In short: In Catalina West HOA v. Fannie Mae (2016), the Third District held that Florida’s HOA safe harbor, section 720.3085(2)(c), caps a foreclosing first mortgagee’s liability at the lesser of 12 months of unpaid assessments or 1% of the original mortgage debt. Attorney’s fees, costs, interest and late fees are not included. Affirmed.
The Facts
A couple took out a mortgage in 2005 on a home in a Miami-Dade development with two homeowners’ associations. Fannie Mae bought the loan in 2006, foreclosed in 2011, named both associations as defendants, won a final judgment in 2013, and took title by certificate of title in April 2013.
When Fannie Mae asked for payoff letters, the associations demanded not only quarterly assessments and late charges but also violation charges, costs and attorney’s fees. Fannie Mae sued for a declaration that the statutory safe harbor limited what it owed.
The associations argued that the statute’s payment-application rule required them to apply any money first to interest, late fees, costs and attorney’s fees before assessments, so the safe harbor amount would never bring their accounts current. The trial court ruled for Fannie Mae, limiting its liability to the past 12 months of assessments and excluding interest, late fees, fees and costs.
The Decision
The Third District affirmed. The safe harbor limits a qualifying first mortgagee’s liability to the lesser of the parcel’s unpaid common expenses and regular or special assessments for the 12 months before it took title, or one percent of the original mortgage debt. Because the Legislature listed only those items, the court read it to exclude attorney’s fees, costs, interest and late fees. It agreed with a federal decision that treated those charges as individual penalties, not shared community expenses.
The court also rejected the associations’ payment-application argument. The ordering rule in section 720.3085(3)(b) tells an association how to apply money it receives; it cannot create a right to collect more than the safe harbor allows. As to the lender’s payment, the line items for interest, fees and costs would simply be zero.
The Law
Under section 720.3085(2)(b), a new owner of a parcel in an HOA community is generally jointly and severally liable with the prior owner for all unpaid assessments that came due up to the transfer. Section 720.3085(2)(c) carves out a safe harbor for a first mortgagee, or its successor, that takes title by foreclosure or deed in lieu: its liability for pre-title assessments is the lesser of 12 months of unpaid common expenses and assessments or 1% of the original mortgage debt. The safe harbor applies only if the lender sued the owner and initially joined the association as a defendant.
Section 720.3085(3)(b) requires payments to be applied first to interest, then late fees, then collection costs and attorney’s fees, then the delinquent assessment. Condominiums have a parallel safe harbor in section 718.116. As of the 2026 Florida Statutes, the HOA safe harbor language relied on in this case is still in place.
Current law (2026): Section 720.3085(2)(c) and (3)(b), Fla. Stat. (2026), retain the safe-harbor and payment-application language construed in the opinion (statute last amended by ch. 2024-221; safe-harbor text unchanged per flsenate.gov review).
Lessons
- A foreclosing first mortgagee that properly joined the HOA owes at most 12 months of assessments or 1% of the original loan, whichever is less.
- HOAs can’t add attorney’s fees, late fees, interest or collection costs to the lender’s safe harbor amount.
- The safe harbor depends on joinder: the lender must have named the association in the foreclosure.
- Associations should pursue the prior owner for amounts the lender doesn’t owe, and buyers at foreclosure sales should check whether the safe harbor actually applies.
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
HOA Safe Harbor: Cap or Floor? | Catalina West HOA v. Fannie Mae, 3D15-0271
Go Deeper
- HOA and Condo Association Foreclosure in Florida: Notice Rules and Defenses
- The Florida Foreclosure Sale: Timing, Redemption, Surplus Funds, and When You Have to Move
- Florida Condo Owners' Rights: Special Assessments, Records, and Disputes With the Association
Frequently Asked Questions
How much does a bank owe an HOA after foreclosure in Florida?
Under section 720.3085(2)(c), if the first mortgagee sued and joined the association, its liability for assessments that came due before it took title is the lesser of 12 months of unpaid assessments and common expenses or 1% of the original mortgage debt.
Can an HOA charge a foreclosing lender attorney's fees and late fees?
Not under the safe harbor. In Catalina West v. Fannie Mae, the Third District held the safe harbor covers only unpaid common expenses and regular or special assessments. Attorney’s fees, costs, interest and late fees incurred before the lender took title are excluded.
Does the HOA safe harbor apply to third-party buyers at a foreclosure sale?
The statute protects the first mortgagee and its successors or assignees as later holders of the first mortgage. A third-party buyer at the sale generally does not get it and may be jointly liable for all past-due assessments. Check the statute and recent case law before bidding.
What does the HOA payment-order rule in 720.3085(3)(b) do?
It requires an association to apply payments first to interest, then late fees, then collection costs and attorney’s fees, then the assessment. Catalina West held this ordering rule cannot create a right to collect more from a foreclosing lender than the safe harbor allows.
Talk to a Florida foreclosure and HOA lien lawyer
Weidner Law, P.A. handles Florida mortgage and association lien foreclosures from St. Petersburg. If you need a foreclosure defense lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
