HOA escape route heads to Florida Senate despite legal experts’ warnings

A proposal to create a path for homeowners associations to disband is headed to the Florida Senate.

House Bill 657 sailed past the House of Representatives with a 108-2 vote on Thursday, despite legal experts’ concerns that the legislation would cause problems with oversight of infrastructure owned by residential communities.

The proposal is the latest attempt by state lawmakers to tackle the problem of rogue leadership at HOAs and condominium associations, or COAs. About half of Florida homeowners live in communities governed by either an HOA or a COA.

Disputes between residents and association leaders have plagued the state for decades.

Complaints of bad behavior include election interference, embezzlement, lack of transparency and retaliation. Some homeowners have accused association managers and attorneys, who are hired and paid for by residents’ assessments, of playing a role and aiding rogue board members.

The biggest criminal case related to HOAs in recent history played out at the Hammocks, the state’s second-largest HOA and South Florida’s largest. Six people are awaiting trial on charges tied to their alleged roles in a multimillion dollar bogus contractor scheme and have pleaded not guilty. Two others pleaded guilty.

Florida law has given the communities leeway to govern themselves, though lawmakers have tightened oversight since the 2022 Hammocks arrests.

“HOAs are a failed experiment. We have allowed for too long in this chamber to have a lack of complete oversight for what I believe is the smallest and most powerful form of government,” Rep. Juan Carlos Porras, whose district includes the Hammocks in West Kendall, told House members Thursday.

HB 657’s HOA dissolution process would start with at least half of the homeowners signing a petition in favor of disbanding. A termination plan requires two-thirds of homeowners’ approval before a court could sign off on the plan.

HOAs, which primarily consist of single-family homes and townhomes, also have their own roads, sewers, stormwater management systems, landscaping and other infrastructure, as well as amenities such as lakes, tennis courts and gates. After a dissolution, the bill calls for title of HOA property to go to a termination trustee, which at first would be the board of directors and then an appointed person.

This would create problems, attorneys who specialize in HOA law have said, with some experts arguing it simply won’t work. The issue is over who would take ownership of, oversee and pay for the maintenance of the infrastructure. Some HOA assets, such as trucks and equipment, can be sold, but infrastructure such as roads can’t.

Many Florida counties and municipalities have laws that require large residential developments to create HOAs, vesting control and responsibility for upkeep and renovations of infrastructure with the associations, attorney William Sklar previously told The Real Deal. That’s appropriate because most HOAs are gated, and it wouldn’t make sense to put the tax burden on property owners countywide for roads used only by the HOA residents, he said.

Lawmakers attempted to target some of those concerns with amendments to the bill. One addition requires HOAs to alert municipalities they are going through the dissolution process, as some HOAs have contracts with cities. The bill addresses easements created for HOAs that are dissolving, saying the land goes back to the previous owner, if tax payments are up to date.

Floridians “are sick and tired of what’s going on in their HOA, they are now going to have the tools to completely rid themselves once and for all of these corrupt institutions,” Porras said.

He didn’t immediately return a request for comment.

HB 657 does more than open a path for HOAs’ dissolution. It would give circuit courts the option to create a Community Association Court, dedicated to hearing cases stemming from HOAs and COAs, scrapping the requirement for homeowners to go through mediation before they sue.

The court’s creation is meant to alleviate overwhelming caseloads related to associations.

Community Association Court programs in Miami, Fort Lauderdale and Tampa are already funded, Porras said. The bill calls for two association court judges in Miami and one each in Fort Lauderdale and Tampa.

Besides that, the legislation would make it a second degree misdemeanor for a COA or HOA leader to “wilfully and knowingly” fail to provide records requested by a prosecuting or law enforcement agency.

Under HB 657, COAs that haven’t established electronic board election voting will be required to set up a website or an app where unit owners can vote.

The legislation also enhances the conflict of interest thresholds at HOAs, potentially voiding the votes of members with conflicts who don’t recuse themselves from discussion and voting.

The Senate is expected to vote on HB 657 by Friday, when Florida’s legislative session ends.

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