Second District Affirms Conclusion That Bank Not Liable For Past Due Assessments

In Coral Lakes Community Association, Inc. v. Busey Bank, N.A. (2D08-5062), the Second District affirmed the trial court's conclusion that the bank was not required to pay delinquent assessments due to the homeowners association and affirmed the trial court's entry of a summary judgment in foreclosure.  The court stated:

At the hearing on the motion for summary judgment, the only contentious issue was whether the Bank was excused from paying the unpaid HOA assessments that had accrued. The Bank argued that at the time of the execution of its note and mortgage in 2006, the HOA's Declaration gave its lien a distinct and very advantageous priority position over any HOA lien for unpaid assessments. Moreover, the Bank, by virtue of being an intended third-party beneficiary of this paragraph of the Declaration, could not have this benefit removed by operation of the statute, which was not in existence at the time it entered into its contract with the homeowners.  Further, the Bank argued, citing to City of Sanford v. McClelland, 163 So. 513 (Fla. 1935), applying the new statutory language would impair the Bank's contractual right, i.e., its vested lien priority.

The court concluded:

We conclude that because of the Declaration's plain and unambiguous language subordinating any claim for unpaid HOA assessments to a first mortgagee's claim upon foreclosure or deed in lieu of foreclosure, it controls and absolves the Bank, as first mortgagee, from liability for any assessments accruing before it acquires the parcel. "Restrictions found within a Declaration are afforded a strong presumption of validity, and a reasonable unambiguous restriction will be enforced according to the intent of the parties as expressed by the clear and ordinary meaning of its terms. . . ."

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The HOA yielded any right to claim it had a superior lien position to the Bank's preexisting mortgage by virtue of the plain and unambiguous language of its Declaration, which the Bank had every right to rely upon when deciding to finance the homeowners' home in the Coral Lakes community. The trial court did not err in finding the Bank's first mortgage lien superior to the HOA's claim for unpaid assessments notwithstanding section 720.3085.