Lenders foreclosing on property, business or mixed-use residential or commercial properties that include covenants, deed constraints, declarations, owners associations, and developer/declarant rights ought to understand certain problems that may occur during the course of the foreclosure action that might have a substantial influence on the eventual total expense of the foreclosure, the lender's capability to market the residential or commercial property post-foreclosure, and various functional problems that connect to these kinds of jobs. Similar concerns arise when taking title through a deed-in-lieu of foreclosure. No two distressed tasks are precisely alike and there are myriad concerns and traps that can be prevented with mindful and early preparation. The following is a standard list to notify you to problems that must be attended to before and during the pendency of the foreclosure or prior to acquisition by means of a deed-in-lieu.

Type of residential or commercial property being foreclosed

- Residential, commercial, or mixed-use
- A group of lots or systems
- A single lot or unit
- Developed, partially developed, or undeveloped

Obtain and examine the foreclosure title commitment, a U.C.C. search, and a municipal lien search in certain counties to determine the applicability of the following issues:

- Homeowner association declaration of covenants
- Declaration of condo
- Declarations and deed restrictions referring to the general neighborhood or advancement
- More than one association (master and sub associations).
- Subdivision plat( s).
- Contractors' liens.
- Owners' association liens.
- Municipal liens, consisting of super-priority community liens (might not appear in the realty records).
- Recorded mortgage pre-dates recordation of development documents and specific changes to the condominium statutes.
- Recorded joinder and consent of mortgagee to development files.
- Ownership of residential or commercial property and personalty

Subdivisions (Homeowner's Association)

- Homeowners associations are normally governed by Chapter 720, Florida Statutes. Certain statutory provisions might take precedence over provisions in the deed restrictions, however that is not always the case (may depend upon the substance of the particular issue and the presence of statutes at the time the deed restrictions were tape-recorded).
- Does the Declaration referral Ch. 720, Florida Statutes? Yes. Declaration tape-recorded prior to October 1, 2007? Review mortgage foreclosure arrangement to determine how the declaration addresses evaluation liability.
No. Review the mortgage foreclosure arrangement in the statement because of the statutory restriction on liability (12 months of typical cost assessments or one percent of the original mortgage debt) per § 720.3085( 2 )( c), Fla.

Stat. Condominiums

Statutes. Condominiums are created pursuant to and are governed by Chapter 718, Florida Statutes. Accordingly, the statute might be given more deference than the statement of condo.
Declaration of Condominium - If tape-recorded prior to July 2010, § 718.116, Fla. Stat. offers that assessment liability was restricted to the lower of up to six months of unsettled common cost evaluations or one percent of the original mortgage financial obligation.
- If taped after July 2010, § 718.116, Fla. Stat. offers a constraint on assessment liability to the lesser of approximately 12 months of unsettled common expenditure evaluations or one percent of the original mortgage debt.
- Review declaration of condo for a provision that instantly updates the requirements of § 718.116, Fla.

Stat. -Are leases current?- Tenants paying lease or in-kind?
- Are occupants existing on rents and charges?
- Do business tenants have proper licenses (i.e. liquor licenses).
- Are occupants complying with use restriction requirements (i.e. signage).
- Are occupants adhering to regional government guidelines (i.e. parking).
- Are there empty systems that need to be remodelled or fixed?
- Are tenants making payments to an owners' association (due to the fact that the landlord owner has stopped working to pay outstanding evaluations)?

Developer/Declarant Rights

- Even if a project is finished, a bulk purchaser/successor developer will likely need some developer/declarant rights in order to establish the residential or commercial property, run a sales center, construct model homes, put up sales signs, and so on. It is necessary to evaluate which rights are needed and then seek advice from regarding the very best method to acquire such rights while limiting liability for predecessor acts.
- Developer/Declarant rights are discovered in a composing that is taped and details the rights, responsibilities and obligations offered to a developer/declarant pursuant to statutes and deed restrictions/declarations.
Condominium Developer Rights - Assess whether it makes sense to get designer rights pursuant to the Distressed Condominium Relief Act to obtain rights needed for sales and marketing while limiting liability for previous developer acts.
- Determine whether acquisition of condo units wholesale must be as a bulk assignee or bulk buyer ( § 718.703, Fla. Stat. ).- A celebration taking title to condo systems upon foreclosure or by means of deed-in-lieu that has an appropriate project of developer/declarant rights and is categorized as a bulk assignee could: - Control the development up until such time as it sells the residential or commercial property to another buyer.
- Amend to fix existing shortages in the statement of condominium (relying on the language of the file).
- Control the books and records of the development and make certain they remain in order.
- Appoint a residential or commercial property management company of its choice, depending upon any existing management agreement.
- Enhance the sales capacity of the residential or commercial property by changing the governing documents (depending upon the language of the document)

- Can market and sell or lease systems, maintain model units, and have signs on the common elements.
- Triggers turnover of control of the association (if turnover has not previously took place) but is not responsible for turnover expenditures.
- Is not accountable for claims versus the designer for breach of service warranty, building defects, or failure to appropriately run the condo association

- Successor developer will likely choose a particular assignment of developer/declarant rights instead of counting on basic project.
- A loan provider with development rights may be exempt from neighborhood lot assessments (in lieu of assessments it may need to money budget plan shortages), but that is reliant upon the timing of recording of the mortgage and the deed constraints and the specific language consisted of in the deed constraints.
- Assignment of designer rights need to remain in recordable form

- Assignment of designer rights may need resignation of old board of directors and visit of a brand-new board.
- The brand-new board requires to meet to eliminate old officers and elect new ones.
- Budget and evaluation collection concerns.
- Correction of inadequate or malfunctioning paperwork.
- Develop owners' association transition plan in advance - statutes govern transition in both condos ( § 718.301, Fla. Stat. )and property owners associations ( § 720.307, Fla. Stat.

) Issues During Pendency of Foreclosure Action

- A receivership can restrict direct exposure for the foreclosing loan provider by dealing with issue issues prior to the transfer of title, such as: - Environmental problems.
- Chinese drywall.
- Completion of preliminary building and construction.
- Making significant repairs.
- Security/vandalism.
- Marketing and sales.
- Managing occupants.
- Compliance with governmental guidelines.
- Compliance with developmental plan.
- Other various issues

- Continue marketing of systems for sale to avoid automated turnover.
- Funding the association.
- Advance funding certificates (a kind of protected loaning to the association so bank funding does not get included in the uncollectible shortage).
- Receivership certificates.
- Continuation of deficit financing (financing only association deficits as opposed to funding association based on a spending plan).
- Audit association's operating, working capital and reserve accounts.
- Maintains official records

Post-Foreclosure

- Monitor timelines for: - Assessments - Payment of evaluations due as of date of conveyance.
- Payment of ongoing evaluations

Other Special Development Issues

- Marinas.
- Partial termination of condo.
- Condo hotels.
- Mixed use jobs.
- Community advancement districts or special taxing districts.
- Mobile home parks.
- Timeshares and fractional interests.
- Infrastructure building and construction.
- Submerged state land leases should be examined for functions of transferring along with the residential or commercial property.
- Livestock.
- Mitigation and sanctuary.
- Water management permits and responsibilities.
- Reserved business interests in covenants. For example: - Right to sell parking spaces.
- Right to manage cable costs

This list is basic in nature and does not cover all possible concerns with regard to the conveyance by means of foreclosure or deed-in-lieu of residential or commercial property in a distressed condo or house owners' association project. Careful analysis of your task with members of the Real Residential Or Commercial Property Litigation and the Community, Condominium, and Resort Development Group of the Real Estate and Finance Practice Group will lead to a smooth shift of the task with required rights for sales and operation of the task.