Article Courtesy of The TCPalm
By Alexi Howk
Published July 27, 2008
HUTCHINSON ISLAND
— The Florida Department of Business and Professional Regulation is
investigating the financial practices of the Colonnades condominiums after
several residents filed complaints alleging their homeowner's association
refused to give them insurance money to cover damage from the 2004
hurricanes.
The residents, many of whom have filed lawsuits in
circuit court against two of the 11 associations within the 250-unit
development off Seaway Drive, accuse the associations of withholding their
insurance money. Each association has its own insurance policy.
They also say their complaints with the Colonnades
bring to light another issue — that there isn't enough regulatory
oversight by state government of condominium associations.
"Florida may be paradise, but our paradise is
lost," said Paul Fappiano, one of the co-complainants.
He sold his unit last month and moved to San
Francisco with his wife, Donna, because he said they no longer could deal
with the stress of living in the Colonnades. The unit had been in his
family since 1976 and was his retirement home.
He said the association owed him $60,000 but only
gave him $10,000. He said he paid $40,000 of his own money to repair the
unit.
Specifically, residents, including Fappiano, allege
in lawsuits that Association 8:
• Refused to supply financial reports to members
for more than two years and provide information showing how almost $2
million in insurance money was being disbursed
• Allowed board members to use insurance money to
pay for unintended purposes, including for legal fees and to construct a
$27,000 garden that was not damaged from the hurricanes
• "Grossly overpaid" United American
Contractors, the Davie contractor hired by the association to make repairs
• Forced unit owners to sign release statements to
get their insurance money, but provided no information as to how payouts
were computed.
Chuck Clock, the former Association 8 board
president — who quit last month and moved to a unit in Association 11 to
get away from "the mess" — said if damage to a unit was
assessed at $50,000 and the contractor charged $30,000 for the work, the
unit owner would receive the remaining balance. However, he said unit
owners were required to sign indemnification receipts, agreeing to the
amount owed.
"Unit owners wouldn't sign the releases to get
the money," Clock said.
Robert Rydzewski Jr., attorney for associations 7
and 8, said several unit owners who had flood damage were paid $10,000 in
advance by the association, which later was to be deducted from what was
owed. When the insurance money came in, he said there was a surplus of
money because the association was able to keep repair costs down.
"It's the association's position that the
insurance proceeds were distributed correctly," Rydzewski said.
"The unit owners are disputing the amount owed. There was a surplus
of funds and people started getting greedy and not trusting each
other."
Meanwhile, the state's division of Florida Land
Sales, Condominiums and Mobile Homes is looking into the accounting
practices of the association and has asked Association 8 to turn over
financial reports from 2004 through 2007. The association has until the
end of this month to respond.
Officials with that state division and with the
state Department of Business and Professional Regulation declined to
comment on the pending investigation.
Sam Farkas, a department spokesman, said other
condominium associations around the state also are being investigated for
their financial practices, but could not be specific about them.
Jon Peet, another spokesman, said the department is
careful about what it investigates, because state law only allows it
limited oversight of condominium associations. It can enforce financial
reporting and board elections. It can't enforce an association's bylaws.
And that limited oversight is what has Colonnades
residents such as Rose Patterson upset.
"This is the only (state) agency we're under,
yet they have no teeth," she said
Patterson and several other residents asked state
Senate President Ken Pruitt, R-Port St. Lucie, to step in and help. A
representative from Pruitt's office met with residents and department
officials in February.
As for the residents' desire for more government
oversight of their association, Pruitt's viewpoint is clear: He thinks
there needs to be a balance between maintaining the rights of private
property owners to govern themselves while belonging to a homeowners'
association, his spokeswoman Kathy Mears said.
"(He) supports the existing regulatory
oversight that is framed in Florida statute because there is an
opportunity for (the state) to have some oversight while at the same time,
providing judicial relief," Mears said.
QUESTIONS?
• The Florida Department of Business and
Professional Regulation encourages all condominium owners who suspect any
wrongdoing by their association to file a complaint. Department officials
said they investigate every complaint received.
• Owners can download the complaint forms online
at www.myfloridalicense.com/dbpr/lsc/index.html
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