HOW TO FLEECE HOMEOWNERS?

An Opinion By Jan Bergemann
President, Cyber Citizens For Justice, Inc.

Published July 11, 2023

I can assure you: Some Management firms and some law firms have really made it an art creating some extra income – to the detriment of homeowners.

I guess the Florida Legislature had thought that they had it all figured out when they enacted FS 720.3085 (see below).

But some management firms and law firms are very inventive when it comes to fleecing homeowners.

We all know the old trick: Cashing checks only a while after the past due date – and instead of immediately informing the homeowner that late fees are now due, they just wait some time before informing the owner – and now adding interest and “administrative late fees” to what little amount was owed initially. It’s good business if they wait long enough – and a $5 late fee quickly increases to a few hundred dollars.

Here is an example from a ledger of a “past due” owner:

Owner paid their assessments on 09/09/2021 but did not include the $3.00 in interest. Management sent them a demand letter at a cost of $35.95. By law this fee cannot be included in the demand letter but it gets put on the owner’s ledger. After that it just snowballed with monthly charges of $35.95 until the Owners ended up paying $774.77 in August of 2022, which was $400.00 in assessments and $374.77 in mostly management fees. The management company had, prior to the final payment, wrote off interest and late fees but not their management fees. Since the original $3.00 in interest was reversed there should not have been any management fees!

Or another example of circumventing the wording of the statutes:

FirstService Residential (former Continental) is charging $35.95 per month in “admin fees” to send notices.

It gets even better if the late-notice is being sent to an address – or e-mail address -- the owner is no longer using. Now it’s time for the management firm to hand the “delinquent” account over to a “friendly” law firm (rumor has it that some law firms are even paying a $150 “Finder’s Fee” to management firms) and a once small amount turns into a debt of a few thousand dollars.

Big business since most owners don’t have the financial ability to fight this “SCAM” in court and rather scramble trying to find the money to pay off this “artificially created” debt in order to avoid the foreclosure of their home.

And it looks like even judges don’t really know the provisions of FS 720.3085. Court records show that they even allowed “administrative fees” to be charged when it comes to allowing legal fees to the prevailing party.

These money-making ways to increase the income comes pretty much without any risk; If the management company is caught red-handed, they use the old defense already used in the Nuremberg trial: “We acted on orders of the board!” well, it didn’t work in Nuremberg, but it sure works in Tallahassee!

FS 720.3085(3) Assessments and installments on assessments that are not paid when due bear interest from the due date until paid at the rate provided in the declaration of covenants or the bylaws of the association, which rate may not exceed the rate allowed by law. If no rate is provided in the declaration or bylaws, interest accrues at the rate of 18 percent per year.

(a) If the declaration or bylaws so provide, the association may also charge an administrative late fee not to exceed the greater of $25 or 5 percent of the amount of each installment that is paid past the due date.

(b) Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment. A late fee is not subject to the provisions of chapter 687 and is not a fine. The foregoing is applicable notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The preceding sentence is intended to clarify existing law.

(3) Assessments and installments on assessments that are not paid when due bear interest from the due date until paid at the rate provided in the declaration of covenants or the bylaws of the association, which rate may not exceed the rate allowed by law. If no rate is provided in the declaration or bylaws, interest accrues at the rate of 18 percent per year.

(a) If the declaration or bylaws so provide, the association may also charge an administrative late fee not to exceed the greater of $25 or 5 percent of the amount of each installment that is paid past the due date.

(c)1. If an association sends out an invoice for assessments or a parcel’s statement of the account described in s. 720.303(4)(j)2., the invoice for assessments or the parcel’s statement of account must be delivered to the parcel owner by first-class United States mail or by electronic transmission to the parcel owner’s e-mail address maintained in the association’s official records.

2. Before changing the method of delivery for an invoice for assessments or the statement of the account, the association must deliver a written notice of such change to each parcel owner. The written notice must be delivered to the parcel owner at least 30 days before the association sends the invoice for assessments or the statement of the account by the new delivery method. The notice must be sent by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the parcel address, must be sent by first-class United States mail to the parcel address. Notice is deemed to have been delivered upon mailing as required by this subparagraph.

3. A parcel owner must affirmatively acknowledge his or her understanding that the association will change its method of delivery of the invoice for assessments or the statement of the account before the association may change the method of delivering an invoice for assessments or the statement of account. The parcel owner may make the affirmative acknowledgment electronically or in writing.

(d) An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the parcel owner which specifies the amount owed the association and provides the parcel owner an opportunity to pay the amount owed without the assessment of attorney fees. The notice of late assessment must be sent by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the parcel address, must also be sent by first-class United States mail to the parcel address. Notice is deemed to have been delivered upon mailing as required by this paragraph. A rebuttable presumption that an association mailed a notice in accordance with this paragraph is established if a board member, officer, or agent of the association, or a manager licensed under part VIII of chapter 468, provides a sworn affidavit attesting to such mailing.