Receivership
We hear the dreaded “R” word more and more these days as associations are having trouble attracting owners to serve on their condominium boards. Just what does the “R” word stand for? It stands for Receivership and there are some good reasons why you don’t want this to happen to your association. An association may go into Receivership if there are not enough owners to fill the vacancies on the board to constitute a quorum and properly run the association according to the bylaws.
Any owner may file a petition with the circuit court within the jurisdiction of where the condominium is located to have a receiver appointed to manage the affairs of the association (see FS 718.1124). The owner who intends to apply to the circuit court needs to provide a Notice to the owners about this.
The form of the notice shall be as follows:
NOTICE OF INTENT TO APPLY FOR RECEIVERSHIP
YOU ARE HEREBY NOTIFIED that the undersigned owner of a condominium unit in (name of condominium) intends to file a petition in the circuit court for appointment of a receiver to manage the affairs of the association on the grounds that the association has failed to fill vacancies on the board of administration sufficient to constitute a quorum. This petition will not be filed if the vacancies are filled within 30 days after the date on which this notice was sent or posted, whichever is later. If a receiver is appointed, the receiver shall have all of the powers of the board and shall be entitled to receive a salary and reimbursement of all costs and attorney’s fees payable from association funds. Signed (name and address of petitioning unit owner.)
This notice requirement also states that the notice must be sent by certified mail or by personal delivery and in addition to be posted conspicuously on the condominium property. This notice requires that it be sent and/or delivered to the unit owners and posted at least 30 days at the condominium property, 30 days prior to the filing of the petition seeking receivership. In addition, the notice shall be sent to the address used by the property appraiser in the county where the condominium is located. If that information is not available, then it must be sent to the unit address.
If the association fails to fill the vacancies within the 30 day notice required, then the unit owner may proceed with the petition. If a receiver is appointed by the circuit court, all unit owners shall be given written notice of such appointment.
The association shall be responsible for the salary of the receiver, court costs, and attorney’s fees. The receiver shall have all powers and duties of a duly constituted board of administration and shall serve until the association fills vacancies on the board sufficient to constitute a quorum and the court relieves the receiver of the appointment.
Now 2 big reasons you do not want this to happen in your condominium:
1. Loss of control of the association’s management, operations, decisions, and finances by someone who is not invested in the association like an owner.
2. Your operating costs will go up substantially, as the person assigned as your receiver could be an attorney (cost), who will hire a manager and other professionals to run things (cost) and the attorney, the manager and other professionals will have to report to the courts on how they are doing (costs). Every time the receiver gets involved with anything, there will be a cost to the association and if there are no savings, there will be special assessments to pay for the costs associated with the receivership.
I just think it makes a lot of sense for the owners to come together, devise a strategy, pitch in and get involved on the board of directors, committees and in any other capacity that helps the association to prosper rather than be run by a stranger. The next time you hear the “R” word being tossed around, get involved and the “R” word will disappear.
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