Lenders foreclosing on domestic, industrial or mixed-use residential or commercial properties that include covenants, deed constraints, statements, owners associations, and developer/declarant rights ought to be conscious of specific issues that may occur throughout the course of the foreclosure action that might have a significant influence on the eventual total cost of the foreclosure, the loan provider's capability to market the residential or commercial property post-foreclosure, and different functional problems that connect to these kinds of tasks. Similar concerns arise when taking title through a deed-in-lieu of foreclosure. No two distressed projects are exactly alike and there are myriad issues and traps that can be prevented with cautious and early preparation. The following is a standard list to signal you to issues that must be attended to before and throughout the pendency of the foreclosure or prior to acquisition by means of a deed-in-lieu.

Kind of residential or commercial property being foreclosed

- Residential, business, or mixed-use
- A group of lots or systems
- A single lot or system
- Developed, partially established, or undeveloped

Obtain and evaluate the foreclosure title commitment, a U.C.C. search, and a community lien search in specific counties to determine the applicability of the following problems:

- Homeowner association statement of covenants
- Declaration of condominium
- Declarations and deed limitations relating to the overall community or advancement
- 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 property records).
- Recorded mortgage pre-dates recordation of formation documents and particular modifications to the condominium statutes.
- Recorded joinder and permission of mortgagee to formation files.
- Ownership of residential or commercial property and personalty

Subdivisions (Homeowner's Association)

- Homeowners associations are typically governed by Chapter 720, Florida Statutes. Certain statutory provisions may take precedence over provisions in the deed restrictions, however that is not always the case (may depend upon the compound of the specific concern and the existence of statutes at the time the deed constraints were recorded).
- Does the Declaration reference Ch. 720, Florida Statutes? Yes. Declaration tape-recorded prior to October 1, 2007? Review mortgage foreclosure provision to determine how the statement addresses evaluation liability.
No. Review the mortgage foreclosure provision in the declaration due to the statutory constraint on liability (12 months of typical cost evaluations or one percent of the initial mortgage financial obligation) 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 provided more deference than the statement of condominium.
Declaration of Condominium - If recorded prior to July 2010, § 718.116, Fla. Stat. provides that evaluation liability was limited to the lesser of approximately 6 months of unpaid typical expense assessments or one percent of the initial mortgage financial obligation.
- If tape-recorded after July 2010, § 718.116, Fla. Stat. offers a limitation on evaluation liability to the lower of approximately 12 months of unsettled common expenditure assessments or one percent of the original mortgage debt.
- Review declaration of condominium for an arrangement that instantly updates the requirements of § 718.116, Fla.

Stat. -Are leases present?- Tenants paying rent or in-kind?
- Are renters existing on rents and fees?
- Do commercial renters have appropriate licenses (i.e. liquor licenses).
- Are renters abiding by use limitation requirements (i.e. signs).
- Are renters complying with local federal government regulations (i.e. parking).
- Exist empty systems that require to be remodelled or repaired?
- Are renters paying to an owners' association (because the landlord owner has stopped working to pay exceptional assessments)?

Developer/Declarant Rights

- Even if a job is completed, 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 model homes, erect sales signs, etc. It is necessary to assess which rights are required and then speak with relating to the very best way to obtain such rights while limiting liability for predecessor acts.
- Developer/Declarant rights are found in a writing that is taped and describes the rights, duties and responsibilities provided to a developer/declarant pursuant to statutes and deed restrictions/declarations.
Condominium Developer Rights - Assess whether it makes good sense to obtain designer rights pursuant to the Distressed Condominium Relief Act to acquire rights required for sales and marketing while restricting liability for prior developer acts.
- Determine whether acquisition of condominium units in bulk need to be as a bulk assignee or bulk buyer ( § 718.703, Fla. Stat. ).- A party taking title to condo units upon foreclosure or by means of deed-in-lieu that has an appropriate assignment of developer/declarant rights and is categorized as a bulk assignee could: - Control the development till such time as it offers the residential or commercial property to another purchaser.
- Amend to correct existing deficiencies in the declaration of condo (relying on the language of the document).
- Control the books and records of the advancement and ensure they remain in order.
- Appoint a residential or commercial property management company of its choice, relying on any existing management contract.
- Enhance the sales potential of the residential or commercial property by modifying the governing documents (relying on the language of the document)

- Can market and sell or rent units, maintain model units, and have signs on the typical elements.
- Triggers turnover of control of the association (if turnover has not previously took place) however is not responsible for turnover expenditures.
- Is not responsible for claims versus the developer for breach of warranty, building flaws, or failure to effectively operate the condo association

- Successor developer will likely choose a particular project of developer/declarant rights rather than relying on basic project.
- A lending institution with development rights might be exempt from subdivision lot assessments (in lieu of evaluations it might have to fund spending plan deficiencies), however that depends on the timing of recording of the mortgage and the deed restrictions and the particular language consisted of in the deed limitations.
- Assignment of designer rights need to remain in recordable kind

- Assignment of developer rights may require resignation of old board of directors and consultation of a new board.
- The brand-new board requires to fulfill to remove old officers and choose brand-new ones.
- Budget and assessment collection concerns.
- Correction of inadequate or defective documentation.
- Develop owners' association shift strategy in advance - statutes govern shift in both condominiums ( § 718.301, Fla. Stat. )and house owners associations ( § 720.307, Fla. Stat.

) Issues During Pendency of Foreclosure Action

- A receivership can restrict direct exposure for the foreclosing loan provider by handling issue issues prior to the transfer of title, such as: - Environmental concerns.
- Chinese drywall.
- Completion of preliminary construction.
- Making significant repairs.
- Security/vandalism.
- Marketing and sales.
- Managing renters.
- Compliance with governmental regulations.
- Compliance with developmental strategy.
- Other miscellaneous problems

- Continue marketing of units for sale to prevent automated turnover.
- Funding the association.
- Advance funding certificates (a form of protected loaning to the association so bank financing does not get consisted of in the uncollectible shortage).
- Receivership certificates.
- Continuation of deficit funding (funding only association deficits instead of moneying association based on a budget).
- Audit association's operating, working capital and reserve accounts.
- Maintains official records

Post-Foreclosure

- Monitor timelines for: - Assessments - Payment of assessments due as of 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 unique taxing districts.
- Mobile home parks.
- Timeshares and fractional interests.
- Infrastructure construction.
- Submerged state land leases need to be evaluated for functions of transferring together with the residential or commercial property.
- Livestock.
- Mitigation and conservation locations.
- Water management allows and responsibilities.
- Reserved business interests in covenants. For example: - Right to sell parking areas.
- Right to manage cable tv costs

This checklist is basic in nature and does not cover all possible issues with regard to the conveyance through foreclosure or deed-in-lieu of residential or commercial property in a distressed condominium or house owners' association task. Careful analysis of your job 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 transition of the job with necessary rights for sales and operation of the job.