Statute of Limitations: Managing HOA & Condo Debt
The statute of limitations is a legal mechanism that prevents a creditor from using judicial processes to pursue the collection of a debt—or enforcement of a covenant—after a specified period. Under Florida law, this timeframe is set at five years for actions founded on a written instrument, such as a declaration. The relevant statute, Florida Statutes § 95.11(2)(b), states: “A legal or equitable action on a contract, obligation, or liability founded on a written instrument, except for an action to enforce a claim against a payment bond, which shall be governed by the applicable provisions of paragraph (5)(e), must be commenced within 5 years.” This means we cannot collect association debt more than five years after it accrues on the ledger, nor typically pursue covenant enforcement beyond five years from when we become aware of the violation. While this flyer focuses on debt collection, the principle extends to covenant issues as well.
Implications for Collections
Associations must not allow files to remain delinquent for multiple years—certainly not beyond three—because the process to reach litigation can take upwards of a year. Only the initiation of a lawsuit stops this clock; filing a claim of lien does not toll the statute of limitations. Once debt exceeds five years, it must be waived, as pursuing it becomes legally unviable. A file in this posture becomes challenging to manage, with each step introducing new cutoff points, requiring us to recreate the ledger internally. This underscores my advice to all association clients: pursue delinquent debt promptly upon delinquency, rather than waiting to send only large balances to counsel. Collecting a few hundred dollars is far simpler than tackling a few thousand, and this approach avoids statute of limitations pitfalls.
Federal and State Considerations
The Federal Debt Collection Practices Act (FDCPA), applicable only to third-party collectors like my law firm when acting for an association, prohibits demanding debt barred by the statute of limitations. Violations carry significant penalties for us, so we adhere to a strict policy of not pursuing debt over five years old. We require association clients to strip such debt, believing it is legally mandated. Additionally, the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), under Fla. Stat. § 501.201 et seq., applies directly to creditors and their agents, including Community Association Managers. While I do not offer a legal opinion here, it is worth noting that demanding time-barred debt, even without litigation, could violate FDUTPA, potentially leading to severe consequences. This reinforces our blanket policy against collecting debt beyond the five-year limit.
Murrell Law - Serving Florida Boards with Precision | 35 Durbin Station Court, Unit 106, Saint Johns, FL 32259 | (904) 624-1474
