Tag Archives: goonan

Condo or Hotel?

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guest blog by Deborah Goonan

AirBnB, VRBO, and online vacation rental sites have taken on a life of their own. Now condo owners can arrange to rent their units by the week, with the click of a few buttons. But some Florida condo owners are upset that their condo building has been overrun with tourists from all over the world, making their homes feel more like a hotel.

In the video report linked below, Michele Gillen, CBS4, Miami Beach, features Octagon Towers, just steps from South Beach. One condo owner laments that she no longer knows her neighbors, because they change every week. The problem has been ongoing.

The City of Miami Beach is threatening to shut off utilities to Octagon Towers, if owners do not cease and desist short-term rentals. That’s against city fire code. And Miami Beach already has dozens of hotels and Condo Hotels specifically permitted for vacation lodging.

But that doesn’t stop Condo Board member Sigmund Esposito from breaking condo restrictions and city codes all day long. Check out the interview of his vacation tenants, who were apparently unaware of the City’s ordinance restricting short-term rentals in residential condominiums.

Here’s my take on this. Octagon Towers is but one example of why condo owners frequently disagree about how their Association should be governed and managed. There is almost aways a conflict between the owners who actually live in their units and the owners who rarely stay in their units, but want to collect maximum rent.

So, here’s a suggested solution. If we are going to create RESIDENTIAL condominiums such as Octagon Towers (where long term leases may be allowed), then let’s not run the Association like a corporation! Don’t hand all the power to the Board, and don’t allow corporations to own individual units as if they were actual “persons.” (Searching public records for Octagon Towers, I noticed quite a few LLCs as owners.) Treat residents as actual citizens of their community, albeit a small community. Pre-screen buyers and long-term tenants to be certain they are looking for a place to live in peace and quiet, and not a money-making revolving door for vacationers.

Steer those hoping to make a killing on vacation rentals to what should be called INVESTMENT communities, such as condo hotels. Perhaps this is the kind of Association CAI had in mind when it decided years ago that “Community Associations” are businesses.

Some may be. But most aren’t — or shouldn’t be

(Miami Beach Condominium Reportedly Being Used As A Hotel « CBS Miami)

(Just in case you want to know what a condo hotel is:)

Timberlake Management, aka “The Condo Crime Family”

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guest blog by Deborah Goonan

Former FL Representative Julio Robaina calls the Timberlake management company run by the Duggers the “Condo Crime Family,” in this special News 10 report by Bob Norman. Take a look at the video of some of these communities that the Duggers manage – clogged storm drains, flooded streets every time it rains, trash all over the place. Exactly all of the blight that HOAs are supposed to prevent, right? Have these HOA property values been enhanced over the years? Not on your life!

Supposedly, Florida has the Department of Business and Professional Regulation (DBPR) to oversee condominiums, timeshares, and mobile home parks, to protect homeowners from financial misconduct and abuse. But how many complaints must be filed before Timberlake is shut down for good, and the Dugger family is held accountable? Apparently more than 30! Florida’s DBPR, a state level agency, does very little to protect condo owners.

That may explain why, for two years in a row, the FL Legislature has not even considered a bill that would extend DBPR authority to include oversight of Homeowners Associations. Meanwhile, the state has taken nearly half of the revenue paid by condo owners ($4 per condo unit across FL) and spent it on other services. Another slap in the face to condo owners.

Anyone who owns or resides in Association-governed property in Florida should be outraged. In fact, even if you are lucky enough not to have to live under HOA rule, as a taxpayer, you should still be very concerned about obvious incompetence and corruption that affects the lives of millions of your family members, friends, and neighbors.

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

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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

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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

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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 an effective tool to help resolve 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.

(link to story on board president misconduct)

 

http://www.local10.com/news/condo-president-admits-wrongdoing-in-court-after-local-10-investigation/32561836‏