Category Archives: Florida
What about your Property Rights?
By Deborah Goonan
(Independent American Communities Blog, http://independentamericancommunities.com/)
Spokespersons for the US Common Interest, Association-Governed Communities industry give plenty of lip service to the concept of property rights. But what does that mean for special interests such as Community Associations Institute (CAI), National Association of Home Builders (NAHB), and National Association of Realtors (NAR), to name three of the biggest players in the HOA industry?
I’ll let you in on a little secret: the industry is not interested in preserving your individual property rights, or even your Constitutional rights, for that matter. When CAI, NAHB, and NAR speak about property rights for residents in HOAs, it is generally in the context of balancing the rights of owners with the rights of the Association.
CAI attorneys are especially vocal about the rights of Associations. In their Public Policy Guide, here’s what CAI has to say about private property rights: (emphasis added)
Community Associations Institute (CAI) supports protections that enable property owners to challenge governmental taking of common or private property. CAI opposes legislative or judicial actions that would limit or restrict the ability and rights of community associations to maintain control over association common property.
Read between the lines. When CAI refers to “private property,” it is really talking about the Association’s “private” property. However, to be more precise, commonly owned property is, in fact, collective not private. And that collective ownership is structured as individual shareholders in a corporation.
Due to its collective nature, a homeowner or condo or cooperative association almost always holds more rights than the individual. It is the Association that controls and spends assessment funds collected from individual owners. And as we all know, the one that holds the purse strings tends to hold power and influence.
Whose interest is served by HOA industry groups?
Here’s my observation: both CAI and NAHB (and related investor groups) want to increase and preserve the power of Owner Association Boards. That’s one of the most insidious hazards of HOA living, not only for owners, but also tenants. But one needs to recognize that these special interest groups seek to preserve the power of HOAs for different reasons.
CAI benefits from a powerful HOA Board that will engage in contracts, that will in turn collectively pay millions to their CAI-members: management companies, attorneys, insurance and reserve professionals, landscape companies, and other community service providers.
NAHB and investor groups, on the other hand, create and control HOA Boards. They find it imperative to control the voting interests – and therefore HOA finances. From their perspective, it is of critical importance to maintain developer’s rights and a corporate shield from liability for as long as possible. At heart, these real estate moguls do not trust common owners to properly manage what they see as their Creations and Empires.
But individual homeowners and residents also endure the effect of other conflicting interests of builders, developers, and speculative investor groups. After all, developers and their affiliates are the ones who can choose to cut corners on construction and do fracking right under your house, but yet they don’t want to be held accountable for resulting health and safety hazards or damage to your home. Association-Governed Residential Communities are often intentionally designed to provide ongoing income streams that outlive the developer’s construction phase.
Too many developers and savvy investors are the kind of people who want the right to sell homes and condos at inflated prices, and then take over the association and buy back your property at pennies on the dollar. These are the folks who want to turn a residential property into their personal real estate investment – as they morph what was sold as owner-occupant communities into poorly managed apartments or Airbnb, VRBO hotels.
The Realtor association (NAR) has its own special interests — they want their members to sell as much real estate as possible and avoid legal liability for selling you a money pit, or a bad investment. Of course, some real estate agents are ethical, but the current system with regard to sale of property with HOA strings attached lacks accountability.
But by far the biggest consumer problem we face is this: federal government policy makers and local politicians often bow down to these special interests and throw the rights of individual housing consumers under the bus.
It’s time to change that dynamic and shift rights back where they belong – to individual consumers of housing. Learn more at Coalition for Community Housing Policy in the Public Interest, http://www.chppi.org/
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 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)
This One Will Absolutely Fry Your Brain!
Here’s an HOA in Central Florida that will fine you ten thousand bucks if you post a negative online review about the community. And that money has to be paid within ten days.
Not only that, but this fascist HOA leader claims to own all copyrights of all material posted by his Windemere Cay Homeowners Association.
From what store are these idiots buying their supplies of Stupid Juice?
