A Surfside condominium association may have made a financial misstep when it took title to an oceanfront apartment, then asked the next owner to pony up overdue assessments, a divided Third District Court of Appeal panel said Wednesday.
In July 2008 the Spiaggia Ocean Condominium Association Inc. initiated lien foreclosure proceedings against New York publicist Ellyn Harris, who owned Unit 402, and a year later won a default summary judgment of $30,865.
The Bank of New York, which held the first mortgage, also initiated foreclosure proceedings and named the association as a defendant. The mortgage far exceeded the value of the unit.
The association was the only bidder, took title to the unit subject to the mortgage and rented the unit.
Aventura Management LLC was the successful bidder at the bank’s foreclosure sale in September 2010.
The condo association attempted to recover from Aventura Management the unpaid assessments, late fees and interest that had accrued since Harris defaulted. Aventura maintained that because the company was a third-party purchaser, the association was liable.
The Third District majority agreed.
“The statute nowhere requires a condominium association to position itself as the current or prior owner,” Judge Angel Cortiñas wrote, joined by Senior Judge Alan Schwartz. “That outcome is the result of external market forces, namely that condominium associations may find, as appellee did, that no one is willing to bid on a foreclosed unit at a foreclosure sale.”
Harris paid $940,000 in 2005 for the condominium, according to Miami-Dade County records. Aventura Management bought it for $345,200. The unit is currently assessed at $349,750.
Judge Frank Shepherd disagreed with Cortiñas and Schwartz.
“The statute could be clearer. However, based upon my study, I believe the decision of the trial court most accurately reflects the intention of the Legislature as expressed by the statute,” he wrote.
The majority noted state law allows the association to go after Harris for the unpaid assessments.
Both sides hailed the ruling as a victory.
Ramon Palacio, a partner at the Association Law Group who represented the Spiaggia association, called the reversal of Miami-Dade Circuit Judge Ronald Dresnick’s summary judgment a “procedural reversal” and directed attention to one sentence of the opinion: “Appellee is correct that the lien survives the foreclosure; merger of the lien with the final judgment is incompatible with the liabilities established by the statute,” Cortiñas wrote.
“I think condo and homeowner associations are going to be thrilled with that result,” added Ben Solomon, senior partner at the Miami Beach firm.
Benjamin Esco of the Miami office of Cole Scott & Kissane and Doug Stein of Seipp & Flick in Miami were Palacio’s co-counsel.
Miami Beach attorney Brett Feinstein, who represented Aventura with partner Douglas Stratton, also said the decision “looks like a win,” but he expected the condo association to ask for a rehearing and perhaps appeal to the Florida Supreme Court.
“This thing affects every condo association in the state of Florida, and it affects purchasers,” Feinstein said.
He said the Spiaggia association has not allowed Aventura to rent the unit.