While
it is unclear how many lawsuits are on dockets around the state
involving homeowners and associations, one Fort Lauderdale attorney who
has represented dozens of clients against associations says 100 liens
and foreclosure suits by homeowners associations are filed every week in
Broward County alone.
Gov. Jeb Bush's
task force on homeowners associations in 2004 recommended
legislation to halt the practice of taking homes to satisfy
overdue fines, a law that took effect last year.
The task force heard several stories of
homeowners having to pay tens of thousands of dollars in legal
fees to keep their houses after refusing to pay questionable fines
to their associations.
In Healy's case, the issue was not fines but |
Update
THE STORY SO FAR: Fairway Village
Homeowners Association fore- closed on Karin Healy's home
in June. It was auctioned for $11,000 on July 20.
WHAT'S NEXT: A circuit court judge will hear Healy's
appeal to set aside the sale this morning at 10:30. Healy
is expected to ask to sell her home herself so she can pay
the delinquent fees. |
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$1,380
in unpaid dues. And unpaid dues are not covered under the 2004 law.
Healy, 47, is a single mother with three teenage daughters. She filed
for bankruptcy last April, which is when she began to fall behind.
To pay the dues debt, her home in the Fairway Village subdivision was
auctioned off by the homeowners association two weeks ago for $11,000.
Association advocates and some of Healy's neighbors sympathize with her
current predicament but stand by their association's action, arguing
that without threat of foreclosure it has little power to collect the
dues that help maintain the small, two-street subdivision adjacent to --
but not connected to -- Plantation Golf and Country Club.
None of the association's board members returned calls for comment
Thursday. Both the management company, Capri Property Management, and
the association's attorney, Sharon Vander Wulp, also refused to comment.
One neighbor, Robert Wynne, 72, said he wasn't aware of the foreclosure
and sale. But he defended the association, saying it had little choice
but to sell off Healy's house, despite her financial struggles.
"It's sad. My heart goes out to people like that," Wynne said.
But he added, "The least you can do is go to the association and
tell them you can't pay ... I don't think it's fair that everyone pays
their dues, and she doesn't."
Dan Lobeck, a Sarasota real estate attorney and advocate for homeowners
associations, said cases like Healy's are rare and should not reflect
negatively on an otherwise valuable right of residents to bind together
for the good of the neighborhood.
"In fulfillment of those common maintenance functions and
enforcement functions, associations are given taxing authority,"
Lobeck said. "Just as the government has its remedy, homeowners
associations are given their remedy to collect their taxes."
Critics, such as state Rep. Julio Robaina, R-Miami, say homeowners
associations are even more powerful than the government.
For the county to sell off a home, for example, it must go through a
two-year process. There is no time restriction for homeowners
associations to sue, nor is there a minimum debt level. Some
foreclosures have taken place over less than $100.
Homeowners associations operate with no oversight, and in the event of a
dispute over fees, fines or elections, a homeowner's only recourse is to
go to court.
The terms of the association's powers of foreclosure are spelled out in
contracts that homeowners sign when they purchase the property. But
Healy said she never read the small print in her association's nearly
50-page declaration of covenants, conditions and restrictions.
Even if homeowners owe associations thousands of dollars, there should
be checks on the power of associations to foreclose, Robaina said.
At the least, he said, the state should establish a consumer advocate,
or ombudsman, to settle disputes between homeowners and their
associations, similar to the one for condo associations.
Robaina filed a bill this year to tackle the issue. House Bill 1229
would have put homeowners associations under the purview of the state
Department of Business and Professional Regulation.
"One of my goals is to try to bring regulations to homeowners
associations the same way that condos have it, so that people will
finally have a place when there is abuse," Robaina said.
"These people get away with murder, and it ends up in a civil
courtroom, which costs people a lot of money."
Robaina's bill never made it out of committee.
It would have given homeowners a place to turn in the event of a dispute
with their association, and it would have given the state authority to
reprimand or even fine associations that have acted illegally.
It also would have set a $2,500 threshold for unpaid dues before an
association could use the power of foreclosure.
Robaina admits adjustments are needed to give the bill a chance of
passing, and he is organizing a meeting in Miami later this year at
which he hopes to bring the associations' lobbyists and consumer
advocates to the table to help craft a bill.
Several elements, Robaina and others say, should be considered:
The foreclosure threshold needs to be reconsidered, and a new formula
devised. Because associations range from the very large, with hundreds
of members, down to ones with only a handful, a one-size-fits-all
monetary figure isn't workable, Community Association Leadership Lobby
attorney Donna Berger says.
It is a point Robaina concedes. While a 300-member association might be
able to carry a couple of thousand dollars in unpaid dues, Robaina says,
spreading that debt among only 10 members in a small association is too
burdensome.
Robaina advocates requiring associations to make a good-faith effort to
work out a payment plan with a delinquent homeowner before they refer
the case to their attorney.
While most associations will send lateness notices, they are not
required to do so and can refer accounts even one month delinquent to
their attorney. When that happens, what started as a relatively small
amount of money quickly grows into a mountain of debt for the homeowner.
"They trap you by adding on attorney's fees, late fees and
interest," says Fort Lauderdale-based attorney Blane Carneal, who
says he has represented dozens of clients against homeowners
associations. "Your only way out is to hire an attorney and fight
it in court."
In Healy's case, the $1,380 her association says she owes has been
augmented by more than $4,000 in attorney's fees and court costs.
More education is needed. Berger believes a simple, one-page overview of
association rules and the association's power to foreclose in event
of nonpayment of dues given to home buyers at their closing would
"go a long way in preventing problems." As it stands, home
buyers must muddle through the association's covenant, often dozens of
pages long.
"They need to know that these payments are right next to the
mortgage in terms of their importance," Berger said.
Healy certainly knows that now.
Two weeks ago, the association sold Healy's home at a courthouse auction
for $11,000, about six weeks after a judge approved foreclosure on the
house. Property records show nearly identical homes in the Pulte Home
development selling for between $250,000 and $320,000.
Wynne said the majority of Fairway Village's residents are working
families with children who pay their dues on time and maintain their
properties. They credit their rising home values to the services and
rules enforced by the the association, Wynne said.
Bob Twine, 71, who moved to the neighborhood three years ago, said he
knew of Healy's situation only from what he read in the paper.
At an association meeting three months ago, he said the board spoke of
possible foreclosures but mentioned no names.
Twine said he didn't blame the association for taking action but didn't
understand why Healy didn't take out a home equity loan or sell the
house herself as her association debts piled up.
"That's the only recourse they have against people who don't
pay," Twine said. "Do the rest of us have to increase our dues
to cover her inadequacy?"
Unless a judge today nullifies the auction of her home to American
Recovery Group, Healy said she would look for an inexpensive rental for
her family, where she'll attempt to rebuild without the benefit of six
years' worth of home equity.
"They essentially made $200,000 for 15 minutes on the courthouse
steps," she said.
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