Tag: HOA

When it comes to monthly dues and homeowners’ associations, questions come up frequently; both from executives dealing with homeowners who aren’t paying yearly dues; and from homeowners wondering whether there are circumstances that allow them to withhold monthly dues.

When it comes to homeowners’ dues, property managers, presidents, and other executives have a fiduciary duty to ensure that all owners stay current with their dues. The failure to do so could lead to a Pandora’s Box of issues, whereby other owners follow suit and fail to pay dues as well.

Owners Failing To Pay Dues

Most legal documents signed with homeowners’ associations, as well as state laws, allow associations to file liens against owners for failing to pay their dues. Another option for the association is to foreclose on the owner. Regardless of the option pursued, working with an experienced homeowners’ association attorney in your area is necessary, noting that, in most circumstances, the association can also recoup its legal fees for having to file against the owner.

Recently, one of the largest home builders in the nation lost a $16.3 million judgment to a condo association after the judge found that it had engaged in deceptive practices, leaving the association in poor financial condition.

The company—D.R. Horton—started developing the association—Majorca Isles Master Association in Miami Gardens—back in 2005, but decided to stop building when the recession hit. Because of this, many of the condo owners stopped paying their fees, resulting in a deficit for the association. In response, the directors appointed by Horton diverted funds to pay the expenses of the associations, breaching their fiduciary duty to the association, and ultimately shifting the economic loss of the company to the homeowners themselves by cutting services and amenities.

When Horton turned over management of all the associations to the homeowners in 2011, they had gaping holes in funding, leading to a Chapter 11 bankruptcy reorganization filing. The company also failed to keep detailed financial records and mischaracterized the income, recording unpaid assessments fraudulently as assets in order to give off the false appearance that the association was solvent, even though it was not.

Anyone who’s lived in Florida knows that we go through a “state of emergency” from time to time, either due to heavy rains, tropical storms, hurricanes, or other natural disasters. When there are events which give rise to property damage, this will inevitably lead to insurance disputes, as upkeep and welfare issues arise with respect to all of the various types of damage these disasters can bring.

With the number of condominiums and homeowners associations on the rise in the Sunshine State, inevitably, questions come up concerning whose responsibility it is to ensure that property and people are protected when these disasters occur. In that respect, it can be helpful for association boards to make it clear to residents, beforehand, what their responsibilities are with respect to their authority under the law.

The Law in Florida

Homeowners and condominium associations are provided with a certain amount of powers and protections under Florida laws. For example, under the Florida Condominium Act, the board of administration—in response to damage caused by an event for which a state of emergency is declared—may partake in activities necessary to protect the health, safety, and welfare of the association and mitigate any further damage, such as conduct board meetings, name assistant officers, enter into agreements with local counties and municipalities and/or contracts for items or services, implement a disaster plan, require evacuation, and engage in other necessary activities to protect the property and its residents.