Lenders foreclosing on domestic, commercial or mixed-use residential or commercial properties that include covenants, deed restrictions, declarations, owners associations, and developer/declarant rights must be conscious of certain problems that may emerge during the course of the foreclosure action that might have a significant influence on the eventual total expense of the foreclosure, the loan provider's capability to market the residential or commercial property post-foreclosure, and various operational concerns that relate to these kinds of jobs. Similar concerns occur when taking title by means of a deed-in-lieu of foreclosure. No two distressed tasks are precisely alike and there are myriad issues and traps that can be prevented with mindful and early planning. The following is a basic checklist to notify you to concerns that must be dealt with before and during 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, commercial, or mixed-use
- A group of lots or units
- A single lot or unit
- Developed, partly established, or undeveloped

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

- Homeowner association statement of covenants
- Declaration of condominium
- Declarations and deed constraints relating to the general neighborhood 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 files and certain changes to the condo statutes.
- Recorded joinder and consent of mortgagee to formation documents.
- Ownership of residential or commercial property and personalty

Subdivisions (Homeowner's Association)

- Homeowners associations are normally governed by Chapter 720, Florida Statutes. Certain statutory arrangements may take precedence over arrangements in the deed restrictions, however that is not always the case (might rely on the compound of the particular issue and the presence of statutes at the time the deed constraints were taped).
- Does the Declaration reference Ch. 720, Florida Statutes? Yes. Declaration taped prior to October 1, 2007? Review mortgage foreclosure arrangement to identify how the statement addresses evaluation liability.
No. Review the mortgage foreclosure arrangement in the declaration because of the statutory restriction on liability (12 months of common cost evaluations or one percent of the initial mortgage financial obligation) per § 720.3085( 2 )( c), Fla.

Stat. Condominiums

Statutes. Condominiums are developed pursuant to and are governed by Chapter 718, Florida Statutes. Accordingly, the statute might be given more deference than the declaration of condo.
Declaration of Condominium - If recorded prior to July 2010, § 718.116, Fla. Stat. provides that evaluation liability was limited to the lower of approximately 6 months of overdue typical cost evaluations or one percent of the original mortgage financial obligation.
- If recorded after July 2010, § 718.116, Fla. Stat. offers a constraint on evaluation liability to the lesser of up to 12 months of unsettled typical cost evaluations or one percent of the original mortgage financial obligation.
- Review declaration of condominium for a provision that instantly updates the requirements of § 718.116, Fla.

Stat. -Are leases current?- Tenants paying lease or in-kind?
- Are tenants present on rents and dues?
- Do commercial occupants have appropriate licenses (i.e. alcohol licenses).
- Are occupants abiding by usage constraint requirements (i.e. signs).
- Are renters complying with local federal government regulations (i.e. parking).
- Exist empty systems that require to be refurbished or repaired?
- Are occupants paying to an owners' association (since the property manager owner has stopped working to pay impressive evaluations)?

Developer/Declarant Rights

- Even if a project is completed, a bulk purchaser/successor designer will likely require some developer/declarant rights in order to establish the residential or commercial property, run a sales center, build design homes, put up sales indications, etc. It is crucial to evaluate which rights are required and after that seek advice from relating to the best method to obtain such rights while limiting liability for predecessor acts.
- Developer/Declarant rights are discovered in a writing that is tape-recorded and lays out the rights, tasks and responsibilities provided to a developer/declarant pursuant to statutes and deed restrictions/declarations.
Condominium Developer Rights - Assess whether it makes good sense to get designer rights pursuant to the Distressed Condominium Relief Act to acquire rights required for sales and marketing while limiting liability for previous designer acts.
- Determine whether acquisition of condominium systems in bulk must be as a bulk assignee or bulk buyer ( § 718.703, Fla. Stat. ).- A party taking title to condo systems upon foreclosure or via deed-in-lieu that has a proper project of developer/declarant rights and is categorized as a bulk assignee might: - Control the advancement until such time as it sells the residential or commercial property to another purchaser.
- Amend to correct existing deficiencies in the statement of condominium (relying on the language of the document).
- Control the books and records of the development and make sure they remain in order.
- Appoint a residential or commercial property management business of its choice, relying on any existing management contract.
- Enhance the sales capacity of the residential or commercial property by changing the governing documents (relying on the language of the file)

- Can market and offer or lease systems, preserve design units, and have signs on the common aspects.
- Triggers turnover of control of the association (if turnover has not previously took place) but is not accountable for turnover costs.
- Is not responsible for claims against the designer for breach of warranty, construction flaws, or failure to properly run the condo association

- Successor developer will likely prefer a specific project of developer/declarant rights rather than relying on basic assignment.
- A loan provider with development rights may be exempt from neighborhood lot evaluations (in lieu of assessments it might need to money budget deficiencies), however that depends on the timing of recording of the mortgage and the deed constraints and the particular language contained in the deed constraints.
- Assignment of designer rights need to remain in recordable kind

- Assignment of designer rights might require resignation of old board of directors and consultation of a new board.
- The brand-new board needs to meet to eliminate old officers and choose brand-new ones.
- Budget and evaluation collection concerns.
- Correction of inadequate or faulty documents.
- Develop owners' association transition strategy ahead of time - statutes govern transition 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 exposure for the foreclosing loan provider by dealing with problem concerns prior to the transfer of title, such as: - Environmental problems.
- Chinese drywall.
- Completion of initial building.
- Making major repairs.
- Security/vandalism.
- Marketing and sales.
- Managing occupants.
- Compliance with governmental guidelines.
- Compliance with developmental strategy.
- Other various problems

- Continue marketing of systems for sale to prevent automated turnover.
- Funding the association.
- Advance funding certificates (a type of guaranteed loaning to the association so bank funding does not get consisted of in the uncollectible shortage).
- Receivership certificates.
- Continuation of deficit financing (financing only association deficits instead of moneying association based on a budget 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 continuous evaluations

Other Special Development Issues

- Marinas.
- Partial termination of condo.
- Condo hotels.
- Mixed use projects.
- Community advancement districts or unique taxing districts.
- Mobile home parks.
- Timeshares and fractional interests.
- Infrastructure building.
- Submerged state land leases should be examined for functions of moving together with the residential or commercial property.
- Livestock.
- Mitigation and conservation areas.
- Water management allows and responsibilities.
- Reserved company interests in covenants. For instance: - Right to offer parking areas.
- Right to control cable television service expenses

This list is general in nature and does not cover all possible problems with regard to the conveyance by means of foreclosure or deed-in-lieu of residential or commercial property in a distressed condo or property owners' association project. 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 lead to a smooth shift of the task with essential rights for sales and operation of the job.