Were Association Lien Foreclosures Intended to Be Covered by Florida’s Moratorium on Mortgage Foreclosures?

Matt G. Firestone
May 9, 2020
Mortgage

UPDATE JULY 29, 2020: EO 20-180 was signed by Governor Ron DeSantis on July 29, 2020, and finally provided clarification on whether association lien foreclosures were intended to be covered by Florida's Moratorium on Morgage Foreclosures. You can find more information on our latest blog HERE.

On April 2, 2020, Florida Governor Ron DeSantis, in response to the COVID-19 pandemic, issued Executive Order 20-94, entitled “Mortgage Foreclosure and Eviction Relief” (“EO 20-94”).  EO 20-94 provided for a statewide moratorium on mortgage foreclosure causes of action as well as a statewide moratorium against residential evictions based upon the non-payment of rent (While there was no express limitation of that moratorium to residential mortgage foreclosure causes of action, it appears, from the language of that order, that it was only intended to apply to residential mortgage foreclosure actions).

EO 20-94 was set to elapse again on June 30, 2020, but only hours away from the expiration of the existing Executive Order ("EO 137"), Governor DeSantis signed Executive Order 20-159 that extended those moratoriums for another month.

One of the many questions begged by the issuance of EO 20-94 was this one: “Were homeowner’s association and condominium association lien foreclosure actions intended to be covered under the moratorium on mortgage foreclosures established by EO 20-94?”

“While there is no reference, in EO 20-94, to homeowner’s association liens or condominium association liens, the uncertainty as to whether the association lien foreclosure actions were intended to be covered by EO 20-94 stems from the interdependency, between the association lien foreclosure actions and mortgage foreclosure actions, established by the Florida Statutes.  Section 718.116(6)(a), Florida Statutes and Section 720.3085(5), Florida Statutes, both provide:   “The association may bring an action in its name to foreclose a lien for unpaid assessments secured by a lien in the same manner that a mortgage of real property is foreclosed and may also bring an action to recover a money judgment for the unpaid assessments without waiving any claim of lien.”       

Thus, if an association lien foreclosure action is to proceed in “the same manner in which a mortgage of real property is foreclosed”, and a mortgage on real property cannot currently be foreclosed due to EO 20-94, it would then seem to follow that association lien foreclosure actions must be subject to the same statewide moratorium that currently prevents mortgages on real property from being foreclosed.

This result may not have been intended by Governor DeSantis.  That appears to be demonstrated by the fact that EO 20-94 did not expressly restrict all foreclosure actions on real property.  Instead, only mortgage foreclosure actions were restricted. That conclusion also appears to be bolstered by the following language found in Section 3 of the order:  “Nothing in this Executive Order shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.”  If EO 20-94 were intended to also apply to association lien foreclosure actions, it would have been likely that Section 3 would have been rewritten to have read: “Nothing in this Executive Order shall be construed as relieving an individual from their obligation to make mortgage payments, homeowner’s association or condominium association payments, or rent payments.”     

However, a reading of EO 20-94 as restricting all foreclosure actions on real property, or at least on residential real property, appears to be supported by the apparent underlying goal of that order --- preventing Florida residents from being forced out of their residences, during the pandemic, due to a failure to pay obligations associated with the occupancy of those residences, for those obligations (such as a mortgage obligation or a rent obligation) that afford a creditor the right to compel the resident to vacate the residence (through the completion of a foreclosure sale by the mortgage holder or the completion of an eviction action by the landlord).  Since a homeowner’s association and a condominium association are both in the class of creditors that also have the right to compel the resident to vacate the residence (through the completion of a foreclosure sale), perhaps Governor DeSantis did intend for EO 20-94 to also apply to a homeowner’s association and a condominium association.

Regardless of Governor DeSantis’ original intentions at the time of the issuance of EO 20-94, this reader hopes that, in the event the restrictions imposed by EO 20-94 are extended beyond the current deadline through the issuance of a subsequent executive order, the subsequent order will provide clarity as to this issue.  In addition, perhaps the extended order, assuming one is issued, will provide an exception for vacant properties as there would appear to be no reason to prevent foreclosures on properties that are currently vacant.

For the latest news on COVID-19’s effects on community associations, contact our association law team for more information.

July 1, 2020 Update:
Executive Order 20-121 (“EO 121”) was issued on May 14, 2020 by Governor DeSantis. It extended EO 20-94 through the end of the day on June 1, 2020.  Unfortunately, EO 20-121 did not clarify whether EO 20-94 was intended to also cover homeowner’s association and condominium association lien foreclosure actions.  It also did not provide an exception for vacant properties.  Instead, EO 20-121 merely read: “I hereby extend Executive Order 20-94 until 12:01 a.m. on June 2, 2020.”   

Executive Order 20-137 (“EO 137”) was issued on June 1, 2020 by Governor DeSantis.  It extended EO 20-94 through the end of the day on June 30, 2020.  Unfortunately, EO 20-137 did not clarify whether EO 20-94 was intended to also cover homeowner’s association and condominium association lien foreclosure actions.  It also did not provide an exception for vacant properties.  Instead, EO 20-137 merely read: “I hereby extend Executive Order 20-94 until 12:01 a.m. on July 1, 2020.” 

On June 30th, only hours away from the expiration of the existing Executive Order ("EO 137") which provides a statewide moratorium against both residential mortgage foreclosure actions and residential eviction of tenants, Governor DeSantis signed Executive Order 20-159 that extended those moratoriums for another month. Once again, this new order didn't clarify whether EO 20-94 was intended to cover homeowner's and condominium association lien foreclosure actions, although it has been read by most Florida trial courts to also apply to residential lien foreclosure actions.