A path to disbanding homeowners associations for residents unhappy with their HOAs is part of a proposal ahead of next year’s session of the Florida Legislature.
Rep. Juan Carlos Porras filed House Bill 657, another legislative attempt to address HOA problems and help residents clashing with their leadership. But experts on association law say the proposal would cause more problems than it solves.
The proposal also calls for creating a Community Association Court Program to focus solely on disputes arising at condo associations and HOAs, a way for these cases to work their way through the courts faster and alleviate the backlog of such litigation.
Across the state, homeowners living in communities governed by associations for years have raised complaints of wrongdoing against board members, and in some cases also against the attorneys and management firms working for HOAs.
Allegations have varied, with homeowners often claiming HOAs are withholding records and provide little transparency for assessment increases, as well as problems such as election interference, misappropriation of funds, and bullying and retaliation against those who speak out.
The most extreme case unraveled at the Hammocks HOA in West Kendall, where police arrested four former board members and a fifth person on charges they siphoned close to $4 million from association coffers, according to criminal and civil court filings. The Hammocks, which consists of condos, single-family homes, townhomes and apartments on 3,800 acres and is home to about 18,000 residents, is South Florida’s biggest HOA and second-largest in the state after The Villages.
Prosecutors in the Hammocks HOA case claimed ex-board members hired contractors that did little to no work at the Hammocks and then diverted the payments to themselves. Two former board members pleaded guilty and are cooperating with investigators, and the rest of those charged have pleaded not guilty and are awaiting trial.
Under Porras’ proposed legislation, a resident seeking to dismantle an HOA would start by filing a petition signed by 20 percent of homeowners. The board must then schedule a meeting within 60 days and set the rules for a vote on the termination, which would require approval by two-thirds of homeowners.
The HOA would be required to submit its plan of termination to the court and, if approved, to select a termination trustee, either the board or an appointed trustee, to wind down the association’s affairs, including any pending litigation and debts, and sell off or dispose of the HOA’s assets.
Porras, the majority of whose district consists of the Hammocks, didn’t return a request for comment.
In a statement to WJXT in Jacksonville, he said it’s time for “the conversation if homeowner associations are really needed.”
“In my opinion, they act more as a failed experiment. They’re a quasi-elected pseudo-government that have more power and are entitled to more rights than I think most cities and counties do,” he told the news station.
But attorneys who specialize in HOAs said disbanding them won’t be easy, and likely won’t work at all. HOAs own common areas, including pools, tennis courts, lakes, playgrounds and clubhouses, but more important, the roads, gates, landscaping, lighting, sewage and flood control infrastructure such as retention ponds.
Although some assets, such as landscape trucks, could be sold as part of the dissolution plan, infrastructure would be harder to dispose of.
“The association has … obligations to the common areas,” said attorney Carolina Sznajderman Sheir. “You may be dissolving the actual corporation, but how are you going to split up the assets? Who is going to take responsibility for maintaining the roadways [and other infrastructure]? Who is going to be responsible for operating, maintaining and insuring this?”
Attorney William Sklar said the bill’s termination clause “wouldn’t work.”
Most Florida counties and municipalities have laws on their books that require for multi-home developments to include HOAs that will own, maintain and insure the infrastructure, said Sklar, of Carlton Fields. HB 657 essentially would go against these existing laws, which would necessitate a massive overhaul of regulations.
Local governments’ mandate for the creation of HOAs for multi-home developments makes sense, he added. Because many of these communities are gated, the roads, stormwater and sewer systems are only used by the residents in an HOA.
“If I am Miami-Dade County and you want to create 100 lots with 100 homes, I don’t want everyone in Miami-Dade County to pay for that internal road,” said Sklar. “It has nothing to do with the rest of [the county], so why should the citizens of Miami-Dade pay for every little community’s roads or access?”
Complicating matters is that some HOAs consist of townhomes that share roofs. Disbanding an HOA may mean homeowners would have to agree on how to divide the maintenance bill.
“How are they going to dissolve and maintain the roof?” said Sheir, of Eisinger Law. “How do you informally split up the tab?”
Under state law, HOAs already have a dissolution process. Every 30 years they have to vote on whether they want the association form of government to continue, said Travis Moore, a lobbyist with the Community Association Institute, a trade organization for managers, attorneys, contractors and other service providers to associations.
Porras’ “initial thought was to dissolve all HOAs and make them CDDs [Community Development Districts] or other kinds of quasi-governments,” Moore said. But that “is weird because then the developers get to be a local government except they aren’t elected.”
Sheir took issue with another clause in the bill: Starting July 1, each newly formed HOA has to include a statement in its governing documents that it’s governed by the Florida Condominium Act. It would require existing HOAs to hold a meeting to decide whether to also include this statement in their declarations.
“He is basically turning every HOA into a condo, which makes no sense,” she said.
Condo associations and HOAs are fundamentally different, attorneys said. For one, in a condo association, each unit owner has a percentage ownership share in common areas, and in an HOA, the association owns the common areas.
Attorneys hailed the bill’s call for a Community Association Court, however.
“I have personally heard from chief judges of several circuits … say to me, ‘We don’t need these covenant cases, mailbox color cases. We need to take them out of the circuit courts.’” Sklar said. “So this is a good alternative.”
For both condo associations and HOAs, the bill removes the requirement for presuit mediation, allowing residents to directly file claims with the Community Association Court. Residents at condo associations still also have the option to file for arbitration through the state administrative process.
HB 657 isn’t the only upcoming bill aiming to reform associations. SB 906, sponsored by Sen. Ileana Garcia, calls for the creation of a state ombudsman for HOAs, after a similar proposal at this year’s legislative session fizzled out.
Florida’s legislative session starts Jan. 13.
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