Tag Archives: Florida

After Judge ousts Receiver, no improvement at Blossom Park (FL) condos

guest blog by Deborah Goonan

Last time I told you about Blossom Park condos in April, owners had decided they wanted to take back control of their Association from Receiver Frank Barber.


Several of the owners had high hopes of turning the place around, after many years of neglect. A judge terminated the Receiver’s contract last month.

Well, it didn’t take long for the newly formed Condo Board to throw in the towel. Assessments are seriously delinquent, and remaining owners are apparently not interested in paying for a place that has become a haven for crime and a safety hazard. Reportedly, the trash is piling up now, too.

Where are the developers willing to swoop in like White Knights and rescue this dilapidated old motel turned into low-income condos? Isn’t that why Florida clings to its “eminent domain for condos” law?

It appears Blossom Park has reached the end of its useful life.

(link to requiem for Blossom Park)

Florida Appeals Court Decides CC&Rs Trump State Law

guest blog by Deborah Goonan

Florida HOA industry proponents are all abuzz about a recent District Court ruling. The Fourth District Court of Appeals (DCA) has clarified in its decision that if HOA Covenants, Conditions, & Restrictions (CC&Rs) specifically state that a third-party buyer need not be responsible for paying past due assessments, that provision overrides FL state law.

Florida statute currently requires that third-party buyers at foreclosure must pay all past due assessment liens accumulated by prior owners. However, as written, its intent is not to impair contract rights that were in effect prior to the 2007 statute.

In this article (HOA COLLECTIONS…Fourth DCA Decision Slams HOAs In Florida) the owner of an HOA collections business does not appear to be happy with the appellate court’s decision to defer to HOA governing documents in lieu of state law.

Note the double standard at play here. When it comes to CC&R violations, HOA-proponents want the “contract” to prevail. But when it comes to collection of past-due assessments from third party owners, the same folks want state law to override the CC&Rs, thereby impairing the HOA “contract.” In fact, the lower court decided the case in favor of the HOA, citing state law.

In this article written by a FL Attorney, blame and shame is cast upon lenders for “mooching” off of homeowners, and state legislators for creating laws that protect mortgage holders’ financial interest at the expense of homeowners and taxpayers.
But didn’t HOA proponents favor “mooching” off of homeowners when they gloated about NV and DC appeals courts decisions that third-party buyers at HOA foreclosure sales could wipe out mortgage liens? After all, what happens to property values when an $800,000 home sells at auction for little more than $6,000 owed one the HOA lien?

Lots of angles here.

For instance, what exactly are your HOA assessments paying for? Most of it may be for essential infrastructure – roads, storm water systems, private utilities, security, and the like. These are traditional government services, making HOA assessments akin to property taxes. So why is the HOA a corporation and not an official “mini-government” subject to prevailing Constitutional law instead of contract law?

Portions of assessment funds may also be for non-essential amenities. But our current laws treat all of these funds as absolutely essential, and as mandatory obligations. Assessments must be paid No Matter What, or risk lien and foreclosure by your HOA. If HOA fees were truly “contractual” obligations, homeowners would have the power to withhold payment for non-delivery of services, and the HOA would not have the power to foreclose to collect liens.

On the other hand, if HOAs were truly “mini-governments,” then why wouldn’t HOA assessment liens – at least the portion payable for essential services – hold an equal or higher priority than property tax liens?

So many contradictions and double standards, none of which benefit the homeowner.

(link to brief summary of new case law)


FL legislation passed will harm, not help Condo and Homeowners’ Association owners and residents

guest blog by Deborah Goonan

I can’t say I’m surprised, but I am thoroughly disgusted by the nature of HOA legislation that has passed the 2015 Legislative session, despite the fact that the FL House threw in the towel 3 days early. Given the hostile nature of other pending bills, it was probably a blessing in disguise.

Here are some highlights of what HOA-related passed and what failed:

CCFJ-backed SB 1308/HB 1263, the bill that would have authorized limited state oversight of HOAs similar to that available to condo owners, died before ever making it to a committee, for the second year in a row.

SB 611 / HB 736, a bill that would have limited fees charged for estoppels, and that was hotly debated and opposed by management, collection companies and Association law firms, effectively died when the session was dismissed early. That means business as usual. Fee gouging and hitting buyers at closing with last minute with extra closing costs will continue for at least another year.

HB 791 passed 98-17 in the House and unanimously in the Senate. The bill will extend the Distressed Condominium Act (DCA) for two more years, until June 30, 2018.  The DCA allows investors to “bulk buy” condos for rehab and resale, but significantly limits bulk owner liability for construction defects and also allows investors to waive funding of reserves until each unit is sold. The DCA has played a key role in creating perverse incentives for investors to take over condo Boards and force termination upon remaining owners, who have in turn been forced to sell for a fraction of what they paid for their units several years ago.

The bill also specifies that official records now include only “written records,” effectively eliminating audio or videotapes among the records HOAs must retain for at least 7 years. Also in this bill: if you are a tenant, and your landlord owns multiple units, but owes any financial obligation pertaining to even ONE unit, the HOA may suspend your privileges to use the recreational amenities and common areas until the owner is current, even if your unit is not directly tied to a fine or delinquent assessment.

Also buried in this homeowner-hostile bill is a carefully crafted provision that will allow HOAs governed under Statute 720 to issue fines exceeding $100 per violation and $1000 in the aggregate if the governing documents allow it. There will be no absolute maximums that HOAs can fine owners, so long as the oligarchy that controls a supermajority of votes is able to amend the documents any way it sees fit.  To make it even easier to accomplish a vote, the bill also permits proxies to be faxed or emailed, and will now allow for online voting.

And the standard priority of payment application for HOAs remains as follows: payments first apply to interest, then late fees, then attorney and collection fees, and last, but not least, the amount of the delinquent assessment. And HB 791 merely states that fines of less than $1000 may not become a lien against the home, implying that fines of $1000 or more CAN become liens that could then lead to foreclosure by the Association.

The topper for outrage in HB 791 is the fact that even if an Association fails to provide timely notice of an amendment to the CC&Rs, that will not affect its validity. In plain language that means that you can be penalized for violating a new covenant or amendment, even if you have no idea that it exists.

Attached are relevant links for any wonks out there that want to read the details.

(link to attorney summary of FL legislation affecting HOAs, Condos)

(link to SB 791)

(link to CCFJ SB 1308, now dead)


FL legislature passes amended version of condo termination bill, still full of loopholes

guest blog by Deborah Goonan

Florida Legislators have done it again. They have managed to pass a bill that gives the illusion of protecting condo owners, but, in reality, does very little to prevent real estate investors and developers from exploiting consumers, violating 5th Amendment Rights to unlawful taking of property and just compensation.

In the final week of the 2015 legislative session, both the Florida House and Senate voted unanimously to approve passage of HB 643 (identical to SB 1172). Republicans Chris Sprowls and Chris Latvala sponsored these companion bills, with the intention of making it more difficult for bulk buying investors to take advantage of condo owners, particularly those who paid high prices at the time of purchase. Tens of thousands of Florida condo owners have faced forced termination of their distressed condominium associations, with the result that most have been kicked to the curb, forced to sell their units for pennies, most losing all of their equity or left with outstanding mortgages.

Even in its original draft, HB 643 and companion bill SB 1172 had loopholes. (See link to previous blog) But over the course of recent weeks, the two bills were consolidated and amended (watered down) 9 times.

So many loopholes remain in this bill, and news releases are providing inaccurate and incomplete information, touting HB 643 as a “step in the right direction.”

For instance, a recent news release states that condo owners will receive 1% of the value of the unit to help with relocation expenses. But HB 643 specifically states that the relocation allowance will be equal to 1% of termination proceeds. With all the offsets allowed against termination proceeds — the outstanding first mortgage, delinquent assessments, special assessments, fines, etc. — the proceeds could end up being very low or even zero. Do the math – 1% of zero is zero.

Plus there are so many conditions for condo owners to receive the original purchase price of their condo units, that this bill is unlikely to help the vast majority of condo owners. The conditions include:

o   The original purchase has to be made from the developer, not a resale;

o   The property must be the owner’s homestead, as registered in the County of residence;

o   The owner must have absolutely no financial obligation to the lender or the HOA, including an unpaid exorbitant special assessment and/or questionable fine issued by the bulk owners in order to “break” owners and pressure them into selling at a loss.

o   The “full purchase price” concession only applies if bulk owners represent at least 80% of voting interests approving a plan of termination. What if the bulk buyer that controls, say, 75% of voting interests, but then amends the documents to allow for first right of refusal? That would give investors the power to approve sales to straw buyers that will vote in favor of termination, but exempt them from reimbursing owners their full purchase price when that exceeds current fair market value. As written, the bill would not require buyers to be disclosed as affiliates as long as no one buyer acquires at least 20% of the condominium.

And if the bulk buyers control less than 80% of the voting interests, but a percentage sufficient to allow unilateral amendment of the governing documents, this bill does nothing to stop investors or developers from changing the basic rules of the game to their own advantage — even reducing the percentage necessary to approve the termination below 80%, as is permitted by FL Statute.

The loopholes are so obvious, even to non-attorneys and lay people. How can Legislators – many of them educated in law, political science, business, or public policy – justify voting in favor of HB 643?

(South FL Business Journal news release on HB 643)

(unanimous vote of approval)

(full text of HB 643)

(previous blog)

Update: Justice served for one Florida Condo Association

guest blog by Deborah Goonan

After Bob Norman of Channel 10 news brought media attention to Board member misconduct at Georgian Court North Condo Association last fall, former President Ed Ryan entered a guilty plea on criminal charges of practicing community association management without a license.
The Judge sentenced Ryan to 3 months probation and 25 hours of community service. Ryan was also ordered to return his ‘borrowed’ car to the Association and resign from the Board. The judge did not order financial Restitution.

The Attorney General opened the case following an investigation by Local 10 News in September.

The media really can be effective in resolving problems for homeowners. The Association is now pursuing a civil lawsuit in an attempt to recover hundreds of thousands of dollars that Ryan paid himself over ten years.