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Article Courtesy of The Tampa Bay
Times
By Susan Taylor Martin
Published April 15, 2016
Ever since the housing bust, many Tampa Bay companies have
reaped big bucks renting out homes that are in foreclosure.
Now there are signs that Florida Attorney General Pam Bondi's office is finally
taking a hard look at what one real estate expert calls an "unscrupulous scam."
The office confirmed this month that it has an "active consumer protection
investigation" into at least one of the companies, HOA Problem Solutions of
Tampa. It recently issued subpoenas for company records under a statute that
outlaws unfair, deceptive and unconscionable business practices.
Bondi's office would not give any details. In a motion responding to the
subpoenas, an attorney for HOA Problem Solutions indicated the investigation
might partly involve complaints from tenants renting houses and townhomes from
the company.
According to the motion, the subpoenas ask the firm to turn over copies of "all
lease agreements" including those in which a tenant was placed in a home within
30 days of a foreclosure sale.
Also sought are phone numbers, email addresses and other information that could
be used to identify "Florida consumers whom the company contacted, solicited,
offered or provided any services."
The documents requested "are overly broad, unduly burdensome and not likely to
lead to admissible evidence," the motion says in seeking to modify or set aside
the subpoenas.
Incorporated in 2012, HOA Problem Solutions lists Michael Chancey as its sole
corporate officer. It is among scores of limited liability companies launched to
temporarily acquire and rent out homes after Chancey's father, Ralph, hit on a
novel way of making money from the foreclosure crisis.
Florida has 40,000 condo and homeowner associations, which can file liens and
foreclose if homeowners don't pay their dues. Associations want to beat the bank
to foreclosure, because a bank foreclosure usually wipes out the association's
lien and leaves it with no way to recoup its delinquent fees.
In what's been called "the race to the courthouse steps," associations have an
advantage. Most homeowners owe less than $15,000, so associations can file their
foreclosure cases in county court instead of circuit court with its higher
dollar amounts and heavier caseloads. That way associations can get a final
judgment of foreclosure faster than the banks.
The time lag created an opportunity for third-party investors like the Chanceys.
Once a property goes to public auction, anyone can bid. It usually costs just a
few thousand dollars to cover the delinquent association dues, court costs and
lawyers' fees. The winning bidder gets title to the home and can rent out the
property for months, even years, before the bank finally forecloses and the
property is sold.
As the Tampa Bay Times has reported, companies connected to the Chanceys and
others got title to millions of dollars worth of homes for just pennies on the
dollar. Among them were a $1.2 million bayfront mansion in Apollo Beach for
$10,010; a 3,700-square-foot home in north Tampa for $8,090; and dozens of
single-family homes in Brandon and Riverview for less than $4,000 each.
Sometimes, however, the delinquent fees are so high that no one bids. According
to its website, HOA Problem Solutions came up with an answer: In exchange for
the association deeding it the property, the company would assume responsibility
for repairs, maintenance and association fees. It would find tenants and split
the rents with the association.
"We manage difficult HOA problems so you don't have to," says the website, which
features Michael Chancey's uncle, Jimmy Chancey.
Public records, though, indicate the company sometimes bypasses the association
and gets the deed directly from the homeowner. HOA Problem Solutions currently
is listed as owner of 26 homes in Pinellas and Hillsborough counties. Most of
them were acquired through quit-claim deeds from people like Robert Gaston, who
used to live in Riverview's Summerfield community.
Last year, the homeowners association got a $9,200 judgment against him for
failing to pay dues. He already had moved out of his three-bedroom, two-bath
house when he got a call from HOA Problem Solutions.
"They told me they wanted to buy the home from me,'' he said. "They told me they
were going to pay the association fees and they wanted to get the deed to the
house and fix it up and rent it out or sell it."
Gaston said the company offered him $500 if he would sign a quit-claim deed
transferring ownership. He agreed, and "they told me I had no more
responsibility for the property; it's done."
If that's the case, Gaston was misled, says lawyer Robert Stern, an expert on
real estate law at the Tampa firm Trenam Kemker. The main thing a quit-claim
deed does is put the deed in someone else's name.
"In fact, they are not absolved of responsibility for the property," Stern said
of homeowners like Gaston. "They remain contractually obligated for their note,
their mortgage and all other obligations."
Gaston said he thought that deeding away the house would help him clean up his
credit so he could buy another home in two years. But the association's judgment
still remains on his record, possibly killing any chances of getting a loan,
Stern said.
Meanwhile, there is no evidence in public records that HOA Problem Solutions has
paid the association fees, either. But since the deed is now in the company's
name, it could rent out the house during the months it might take the
association to get a judgment against it, too.
"Unscrupulous scam is a summary of this process," Stern said.
Michael Chancey did not return calls for comment. His uncle, Jimmy, was terse
when asked about the company's operations. He said he did not know anything
about the attorney general's investigation. He said the company does acquire
deeds from homeowners associations though sometimes under names different than
HOA Property Solutions.
What names?
"None of your business," he said. |