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Condominiums — Mortgages — Foreclosure — Liability for assessments — Where plaintiff became assignee and subsequent holder of first mortgage on condominium unit and thereafter acquired title to unit through foreclosure action in which condominium association was joined as defendant, plaintiff has limited liability for unpaid condominium association assessments

Plaintiff  FNMA,  assignee of an original note and mortgage to Countrywide filed a declaratory judgment action as to its liability for unpaid condominium dues  under §718.116(1)(b), Florida Statutes.

Pursuant to the Florida Condominium Act, the assignee of a first mortgagee who acquires title to a condominium unit through foreclosure has limited liability for unpaid condominium association assessments. § 718.116(1)(b), Fla. Stat. (2011). To fall under this statutory safe harbor, the assignee must show: (1) it was a subsequent holder of the first mortgage; (2) it acquired title to the condominium unit through foreclosure; and (3) the condominium association was joined as a defendant in the foreclosure action. § 718.116(1)(b), (g), Fla. Stat. (2011).

A first mortgage was given to Countrywide Home Loans, Inc. Plaintiff was assigned the loan secured by this first mortgage on or about October 1, 2006. As a matter of law, this assignment of the loan to the Plaintiff also assigned the mortgage securing the loan to the Plaintiff. Johns v. Gillian, 134 Fla. 575, 580 (Fla. 1938). On October 18, 2006, the mortgage was recorded in the Official Records of Palm Beach County, Florida. On August 23, 2010, the loan servicer obtained a Final Judgment of Mortgage Foreclosure in Countrywide Home Loans Servicing, LP v. Walker et al., Case No. 502009CA011339XXXXMB (Fla. 15th Cir. Ct. Aug. 23, 2010). The Defendant was joined as a defendant in the foreclosure action. The final judgment assigned the loan servicer’s right to bid at the foreclosure sale to the Plaintiff if the servicer was the purchaser at the sale. Following the foreclosure sale, the Clerk issued a Certificate of Title naming the Plaintiff as the purchaser of the property on June 7, 2011.

The Plaintiff acquired title through the foreclosure action, in which the Defendant was joined as a party. § 718.116(1)(b), Fla. Stat. (2011). The Plaintiff would not fall under the safe harbor in section 718.116 if it had merely been assigned the bidding rights of the foreclosure plaintiff, without having a prior interest in the loan or mortgage. The Court finds, however, that the Plaintiff became an assignee and subsequent holder of the first mortgage in October of 2006. Compare Bay Holdings, Inc. v. Island Blvd. Condo Ass’n, 895 So. 2d 1197, 1197 (Fla. 3d DCA 2005) [30 Fla. L. Weekly D547c] with Oriole Golf & Tennis Club Condominium One J Ass’n, Inc. v. Calbo, Case No. 03-CIV-21883, 2004WL6039691 (S.D. Fla. Jan. 22, 2004).

Accordingly, it is


1. Plaintiff’s Motion for Summary Judgment is hereby GRANTED.

2. Pursuant to section 718.116(1)(b), Florida Statutes, the Plaintiff’s liability to the Defendant for unpaid assessments accrued prior to June 7, 2011 is limited to the lesser of: (1) the unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding June 7, 2011 and for which payment in full has not been received by the association; or (2) one percent of the original mortgage debt.

FEDERAL NATIONAL MORTGAGE ASSOCIATION v. KENSINGTON OF ROYAL PALM BEACH CONDOMINIUM ASSOCIATION, INC.,  Circuit Court, 15th Judicial Circuit in and for Palm Beach County. Case No. 502012CA002391XXXXMB, Division “AG.” May 16, 2012. Honorable David Crow, Judge. 19 Fla. L. Weekly Supp. 714a Online Reference: FLWSUPP 1909FEDE