WHY COMMUNITY ASSOCIATION BILL H561/S1196 WILL NOT HELP ASSOCIATIONS/OWNERS!

An Opinion By Jan Bergemann 
President, Cyber Citizens For Justice, Inc. 

Published April 22, 2010

We hear so much about the "great" bill that is passing House and Senate and will end up on the desk of Governor Charlie Crist – a bill that is touted as the salvation for many community association problems.

Proponents of the bill claim that "it has everything that community association leaders and owners have been calling for."

I have to disagree strongly with these statements. The serious problems community associations and its owners face are caused by BUDGET DEFICITS STEMMING FROM UNPAID DUES AND/OR FORECLOSURES. Every discussion on bulletin boards and during the many town hall meetings ended in complaints about financial distress owners are facing. Hugely increased dues and/or special assessments create havoc among the owners.

Absolutely nothing in this bill will really do anything to remedy this serious problem. If you read the actual wording of the bill, you will find that most of the provisions are so-called feel-good measures. Some of the provisions will even increase the cost of association living, increase the profits of the service providers, increase the dictatorial power of association boards, and allow board members to vote to pay themselves.

This bill throws breadcrumbs to owners, who often don't understand the real meaning of the wording used in this bill -- and who often blindly trust the people behind this bill without finding the facts for themselves.

Let's just take a look at some of the provisions that have been touted as great reforms to help associations/owners deal with the disaster created by the system of community associations. Here is an analysis of some of the great "achievements" of this bill as stated in an article written by Daniel Vasquez in the Sun Sentinel headlined: "Florida condo bill headed to House vote." 

• Foreclosures and banks: "SB 1196 would require the banks pay more — up to 12 months of past due assessments — the same amount required for bank-instigated foreclosures in homeowner communities." Everybody involved in the issue knows that the 2nd District Court of Appeals already turned down these provisions in FS 720.3085 [See: Coral Lakes Community Association, Inc. v. Busey Bank, N.A.]  This means that some poor condo owners -- most likely located in the district of the 2nd DCA -- will be used as guinea pigs and will lose their shirts trying to use this "legislative reform."  Instead of getting money, they will face huge legal bills.

• Bulk buyers: "The bill would make it easier for bulk buyers of condos. Florida currently deems anyone who purchases more than seven units in a condominium of 70 units or more — or more than five in a condominium with less than 70 units — a "developer." There is no protection for condo owners in this provision. A bulk buyer -- not deemed a developer any longer -- can buy sufficient units to run the show and be the dictator as long as he wants. The problems in so-called condo-hotels and or mixed use condos should have taught us a lesson.  Obviously not!  It only works for a very limited number of condos anyway.

• Delinquent owners: "To empower condo associations to bar delinquent owners from common areas, such as clubhouses and pools."   Allowing boards and neighbors to bar owners who are behind in their dues from using common areas may make boards and neighbors feel better, may help with frustration issues, but will not put any needed money in the association coffers. 

• Collecting money from renters: "Allows associations to collect rent money directly from tenants in units of owners in arrears." That may help a little, but is not a real solution. The language used in this provision is very complicated and may easily be challenged in court. We have a renter's market in Florida. If a renter feels harassed, he/she will move after not paying rent for two months to recover the security deposit and the association will have another unit not paying dues -- and will be stuck with the legal bills.

• High-rise safety upgrades: "Allows associations of condo high rises to more easily postpone state-required fire safety upgrades. Florida currently requires all high-rise buildings 75-feet or higher to install fire sprinklers in all common areas and individual units by 2014."  But that's not the only safety provision that would be scratched: Also, associations would be allowed to forego provisions for emergency power supplies for elevators and would allow certain condos not to install fire alarm systems. How about: Sprinkler systems save lives, especially if the folks are elderly retirees who can't quickly run downstairs and don't get early warnings because the fire alarm systems were not installed? Or remember the many elderly folks who were stuck in their condos for weeks when the elevators didn't function because of power failure? These provisions have already caused two community association bills to be vetoed [S714 (2009) Governor Charlie Crist; H391 (2006) Governor Jeb Bush]. What has changed since then? Does protecting banks and/or mortgage companies now take priority over lives, health and safety of condo owners?

Those are only the provisions the supporters of H561/S1196 mention as "REFORMS."

What about all the bad provisions the supporters would rather not mention, because they are afraid that some boards and owners will become opponents when they figure out the downside of this bill?

• FS 720.305: Allowing enforcement of fines levied by association kangaroo courts with liens and foreclosures. Gives dictatorial boards a great tool to shut up opponents who dare to criticize the board and/or manager.

• Use of wording like any monetary obligation due the association. This kind of language opens the door to target again specific homeowners and condo owners, because it’s vague and can be used for fines, legal fees, late fees and other assessments that can be levied against specific owners only.

• Allowing cost added by management companies for "preparation" of public record requests. Requesting five pages of a past board meeting can suddenly cost you $72.50! Bill language hides as well certain important records from public view. What happened to TRANSPARENCY?

• 720.31 Recreational leaseholds; right to acquire; escalation clauses. Courts turned down the purchase of golf courses and the ability of boards to make club membership mandatory. Many recent examples from all over Florida show that golf courses are a safe bet to bankrupt associations and owners! Even the PGA admits that interest in golf is fading fast and the cost of maintaining golf courses is increasing quickly.

• FS 720.303(12) Compensation prohibited: The wording does exactly the opposite of what the headline promises. It allows board members to compensate themselves by a simple vote to change the bylaws.

• Adding more versions of BULK CONTRACTS. Bulk contracts are the reason why owners have to pay for their neighbors who stopped paying. They are the reason for increased dues and special assessments.  The bill adds even more versions of bulk contracts, which increases the indebtedness of owners even more.

These are just the ugly highlights of a bad bill!

This bill is an obvious declaration of bankruptcy of the community association system in Florida.

The bill promotes feel-good provisions to make gullible homeowners and condo owners believe that something is being done to help them. A wide majority of provisions are actually band-aids trying to cover up the huge wounds suffered by the crash of the real estate market. It further allows banks and mortgage companies -- who caused the whole disaster by irresponsible lending -- to escape liability for the damages they caused.