Third District Court of Appeal

State of Florida

Opinion filed October 3, 2018.

Not final until disposition of timely filed motion for rehearing.

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No. 3D17-370

Lower Tribunal No. 09-55435

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Federal National Mortgage Association,

Appellant,

vs.

JKM Services, LLC, as Receiver for Cedar Woods Homes

Condominium Association, Inc.,

Appellee.

An Appeal from a non-final order from the Circuit Court for Miami-Dade

County, Samantha Ruiz-Cohen, Judge.

Levine Kellogg Lehman Schneider + Grossman and Jeffrey C. Schneider

and Marcelo Diaz-Cortes; Greenspoon Marder and Aaron T. Williams (Fort

Lauderdale), for appellant.

Shir Law Group and Stuart J. Zoberg and Guy M. Shir (Boca Raton), for

appellee.

Before SALTER, EMAS and LINDSEY, JJ.

SALTER, J.
Federal National Mortgage Association (“FNMA”) appeals a final circuit

court order denying its motions to intervene in, and to terminate, a receivership

proceeding insofar as it affected three condominium units recently subject to

FNMA foreclosure proceedings, and to determine the amount owed by FNMA to

Cedar Woods Homes Condominium Association, Inc., the appellee

(“Association”), under the so-called “Safe Harbor Statute,” section 718.116(b),

Florida Statutes (2014). FNMA’s motions presented the circuit court, and now

present us, with several novel issues that arose within condominium associations in

the real estate downturn and foreclosure crisis of the past decade. 

Based on the analysis which follows, we are constrained to reverse the

orders denying relief to FNMA, and to remand the receivership case to the trial

court for further proceedings.

I. Background and Proceedings in the Circuit Court

In this case, the Association reached a point in 2009 where over ninety

percent of its 165 condominium units were delinquent in assessment payments, and

the majority of those units were also in foreclosure. The Association needed the

assessments to cover repairs, maintenance, and capital improvements. 

For a variety of reasons, the lenders and loan servicers on the units in

foreclosure were slow to prosecute their cases. Notwithstanding delays measured

in years rather than months, by law the foreclosing lenders obtaining title were not

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obligated to pay any accrued arrearages for assessments beyond the lesser of

“unpaid common expenses and regular periodic assessments which accrued or

became due during the 12 months immediately preceding the acquisition of title

[by the lender]” or one percent of the original mortgage debt (quoting from the

Safe Harbor Statute cited above).

A. The 2009 Receivership

In law as in engineering, necessity is the mother of invention. In 2009, the

Association filed an emergency petition in the circuit court seeking the

appointment of a receiver to preserve and protect the condominium property in

light of the overwhelming delinquency rate by unit owners. The Association

claimed, and a magistrate judge found, that the great majority of units were subject

to bank foreclosure actions, with several units “abandoned and vacant for as long

as two years.” The property manager’s affidavit in support of the petition reported

that the Association appeared to be insolvent and had received final notices that

water, common area electricity, and garbage service would soon be terminated.

The Association’s petition was based on a provision of the Condominium

Act, section 718.116(6)(c), Florida Statutes (2009):

If the unit is rented or leased during the pendency of the foreclosure

action, the association is entitled to the appointment of a receiver to

collect the rent. The expenses of the receiver shall be paid by the

party which does not prevail in the foreclosure action.

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The petition sought the appointment of a receiver “over those units subject

to foreclosure actions or soon-to-be-filed foreclosure actions by the Association to

collect unpaid assessments” and to “(a) collect rents due to unit owners currently

being sued by the Association to foreclose assessments liens; (b) hire a

management company to manage, maintain and lease units subject to assessments

lien foreclosures; (c) hire a locksmith to break door locks and change door locks to

vacant units subject to assessments lien foreclosures; (d) lease or rent units and

evict non-paying tenants; (e) contract with contractors to repair and maintain units

subject to foreclosure lien assessments; and [pursue other relief as permitted by the

court].”

After various hearings and orders, in 2010 the trial court appointed a

receiver (“Receiver”) to manage and preserve all “Foreclosure Rented Units” and

“Foreclosure Abandoned Units,” with assessments delinquent for sixty days or

more and subject to foreclosure by the Association. The Receiver was to collect

all rental income from such units, initiate eviction for non-payment of rent on such

units, and use the collected income to pay back-owed assessments, the Receiver’s

costs and expenses, and “any and all expenses associated with the Condominium.” 

The emergency petition for the appointment of the Receiver was filed by the

Association and as a separate action. It did not join or name the owner or

mortgagee of any unit as a party when filed. A magistrate judge recommended

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relief regarding the Association’s petition, and the circuit court entered orders

appointing the Receiver and expanding the Receiver’s authority. The orders

relating to the Receiver did not attach property descriptions or otherwise place the

mortgage lenders in this case on notice of the Receiver’s powers.1

B. FNMA’s Title to Three Units 

The three condominium units at issue in this appeal, each within Cedar

Woods Homes, are identified as Unit 10-105, Unit 10-102, and Unit 17-103. Each

was subject to a recorded mortgage ultimately owned by FNMA. Each of the

mortgages was recorded in 2006, years before the commencement of the

receivership by the Association. The foreclosing plaintiffs (in three separate

circuit court foreclosures) were GMAC in April 2009 (Unit 10-105); Nationstar

Mortgage in 2012 (Unit 10-102); and Bank of America in 2013 (Unit 17-103). 

These entities held and serviced the mortgage loans on behalf of the owner,

FNMA.

Apparently unaware of the Receiver’s appointment and powers, the

foreclosing lenders did not move to intervene in the separate receivership

proceeding during the pendency of their respective foreclosure cases. Similarly,

the Receiver never asserted liens or other claims against the foreclosing

mortgagees during the pendency of the three foreclosure cases. Final judgments of

1

 The Association sent written notice of the emergency petition for appointment of

a receiver to individual unit owners two months after commencing the case.

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foreclosure were entered in all three cases, the three units went to foreclosure sale

by the clerk, and FNMA received certificates of title in 2014. 

After FNMA obtained title, it requested an estoppel certificate from the

Association to pay the amount dictated by the Safe Harbor Statute for each unit. 

But the Receiver responded on behalf of the Association with a much more

substantial, itemized demand for multiple years of past-due assessments,

Receiver’s fees, attorney’s fees for the Receiver’s attorneys, and other charges.

C. FNMA’s Motions to Intervene in the Receivership Case

After attempts to negotiate a settlement with the Receiver and Association,

in 2016 FNMA filed motions to intervene in the 2009 receivership case, to

terminate the receivership as to each of the three units, to determine amounts due

under the Safe Harbor Statute, and to compel an accounting and quarterly financial

reports by the Receiver. The circuit court denied the motions as to all three units,

finding FNMA waited too long to seek relief, “became subject to this receivership”

on obtaining title in 2014, and accepted the benefit of work performed by the

Receiver. The trial court also found that “receiver amounts” were payable by

FNMA above and beyond the condominium unit assessments capped by the Safe

Harbor Statute. This appeal followed.

II. Analysis

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We address, in turn, a collection of four issues with varying standards of

review and sources of controlling authority.

A. Intervention

Was FNMA entitled to intervention in the receivership case under

Florida Rule of Civil Procedure 1.230? 

The trial court denied FNMA’s motions to intervene as moot, concluding

that FNMA became subject to the receivership as a party when it received

certificates of title to units subject to the receivership proceeding. Rulings on

motions to intervene are reviewed for an abuse of discretion. Union Cent. Life Ins.

Co. v. Carlisle, 593 So. 2d 505, 507 (Fla. 1992). 

The receivership had not concluded, and the Receiver had not been

discharged, when FNMA sought intervention. FNMA clearly had a direct

(ownership) interest in the three units; the Receiver claimed a lien and assessment

and other amounts substantially in excess of the amount computed by FNMA. 

These factors supported intervention. Id. at 507-08. Although we do not agree

that FNMA’s motion to intervene was unnecessary or moot because FNMA

“became subject to this receivership” upon taking title to the units,2the trial court

correctly concluded that FNMA’s motions should be heard and determined.

2

 In the order under review—which was prepared and submitted by counsel for the

Receiver—FNMA is characterized as if a third-party purchaser at a foreclosure

sale “who does not need to intervene under Rule 1.230 in order to have standing to

appeal” (quoting Arsali v. Deutsche Bank Nat’l Tr. Co., 82 So. 3d 833, 835 (Fla.

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B. Validity of the Receivership Orders as Against FNMA

Were the receivership orders valid as against FNMA? 

The trial court’s authority to appoint a receiver for condominium units in

arrears on condominium assessments, whether by statute or as a matter of equity

and common law, is a legal issue reviewable under the de novo standard of review,

but the decision to appoint a receiver is reviewed for an abuse of discretion. Puma

Enters. Corp. v. Vitale, 566 So. 2d 1343, 1344 (Fla. 3d DCA 1990).

As already noted, the Condominium Act expressly authorizes the

appointment of a receiver to collect rent payable by the occupant of a unit during

the pendency of “the foreclosure action.” § 718.116(6)(c). When read in context,

however, this refers to the foreclosure of a condominium association’s lien on a

unit “to secure the payment of assessments,” section 718.116(5)(a); section

718.116(6)(a) authorizes an action in the association’s name “to foreclose a lien for

assessments in the manner a mortgage of real property is foreclosed.”

So the statutory authority in the Condominium Act for a receiver relates to a

unit which has accrued, unpaid assessments, but has been leased by the owner to a

tenant. The receiver is then able to collect the rent and apply it (after allowed

expenses) to the unpaid assessments. The statutory assessment does not extend to

4th DCA 2011), and citing similar cases). Those cases relate to intervention in

underlying foreclosure actions rather than the situation presented here. In this

case, FNMA was seeking intervention in a separate action, the 2009 receivership

case.

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all units, or all units in pending mortgage foreclosure proceedings, or in

foreclosure proceedings which might eventuate after the appointment of the

receiver for a specific unit.

Nonetheless, Florida common law provides substantial authority for the

appointment of a receiver to take custody of real property embroiled in litigation in

order to preserve and protect the property as the rights of the parties are

determined. See, e.g., Metro-Dade Invs. Co. v. Granada Lakes Villas Condo., Inc.,

74 So. 3d 593 (Fla. 2d DCA 2011); see also Fla. R. Civ. P. 1.620. We conclude

that the trial court had the authority to appoint a receiver to preserve and protect

enumerated units that were in arrears regarding their assessment payments and

subject to an Association lien. We need not reach the validity of the receivership

orders insofar as they purported to affect units other than the three units involved

in this appeal. 

This power, whether based on (1) the court’s statutory authority conferred

by section 718.116(6) of the Condominium Act, or (2) the court’s inherent

equitable authority, was limited in scope to the owners and occupants of the units

subject to an Association lien for unpaid assessments. The Receiver’s authority

and trial court’s jurisdiction in the 2009 receivership case did not automatically

implead existing or subsequent lenders foreclosing mortgage loans on units in

Cedar Woods Homes. More specifically, FNMA neither authorized the

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appointment of the Receiver nor agreed to compensate the Receiver and Receiver’s

attorneys for any work they may have done. 

C. Validity and Priority of the Parties’ Claims

As between the Receiver’s claims regarding each of the three units and

FNMA’s final judgment lien and certificate of title, which of the Receiver’s

claims are valid and enforceable against the units, and if so, what is the extent

and priority of each claim? 

The priority of lien claims in real estate as between condominium

associations for assessments and foreclosing mortgage lenders is governed by

statute, and our review is de novo. U.S. Bank Nat’l Ass’n v. Farhood, 153 So. 3d

955, 958-59 (Fla. 1st DCA 2014). 

These issues are generally determined by the operation of sections 28.222,

(regarding clerks of court, official records, and register of recorded instruments),

695.11 (sequence per official records book and page to determine priority), and

695.01 (conveyances, transfers, or mortgages of real property, or of any interest

therein, required to be recorded to establish priority “against creditors or

subsequent purchasers for a valuable consideration and without notice”). City of

Palm Bay v. Wells Fargo Bank, N.A., 114 So. 3d 924, 927 (Fla. 2013).

Applying these statutes and the particular provision governing liens for

condominium assessments vis-a-vis first mortgages of record (section

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718.116(5)(a)), the FNMA mortgage liens enjoyed priority over the condominium

assessment liens, save for (1) those arrearage amounts for which the mortgage

lenders became responsible under the Safe Harbor Statute, and (2) duly-imposed

Association assessments for the period commencing with FNMA’s certificate of

title and continuing through FNMA’s subsequent conveyance of title, if that has

occurred.

The Receiver’s compensation, attorney’s fees, and costs, are payable by the

non-prevailing party if the receivership was commenced under subsection

718.116(6). Paragraph (c) of that provision specifies that the expenses of a

receiver appointed pursuant to that statute “shall be paid by the party which does

not prevail in the foreclosure action.” 

In the case of a common law receivership established for the preservation

and protection of property involved in a pending lawsuit, the “courts are generally

vested with considerable discretion in determining who shall pay the cost and

expenses of receiverships,” though “[r]eceivership fees, being a part of costs,

follow the result of the suit.” Barredo v. Skyfreight, Inc., 430 So. 2d 513, 514 (Fla.

3d DCA 1983). Where there are no remaining assets in a receivership from which

to make payments, “such costs, if recoverable at all, must be recovered in a

separate action for that purpose.” Id.

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Under either of these scenarios and sources of authority, FNMA did not

move for the Receiver’s appointment and was not a party to the 2009 receivership

lawsuit until its interests in intervention were asserted by motion. FNMA thus has

no apparent obligation on this record to pay the Receiver and related receivership

expenses.3

D. Extent of the Association’s Claim: the Safe Harbor Statute

Is FNMA’s liability for condominium assessments during the

foreclosure proceedings, and through and including issuance of the

certificates of title, limited to the amount computed according to the Safe

Harbor Statute? 

For the reasons already detailed in preceding sections of this opinion, the

computation of FNMA’s “safe harbor” amount is a factual issue that was not

addressed by the trial court because of its determination that FNMA’s claims were

untimely. The amount payable by FNMA to the Association will be a matter for

determination by the trial court on remand, although it should be a matter of

arithmetic and agreed resolution.4

3

 One can posit circumstances in which, for example, a foreclosing lender lacking

a security interest in rents paid by a non-borrower tenant during the foreclosure

case nevertheless received those rents—in derogation of the right of a courtappointed receiver designated under section 718.116(6)(c) to collect those rents. 

But no such facts are apparent in this record, and we therefore decline to address

the merits or outcome of such a hypothetical case.

4

 The Safe Harbor Statute is clear that the liability of FNMA is for the lesser of (a)

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FNMA’s entitlement to the statutory cap on liability for accrued, unpaid

condominium assessments prior to the date it obtained title is well-established. 

When FNMA initiates a foreclosure in its own name, we have affirmed the

application of the Safe Harbor Statute. Catalina W. Homeowners Ass’n v. Federal

Nat’l Mortg. Ass’n, 188 So. 3d 76, 81 (Fla. 3d DCA 2016). FNMA’s entitlement

to the limitation as a loan purchaser and assignee of a final judgment of foreclosure

obtained by a servicer on FNMA’s behalf is equally well-settled. Beltway Capital,

LLC v. Greens COA, Inc., 153 So. 3d 330, 334 (Fla. 5th DCA 2014) (“In making

this decision, this Court joins the long line of trial courts to find [FNMA] was

entitled to safe harbor under similar circumstances”); see also Hemingway Villa

Condo. Owners Ass’n v. Wells Fargo Bank, N.A., 240 So. 3d 104 (Fla. 3d DCA

2018).

III. Conclusion

The Association’s petition for a multi-unit, flexible receivership for

abandoned, delinquent, and in-foreclosure condominium units was innovative and

“unpaid common expenses and regular periodic assessments” that became due

during the 12 months immediately preceding FNMA’s certificate of title, “and for

which payment in full has not been received by the association,” and (b) one

percent of the original mortgage debt. (Emphasis provided). The “one percent”

alternative would be considered here because the foreclosing lender “joined the

association as a defendant in the foreclosure action.” § 718.116(1)(b)1.a., 1.b. On

remand, this computation could require an evidentiary hearing to establish the date

and amount of unpaid common expenses and assessments during the 12-month

period as affected by any rent collections by the Receiver and the manner in which

those amounts may have been applied to the unit arrearages.

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responsive to a crisis at Cedar Woods Homes. The resulting stand-alone

receivership lawsuit, however, is a departure from the traditional adversarial array

of parties with disputed claims, liens, and interests in property.5

As a result, the Receiver essentially became little more than an officious

intermeddler vis-à-vis the foreclosing mortgage lenders, with no authorization to

act on behalf of those lenders. The Receiver served as a court-authorized property

manager for certain units and also acted as an eviction and collection agency for

the Association. 

On this record, the receivership expenses were not ratified by the

Association for apportionment and assessment to all unit owners as other capital

and operating expenses would be, and the Receiver’s itemized claims evidence no

such apportionment or authorization with the requisite Association corporate

formalities. 

Due process required notice to the foreclosing first mortgagees before they

could be taxed, after the fact, with receivership expenses for services they never

sought or authorized. We reiterate, however, that the Receiver’s expenditures at

the behest of, and for the benefit of, the Association may provide a basis for claims

5

 The receivership proceeding in the circuit court is thus styled, In re Cedar Woods

Homes Condominium Association, Inc., Petitioner. Until FNMA objected to the

Receiver’s claims against its three units, the Association and Receiver were the

only parties in the case. A successor trial judge (who had not entered the

receivership orders) was tasked with the unenviable duty of evaluating and ruling

on FNMA’s motions in a unique proceeding. 

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against persons or entities other than FNMA: defaulting unit owners, tenants, or

the Association itself, to the extent that the Receiver paid for common area

improvements, for example. As no such claims are before us, we express no

opinion regarding them.

We reverse the order denying FNMA’s motions and remand the case for

further proceedings to compute the amount specified by the Safe Harbor Statute. 

Upon payment of any such amount, FNMA’s units are to be released from further

claims or proceedings in the receivership case and by the Receiver. As a unit

owner from and after the certificate of title, and through its term of ownership,

FNMA is responsible for condominium assessments as they become due.

Reversed and remanded for further proceedings.

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