FAQs

LMF is based in Tampa, Florida. It is a privately owned Limited Liability Company formed for the sole purpose of providing capital to condo and home owner associations. LMF is extremely well capitalized, and has funded associations throughout Florida.

No. A collection company is typically hired to pursue collection of bad debt. If it successfully collects that debt it is entitled to keep a large portion of it. If it does not, it often charges collection costs to the Association anyhow. LMF is totally different and much better for the Association because LMF pays the Association an amount up to 4.5 months of assessments for bad debt in advance and the balance after it's collected. LMF profits solely from the collection of interest and late fees.

LMF is not a law firm.  LMF hires Business Law Group to collect accounts it purchases.  LMF DOES NOT CHARGE THE ASSOCIATION LEGAL FEES and will not pass any uncollectable legal fees or expenses back to Association even in event LMF cannot recoup through collection efforts.

Why would carrying any bad debt make sense when LMF can provide non-recourse cash and free collection services?

An Association that currently has some delinquent assessments will likely have more and more delinquent assessments. The sooner LMF gets involved; the sooner delinquency issues can be controlled.

Since FHA, Fannie Mae, and Freddie Mac require an Association's delinquency rate to be less than 15% in order to write a purchase money mortgage on a condominium property, the condominium market has entered into a "death spiral" with vacant inventory in excess of the number of cash buyers. An Association can use LMF's upfront cash to meet the 15% lending requirement thereby ensuring a market for its vacant units and protecting values for its owners.

What if our delinquency problem continues to grow?

LMF is like a free insurance policy. It costs an Association nothing out of pocket to sign up and it's an immediate benefit in managing collections going forward. For example, if next month 3 unit owners don't pay their assessments the Association simply calls LMF for a check to offset the non-payments, instead of having to go after the late paying owners themselves...why wouldn't you use LMF?

LMF will fund against the units the Developer has sold. LMF will not fund against Developer owned units while the Developer is guaranteeing Association's expenses, or fund against Developer owned units while the Developer has any position on the Association's board. LMF will consider funding against Developer owned units only after the Developer has relinquished total control of the Association and the Developer is no longer guaranteeing anything to the Association.

LMF has no maximum funding amount. Small initial funding amounts will be considered on case-by-case basis.

It generally depends on the Association, but after an Association signs an LMF Purchase Agreement and provides LMF its accounting and due diligence information, LMF can normally fund within 10 days.  Obtaining legal files on accounts LMF is purchasing is the most common factor for delayed closings.

LMF advances an amount up to four and one-half months of assessments of the delinquent account's assessment balance up front on condominium association accounts and up to six months of assessments on HOA accounts. When the account is paid off in full LMF pays the Association the balance of unpaid delinquent assessments collected, including assessments that may accrue after LMF purchases the accounts. LMF will advance a lower up front percentage of a delinquent account's balance when the account exceeds a 6 month balance.
The total amount that LMF will advance to an Association for its delinquent accounts will be based on LMF's analysis of an Association's financial condition. After LMF's review of the Association's finances and its delinquent accounts, LMF will provide a written term sheet that will indicate dollar amounts and terms under which LMF is willing to purchase an Association's accounts. If an Association is agreeable to such terms, a Purchase Agreement and schedule of assignments will be prepared with final purchase price amounts. 

LMF will fund against unpaid assessments as soon as the grace period for payment(s) has expired, and they are considered delinquent pursuant to Association's declaration and by-laws.  LMF only funds against regular assessments but will collect any special assessments that appear upon the ledgers.  LMF can not fund against special assessments since a mortgage foreclosure may wipe these out.

LMF will provide a purchase proposal based on each Association's specific situation. The general premise of our agreement is that LMF purchases assignments of delinquent Association assessment balances, and the Association authorizes LMF's attorneys to lien collect upon Associations behalf. The Association assigns its rights to collection proceeds to LMF.  LMF offers a true win-win transaction.  LMF's Purchase Agreement is based upon the philosophy that the association will be better off with LMF's deal under every possible scenario.

Florida Statutes allow interest to accrue on unpaid Association assessments as well as the recovery of late fees and legal fees. The exact amount of interest and late fees is determined by the Association's declaration and if the declaration contains no stated interest or late fees, Florida Statutes allow collection of 18% default interest and late fees of $25 per delinquent assessment. LMF charges a 5% origination fee on all advances to offset its acquisition and underwriting costs.  The origination fee is deducted at the time of the initial funding and collected by LMF only when the account pays off. Associations receive all unpaid assessments collected, LMF keeps all default interest, fees, and collection costs. Typically Associations and Management companies regard collection of delinquent assessments as an expensive and time-consuming hassle. LMF's business is set up to handle large-scale collection volume through its law firm. We also find that Associations prefer to stay out of the collection business as it can create conflicts between unit owners, Associations, and their management companies.

No. LMF assumes all risks associated with collecting delinquent assessments and in the event we are unsuccessful in collecting the assessments funded to the Association, the Association has no financial obligation to LMF. LMF is actually purchasing an assignment of the Association's collection proceeds rather than lending it money.  This is a major difference between LMF and its competitors who require repayment of their initial funding under certain circumstances and also require the associations to pay legal fees that are not recovered from the debtor.

No. LMF will not only pay for all of the legal costs of pursuing delinquent assessments, but will also do all the work. An Association no longer has to retain attorneys directly or deal with this process...LMF takes over and directs its attorneys what to do. LMF primarily uses Business Law Group, P.A. but will consider using other attorneys for local filing work.

Once an Association submits the online questionnaire, LMF will prepare a Funding Estimate.  If the Association is interested, LMF will then provide its standard Purchase Agreement for review by the board.  Usually only board approval is required.  LMF recommends that the board's attorney review the agreement unless the board's attorney is also performing collection work and therefore has a conflict of interest.  Every major law firm in Florida has reviewed the LMF Purchase Agreement.  A list of attorneys who are familiar with the LMF agreement is available upon request.  They typically charge $500 per review. The Purchase Agreement is really an agreement that provides the association with an option to sell accounts to LMF.  Once the Purchase Agreement is signed the association sends ledgers of accounts it wishes to sell to LMF.  LMF hires a title company to review the accounts and prepares a Schedule of Assignments which simply lists the accounts and amounts funded.  The association and LMF execute the Schedule of Assignments and LMF pays the association.

It is always wise to have an attorney review legal documents. We recommend Associations have our documents reviewed by their business attorney, or the attorney that drafted their condo documents. We do not recommend Associations have our documents reviewed by an Association attorney if that attorney is currently engaged in claim of lien and collection work for Association, as a conflict of interest exists.

LMF's legal counsel is always available to discuss legal issues directly with the Association's attorney. LMF can also provide references to reputable and non-conflicted attorneys that have already reviewed our agreement. These attorneys typically charge $500 to advise associations of their rights and obligations under the LMF Purchase Agreement.

LMF only funds Associations with reputable professional management in place. LMF is not an Association manager and has no interest in the management business. Our business is designed solely to support the existing Association management by providing them capital and assuming the collection efforts of "delinquent assessments" only. LMF and its attorneys coordinate collection efforts with the management companies and their accounting staff. LMF attempts to collect all management company fees that are charged to the delinquent accounts.  LMF can integrate with all major association accounting software platforms. 

LMF engages its attorneys to enforce all rights provided to the Association by its declaration, by-laws, and Florida Statutes. Florida Statutes dictate the necessary notices required to collect, lien, and foreclose against a delinquent unit. LMF's attorneys will not compromise any assessment collection without the consent of the Association. LMF requires that its attorneys be firm but respectful in their efforts to collect delinquent accounts. All communication with owners is done in writing to ensure the accuracy of communications. While no amounts owed are compromised without the Association's consent, if an owner has a willingness and ability to pay assessments on a current basis, a payment plan will be offered where the entire outstanding balance can be recovered in approximately twelve (12) months. LMF's agreement with its attorneys requires that when a payment plan is in place and current, no additional legal fees will attach to the account. This ensures the Associations recovery is not postponed by payments to the lawyers.

First of all, LMF pays up front cash for the assgnment of the delinquent account.

Florida Law grants Associations priority lien powers to ensure an Association can collect its dues. However, collecting delinquent assessments through claim of lien actions or foreclosing on liens can be a tedious and time consuming process that requires up front capital to pay legal fees and costs. The up-front capital and collection work also goes beyond a management company's scope of typical services.

LMF has the resources, personnel, legal knowledge, and collection experience to fully utilize a condo association's statutory rights, and a business strategy designed specifically to recover delinquent assessments. In addition to collection efforts to unit owners, we use assigned lien rights to negotiate collection payments from mortgagees, loan guarantors, etc. LMF will also offer to buy out mortgagees/owners, take title and negotiate mortgage modifications or enter into forbearance agreements with mortgage holders, and sometimes foreclose on condo units.

Also remember that LMF is the one at risk for collecting assessments since we fund Associations cash up-front and we are paying for legal expenses. If LMF is unsuccessful on collecting, the Association keeps LMF's money and is still ahead of game.

No. Per the agreement "Association will have the right to offer and LMF will accept an assignment of proceeds..." This means that Associations are not obligated to sell any accounts to LMF if they don't wish to sell them to LMF.

Yes. The Association will be responsible for costs incurred to the previous attorney, and LMF will be responsible for all costs after our account purchases. LMF will request the collection files of purchased accounts from the previous attorney and will assume the collection efforts already started. LMF will request an accounting of the Associations collection costs and will include those costs in our payoff amounts. To the extent that LMF is successful in recouping Association's prior collection expenses, those expenses will be 50% reimbursed to the Association with the balance going to LMF's attorneys to defray the costs of taking over and remediating files in progress.

Yes, we do not buy:
Developer owned units while the developer is still in control of the Association.
Owner occupied units where the owner is in bankruptcy.
Units where the owner has pending litigation with the Association.
Units belonging to members of the association board.

No. LMF will only fund associations that have quality professional management in place. Fees, such as estoppel fees, earned by a management company in a typical collection effort apply to the collection of LMF accounts and will be invoiced and collected.

LMF requires its attorneys to provide free of charge to each association with a monthly report detailing the status of every account, the amounts owed, collected, and next legal action to take place.  LMF also requires the attorneys to answer free of charge any questions the manager or board members may have with regard to collections.  Most managers enjoy being able to speak with a lawyer and not worry about a bill and its worth it to LMF to pay for this in order to increase the amounts collected.

No. LMF is unable to fund against special assessments, water bills, fines or similar charges as these charges are not protected by Florida's "Super Lien". LM Funding will invoice and attempt to collect these amounts whenever applicable.