Can a Florida HOA Board eliminate a viable asset in the balance sheet without any kind of notice?

[des-hoa]

In 2009 our Florida HOA obtained a court ordered judgement again a homeowner. The original judgement was $35,000 if the interest was collected its value today would be $95,000. The HOA showed it on the balance sheet ever since as a positive asset and backed it out as liability (entered in part as a reminder to be listed in the estoppel when the home was sold). That is until this Feb. when the new board removed it from the balance sheet. Can they just do that? Shouldn’t be shown? Board never notified in writing or at the Feb meeting that this change was made. Don’t know who (attorney/account/treasure/etc.) made this decision.

 

[Zigner]

If proper procedures weren't followed, then the lien would have expired in 2019.

 

[LdiJ]

In 2009 our Florida HOA obtained a court ordered judgement again a homeowner. The original judgement was $35,000 if the interest was collected its value today would be $95,000. The HOA showed it on the balance sheet ever since as a positive asset and backed it out as liability (entered in part as a reminder to be listed in the estoppel when the home was sold). That is until this Feb. when the new board removed it from the balance sheet. Can they just do that? Shouldn’t be shown? Board never notified in writing or at the Feb meeting that this change was made. Don’t know who (attorney/account/treasure/etc.) made this decision.

For proper accounting, if the lien expired, then it would no longer be an asset of the HOA and the item would need to be removed. They would not have the option of keeping it on the balance sheet.

 

[Zigner]

It would make sense that an entry would be made to remove it, though.

 

[LdiJ]

It would make sense that an entry would be made to remove it, though.

Well yes, but that "entry" would not show up as a separate item on a balance sheet. It would in the ledger detail, but not on the balance sheet.

 

[quincy]

A link to the Florida laws on judgments/judgment liens (2012):

https://www.flsenate.gov/Laws/Statutes/2012/Chapter55/All

 

[des-hoa]

Guess my question needs a slight revision. The FL statue 55.081 Statute of limitations, lien of judgment. — Subject to the provisions of s. 55.10, (which states prior to July 1, 1987) no judgment, order, or decree of any court shall be a lien upon real or personal property within the state after the expiration of 20 years from the date of the entry of such judgment, order, or decree. That being said the judgement should be listed as an assessment which is collectable if not paid at the house sale. Don’t want to lose the $’s. This becomes a tricky legal question since it involves a number of FL statues and what can be put in a estoppel letter.

 

[Zigner]

Guess my question needs a slight revision. The FL statue 55.081 Statute of limitations, lien of judgment. — Subject to the provisions of s. 55.10, (which states prior to July 1, 1987) no judgment, order, or decree of any court shall be a lien upon real or personal property within the state after the expiration of 20 years from the date of the entry of such judgment, order, or decree. That being said the judgement should be listed as an assessment which is collectable if not paid at the house sale. Don’t want to lose the $’s. This becomes a tricky legal question since it involves a number of FL statues and what can be put in a estoppel letter.

The judgement is good for 20 years, but the lien needs to be renewed after 10 years.

 

[quincy]

Guess my question needs a slight revision. The FL statue 55.081 Statute of limitations, lien of judgment. — Subject to the provisions of s. 55.10, (which states prior to July 1, 1987) no judgment, order, or decree of any court shall be a lien upon real or personal property within the state after the expiration of 20 years from the date of the entry of such judgment, order, or decree. That being said the judgement should be listed as an assessment which is collectable if not paid at the house sale. Don’t want to lose the $’s. This becomes a tricky legal question since it involves a number of FL statues and what can be put in a estoppel letter.

You might want to ask the HOA why the lien was removed. I suspect it was removed because no extension was sought but the HOA probably is your best source of information.

 

[zddoodah]

The original judgement was $35,000 if the interest was collected its value today would be $95,000.

Uhhh...no. A judgment entered in 2009 originally accrued interest at the rate of 8% per annum. Even if that rate remained constant over the past 13 years (and it didn't), the interest on a $35k judgment would be $36,400, so the total value would be $71,400. However, the rate of interest on judgments took a more-or-less immediate nose dive. By October 2011, the rate had dropped to 4.75%, which remained in place until 2016, when it started rising slightly. It peaked at 6.89% in October 2019 and has now dropped back to 4.25%. I'm not going to do the math, but I'm guessing the current value of the judgment is somewhere in the $50-60k range.

the new board removed it from the balance sheet. Can they just do that?

They did do it, so it's obvious that they can do it.

Shouldn’t be shown?

I don't know. You'd have to ascertain the reason for the removal. Perhaps the judgment is regarded as uncollectible and has been written off (even though judgments are enforceable for 20 years). And, as noted above, judgment liens expire after five years and can be renewed for an additional five-year period. Thus, the lien created by the judgment in question expired three years ago.

Board never notified in writing or at the Feb meeting that this change was made.

Never notified whom? Why do you think the board should have notified anyone?

Query why you care.

 

[quincy]

Guess my question needs a slight revision. The FL statue 55.081 Statute of limitations, lien of judgment. — Subject to the provisions of s. 55.10, (which states prior to July 1, 1987) no judgment, order, or decree of any court shall be a lien upon real or personal property within the state after the expiration of 20 years from the date of the entry of such judgment, order, or decree. That being said the judgement should be listed as an assessment which is collectable if not paid at the house sale. Don’t want to lose the $’s. This becomes a tricky legal question since it involves a number of FL statues and what can be put in a estoppel letter.

des_hoa, is the house in question now being sold?