Wednesday, August 7, 2013

Collecting Rent from a Delinquent Owner

I cannot tell you how many times I get asked about collecting rent on a delinquent owner's home or unit. Here's the owner in an association is delinquent in paying assessment, meanwhile they are renting their house or unit and presumable keeping the rent. Typically they are not using the rent to pay the association or the bank.  Can the association collect the rent? How does it going about doing so? Click through to find out....
Can an association collect rent from a delinquent owner that is renting their unit or house?  Absolutely yes, see Fla. Stat. 718.116(11) and 720.3085(8)(a). All the association has to do is send a letter to the tenant and copy the owner making a demand for the rent and the tenant is required to pay the rent directly to the association until the delinquency is satisfied.  Seems easy enough.  BUT what happens when the tenant doesn't pay, what happens when the tenant is a short-term renter, what happens when the renter is paying money to a rental company who then pays the owner, what happens when the "tenant" turns out to be a family member of the owner and the tenant is simply staying in the unit for a few weeks? what happens get the picture.  

Florida law provides that once a demand is made for a tenant to start paying its rent to the association that if the tenant fails to do so the association can follow the statutory procedure to evict the tenant.  Sounds great right?... So the association follows the statutory eviction procedure, spends the legal fees to do so, and at the end of the procedure what does the association have??? not much.  

In a typical eviction once the landlord/owner completes the eviction they get possession of the property back and can then lease it to somebody else.  This isn't the case with an association eviction.  When an association completes the eviction they do not get possession of the property to lease it, instead possession goes back to the owner again. There's nothing that prevents the owner from leasing the property to somebody else and forcing the association to start the process all over.

Generally, completing the eviction procedure only makes sense when the tenant themselves is a problem for the association. 

Short Term Rental
In the Florida panhandle short term condo rentals are the norm. People can rent their condos on a weekly basis over the summer and winter months and largely finance the property for the remainder of the year. How can an association collect rent when it's being rented a week or several days at a time? If the unit owner is self renting through a service like VRBO, frankly it's nearly impossible. The money and people transfer so quickly it's hard for the association to pin anybody down. Conversely though, if the owner is using a rental company, the association can usually coordinate with the rental company to have the rent paid to the association. I've found that as long as the rental company first gets to take their rental fee out of the amount collected they almost always will pay the remainder to the association.  

Final Tips
Remember the amounts collected get applied first to legal fees, late fees, interest, and THEN assessment. Once that entire amount is satisfied a letter must go to the tenant instructing them to begin directly paying their rent to the landlord again. As always, I encourage any association board to speak with their attorney prior to pursuing any of the collecting strategies above. 

Good Luck.    



  1. Hello there! Very helpful article! I'm really glad that I was able to stumble upon your weblog while searching Google. Thank you for this great post!
    affordable property management

  2. not a problem, thanks for the comment.