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Federal National Mortgage Ass'n v. Mirabella at Mirasol Homeowners' Ass'n
Citations: 204 So. 3d 164; 2016 Fla. App. LEXIS 17583Docket: No. 4D15-4792
Court: District Court of Appeal of Florida; November 22, 2016; Florida; State Appellate Court
The appeal addresses the interpretation of the term "initially" in the context of Florida's statute limiting the liability of first mortgage holders for homeowner association assessments. The trial court ruled that "initially" modifies the verb "join," leading to the affirmation of this ruling. The appellant, Federal National Mortgage Association (FNMA), acquired property in Palm Beach County through foreclosure but did not join the homeowners association, Mirabella, until four years later. Under common law, a junior lienholder cannot extinguish a senior lienholder’s interest. The relevant statute, Section 720.3085(2)(c), establishes that a first mortgagee’s liability for unpaid assessments is capped if they "initially joined" the association in the foreclosure action. FNMA claimed the statute should protect them as they eventually joined Mirabella, while Mirabella contended that FNMA's delayed joining meant they missed the statute's protections. The trial court and subsequent ruling held that "initially" clearly modifies "joined," meaning FNMA failed to meet the statute's requirement by not joining Mirabella at the start of the foreclosure action. The court concluded that the statute is unambiguous, affirming the trial court's decision. The legislature did not specify that a homeowners association (HOA) must be joined at any point in a mortgage foreclosure action to benefit from a safe harbor provision. FNMA's argument that this interpretation leads to an absurd outcome is rejected. It is reasonable to infer that the legislature intended for HOAs to be involved from the beginning to facilitate case management, monitor progress, request mediation, and expedite resolution to minimize financial losses from unpaid assessments. Consequently, Mirabella is entitled to claim the full amount of unpaid assessments due to FNMA's failure to initially join the association in the foreclosure proceedings. The ruling is affirmed, with concurrence from CIKLIN, C.J. and TAYLOR, J.