Tuesday, October 13, 2015

My HOA Turned Me Over to Collections -- PLEASE HELP!!!

This is a frequent call I receive.  Here's my advice:

If you were ever late with just one payment, you set into a motion a problem that just snowballs.  It may be possible you mailed your check on time but it was not delivered on time.  The association is still entitled to late fees, interest and attorneys' fees whenever a payment is late.  Once the account is late, the account is sent to the attorney and any payments you mail are rerouted to the attorney, which is the reason for the delay in posting payments. 

By state law all payments you send to the association are applied to non-assessment charges first and assessments last.  This means unless you pay the amount demanded in full you will always be late and subject to foreclosure.  Contacting the attorney only adds more legal fees because by state law the association is entitled to all of their attorneys' fees even if a case is never filed.

You need to resolve this now because the association is most likely preparing to foreclose on your property.

Unless you can prove you were never late starting with the first time your ledger is showing a late payment, which is usually not possible without a tracking number on the mail, you will need to request a payment plan in writing to the attorney.  Payment plans are generally approved for 6 to 12 month repayments. The payment plans can be expensive as well because the attorneys charge to set up the plan and charge to process the checks and monitor your account to make sure you continue to pay. 

If the payment plan doesn't work out for you or the association doesn't approve it, consider filing bankruptcy.  If you owe more on your home than it is worth you could lien strip the debt.  If not, you could file a Chapter 13 plan and put the debt into a 5-year repayment plan.  Filing a Chapter 7 without lien stripping will relieve you of the debt, but the lien remains and the association could still foreclose.  You also have to pay any assessments that come due after you file bankruptcy.

If you are in this situation -- hire a lawyer! YOU ARE AT RISK OF LOSING YOUR HOME!

If the association has a third party debt collector, this is definitely a complicated matter that requires hiring a lawyer.

Saturday, August 22, 2015

HOA Bullies & Condo Commandos

The biggest complaint I hear recently from people calling my firm for help is bullying and harassment by their association.  This is no surprise to me since a ruling last year which basically said if you live in an association you better learn to have a thick skin.  The courts and the arbitrators lost their patience long ago for the constant bickering in community associations. Now this lack of patience memorialized in a ruling.

Part of the problem is this misconception that because the associations are corporations bringing a lawsuit against one would result in a big damages award, so owners are quick to want to sue their associations and jam up the courts with harassment cases. The reality of the situation is that unless you have been seriously injured, either physically or in some other manner (like losing your job because the association called your employer), you will be lucky to get all of your attorney's fees  and legal expenses, much less anything for pain and suffering.  These are just not big dollar cases, which means if you do want to sue you will need to finance the case yourself because they are not eligible for a contingency fee arrangement (pay only if you win).

Don't misunderstand me -- I have seen some horrendous acts against homeowners, some of them criminal, but even in those cases lack of evidence is a problem.  The associations are crafty enough to not commit these acts in front of witnesses.

Without regulation by the State of Florida and lack of funds available to the homeowners to bring litigation, the homeowners often have no recourse.  The associations know this and know they can get away with violating state laws and the governing documents of the association.

My recommendations for living in a community association are:

1. Move.  My opinion is the risks outweigh the benefits of living in an association.  You might live in a great association right now, but one election can change everything.

2. If you can't move, educate yourself.  It's harder to take advantage of someone who knows what their rights are and can stand up for those rights.  If you haven't read your governing documents (Declarations, Bylaws, Articles of Incorporation, Rules and Regulations), do so NOW. If you are not sure what something means, pay a lawyer to interpret it for you.  It's better to spend a few hundred dollars now then to spend thousands later if you end up in trouble.  Also, read the state laws.  Chapter 720 of the Florida Statutes governs homeowner associations and Chapter 718 governs condo associations.

3. Try to resolve disputes in an amicable manner first.  Respond promptly to all letters and notices you receive from the association.  Even if their letter is antagonistic, don't respond while your angry and try to respond in a friendly manner.  These letters are often form letters written by the association lawyer who has to put certain things in them to comply with the law.  For instance, the law requires the association to let you know that if you do not pay your past due assessments the association can lien and foreclose on your home.  It has harsh language in it, but most of the language is required. Same thing goes for covenant violation notices. If the association is going to impose a fine the association has to provide you with a notice 14 days in advance of a hearing.  The word "hearing" is usually enough to upset anyone, but it's required to be in the notice.

4.  Always pay your assessments.  No matter how you feel about the way the association is being operated and managed, you cannot withhold assessments and you will lose your home if you do. Even if the money is being embezzled, you still have to pay your assessments.  State law makes it an absolute duty to pay and none of the other issues are a defense.  Financial hardship is not an excuse. If you know you can't pay, call your association and ask for payment arrangements before you are late.

5. Maintain your property.  The fastest way to get into trouble with your association is to not keep your property maintained.  You bought your property in an association so that everyone would keep their property in a neat, attractive manner to preserve property values.  We all have hard times sooner or later, but that doesn't excuse anyone from keeping up their property.  A lot of things can be done to keep the property up that don't cost money, like mowing and edging the lawn or picking up trash, toys, or other items.

6.  Keep an eye on the money.  It's alarming how many associations have funds missing or misappropriated.  Ask for a copy of the annual financial reports.  The associations are required to send out a notice each year letting homeowners know the reports are available.  Periodically ask to see the monthly financial reports.  You have a right to see any official records as long as you send a certified letter to the association requesting access to inspect the records.  Don't ask for copies to be sent -- the associations have no duty to provide the copies other than during the inspection.  The association has ten (10) business days (five for condo associations) to provide you with access to the records.

7.  Don't go looking to pick a fight.  The odds are against you, especially if you don't have deep pockets.  Once you become involved in a dispute with your association chances are you will never be treated decently again.  It gets personal.  It shouldn't, but it does because this is a corporation that is run by your neighbors.

8.  Attend meetings and encourage your neighbors to attend meetings.  Associations become a problem when the homeowners don't care to be involved.  This goes back to item #2.  You can't educate yourself if you don't know what's going on in your neighborhood.

9.  Campaign to be a board member.  Again, lack of participation by the homeowners leads to rogue boards and abusive associations.

10.  If you must litigate, make sure it's over something really important and not just name calling or a general dislike for your associations.  Ask yourself if it's something worth you spending 3-4 years in a court case over and spending tens or hundreds of thousands of dollars over.  There is a financial cost to litigation as well as an emotional cost.  Once you engage in litigation with your association you can't just walk away.  If you back out you will have to reimburse the association their legal fees, which could reach $100,000 or more very quickly.  Make sure you hire a lawyer who has experience litigating against associations. It's not your typical court case.  There are pre-suit requirements and special rules.

Finally, contact your elected officials and tell them we need state regulation for homeowner associations.  We need a state agency to oversee the homeowner associations.  We have regulation for condo associations.  While it's not the ultimate fix to the problem, it's an improvement and arbitration with the State of Florida is less expensive then litigation in civil court.

Saturday, July 18, 2015

Fines Authorized by Statute?

The great debate:  Can the HOA fine if the governing documents do not authorize it but Fla. Stat. 720.305(2) establishes procedures for fining? 

Many community association lawyers and community association managers say yes.

My answer is no despite many of my colleagues disagreeing with me. The statute starts out "The association may levy reasonable fines of up to $100 per violation....." which my colleagues have interpreted to mean the association has a statutory right to levy fines. 

My argument is the Florida Constitution prohibits retroactive application of a statute to change an existing contract (Declarations, bylaws and articles of incorporation are contracts) as reinforced by Cohn v. The Grand Condominium. Additionally, S&T Anchorage v. Lewis held an association cannot act in any way not authorized by its governing documents. The exception to the retroactive application is statutes which are public policy (such as the Florida Friendly Landscaping Act), statutes which are remedial or curative (the recall statute) and statutes which are procedural. The fining statute is procedural, but the part that would allow for a statutory right to fine is not nor was it a public policy statute. 

From Haven Fed. Savings and Loan v. Kirian: “Substantive law has been defined as that part of the law which creates, defines, and regulates rights, or that part of the law which courts are established to administer. It includes those rules and principles which fix and declare the primary rights of individuals with respect towards their persons and property. On the other hand, practice and procedure 'encompass the course, form, manner, means, method, mode, order, process or steps by which a party enforces substantive rights or obtains redress for their invasion. 'Practice and procedure' may be described as the machinery of the judicial process as opposed to the product thereof." It is the method of conducting litigation involving rights and corresponding defenses.” 

My colleagues disagree and until an appellate court rules on the subject we will not know who is right. Does your HOA want to foot the bill for an appellate case to figure this out? My suggestion is err on the side of caution.

Friday, July 10, 2015

BUYER BEWARE!! Your HOA Answers to No One!!

The question I get several times a day asks who can the owner go to in order to file a complaint against their HOA.  The unfortunate answer is: NO ONE.  Unlike condominiums (COAs), the HOAs answer to NO ONE.

Florida does not regulate HOAs.  There has been legislation posed the past two years authorizing the Department of Business & Professional Regulation to create a division to oversee HOAs, but the legislation failed so far both years.  All we can do is try again next year.

Where does that leave the owner?  Digging deep into their pockets to fund a private lawsuit, which can, for a 3-day trial, take 3-4 years and $135,000 - $150,000 to complete.  Often the owner figures they will file the lawsuit and the HOA will settle quickly.  That is a dangerous strategy because the HOAs don't settle all that often and if you drop the lawsuit, you owe the HOA it's legal fees and costs.

You best approach to your problem is to educate yourself about HOAs and attend board meeting, or better yet, don't buy a house in a HOA.

Saturday, May 23, 2015

Correct Mailing Address is Critical to Association Living!

Questions about past due assessments, collection fees and liens almost always include a statement the inquirer did not receive notice.  Not having your correct mailing address on file with the association puts the liability on you. Just like not signing for the certified letter is on you and the association will receive it back marked "UNCLAIMED."

If you are going to dispute any charges, here is my advice:

Pay off the lien first and then bring a separate action for recovery of any fees if the association violated your due process rights. Never risk the loss of your property to prove a point or fight over improper fees.

Hire a HOA/condo lawyer  to audit the fees and bring any possible action.  You need someone who is experienced not only in this area of the law, but the industry practices.

Tenants Attending HOA Meetings!

A common question I run into involves HOAs and condo associations (COAs) denying tenants attendance at meetings.  This is a big mistake for the associations.

The problem started with revisions to the Florida Statutes. Years ago Chapter 720 (HOAs) and Chapter 718 (COAs) used to provide rights for the members or "their authorized representatives" to attend meetings.  Over the years revisions to the statutes removed that language and the HOAs now erroneously believe they can ban non-owners from meetings.

This thinking runs afoul of the Fair Housing Act because Fla. Stat. 720.305(1) requires members, their tenants, guests and invitees to all comply with the governing documents and Chapter 720.  The FHA requires associations to provide those governed by the HOA access to attend meetings

Tuesday, May 19, 2015

HOA Rant

There is a great article posted on CyberCitizens for Justice yesterday.  It's a rant from Lindsey Nesmith in an article she wrote which printed in the Florida Weekly.  My hat is off to Ms. Nesmith for saying the obvious, but what many of us are afraid to say.

You can read the article at:  http://www.ccfj.net/HOARANT.html