My Email Regarding HOA Reform Bill and Affordable Legal Representation

I wrote this to Senator Alan Hayes, House Representative Mike La Rosa, Florida Bar President Ramon Abadin and my friend, Jan Bergemann of Cyber Citizens for Justice (www.ccfj.net):

Gentleman,

I am writing to you today, as an attorney who represents both homeowners’ associations and homeowners who are being victimized by their associations. The HOA Reform bill is critical at this point and comes at a time when the president of the Florida Bar, Mr. Ramón Abadin, has pointed out, in the November issue of the Florida Bar Journal, the need for a new business model because the working class cannot afford an attorney and do not qualify for legal aid.  I see this injustice every day in my practice as I have to tell clients the high legal fees and costs they would incur to hire me to protect them from being another HOA victim.  These cases are not the type that are done on a contingency because rarely has someone been physically injured.  I turned down at least one case a day, sometimes as many as five.  Yesterday it was three.   Most firms won’t represent the homeowners because the associations are a “cash cow.” 

The homeowners’ associations are unregulated and the condominium associations have limited regulation with the Dept. of Business and Professional Regulation (“DBPR”) not having jurisdiction over assessments, which is the biggest source of abuse for homeowners.  Even the appellate courts, in a case called Ocean Two Condo. v Kliger, where the Court stated “Because of the statutory lien rights and the power to prosecute the foreclosure action, an association and its attorneys have ample leverage, and the unit owners have very little. Every telephone call, meeting, or hearing regarding the genesis of the dispute and the amount due produces an incremental unit of attorney billings, and every day until resolution of the dispute increases the interest tariff.” 

In my practice I have witnesses law firms that have paralegals do all the work, yet the homeowners are billed attorneys’ fees, not paralegal fees.  I have witnessed a law firm give sales pitches to associations during hiring interviews and state that “95% of the homeowners can’t afford to sue you and the 5% that can will soon learn that money can be used for a vacation, their children’s college, or retirement and will give up.”  Unfortunately, this is true.  I have seen a law firm give homeowners a letter stating they could not call or come to their office to resolve their assessment delinquency, but could fax their credit card or email and then are given the email address of a former staff member.  Once I got involved the charges ballooned from $795 to over $3,600 with the attorney telling me he had to read all those emails the owner sent trying to get a response.  This is outrageous and had I not gotten involved he would have forced the homeowner to pay those ridiculous legal fees.

The industry not only needs more regulation, but more affordable legal representation. Let’s give DBPR jurisdiction to arbitrate assessment disputes.  This is the biggest source of abuse.  Arbitration is less expensive for the homeowner and the threat of arbitration might help tamper the abuse.

Regulation of the homeowners’ associations is needed to help curtail the abuse of out of control board members.

Right now there is a rise in homeowners’ associations setting up their own corporations to perform work normally performed by vendors.   This results in the board of directors putting their family members on the board of these corporations as paid directors, if not themselves in some cases; the board members receiving free services, the members being denied access to see accounting records of these corporations even though their assessments paid to set up this corporation and bought any equipment, furniture or other assets.  Several times I have witnesses where these corporations are either owned or operated by a board member or have contracts with a board member.  Some associations set up these companies to operate a receivership or rental program to take control of homes in foreclosure, which is needed, but instead funnel the rental income to themselves or the corporation without the association getting a dime.

There is also a rise in the community association management firms setting up their own corporations to perform work normally performed by vendors.  These corporations are then paid top dollar and paid promptly with no one given a chance to dispute an invoice.

There is a rise in the number of cases in which deed restrictions have expired under the Marketable Record Title Act but the HOAs continue to operate as mandatory associations and threaten to foreclose on owners who refuse to pay because they know the chances of the owner affording an attorney are slim.

I have witnessed board members targeting homeowners they do not like.  This targeting sometimes includes criminal activity, which is hard to prove.  Any witnesses refuse to get involved because they know they will be targeted.

The Village Condominium Association in Orlando was taken over by a board member who slowly was able to get rid of anyone who did not agree with him and then proceeded to give himself the management contract, the security contract (with armed security despite not having the proper licenses), and the maintenance contract.  This board member marked all the board members’ assessments as paid each month despite no payment.  He was able to take approximately $40,000 a month from the association (which we documented), depleted the reserves and diverted money from insurance claims to his own pocket. A receiver was eventually appointed to take over and the board removed.

I could write a book on the atrocities committed against homeowners, including cars being set fire, fake bombs on lawns, handicapped owners in wheelchairs being refused to attend meetings and harassed, racial discrimination, sex discrimination, discrimination against veterans.  I have witnessed homeowners being evicted from their homes for past due assessments when their home was in a trust and the association demands the rent be paid to them from the “tenant.”  And let’s not forget the Higgins v. Timber Springs case in which Mr. Higgins was foreclosed upon while on active duty in the military.  Our firm was able to get the foreclosure reversed.  We took the case pro bono, one of the few we could afford to handle as a small firm, because Mr. Higgins could not afford an attorney and was trying to deal with this situation while deployed. 

The sad part is when I have to give these homeowners a quote of the fees to litigate they decide it’s easier to sell their home and move, sometimes to another state.

I apologize this email is so long, because I know your time is valuable, but I appreciate the efforts each of you are making in trying to protect the rights of our citizens.  So many of them lose their homes, not because they can’t afford them, but because they upset their HOA, became a victim, and cannot afford an attorney.  Thank you!

Regards,

Barbara Billiot Stage, Esq.

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.

Covenant Violations and the Fining Process - What Your Rights Are as a Homeowner

This is the time of year where our firm gets a lot of calls about covenant violations, mostly lawns that took a beating during the winter months.  The Florida climate, which goes from almost freezing to tropical in a 24-hour period, tends to be harsh on lawns, but I digress.  That's a blog about Florida-Friendly Landscaping.

There are several things the homeowner should know about the fining process because if you know what the law provides, it is less likely you will be taken advantage of by your HOA.  Remember -- knowledge is power.

A board of directors cannot impose a fine against a homeowner.  The HOA is required to have a committee of at least three (3) members, who are independent and are no relation to the board of directors, the property manager, officers, agents or employees of the HOA.  The committee should be comprised of an odd number to avoid a tie vote.  The odd number of members is industry standard and not part of the statute.  The committee has to agree by a majority vote to impose a fine, which cannot be retroactive, and the board of directors cannot override the vote to impose a fine, but can override the vote to withhold a fine being imposed.

The HOA is required to give the homeowner notice of a hearing to be held to vote on the fines.  The HOA is required to give the owner at least 14 days notice. Now here's where many HOAs get it wrong.  The statute, Fla. Stat. 720.305(2)(b) states "A fine or suspension may not be imposed without at least 14 days’ notice to the person sought to be fined or suspended...."  The statute does not say mailed at least 14 days in advance, IT REQUIRES THE NOTICE TO BE GIVEN TO THE OWNER AT LEAST 14 DAYS IN ADVANCE.

The statute also provides this is a hearing, not a meeting.  The HOA should not be noticing the hearing to the membership to attend as a lynch mob.  Hearings do not require notice.  The only people that should be present are the homeowners, the committee and if the HOA is going to present the case to the committee, a representative of the HOA.  This is usually the property manager or a board member.  The representative of the HOA should not be sitting in on deliberations and voting by the committee.  This would prevent the committee from making an independent decision.

If you find yourself in front of the committee, bring a recorder.  You have the right to do so, although the committee will probably say you don't.  Even board meetings are cut short and adjourned because board members tend to think you have no statutory right to record meetings.

You are entitled to obtain a copy of the minutes from the hearing.  The committee should create minutes and record the vote, listing the vote of each committee member.

If a fine is imposed, you should pay it and then challenge the decision.   Never risk your home.  If you pay the fine, the risk to your home is removed and you can challenge the decision without worrying about losing your home to a foreclosure.  Unpaid fines in excess of $1,000 can be the source of a lien and foreclosure.

Now, off topic, if you have one of those troublesome lawns that doesn't thrive no matter what you try to do to save it (you know, those St. Augustine lawns), then look into Florida-Friendly Landscaping (FFL).  You still have to submit an application to the ARC or ACC or whatever your HOA calls it, but by law the HOA cannot prohibit you from implementing FFL.  Check out the website by the University of Florida's IFAS extension at floridayards.org. 

As far as other violations go, please do not make improvements to your home without filing the ARC/ACC application and please do not store boats, trailers, RVs, 4-wheelers, jet skis and other recreational items on your property.  These are the biggest sources of fines in HOAs.

Community Association Living [Part 4:Staying Out of Trouble]

My practice consists mostly of representing homeowners against their HOA (single-family homes) or COA (condos) and about half of my clients retain my services because they are being sued or about to be sued by their association. The problem is most homeowners do not understand their associations are in a superior position. Most people do not respond well to the covenant violation notices or intent to lien notices. The first reaction is usually "this can't be legal, this has to be wrong." Unfortunately, common sense doesn't dictate right or wrong in these cases and the law is very much on the side of the associations.

The first step to staying out of trouble with your association is to attend board meetings. Keep an eye on what's going on and what your board of directors are doing. If no one is holding them accountable they will think they can do and get away with anything. Even the most well-intentioned board members can lose sight of reality and what is legal if they are contributing a lot of their time to manage the association and no one cares to question their actions.

So what do you do if you are already in trouble? Do not ignore those notices!!! The problem will not go away. Even if you think the notice is wrong, rarely do the associations say they are wrong, they made a mistake and please forgive them. In fact, some will even tell you not to worry, its a mistake and then file a lawsuit to take your home.

If you have a notice for past due assessments, pay it in full. If you don't have the money, get a loan. If you can't get a loan, consider Chapter 13 bankruptcy. Chapter 7 will not save the home, but if you have income, Chapter 13 will save your home. If the notice came from an attorney, don't try to pay the association directly thinking you can avoid the attorneys' fees. You can't. By law any payments are applied to attorneys' fees first, then late fees and interest plus any other collection costs, and the assessments last!! While the association may accept your payment, the payment will be forwarded to the attorney and you will still be past due in paying your assessments. Even if you are past due $5, legally, the association can foreclose on your home. Trying to call the attorney and set up a payment plan will only incur more attorneys' fees. You can send the attorney a written offer of a payment plan, which is what the attorney will request anyway, but most law firms charge $250 or more to set up the payment plan and around $50 to process each payment. That's a lot of money to add to an already past due bill. Most associations have required the bill to be paid in two to six months, but with the state of the economy, many are considering one year payment plans and some will offer two years. Just keep in mind the extra fees the law firm charges for handling a payment plan. Also remember your association can foreclose even if your mortgage company is already foreclosing.

If you have received a notice of a covenant violation, do not ignore that either. Many times owners receive a notice for something that may have existed, but was recently corrected. Still do not ignore the notice!! Let the association know the condition was recently cured!! If your association is threatening a fine please note you are entitled to a hearing before a three member independent committee (no relation to board members or property managers) and the association has to give you fourteen (14) days notice of the hearing. You will have a chance to present your case and the committee has to vote whether or not to fine you. If they choose not to impose a fine, the board of directors cannot override the decision. If you have not fixed the violation they are accusing you of, then contact the association and let them know how soon you can fix it. Don't make the mistake of thinking they cannot force you to fix it. Most of the time they can.

Finally, always get approval from the association before making changes to your property. This is required in every association and the association has the right to make you restore your property to the original condition.

You have to keep in mind you gave up valuable property rights purchasing property subject to an association. You entered into a contract, even though you may not have known it at the time, and you are bound by the terms of that contract (the Declarations, Bylaws and Articles of Incorporation.)

While you can litigate against your association, it is very expensive and the loser has to reimburse the winner their attorneys' fees. These cases are not the type a lawyer will handle on a contingency because there are no physical injuries that would warrant big judgments. If you find an attorney who says they will take the case on a contingency, there is a high chance they have never handled an association case before. There are many procedural requirements to litigating against associations and a mistake could be very costly.

There are very few defenses to a lawsuit by your association. There is no excuse for not paying assessments, even if the board members are stealing money. The only possible defense is if the assessment imposed is invalid, which is rare. There are few defenses to not obtaining the association's permission before making improvements to your property.

Know the rules, play by the rules and make sure your association plays by the rules. If they don't your best and most inexpensive option is to organize a recall of the board.

Last but not least, pay attention to any bills that are being voted on by the Florida Legislature. Every year several bills are introduced and make their way through both houses. Contact your elected officials and let them know why they should or should not vote for a bill. A good example is the hard work my group of colleagues did years ago to remove the right of associations to lien and foreclose on homes for unpaid fines. The law was re-enacted, with a requirement the fine has to exceed a $1000, a couple of years later because the associations put pressure on the politicians. The change didn't help homeowners because now the associations just make sure your fine exceeds $1,000.

Does this sound all doom and gloom? If it got your attention and made you realize your association has way more power than our Constitution intended, then my job is done. Protect yourself by getting involved. Know what your board of directors is doing and know what your legislators are doing. The only way to stop the abuse is to hold everyone accountable.

HOA & Condo Liens - Saving Your Home

Frequently I am asked to help homeowners settle their past due assessments with their condo or homeowners association. This is a very serious situation because the association can and will foreclose much faster than any mortgage company or bank.

Frequently homeowners make the mistake of assuming that 1) if the mortgage company or bank is foreclosing, the association cannot; 2) if the homeowner pays the past due assessments, but not the interest, late fees or attorneys' fees, the association cannot foreclose; 3) sending a check to the property manager will stop the foreclosure; 4) the homeowner can withhold assessments if the association is not doing their job and 5) the association can waive some of the past due assessments and charges.

These are all incorrect and a big mistake. Trying to get around these issues will only increase the attorneys' fees and other charges the association is entitled by law to correct.

It is very important to note that BY LAW, any payments are applied to attorneys' fees and costs FIRST, interest and late fees NEXT and assessments LAST. Unless you pay the full amount being demanded, you will always be past due in assessments and the association can foreclose.

Your options, if you cannot pay the full amount demanded, are:

1) Negotiate a payment plan;

2) File Chapter 13 bankruptcy.

The first option may not be the ideal solution because many association law firms charge $250 to set up the payment plan and $50 per month to process payments, which adds considerably to the amount due and owing.

Chapter 7 bankruptcy is not an option for saving the home. The discharge of association assessments in a Chapter 7 applies only to assessments that came due prior to filing bankruptcy and only extinguish the debt to the person, not the property. This means the association can still foreclose against the property. Also, the homeowner is still liable for assessments that come due after filing bankruptcy.

If a homeowner wants to avoid the foreclosure of the pre-petition assessment lien, the homeowner will have to pay off the pre-petition debt (either in full or through a settlement with the association) even though that debt has been discharged, or file a Chapter 13 bankruptcy which will allow the homeowner to spread the debt over a five-year payment plan. The association may or may not be entitled to 100% of the charges and if the association fails to file a claim, they will not receive any pre-petition assessments and charges.

The Lien and Foreclosure Process in Florida

The association is required to give notice to the homeowner prior to filing the lien by sending two copies of the notice, one by regular mail and one by certified mail, that includes the amount due and the deadline for payment. For HOAs this is 45 days and for condos this is 30 days. If you missed payments, the lien will include the assessments, interest, attorneys fees, and if the governing documents allow, late fees. Once you are turned over to an attorney for collections any payments are applied to all the fees first and assessments last. 

After the lien is recorded the association must then go through the same process to foreclose before filing to foreclose on your home. Once you receive a summons, you have 20 days to file an answer and affirmative defenses or a motion to dismiss. The association will file a motion for summary judgment, which means there are no disputed facts and the association should get your home without a trial. 

DO NOT ATTEMPT TO HANDLE THIS WITHOUT AN ATTORNEY. Your best option is to negotiate a payment plan or file Chapter 13 bankruptcy to put this in a 5-year payment plan. Chapter 7 will not save the home. 

If you missed any payments, fighting over the amount with the association is useless in almost all instances because it will generate attorneys fees that you are liable for and must be paid to keep your home. The courts will award the attorneys 100% of their attorneys fees if you are at fault, even if it's a small amount and their numbers are wrong. 

The courts are facing having their funding cut thanks to the foreclosure cases clogging up the dockets. In many cases good case law is being ignored to move the cases out of the courts and owners are being denied justice and due process because of budget concerns. This has changed the owners slim chance to virtually no chance, but that's my personal opinion.