January 9, 2004 HOA TASK FORCE AGENDA
ITEMS:
The Florida Constitution -- Article X -- SECTION 4. Homestead; exemptions -- protects Florida homeowners from the forced sale of their homes. So it seems? Special interests – as usual – found a way to deny any kind of protection for owners in mandated properties in Florida. Starting out by claiming to protect the interest of common good by allowing foreclosures for unpaid association dues, that given right is today being abused to enforce payments of “fines,” special assessments and attorneys’ fees. It all started out with unpaid dues. The industry claimed deadbeats would ruin the idea of common ownership by refusing to pay the dues, if lien – and foreclosure-power – were not granted. Despite the fact that there are many associations – especially older ones – that don’t have the foreclosure power, there is no case of a bankrupt association that I know of – definitely not because of unpaid dues! During the last legislative session in Arizona an anti-foreclosure bill attracted lots of public input during open hearings. The most outspoken opponent of the bill was Scott Carpenter, Chair of the Community Association Institute Legislative Action Committee For Central Arizona. Carpenter brought along lots of board members to testify to the fact that associations would go broke if this weapon were disallowed. It was interesting to hear that these “experts” had no answers to inquiries of Senators and Representatives that went beyond the simple question of foreclosure power. The industry argued that loss of foreclosure power would adversely affect the purchase of homes with Federal Housing Administration (FHA) or Veteran’s Administration (VA) financing. This argument turned out to be absolutely false. Inquiries to these agencies were answered to the negative. According to written statements from these agencies, there is no difference in financing, whether or not homeowners’ associations have foreclosure power. Even though the Arizona anti-foreclosure
bill was defeated, it will be back in even stronger form in the next session
– with lots more support. Why? Because more ridiculous
cases have become public knowledge. In the meanwhile, newspaper and
media reports have made the public aware
of the existing problems.
Please realize that it’s not the association membership that profits from these powers. It’s a certain kind of specialized attorney who is making a very profitable business by using this weapon. A very small amount of unpaid dues, sometimes even less than $100, quickly mushrooms into a $2000+ bill by adding “legal fees.”
Despite the fact that consumers are supposedly protected by the Fair Debt Collection Practices Act, well-known law firms don’t like to obey the federal rules. (See: Fuller vs. Becker & Poliakoff, 192 F. Supp. 2d 1361 M.D.Fla., 2002.) Even though the Federal Court has ruled, many attorneys don’t like to go by the guidelines and they avoid informing the homeowners about their rights, as the attorneys are required to do. Recently Cyber Citizens For Justice, Inc. collected hundreds of dollars to avoid the foreclosure of a home of a legally blind accountant, who lost his job due to downsizing. We are definitely not talking deadbeat here! Unpaid dues in the amount of $200 mushroomed to $2100 (with legal fees) within six months. The man was threatened with a forced sale of his home on the courthouse steps. He is back at work now and secure in his home, thanks to the generosity of the CCFJ members who cared about this man’s property and his life. While criminals and convicted felons are protected against foreclosures of their homestead, homeowners in associations are not! But it goes even further. Inventive attorneys have as well used the given power to collect on so-called “fines.” This method is often used to shut up “disgruntled” homeowners daring to contradict board members or managers and attorneys. This is a hotly debated issue. Since boards serve as judge, jury and executioner, Supreme Courts in Virginia and Rhode Island already decided “fining by associations is unconstitutional.” Foreclosures based upon unpaid fines should also be declared unconstitutional. Legal fees are the main problems of people trying to repay any debt. If owners had problems paying annual dues in the amount of a few hundred dollars, the adding of attorneys’ fees in amounts of above $2000 makes even honest attempts to pay off the debt mostly impossible. Considering that an Appeals Court in North Carolina (NO. COA99-639) already ruled that attorneys’ fees in this outrageous amount are unreasonable to collect $200 of unpaid dues, we should definitely propose making legislative changes.
The office of Attorney General Charlie
Crist is going to fight for the home of Jupiter flagman George Andres --
you heard his testimony in Orlando -- trying to prevent the foreclosure
of Andres’ home for legal fees incurred during the well-known court
battle. The argument that will be used
in the Supreme Court:
Foreclosure power can’t be used to collect legal fees! In Nature Watch HOA – we heard testimony of homeowners in Tampa – “foreclosure power” is being used to collect special assessments, in this case determined by a court-appointed receiver, who replaced the board by ruling of a judge. But the deed-restrictions of this association state that special assessments have to be approved by majority vote of membership. In this case even the excuse of contract law is not applicable! But still more than 120 homeowners most likely will lose their homesteads due to foreclosure. Where are the government agencies supposedly protecting consumers’ rights? So far not one agency has done anything to help these homeowners under siege! Throughout the United States the number of unjust cases where foreclosure power is being abused and outrageous legal fees are being charged has been hidden and often difficult and very expensive to discover. However, research in Harris County, Houston, TX, revealed that this weapon to subdue homeowners is used more often than admitted. More than 15,000 foreclosure filings -- a conservative undercount -- were listed from 1985 to 2001. One attorney alone was responsible for more than 1500 foreclosure filings. (See: http://pages.prodigy.net/hoadata/) A noteworthy aspect: The industry always claims that all this foreclosure power is necessary to protect the property values. The research showed that actually the opposite is the case. Analysis showed that associations with many filings had by far the lowest positive price trend change. The value of a home is based on the actual home itself, its location and the economy. Annual home price listings show no advantage to HOAs. It is obvious that foreclosure power is not serving the homeowners and the associations. In order to protect Florida homeowners and condo-owners against this power, very often abused by boards and industry partisans, we need to stop this weapon from being used. Homeowners need the protection given them originally by the Florida Constitution. There are many other ways to collect unpaid dues, but they require proper court procedures. In order to do so, we need legislative changes here in Florida. I would like to make the following motion: The members of the Task Force support the following:
JOINT RESOLUTION
SECTION 1. ARTICLE X Section 4. Homestead;
exemptions.-
(a) An obligation to pay homeowners’ association fees and/or assessments for maintenance and ownership of common areas, facilities and services is a debt for which an encumbrance may be fixed on homestead property. The homestead, however, is protected from forced sale for the payment of a debt described by this section. SECTION 2. This proposed Constitutional amendment shall be submitted to the voters at an election to be held November 2, 2004. The ballot shall be printed to permit voting for or against the proposition: "The Constitutional amendment permits an encumbrance to be fixed on homestead property for an obligation to pay certain homeowners’ association fees and/or assessments without permitting the forced sale of the homestead." Respectfully,
IN ALLIANCE WITH:
Florida Constitution
-- Article X |
