Tag Archives: HOA corruption

Got $60,000 to Spare?

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guest blog by Deborah Goonan

Do you have $60,000 to spare?

Imagine you own a one or two bedroom condo in Fort Lauderdale, with a balcony view toward the Intracoastal, and within walking distance to the Atlantic Ocean and beach city night life. Ah, paradise!

Until you get a letter from the Condo Association, demanding that you cough up nearly $60,000 for needed repairs in just a few weeks. You read that right: SIXTY.THOUSAND.DOLLARS.

According to a Channel 10 news report by Bob Norman, owners received notice of the special assessment on February 20, 2015. The first $20,000 was due on April 10, with the full balance due by June 10. Nearly half of owners were unable to come up with the first $20,000 installment. It’s not looking good when the Association cannot collect even one third of what it says is needed to make repairs.

Now many owners are understandably stressed out, knowing they face possible lien and foreclosure if they are unable to come up with all the money within a few weeks. The Association Board is reportedly looking into loan financing to raise the balance of the money needed for repairs, and to allow owners to pay over time. It’s looking like a loan — if they can secure one — will be for millions of dollars plus interest. Either way, assessments will increase dramatically. So much for the argument that condos provide affordable housing.

A quick check of public records for Embassy Tower II Condo reveals recent sales values of perhaps $170,000 – $300,000 per unit, depending on the size and number of upgrades inside. This special assessment amounts to perhaps 20-33% of the value of the unit at the time of sale. Even if owners are able to come up with this sizable chunk of change, will they ever see a good return on their investment?

Also according to public records, Embassy Tower II condo was built in 1973. That makes this condominium complex 42 years old. If owners had been setting aside reserves all along, there would be no need for a $60,000 special assessment. But, as readers of this blog know, it is rare for HOAs to adequately fund reserves.

Let’s do the math, 102 units times $60,000…that’s about $6.1 million shortage of reserves!

So, I’ll make a prediction. Because of its location near both the Atlantic Ocean and the Intracoastal, I’ll bet investor groups are keeping a close eye on Embassy Tower II, just waiting to snatch up units from owners desperate to sell, or facing foreclosure. Why, as soon as they can oust enough current owners, and take control of the Board, they can terminate the Association, and boot out the remaining owners. Then they can raze the 42-year-old building and put up a shiny new condo tower with twice as many units! They’ll make millions!

You see, the dirty little secret about many “affordable” condominiums is that planned obsolescence is part of the equation, virtually guaranteeing redevelopment every 30-50 years.

 

(link to Channel 10 report on huge special assessment)

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 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.

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

 

Dallas HOA Still Affected by Internal Strife

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guest blog by Deborah Goonan

A few months ago, a County Judge dismissed a case brought by Highlands of McKamy HOA against the Toras Chaim congregation. The small Orthodox Jewish congregation thought its battle was over, and then the City of Dallas sued the congregation over permit violations. That case is still pending.

Now, the same HOA community is back in the news, this time regarding a dispute between a homeowner and the Association over a brick wall that was inexplicably torn down, without notice, from the rear border of his yard. That left the affected homeowner’s back yard wide open to a busy road and nearby railroad tracks, significantly increasing noise levels and eliminating privacy.

It seems the brick wall was in need of repair, and the Board, led at the time by former President David Schneider, made the hasty decision to tear it down, rather than attempting to shore it up.

Kind of a metaphor for how all disputes were handled by Schneider and his allies.

The affected homeowner had been trying to sell his house, but that attempt was unsuccessful. Perhaps the gaping hole in the barrier wall is the primary reason the house remains unsold?

According to the report in the Dallas Observer, before a majority of homeowners recalled Schneider from the Board, they also forced a $10,000 cap on the budget, in order to limit the HOA’s exposure to legal expenses over the unpopular decision to sue the Toras Chaim. That led to a lack of funds to replace the wall after it was torn down nearly a year ago.

In the meantime, the City of Dallas was about to levy fines because the wall has not yet been replaced. Fortunately, the Dallas Observer reports that the new Board has authorized an emergency repair, and the wall will soon be rebuilt.

Once again, we are reminded that one rogue Board member and a few allies can wreak plenty of havoc in a once peaceful and harmonious HOA community. Even an HOA with minimal common areas and low HOA assessments can run into trouble and considerable expense. A personal dispute that should have stayed between neighbors of two residences has become a source of ongoing strife for the entire HOA. A contentious and questionable election led to a recall that divided the community.

Every member of the Highlands of McKamy Association had to pay for legal expenses for what amounted to a frivolous lawsuit aimed at denying First Amendment rights and religious freedom. Now the HOA also has to pay to replace a 9-ft. tall brick wall that might have been saved rather than torn down. Oh, and yet another homeowner has just filed suit against Schneider’s former HOA Board, claiming the Board violated its bylaws by awarding a contract to demolish the wall to a single bidder, with no competitive bids.

Please explain to me once again, how do HOAs enhance and improve property values?

(link to continuing saga at McKamy HOA)

A Good Reason for an HOA?

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I will certainly concede that I wouldn’t like living across the street from this guy. Still, I suspect that many victims of HOA abuse would rather live next to this house than next to the bullies who run much of HOA Amerika.

Promises, Promises

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guest blog by Deborah Goonan

Today’s blog features the story of a major developer, Centex, allegedly not delivering on amenities as promised to early buyers in the master planned community,

Sullivan Ranch in Mount Dora, Florida, was supposed to include a private equestrian center, according to Sara MacKenzie, a homeowner since 2007. She says she still has the brochures that describe the plans for owners to ride their horses on lush, rolling hills, and the developer did install a fence suitable for the purpose of keeping horses. But the two-story equestrian center, as described, has never been built. MacKenzie claims recent buyers received an addendum disclosing approval for multifamily apartments in place of the promised amenity. So MacKenzie has filed suit against the developer, with a hearing scheduled for April 21, 2015.

In typical HOA style, as soon as MacKenzie began to talk to her neighbors, she was hit with a “non-solicitation” violation. Free speech in an HOA? Only if you are willing to sue to protect your rights.

Do these owners have a solid legal case? Maybe not.

A quick Google search of Centex and Sullivan Ranch is revealing. The current promotional video fails to mention a single word about horses or an equestrian center. Clicking on the site plan thumbnail opens a web page without a site plan, but with this fine print disclaimer:

“The site plan shown is conceptual in nature and for illustrative purposes only to show general features and the layout of the community, and should not be relied upon in making a decision to purchase a homesite. Any improvements shown may not have been constructed and Centex makes no representation or warranty that the improvements will be constructed. The past, present, future or proposed roads, easements, land uses, plat maps, lot sizes or layouts, zoning, utilities, drainage, land conditions, or development of any type whatsoever, whether reflected on the site plan or map, or whether outside the boundaries of the site plan or map, may not be shown or may be incomplete or inaccurate.

“See the recorded plat, utility plans and construction plans on file in the sales office for lot dimensions, restrictions, easements and other important information regarding these lots and this community. Any landscaping that may be shown is for illustrative purposes only and does not represent the current landscaping within the community or plans for future landscaping. Seller reserves the right to change and modify development plans without notice. This site plan is not drawn to scale.”

In fact, I hate to break it to these homeowners, but these boilerplate disclaimers appear on virtually every developer website and brochure these days. This isn’t the first time Centex has not delivered on all of its promised community features and amenities, and plenty of other developers, large and small, have also broken their promises to finish golf courses, club houses, pools, boat slips, bike trails — you name it. If the economy changes, the builder can alter plans for the community to better maximize profit. Homeowners can sue, but there’s no guarantee the developer will ever finish what was started, or that owners will be compensated for broken promises.

Next time you look at a developer’s website or glossy brochure, be sure to read the fine print. For a true representation of what the developer is obligated to build, check the plats on file with your local county clerk, or ask your real estate attorney to check it out for you before you finalize a sale agreement. Visit other communities that were constructed in previous decades, and check out what was completed, and its current condition in relation to age of the community. Then decide for yourself if it’s worth paying extra for amenities that may or may not be completed someday in the future.”