Attorneys claim that community associations are based on contract law?

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

Published November 18, 2009


Homeowners are always told that they signed a contract: They knew what they were getting into!


According to Merriam Webster, a contract is described as follows:

a : a binding agreement between two or more persons or parties; especially : one legally enforceable 

b : a business arrangement for the supply of goods or services at a fixed price


While the homeowner is stuck with whatever the "contract" says, the other person/party can change the written agreement at a whim, creating financial hardship and/or injustice for the homeowner who relied on the contents of the initial "contract."


This so-called "contract" is actually nothing but a binding agreement that obligates the homeowner to stay at attention when being told, to shut up, even if the owner is right, and to pay whatever he/she is being told to pay -- without an argument. But the other party to the contract can make changes as they please. The other party: Developers and/or association boards.


Especially developers, who lure families into these communities with lots of promises spelled out in colorful brochures, are changing these contracts whenever they like, causing the homeowners to suffer heavy financial losses, being forced to live in a community that is turning into a nightmare.


And still homeowners are being told: You signed a contract!


But in the meanwhile this contract was changed without a mutual agreement of both sides and the community that was advertised as “a place in the sunshine with carefree living” quickly turns into a hell-hole. Dues are increasing, special assessments are levied, services no longer exist -- and the community starts looking like a war zone. 


Now people say, “You don't like it -- MOVE!”

Easier said than done. These homes, often purchased for hundreds of thousands of dollars with the life-savings of retirees who hoped to buy their dream home in the sunshine, will not find any buyers, short of giving it away.


You don't believe it? There are many examples all over Florida. Let's just pick one:


Buyers were lured into this community in Central Florida with great promises by Levitt & Son, the initial developer. But the dream homes quickly turned into nightmares, when the developer went bankrupt, and 241 homeowners were suddenly forced to pay the bills for a community that was initially planned for 999 homes, when fully built out. 


This community quickly turned into an eyesore (See: HOMEOWNERS' ASSOCIATION HEARINGS), creating a financial hardship for the current 241 homeowners. It didn't take long for the few owners to realize that they had been had and that they were quickly losing their life-savings.


Court appointed receiver Andrew Bolnick took over (Owners of homes in the EAGLES' RESERVE HOMEOWNERS' ASSOCIATION, INC. in Pinellas County surely will remember him). Bolnick quickly filed with the court the SUPPLEMENTAL DECLARATION OF RESTRICTIONS AND PROTECTIVE COVENANTS FOR THE CASCADES OF GROVELAND. The only one protected by this Supplemental Declaration is BANK OF AMERICA, the same bank that got truckloads of "STIMULUS MONEY" to pay for the mistakes their executives made. Read here some of the HIGHLIGHTS of this Supplemental Declaration:

      7.      Article VI, Section 1 is hereby amended to add the following at the end of the section:
              "Notwithstanding anything to the contrary herein: i) each acre of the Other Parcel of Property shall only be assessed for Assessment, an amount equal to 10% of the amount assessed to a Lot improved with a completed house as defined below. At such time as the other Parcel of Property is platted into lots, then they shall be assessed the same amount as the other Lots. By the way of example, if the annual Assessment for a lot is $100.00, then the annual assessment for the Other Parcel of Property shall be $10.00 per acre contained therein, until such time as it is platted into Lots; and ii) Lot(s) that are not improved with a completed house shall only be assessed at 20% of the amount of Assessments of a Lot that has been improved with a completed house. The foregoing limitation on Assessments is for both General and Special Assessments. For purposes herein, a "completed house" is a house that has been issued a certificate of occupancy or similar governmental approval.

     8.     Article VI, section 8 is hereby amended to add the following at the end of the Section:
            "For purposes of Clarity, Working Capital Fund payments shall not be required on any Other Parcel of Property until such times as the Other Parcel of Property is platted into lots and sold (as Lots) to a third party.

     9.      Article VIII, Section 6 is hereby amended to add the following at the end of Section: 
             "The Board of directors, acting on behalf of the association, shall have the unilateral right, without consent, approval joinder or vote of any Owner or mortgagee, to grant easements over any of the Common Areas and drainage ponds for the benefit of any property lying outside the area of the Property. The terms of such easements shall be at the sole discretion of the Board of directors."


There are a lot more morsels hidden in these "Protective Covenants." It surely changes the whole financial liability for the homeowners -- and it surely turns the initial "contract" upside down. Do you honestly believe that any homebuyer in his right mind would have bought a home in this community if this wording would have been included in the initial "contract"?


But guess what?  Bank of America, the beneficiary of this sneaky amendment, still has a representative on the association board, despite the fact that they weaseled out of their financial obligations. 

Never forget, the developers here in Florida couldn't have overbuilt if the banks and mortgage companies hadn’t made unconscionable loans. In my opinion they are the actual guilty parties in the collapse of Florida 's real estate market.


Oh, I nearly forgot: Remember the big headlines in 2004 about the accounting irregularities at Rite Aid Corporation that led to the conviction of 6 top executives of that firm? One of the executives convicted of felonies was Eric S. Sorkin, former executive vice president for pharmacy services. He is now the president of the board of the Cascades of Groveland Homeowners' Association, Inc. 




Let's face it: Anybody who still considers this community association system halfway sane should really pay a visit to the local loony bin!