Lenders foreclosing on residential, commercial or mixed-use residential or commercial properties that involve covenants, deed limitations, 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 significant effect on the ultimate total expense of the foreclosure, the lending institution's ability to market the residential or commercial property post-foreclosure, and various operational problems that relate to these kinds of tasks. Similar concerns develop when taking title by means of a deed-in-lieu of foreclosure. No two distressed projects are exactly alike and there are myriad issues and traps that can be avoided with mindful and early planning. The following is a fundamental checklist to inform you to problems that should be attended to before and throughout the pendency of the foreclosure or prior to acquisition through a deed-in-lieu.

Type of residential or commercial property being foreclosed

- Residential, commercial, or mixed-use
- A group of lots or units
- A single lot or unit
- Developed, partly established, or undeveloped

Obtain and review the foreclosure title dedication, a U.C.C. search, and a local lien search in particular counties to identify the applicability of the following issues:

- Homeowner association statement of covenants
- Declaration of condominium
- Declarations and deed limitations relating to the overall community or development
- More than one association (master and sub associations).
- Subdivision plat( s).
- Contractors' liens.
- Owners' association liens.
- Municipal liens, including super-priority municipal liens (might not appear in the realty records).
- Recorded mortgage pre-dates recordation of formation files and particular changes to the condo statutes.
- Recorded joinder and authorization of mortgagee to development files.
- Ownership of residential or commercial property and personalty

Subdivisions (Homeowner's Association)

- Homeowners associations are usually governed by Chapter 720, Florida Statutes. Certain statutory arrangements might take precedence over provisions in the deed constraints, however that is not constantly the case (might depend upon the compound of the specific problem and the existence of statutes at the time the deed constraints were taped).
- Does the Declaration referral Ch. 720, Florida Statutes? Yes. Declaration taped prior to October 1, 2007? Review mortgage foreclosure provision to identify how the statement addresses evaluation liability.
No. Review the mortgage foreclosure provision in the statement because of the statutory restriction on liability (12 months of typical expenditure evaluations or one percent of the original mortgage debt) per § 720.3085( 2 )( c), Fla.

Stat. Condominiums

Statutes. Condominiums are produced pursuant to and are governed by Chapter 718, Florida Statutes. Accordingly, the statute might be offered more deference than the statement of condo.
Declaration of Condominium - If recorded prior to July 2010, § 718.116, Fla. Stat. provides that evaluation liability was restricted to the lesser of up to six months of unsettled typical expense assessments or one percent of the original mortgage debt.
- If tape-recorded after July 2010, § 718.116, Fla. Stat. supplies a restriction on assessment liability to the lesser of as much as 12 months of overdue typical cost assessments or one percent of the original mortgage financial obligation.
- Review statement of condominium for a provision that immediately updates the requirements of § 718.116, Fla.

Stat. -Are leases current?- Tenants paying lease or in-kind?
- Are renters current on rents and charges?
- Do business occupants have proper licenses (i.e. liquor licenses).
- Are renters abiding by use constraint requirements (i.e. signs).
- Are occupants adhering to city government policies (i.e. parking).
- Are there empty units that need to be remodelled or repaired?
- Are renters making payments to an owners' association (because the landlord owner has failed to pay outstanding evaluations)?

Developer/Declarant Rights

- Even if a task is finished, a bulk purchaser/successor developer will likely require some developer/declarant rights in order to develop the residential or commercial property, run a sales center, construct design homes, set up sales indications, etc. It is very important to evaluate which rights are required and after that consult relating to the very best method to acquire such rights while limiting liability for predecessor acts.
- Developer/Declarant rights are found in a writing that is taped and lays out the rights, duties and duties offered to a developer/declarant pursuant to statutes and deed restrictions/declarations.
Condominium Developer Rights - Assess whether it makes good sense to get developer rights pursuant to the Distressed Condominium Relief Act to get rights required for sales and marketing while limiting liability for prior designer acts.
- Determine whether acquisition of condo units wholesale need to be as a bulk assignee or bulk purchaser ( § 718.703, Fla. Stat. ).- A celebration taking title to condominium units upon foreclosure or by means of deed-in-lieu that has a correct assignment of developer/declarant rights and is categorized as a bulk assignee might: - Control the advancement until such time as it offers the residential or commercial property to another buyer.
- Amend to correct existing deficiencies in the declaration of condo (relying on the language of the file).
- Control the books and records of the advancement and make certain they are in order.
- Appoint a residential or commercial property management business of its choice, relying on any existing management agreement.
- Enhance the sales capacity of the residential or commercial property by modifying the governing files (depending upon the language of the file)

- Can market and sell or lease systems, maintain model systems, and have indications on the typical elements.
- Triggers turnover of control of the association (if turnover has not formerly happened) however is not responsible for turnover expenses.
- Is not responsible for claims versus the developer for breach of warranty, construction problems, or failure to correctly run the condo association

- Successor developer will likely choose a specific task of developer/declarant rights instead of depending on basic task.
- A loan provider with development rights might be exempt from neighborhood lot evaluations (in lieu of assessments it may need to fund spending plan deficiencies), however that depends on the timing of recording of the mortgage and the deed limitations and the specific language included in the deed limitations.
- Assignment of developer 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 new board requires to meet to get rid of old officers and choose new ones.
- Budget and evaluation collection problems.
- Correction of inadequate or faulty paperwork.
- Develop owners' association shift plan beforehand - statutes govern shift 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.
- Making significant repairs.
- Security/vandalism.
- Marketing and sales.
- Managing tenants.
- Compliance with governmental policies.
- Compliance with developmental strategy.
- Other miscellaneous concerns

- Continue marketing of systems for sale to avoid automatic turnover.
- Funding the association.
- Advance financing certificates (a form of secured loaning to the association so bank funding does not get included in the uncollectible deficiency).
- Receivership certificates.
- Continuation of deficit funding (financing only association deficits rather than moneying association based on a spending plan).
- Audit association's operating, working capital and reserve accounts.
- Maintains main records

Post-Foreclosure

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

Other Special Development Issues

- Marinas.
- Partial termination of condo.
- Condo hotels.
- Mixed usage tasks.
- Community development districts or special taxing districts.
- Mobile home parks.
- Timeshares and fractional interests.
- Infrastructure construction.
- Submerged state land leases should be examined for purposes of moving along with the residential or commercial property.
- Livestock.
- Mitigation and conservation locations.
- Water management permits and responsibilities.
- Reserved company interests in covenants. For instance: - Right to sell parking spaces.
- Right to control cable costs

This checklist is general in nature and does not cover all possible issues with regard to the conveyance via foreclosure or deed-in-lieu of residential or commercial property in a distressed condominium or property owners' association task. Careful analysis of your project 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 result in a smooth shift of the job with needed rights for sales and operation of the job.