Solutions to HOA Abuse in Florida
Common Interest Community Association (or HOA’s) Abuse in Florida
Common interest communities (commonly known as Homeowner Associations or HOA’s) have become more popular across the United States, including Florida. As more and more Floridians find themselves living in these associations, a pressing concern has emerged: financial fraud committed by board members. For many unsuspecting property owners, the consequences of this fraud can be devastating. It’s a whirlwind of unexpected costs, escalating assessments, and the daunting task of attempting to recoup stolen funds. Some Floridians have lost their homes.
This is far from an isolated issue. According to a report by the Community Associations Institute, over the past two decades, there’s been a significant increase in cases of financial mismanagement and outright theft within these communities. As the number of common interest communities grows and such incidents become more frequent, the need for protections for property owners has become critical. Safeguarding property owners from the nefarious actions of a few is the responsibility of both state and local governments.
In this document, Floridians For Honest Lending explains the current problems and solutions Florida homeowners need.
News Coverage:
Univision 23’s Tayhana Garcia reports on condo abuse allegations from the owners and residents of Sunset Palm Villas in Miami-Dade County.
Miami-Dade State Attorney Katherine Fernandez Rundle and Mayor Daniella Levine Cava respond to the investigation. The original report (without English subtitles) is available here.
Condo owners fighting hefty HOA assessments for hurricane damage still under repair.
Dockside at Ventura’s HOA Board of Directors is assessing condo owners a damage assessment fee to cover the overall cost of repairing damaged units. One condo owner, Juan Marmol, says the total assessment he’ll have to pay over 12 years is $128,338.12. Read the Spectrum News report here.
Who oversees Common Interest Community Associations in Florida?
Florida statutes governing various types of common interest community associations are delineated across four distinct chapters:
Chapter 718 pertains to condominiums, Chapter 719 addresses co-ops, Chapter 720 is dedicated to homeowners associations, and Chapter 723 focuses on mobile homes.
Florida’s Department of Business and Professional Regulation plays a pivotal role in governing all of these common interest community associations.
Click on any item below to expand and read a summary of the DBPR’s role with respect to community associations:
Licensing & Education
Regulation & Enforcement:
Dispute Resolution:
For certain disputes between unit owners and associations, the DBPR provides a mandatory non-binding arbitration process. This serves as an alternative to litigation, aiming to resolve issues more quickly and at a lower cost.
Complaints & Investigations:
Property owners or other stakeholders can file complaints against community associations or their managers. The DBPR reviews these complaints and, if deemed valid, conducts investigations. Based on the results of these investigations, the department can take various actions, ranging from fines to revoking licenses.
Ombudsman Office:
Public Records & Reporting:
The department ensures that community associations submit required financial reports, maintain appropriate records, and provide public access to specific documents as mandated by law.
In summary, the DBPR serves as the primary regulatory body for community associations in Florida, ensuring compliance with state laws, resolving disputes, and safeguarding the interests of property owners and other stakeholders.
Solutions:
Keep Funds within the Dept. of Business and Professional Regulation (DBPR):
- The Dept. of Business and Professional Regulation collects annual fees for each housing unit to help fund the Department that oversees most of the rules that govern common interest community associations.
- Since 2008, about 40% of the money DPBR collects from annual fees (or $65 million out of $167 million) has been taken by the state and put into the general revenue fund to balance the state budget.
Solution:
This practice of moving funds out of the DBPR budget should stop.
Sample Legislation:
No sample legislation
Modernize Property Owner Annual Fees:
- The annual fees property owners pay were set decades ago, and need updating. If we want greater regulation and oversight, we need to collect more funds.
- Currently, the annual fees for condos and co-ops is $4 and $5 for mobile home lots. These fees should be adjusted for inflation.
Solution:
Sample Legislation:
No sample legislation
Improve Document Transparency:
- The state should use the annual funds to create a better online system for the Dept. of Business and Professional Regulation.
- This system would store and help DPBR track more official community association documents, making it easier for homeowners, buyers, agents, and investigators to access them.
- Give DPBR regulatory authority to ensure that documents are accessible.
Solution:
Sample Legislation:
Senate Bill 642 (2022) - Online Docs Database
GENERAL BILL by Ana Maria Rodriguez
Description:
Requiring the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation to establish a searchable database by a specified date which contains specified information regarding each condominium association in this state; requiring the division to establish a searchable database by a specified date which contains specified information regarding each homeowners’ association in this state, etc.
SB 1454 (2015) - Division of Florida Condominiums, Timeshares, and Mobile Homes
General Bill by Rene Garcia
Description:
Division of Florida Condominiums, Timeshares, and Mobile Homes: Authorizing the Division of Florida Condominiums, Timeshares, and Mobile Homes within the Department of Business and Professional Regulation to audit an association’s financial statements if a unit owner is not provided with a financial report after a second written request; requiring the division to coordinate and monitor future recall proceedings of a board if the unit owners have attempted to recall the same board member at least two times; requiring the division to enforce and ensure compliance with specified provisions and rules, etc.
Bill Text: PDF
Strengthen the Legal Accountability of Board Members:
- Current statute requires board members within condominiums, co-ops, and HOAs to certify by written consent to faithfully discharge his or her fiduciary responsibility to the association’s members.
- To enhance accountability, we propose changing this requirement from a mere written consent to an affidavit, a legally binding document that can serve as evidence in a court of law.
Solution:
Sample Legislation:
SB 394 (2022): Residential Associations
Financially Protect Property Owners Against Theft:
- Some homeowners have lost money because of thefts by board members.
When this happens, homeowners face more costs, and it’s hard to get the stolen money back. - Florida law says associations need fraud insurance. But nobody is making sure they actually have it.
- The state should watch this more closely and penalize those who don’t follow the rules.
Solution:
Sample Legislation:
No sample legislation
Expand and Strengthen the Ombudsman Role:
- The Condo Ombudsman role should also have power over homeowners associations.
- They should be able to take legal action if needed.
Solution:
Sample Legislation:
CS/HB 1033 (2022) - Homeowners' Associations (Ombudsman powers)
General Bill by Regulatory Reform Subcommittee and Beltran
Description:
Homeowners’ Associations: Revises process & requirements for levying and appealing fines & suspensions, including requiring certain written notices & hearings & creating appeals committee; authorizes parties to initiate nonbinding arbitration rather than presuit mediation for certain disputes; creates Office of Homeowners’ Association Ombudsman within DBPR; provides for funding of office; directs Governor to appoint ombudsman; prohibits ombudsman, officers, & full-time employees from engaging in certain activities or receiving certain remuneration; provides for principal location of ombudsman’s office; provides powers & duties of ombudsman; provides for powers & duties of ombudsman; provides for administration of election monitoring process.
Create a Community Association Fraud Investigation Program:
- Florida should set up a special team to look into condo fraud.
- This could be under the Attorney General’s Office or the Florida Department of Law Enforcement.
Solution:
Previously filed legislation by Sen. Rodriguez and by Rep. Fabricio would create a condo fraud pilot program and would create an investigative unit within the Florida Department of Law Enforcement to investigate complaints that allege criminal activity in connection with residential condominium associations.
Sample Legislation:
SB 274: Condominium Fraud Investigation Pilot Program
GENERAL BILL by Rodriguez
Description:
Condominium Fraud Investigation Pilot Program; Creating the Condominium Fraud Investigation Pilot Program within the Department of Legal Affairs in the Office of the Attorney General; authorizing the department to contract with a private entity to achieve the purpose of the program; requiring that the pilot program be funded from the Division of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund; providing for future repeal of the program unless reviewed and saved from repeal by the Legislature, etc.
HB 811 (2022) - Condominium Association Complaints and Investigations
General Bill by Fabricio
Description:
Condominium Association Complaints and Investigations: Creates investigative unit within FDLE to investigate complaints that allege criminal activity in connection with residential condominium association; requires certain personnel in investigative unit; requires division to review complaints within specified timeframe & take specified actions; provides powers of & requirements for department.
Protect Whistleblowers:
- People who report fraud (like staff or property owners) should be safe from retaliation.
Solution:
No previously filed legislation.
Sample Legislation:
No sample legislation
Provide Legal Support:
- Property owners trying to expose fraud should get some free legal help. Associations have a significant financial advantage, and this deters property owners.
Solution:
No previously filed legislation.