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11-12-2008 Workshop < ," JL<" "'"<'''''''''_>' <~ ~, '\,.> " J!/ 19200 West Conntrv Clllh Drive A ventllT3< FT, :n 1 RO City Commission Workshop Meeting November 12, 2008 9:00 A.M. Executive Conference Room AGENDA 1. Ives Dairy Road Interchange Project (FOOT Representative)* 2. Foreclosure Crisis and Cap on Mortgagee Liability To Condominium Associations ( Commissioner Diamond)* Action Required: Resolution 3. ACES Classroom Additions Project Update (City Manager) 4. Adjournment * Back-up Information Exists This meeting is open to the public. In accordance with the Americans with Disabilities Act of 1990, all persons who are disabled and who need special accommodations to participate in this meeting because of that disability should contact the Office of the City Clerk, 305-466-8901, not later than two days prior to such proceeding. I ..-----..f Florida Department of Transportation CHARLIE CRIST GOVERNOR 1000 N.W. 11 ]th Avenue Miami, FL 33172-5800 STEPHANIE C. KOPELOUSOS SECRETARY Mr. Eric M. Soroka City Manager City of A ventura 19200 West Country Club Drive Aventura, FL 33180 Dear Mr. Soroka: The Florida Department of Transportation is currently working on a roadway project in Miami- Dade County, just west of the City of Aventura. This project is presently in the design process and will be completed by December 28,2008. For your information, we are providing you with a detailed description and limits ofthe project. We would welcome the opportunity to discuss this project with your office. 422129-1-52-01 SR-9 Miami-Dade SR-9/I-95 Interchange at Ives Dairy Road From NE 16th Avenue to Highland Lakes Blvd. Widening, ramp widening, signing & pavement markings Signalization, lighting, drainage and milling & resurfacing Percentage of Completion: 900/0 Budget Amount: $6.6 Million Letting Date: 07/28/2010 Financial Project No: State Road No: County: Local Name: Limits: Description of Work: Please distribute this notice for all staff and/or elected officials that may have and interest or comments for the above mentioned project. If you or any of your staff have additional questions about this project or any other project in District 6, it would be a pleasure to provide additional information. Cc: Aileen Boucle, File Nov 07 08 09:41 a Bob Diamond 305-935-0088 p,1 :MEMO FOR WORKSHOP NOVEMBER 12, 2008 RE: Proposed Resolution to Address the Foreclosure Crisis and Cap on Mortgagee Liability to Condominium Associations - A Disaster Happening. Condominium living was once a dream shared by many people in Florida. That dream may become impaired unless the Florida Legislature comes to the aid of unit owners and condominium associations ("Associations"). I am requesting adoption of a Resolution requesting our State Legislature to provide appropriate relief. According to a recent Miami Herald article (11-03-08) foreclosures in Miami-Dade County have reached epidemic proportions: "More than 40,000 foreclosure lawsuits have been filed in the first nine months of this year. II (Compared with 9,814 in 2006). The rising foreclosures in Florida are resulting in a dramatic negative impact upon just about every Association's financial stability. When a condominium unit is in a foreclosure, the owner is not paying his regular condominium maintenance and other assessments, resulting in a budget shortfall, leaving the Association without the cash flow to pay its costs of operations including utilities, insurance, security, waste removal, staff salaries and management fees. The burden for the deficit falls on the non defaulting unit owners. Until the funds are made available to the Association by special assessment, some Associations have recently resorted to curtailing important services and terminated the employment of employees. An Association is empowered to make and collect assessments for the payment of the common expenses pursuant to Section 718,111 (4), Florida Statutes, and the Governing Association Documents. Section 718.116, Florida Statutes, enables an Association to claim a lien on a unit when the payment of the assessment is delinquent. However, in a first mortgage foreclosure, the Association's lien is subordinate to the mortgage, and moreover, the statute creates a further financial preference in favor of first mortgagees, providing that, the liability qf first mortgagee acquiring title to a unit by foreclosure or deed in lieu of foreclosure for urrpaid assessments that came due prior to the acquisition of title shall be the lesser of the unit's unpaid common expenses and regular periodic assessments that accrued or came due during the six months immediately preceding the acquisition o/title or one percent of the original mortgage debt. On the other hand, the statute further provides that a third party who acquires title to the unit, whether by foreclosure or otherwise, is jointly and severally liable with the previous owner for all unpaid assessments that carne due to the time of transfer oftitle, Therefore, no matter how many years the foreclosure process takes, the fIrst mortgagee, buying in tbe unit at foreclosure (usually the case where there is little or no equity left in the unit) has only nominal liability to pay all the accrued and unpaid assessments. This limitation on the first mortgagee's liability has provided incentive to the mortgagee's to delay the foreclosure process so that it has the best of both worlds: a limitation of liability for past assessments and by not taking title in the normal course, no responsibility for current ongoing condominium assessments. This inequity shifts the entire burden of non-performing unit owners in foreclosure on all the other unit owners. An Association's financial problem is exacerbated by the judicial system not designed or statTed to timely process foreclosure cases. Based on information derived from local Associations, it appears that the mortgagee's are deliberately delaying the prosecution of Nov 07 08 09:42a Bob Diamond 305-935-0088 p.2 mortgage foreclosures, waiting for a better market or other internal conditions in which to acquire title to the units, when they will place the units on the market for resale. In the meantime, many people who "play by the rulesll and have paid their assessments, find themselves in the position of not being able to pay increased assessments to make up the shortfall, putting their own units in jeopardy of foreclosure or resulting in personal bankruptcy. I have already discussed this matter with our newly elected State Representative who concurs with the importance of our submitting a Resolution and the necessity for the Legislature to address this issue. Without the necessity of naming buildings, I am aware of numerous Associations in and near A ventura that already having serious financial problems as indicated. I therefore request that we adopt a Resolution requesting of our State officials, namely, both Representatives and Senators, to amend the statutory cap to provide for additional protection for Associations throughout Florida by addressing the current inequity contained in Section 718.116 aforesaid. I suggest a discussion of the following possible alternatives (as well as any other methods of relief that our Commission may recommend): It is important to recognize the current depressed real estate market (which is not improving) and encourage an expedited foreclosure with a back-end benefit that could possibly mitigate the first mortgagee's loss, while certainly assisting the Association, which is the intended goal: 1. "A first mortgagee or its successor or assignees which acquires title to a unit by foreclosure or by deed in lieu of foreclosure is jointly and severally liable with the previous owner for all the unpaid assessments that became due up to the time of transfer oftitLe except for (a) the unit's regular periodic assessments which accrued or came due during the six (6) months immediately preceding the acquisition of title or (b) 1% of the original amount of the mortgage, whichever amount is the lesser. " This suggested amendment gives strong incentive to the mortgagee to conclude the foreclosure action in 6 months time. 2. Amend the current statute (718.116) by raising the cap (now capped at the lesser of six months or 1 % of the original mortgage) to provide that a mortgagee is liable for all the unpaid assessments that became due up to the time of transfer of title except for the lesser of nine (9) months regular maintenance accruing for the period immediately preceding the acquisition of title or ~IO of the original mortgage. This suggested amendment would provide some relief to the Associations and giving strong incentive to the mortgagee to conclude the foreclosure action in 9 months time. 3. Another alternative would be for the Resolution to simply present the seriousness of the financial problem and request the Legislature to take appropriate action to help the unit owners and Associations< Avent Condo hip 103108 t, ~ ~ 0 < rn ~ /1 r [f; J! :::j rn " r >> Z , I' II ! J I'l JJ I I I ;C; i ~ I i :r> ~ I I I I r-------- I I i I .n ;i i if : ~ I ! I I ! ., z 11m c. 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