Bill would protect condo owners from foreclosures

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By I.M. Stackel 
Thursday, March 9, 2006


Call it the poor person’s housing bill.

But Senate Bill 586 isn’t about finding housing, or creating housing: it’s about keeping it.

For the second legislative session in a row, Florida Sen. Gary Siplin, D-Orlando, stands alone in efforts to keep hungry attorneys from kicking people out of their homes as a result of compounded unpaid home and condo-owner association assessments.

As in the 2005 legislative session, no one from the House side has filed companion legislation, although there are numerous proposed laws that affect condo and homeowners associations, and some clearly spell out how to use money obtained from residential foreclosures.

One also addresses some of the issues in Siplin’s bill, but doesn’t focus exclusively on finances.

Last year, Siplin tried to change the underlying condo and homeowner association law that allows these groups to seize homes after an owner misses several payments.

Documented in incidents around the state, folks end up losing their homes to associations when that subdivision’s property management company hires a law firm.

Florida laws enable these actions by giving homeowner associations lien and foreclosure power even bankruptcy courts and the Internal Revenue Service rarely exercise: taking someone’s home.

It usually begins with an oversight.

A home or condo owner misses one quarterly association fee payment.

After that, it’s a game of catch-up, much like trying to pay off credit card fees, and never making a dent in the principal expenditure.

Locally, that is what happened to Calico Frazzano, an owner at Quail Roost in Naples. Frazzano paid a quarterly maintenance assessment of $396 on Nov. 6, 2003. It was due Oct. 1. By Nov. 7, 2003, Frazzano was informed that she owes not just the $396 she’d already paid, but $803.58, according to a Nov. 7, 2003, collection letter from a Fort Myers law firm retained by Quail Roost.

That included the maintenance fee, interest through Nov. 7, 2003, a $25 late fee, a $350 attorney’s fee, and $25.16 in associated costs.

She had until Dec. 7, 2003, to pay the inflated $803.58 charge. If it wasn’t paid, fees and costs would continue to accrue, according to the attorney’s letter.

Some property management companies are a bit more zealous than others, but state law gives them all the right to pursue foreclosure options. Quail Roost’s property manager has filed 17 such foreclosures since the late 1980s.

Most targets do not realize they need to retain an attorney until it is much too late. Also, law firms hired by property management companies attach legal fees to the initial collectible debt, and that’s illegal, say those who have faced such actions.

State law gives owners a 15-day grace period. But individual owners are obliged to remember when those fees are due.

Attorneys who step in to represent the associations can build a very lucrative practice around the process.

Last year, Siplin tried to get fellow legislators to amend laws so monetary thresholds were built into repossession. The association would not be immediately entitled to recover attorney’s fees when trying to recover late fees, or in foreclosure threats.

Also, Siplin’s legislation would have required appropriate notice before a lien was slapped on, and interest fees would be more neighborly.

His bill died in committee, and no one from the House filed a companion bill.

That was due, in part, to heavy lobbying by large and powerful law firms.

Leading the charge was Becker & Poliakoff, a powerhouse firm that specializes in condominium law.

The firm created the Community Association Leadership Lobby, self-described as the “leading organization working to enhance the quality of life and protect property values for Florida’s community association residents.

CALL advocates on behalf of more than 4,000 member communities, including condominiums, homeowners’ associations, mobile home communities and cooperatives throughout the state.

According to the law firm’s CALL Web site, CALL monitors and responds to legislation emerging from Tallahassee that can significantly impact members, and provides educational services that promote better association management.

Additionally, CALL conducts research about attitudes, opinions, understandings and perceptions of the general population of community association residents across Florida to better understand the needs and concerns of this important segment of the population.”

In December, Becker attorney Donna Berger, CALL’s director, downplayed the number of cases around the state that would be resolved as a result of Siplin’s legislation.

“CALL was one of many groups...that was dismayed and alarmed at the provisions contained in Sen. Siplin’s SB 2632. That bill would have prevented associations from liening or collecting delinquent maintenance in amounts less than $2,500. In some of our HOA communities that amount represents eight YEARS of unpaid assessments,” Berger wrote in a December e-mail to a Daily News reporter.

“Clearly, if you want to avoid abusive foreclosures (which aren’t all that frequent to begin with despite the Chicken Little stories you hear) there are better ways to do it; ways which won’t impact a community’s essential services.”

Siplin said he is not giving up.

“It took me three years to get (an alimony bill) passed. Patience is a virtue. It will get done,” Siplin said in an e-mail in December, not long after he filed this year’s SB 586.

It was assigned to be heard by Regulated Industries committee members, but on Wednesday hadn’t yet been scheduled, according to committee staffers.

Sen. Burt Saunders, R-Naples, is a member of that committee, but could not be reached for comment.

Also stressing the individual’s rights before those of associations, SB 2358 would protect individual property owners from overbearing association officers.

Similar to HB 839, the proposed laws would make association officers and directors personally liable for damages to a member if there is “clear and convincing” evidence that the association leadership’s actions “demonstrate a pattern of behavior designed to harass a member of the association.”

Both bills would hold association leaders to stricter financial reporting rules, and require all associations to be incorporated in Florida.

However, built into the new rules is an out: association power and duties are outlined in both state law and the individual association’s governing documents.

The bill’s original language read as follows: “The powers and duties of an association include those set forth in this chapter and, except as expressly limited or restricted in this chapter, those specifically set forth in the (association’s) governing documents.”

The clause was amended to give associations more leeway, and now states, “The powers and duties of an association include those set forth in this chapter and those specifically set forth in the (association’s) governing documents.”