Tax Deed Purchasers Make An End Run Around HOA Fees

However, state legislators and courts have seen fit to offer some protection for those entities who acquires title of a parcel by tax deed.

Late last year Florida’s Fifth District Court of Appeals delivered an early Christmas present to these new parcel owners in the form of a decision in favor of Lunohah Investments in their case, Lunohah Investments, LLC v. Gaskell.

The court found that tax deed purchasers are not liable to the HOA for pre-tax deed assessments. This comes in addition an amendment to the Florida homeowners association statute in 2007 which allowed homeowner associations to impose liability on a parcel owner for unpaid assessments due only up until time of title transfer. In 2008 they added a safe harbor provision to that law which limited liability for a first mortgagee for acquired the parcel title by foreclosure or deed in lieu of foreclosure to either 12 months of unpaid HOA fees or one percent of the original mortgage amount—whichever is less.

In essence, the 2007 and 2008 state legislature amendments and the December 2013 court ruling help bring some relief to some tax deeds purchasers who might have been reticent to buy parcels so encumbered. Now, they can acquire these parcel titles by tax deed and completely avoid these additional fees as once imposed by the HOA.