis.

As another example, in Katchen V. Braemer Isle Condominium Association, Inc. (Arb. Case No. 98-5485), an owner challenged the board’s decision to make certain landscaping changes which affected the owner’s patio and view. The arbitrator stated, in pertinent part, that:

[I]t is not shown that the contemplated landscaping changes constitute an alteration or betterment within the meaning of the documents…The area in question will not change in function or essential nature; it will still be a landscaped garden area with flowers, bushes, and trees, similar in function to the parcel when petitioners first purchased their unit.

In yet another example, Tilney v. Association of the Fountains, Inc. (ARB. Case No. 02-5651), the owner alleged that the board materially altered the common elements without a vote of the owners as required by the documents and statute due to the addition of trees, landscaping rocks, an irrigation system, and parking spaces upon a previously undeveloped parcel of the property. Again the arbitrator ruled that the foregoing were not material alterations and stated, in pertinent part, that:

The essential character of the property has not changed in a material sense. Some change in appearance is inevitable where landscaping details are altered…but does not compel the conclusion that all changes are material…Even if a material change existed, the degree of maintenance chosen by the board is entitled to a presumption of correctness through operation of the business judgment rule.

Based upon the foregoing arbitration decisions, landscaping decisions such as what shrubbery to plant or how to replace existing shrubs are left to the reasonable business judgment of the board and do not rise to the level of being a material alteration subject to a vote of the unit owners. However, does that mean that all changes to landscaping do not rise to the level of being a material alteration? That answer, like many legal answers: it depends. Sometimes landscaping may be so dramatically changed, or there may be landscaping that is so significant, that changing such landscaping may rise to the level of being considered a material alteration to the common elements (or common areas as to homeowners’ associations).

Such was the situation in Trio Englewood, Inc. v. Fantasy Island Condominium Association, Inc. (ARB. Case No. 98-4670). Here, an owner challenged the board’s decision to remove two  trees. However, the two  trees in controversy were Norfolk Island pine trees, and the arbitrator was unwilling to rule without the benefit of additional fact finding that removal of such trees could not be considered a material alteration. The arbitrator concluded, in pertinent part, that:

[T]wo very tall, conical trees, [that] are, in setting and type, distinct from the other landscaping, and thus may be sufficiently significant features of the landscape that their removal would constitute a material alteration of the common elements.

However, because the arbitrator requested additional fact-finding, we do not know how the situation fully resolved itself. But, this decision indicates that not all landscape changes are exempt from being considered a material alteration.

Accordingly, the next time your association is contemplating changes to its landscaping, and although many changes to landscaping are left to the reasonable business judgment of the board and do not rise to the level of a material alteration requiring a vote of the unit owners, the board would be wise to consult with the association’s legal counsel to weigh in prior to making such changes.