Article
Courtesy of The Tampa Bay Times
By
Susan Taylor Martin
Published June 27, 2017
Danny Di Nicolantonio has lived in St. Petersburg's
Calais Village Condominums for 33 years. Annoyed at times by the actions, or
inaction, of the condo board and property managers, he has complained to the
state agency that is supposed to investigate.
That has left him even more annoyed.
The Department of
Business and Professional Regulation "is about as useless as
a snowball in Florida," Di Nicolantonio says. "I'm sick and
tired of filing complaints with them only to continuously be
told it is out of their jurisdiction, my file has been
closed or to go hire an attorney."
Di Nicolantonio has plenty of company among Florida's 1.5
million condo owners. In a blistering report issued in
February, a Miami-Dade grand jury found that the agency is
"ill suited" and "ill prepared" to investigate the hundreds
of complaints it receives each year about alleged wrongdoing
by condominium
associations.
But hapless condo owners could be getting some relief.
Florida lawmakers this spring unanimously approved a bill
that requires condo associations to give owners better
access to records and imposes criminal penalties for
electoral fraud, theft of funds and conflicts of interest.
The measure would become law July 1 if Gov. Rick Scott signs
it. |
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A bill passed by the Florida Legislature would affect
places like The Slade in Tampa's Channelside district, where
condominium owners have battled a plan to convert homes into
apartments.
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Already signed into law is a bill making it harder to
convert condominiums into rental apartments — a trend that has roiled
Tampa's Slade at Channelside and several other bay area condo communities.
The legislative crackdown on rogue condo boards was sparked by a Miami-Dade
grand jury that spent weeks looking into how DBPR handles complaints and
came away "shocked," "amazed" and "exasperated" by what it found.
In their report, the jurors said the agency's Bureau of Compliance has too
few investigators — just 33 for all of Florida — and shows a "breathtaking"
failure to adequately train them.
While noting that condo owners statewide have complained to and about DBPR,
the report spotlighted some especially egregious South Florida cases
including what the media dubbed "the condo crime family."
DBPR received more than 30 complaints about the married couple and their
daughter rigging elections and stealing funds while serving on association
boards. But if not for a lead generated by law enforcement in an unrelated
case, "the family might not have been stopped," the report says. The three
pleaded guilty to felonies and were ordered to pay $500,000 in restitution.
In general, though, police and prosecutors have been slow to investigate
complaints against condo associations, especially allegations of election
fraud. That's because there is no mention of criminal punishment in Florida
law governing associations.
Under the bill awaiting Scott's signature, forging, stealing or destroying
ballots would be crimes punishable by prison. The measure also imposes
criminal penalties for theft or embezzlement of funds and destruction of
official condo records.
In another area of concern, the Miami-Dade grand jury noted that condo
associations "routinely" spend large sums of money for repairs, landscaping
and other services yet there is nothing to keep board members from voting to
hire companies to which they have a personal connection.
"To our great shock and amazement," the jurors said, "what we thought was a
basic ethical principle that would prevent such situations apparently does
not.
In addressing conflicts of interest, the bill before Scott would:
• Prohibit condominiums from contracting with a service provider that is
owned or operated by a board
member, a close relative of a board member or a person who has a financial
relationship with a board
member.
• Require officers and directors of a condominium board to disclose
activities that might "reasonably be construed'' to be a conflict of
interest.
• Prohibit attorneys from presenting both the board and the management
company of the condo association.
• Prohibit members of the board or management company from buying a unit
foreclosed by the condo association.
In suggesting changes to the law, the jurors noted that while condo board
members have a fiduciary responsibility to unit owners, "it appears some of
them are more involved in self-dealing and looking out for their own
financial interests."
Converting condos to apartments
The other major legislation affecting condominiums is part of a continuing
effort to undo problems caused by a 2007 law passed after hurricanes left
many units damaged and vacant.
The purpose of the law was to make it easier to deal with uninhabitable
condos by enabling 80 percent
of owners — unlike 100 percent previously — to terminate a condominium if no
more than 10 percent of owners opposed. But investors quickly realized the
law could also help them covert condos to lucrative rentals as a St.
Petersburg company is trying to do with Slade at Channelside.
The company, Slade Owner LLC, already owns enough units to meet the 80
percent threshold for terminating the condominium and converting the entire
building to rentals. But Scott approved a change
that reduces to 5 percent the percentage of owners who could block
conversion, potentially making it harder for the company to carry through
with its plans.
That could help the 40-or-so hold-out owners like Eugene McDonald, who
bought his unit three years ago.
"It was going to be my retirement home but when all this started I went out
and bought another condo and rented mine out," said McDonald, who lives in
nearby Skypoint. "But I didn't want to sell until I was sure that it didn't
mess up the rest of the group. The fact they might need only 5 percent cuts
the number of units (needed) to block."
McDonald and others worry, though. It is not clear whether the amended law
that takes effect July 1would be retroactive and apply in situations like
that at Slade where bulk owners already are well into condo-to-apartment
conversions.
The changes approved this year are just the latest attempt to fix what the
Legislature did in 2007.
"I feel like we're having to go back fairly regularly because it's obviously
an area of heavy litigation when you have bulk buyers trying to buy people's
homes," said Rep. Chris Sprowls, a Pinellas County Republican who sponsored
the bill. "You have to react to that."
Last year, as condo owners statewide complained they were being offered less
than the value of their units, the Legislature amended the 2007 law to
provide protections against forced sales. Among them: Homesteaded owners who
bought from the developer must be reimbursed for at least the price they
paid for their units.
Now, under the new changes, all homesteaded owners must be reimbursed for
the full price they originally paid regardless of when they originally
bought their condos. Other owners must be compensated for the fair market
value. The bill also extends the time between a re-vote for condominium
termination to 24 months from the current 18 months, and requires DBPR to
approve termination plans.
"We did it that way to protect homeowners in case there is a flaw in the
plans," Sprowls said.
A bill sent to Gov. Rick Scott is intended to address
conflicts of interest within condo boards by:
• Prohibiting condominiums from contracting with a service provider that is
owned or operated by a board member, a close relative of a board member or a
person who has a financial relationship with a
board member.
• Requiring officers and directors of a condominium board to disclose
activities that might "reasonably be construed'' to be a conflict of
interest.
• Prohibiting attorneys from presenting both the board and the management
company of the condo association.
• Prohibiting members of the board or management company from buying a unit
foreclosed by the condo association.
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