Article
Courtesy of The Real Deal
By Lidia Dinkova
Published November 25, 2023
Florida lawmakers will once again consider a bill aimed
at strengthening regulation of condo and homeowner associations.
The proposal is the latest attempt to address allegations of corruption at
communities governed by associations. Residents for years have sounded the
alarm with claims that their boards of directors, sometimes with the aid of
property managers and association attorneys, are running authoritarian-like
regimes riddled with misappropriation of funds, election fraud and bullying
of those who speak out.
This spring, in response to the Hammocks case in which five people were
arrested and charged with a multimillion-dollar fraud, the legislature took
up bills aimed at increasing oversight over associations. But by the time
property managers, contractors and other private interests were done
lobbying, lawmakers passed a law stripped from most of the beef in the
original bills.
Now, the legislature will vote on a new proposal at its session next year.
Senate Bill 426, filed by Sen. Ileana Garcia, would target an issue
residents claim stands in their way of taking down corruption: state
administration’s lack of power to enforce laws and oversee association
dealings.
Residents “go to the city of Miami, they go to the county, they go to DBPR
[Florida Department of Business and Professional Regulation] and nothing
happens,” Garcia, whose district is in north Miami-Dade County, said at a
Senate Regulated Industries Committee meeting last Tuesday.
“We have a lot of work to do, and I think the hardest part is trying to
recuperate their faith in this system. Once again, where do we start? What
do we do? And we need to do it right away.”
Currently, two laws govern associations: The Condo Act, or Chapter 718, and
the HOA statute, or Chapter 720. The Florida Department of Professional and
Business Regulation is the state authority that investigates complaints,
though residents have told The Real Deal they feel the agency’s powers are
limited and they are left with no other options but to pursue lawsuits at
their own expense.
Under the Condo Act, DBPR can investigate issues related to operating
budgets and reserves, elections, access to records, budgets and other
financial meeting notices, and structural reserve studies. DBPRs powers are
limited and the division often shoots down their complaints citing its lack
of jurisdiction, according to residents who spoke with TRD.
The division has more than 100 employees and a track record of closing
nearly all filed complaints, a DBPR spokesperson said, but they also noted
the state can only investigate within its legally vested power as outlined
by the statutes.
The new bill would implement a Condominium Fraud Investigation Pilot Program
in the Condo Act. The program would have the authority to contract with
companies that employ investigators with experience in financial fraud
cases, as well as to conduct audits and issue subpoenas. If investigators
suspect criminal activity, then the complaints would be forwarded to state
attorneys’ offices.
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