Article
Courtesy of Florida Politics
By
Jesse Scheckner
Published November 18, 2023
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WATCH VIDEO |
‘Unit owners basically have no rights.’
If you own one of Florida’s more than 1.5 million condo
units and are having issues with a potentially malfeasant condo board, “good
luck” getting help from the government.
That’s the refrain
that Spencer Hennings, who served as the state’s condominium
ombudsman from July 2020 to April 2023, repeated Tuesday.
He said it with frustration, not delight. The way Florida
statutes are now written, he said, wrongdoers on the boards
of condo towers and homeowner associations (HOAs) have wide
loopholes through which to evade punishment or removal,
rendering his former office as something of a “toothless
tiger” along with other agencies under whose purview
residential collectives fall as well.
“The current system is very good if the board are good
actors, but if the board is corrupt and if the board are bad
actors — and this is a very small minority of condominium
associations — it is my opinion that the current system is
not (effective),” he said. |
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Former Condo Ombudsman Spencer Hennings
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“Unit owners basically have no rights,
(and if board members are) stealing money, if they’re
concealing records (or) doing something nefarious, good luck
asking them to step down. Their response is going to be,
‘Sue me.’”
Hennings’ comments came during a panel discussion before the
Senate Regulated Industries Committee on condo governance
and regulation. Of the six speakers addressing the
committee, none disputed his assertion that enforcement in
Florida needs an overhaul.
They included John
Perikles, deputy chief of the economic crimes at the
Miami-Dade State Attorney’s Office, which last November
spearheaded the arrest of four ex-HOA members in the
county’s Hammocks neighborhood who looted roughly $2 million
from association coffers.
It took Perikles’ unit half a decade to nab the criminals —
despite having subpoena power, support from four judges and
other government resources — not because, he said, “there
were no specific crimes outlined in the Florida condo or HOA
statutes until very recently.”
That changed somewhat this year after lawmakers unanimously
passed a Homeowners’ Association Bill of Rights in response
to the scandal, but none of the new strictures extend to
condo boards and their management companies.
Perikles was part of a grand jury
investigation that in 2017 declared there was a “crisis with
condominiums.” While there have been some positive changes
since, he said, they’re “mostly on the margins.” |
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John Perikles, deputy chief of
the economic crimes at the Miami-Dade State Attorney’s Office
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“If you’re a corrupt board member of a condo or HOA, there’s
still plenty of profitable business for you to do,” he said,
“and there’s little chance of being caught.”
There’s also little chance of getting ousted unless
residents spend six figure sums on it, said Hennings, who
dealt with the Hammocks case as well. He said he called the
HOA’s lawyer and never got a call back. The HOA manager
refused to cooperate with him too.
“They said, ‘Go lick paint,’ … and that’s because the
ombudsman’s office doesn’t have the ability to make them
have an election (or) remove them from the board if they
don’t work with us,” he said. “They say, ‘Well, we’d rather
not be monitored. We’d rather not have you involved, so
we’re just not going to answer your call.’ That doesn’t seem
right to me.”
Hennings offered a “practical guide for how to be a corrupt
board member in a condominium association and stay there
forever.”
Once elected to a condo board, he said, a member can be
removed in one of two ways. One is by the board’s annual
election. The other is through a recall process that
requires agreement by a majority of unit owners.
Either way, corrupt board members have a relatively simple
way to stay put: They just don’t leave, and neither state
nor local authorities have much power to eject them.
In disputes over such matters, the Department of Business
and Professional Regulation (DBPR) sends in an arbitrator.
Close to 400 arbitrator petitions were filed in the most
recent fiscal year, DBPR Secretary Melanie Griffin told the
committee.
But any decision an arbitrator reaches is nonbinding. They
don’t have the power to enforce their orders.
“What happens is you’re a corrupt board member. The unit
owners have you recalled. You ignore it. It went to
arbitration. The arbitrator sides with the unit owners. You
ignore that. You tell the unit owners, ‘Hire a lawyer. Take
me to court. Good luck.’ This could cost hundreds of
thousands of dollars out of the unit owners’ pockets, by the
way,” he said.
“So, we go to circuit court, (which) could take two years.
We’re already six, seven months after the (condo board)
election, and after a few months, the next year’s election
is going to roll around, and at that point the circuit court
has to dismiss the case because the new election is about to
happen and the old case is moot. This has happened time and
time again.”
To fix the issue, Perikles said, state lawmakers need to
strengthen criminal sanctions against people who destroy
condo records and create additional ones punishing kickbacks
board members may accept from contractors. Right now, it’s
the associations that face fines, not individual board
members.
DBPR also needs an officer capable of properly investigating
claims of corruption by condo boards.
Hennings, meanwhile, said the Legislature should empower the
condo ombudsman to call off or require a condo or HOA board
election and to remove board members if they don’t comply.
“The way it is now, where they can just ignore the ombudsman
and get away with it? Not adequate,” he said.
Sen. Jennifer Bradley, who last year successfully sponsored
a condo safety reform bill in the aftermath of the June 2021
Champlain Towers South collapse in Surfside, noted that
Tuesday’s panel discussion could have happened nearly a
decade ago with little substantive difference.
In light of the numerous changes her measure is making, she
said, it is imperative that the state give condo owners a
reasonable chance to comply without running into management
and governance issues that make doing so harder.
Bradley said she’s been drafting legislation for months to
address the concerns raised Tuesday and others that
stakeholders have brought to her attention this year.
“We cannot ask the condo owners across the state of Florida
to navigate this new reality of making sure their buildings
are secure and that they’re in good financial health with
their hands tied behind their back, with officials not being
able to help them, law enforcement not having a clear avenue
to step up and shut down bad actors, DBPR (not) having the
jurisdiction they need to meaningfully (oversee) folks that
they regulate,” she said.
“I can assure you that we’ve been working on (a) bill since
the end of last Session (to address) jurisdiction, conflicts
of interest, access to records, election education, updating
(association) websites — all included — and I look forward
to filing that soon so that we don’t have to continue to
have these meetings 10 years from now.”
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