CONDOMINIUM REGULATION

Stakes are high in association elections

Article Courtesy of The Miami Herald

BY DONNA GEHRKE-WHITE, DIANA MOSKOVITZ AND JOHN COX

Published July 1, 2007

Ordinarily, elevators and laundry rooms don't vote.

But they did at recent board elections at The Pavilion condominium in Miami Beach. Just when Pavilion owners thought they had the votes for a new board, the incumbent president had the association's attorney announce the current board could cast a vote on behalf of each of the building's 25 common areas. As a result, six of the seven members were reelected.

Ordinarily, elevators and laundry rooms don't vote.

But they did at recent board elections at The Pavilion condominium in Miami Beach. Just when Pavilion owners thought they had the votes for a new board, the incumbent president had the association's attorney announce the current board could cast a vote on behalf of each of the building's 25 common areas. As a result, six of the seven members were reelected.

Now a group of Pavilion owners are part of an increasing number of homeowners demanding the state investigate what they consider election shenanigans at their condo or homeowners' association.

The recent arrests of the board president, property manager and two others in Hallandale in a kickback scheme point up how important a condo election can be. Even in small buildings, elected board members handle millions of dollars of their neighbors' money, making crucial decisions about maintenance and repairs.

Election irregularities often go hand in hand with financial corruption, says Jan Bergemann, founder of the grass-roots statewide group Cyber Citizens for Justice.

Without owners closely monitoring, their ''associations are like a cookie in a cookie jar without a lid. Everyone can grab,'' he says.

While state officials say cases like that at Parker Plaza are extremely rare, complaints about condo or homeowner association elections have been steadily rising.

Partly that is because Florida has more people living in associations, says Mike Cochran, director of the Land Sales, Condos and Homes Division of the state Department of Business and Professional Regulation (DBPR).

''We have 150,000 more units than last year so any time you have an increase in unit ownership, your complaints will probably go up,'' he says.

COMPLAINTS RISE

The number of formal complaints rose from 284 in fiscal 2005 to 318 in the first 10 months of the fiscal year that ends June 30. Owners have 

Disgruntled Pavillion condo owners Jorge Prendes, Priscilla Suarez and Steven Schwartz are upset with spending at the condo, which they say is deteriorating.

Homeowner associations have few places to go

 

WHAT THE LAW SAYS

Condo associations have to hold elections according to Florida law and their own governing documents.

According to Florida law:

 Associations must mail, deliver or electronically transmit a first notice of an election at least 60 days in advance.

 Candidates have until 40 days before the election to submit a written application to be on a ballot and 35 days to submit a one-page resume that the association sends with a second notice of the election.

 The association must send a notice to owners telling them who the candidates are and when the election will be held.

 Convicted felons who have not had their voting rights restored cannot serve on a condo board.

 For an election to be valid, at least 20 percent of the eligible voters must cast ballots.

 Fifteen percent of the unit owners, or six owners, whichever is greater, may petition the Florida Ombudsman's Office for an election monitor to conduct the election. The association pays for the monitor.

 If the association doesn't receive enough candidates to fill positions, then those on the ballot are automatically elected.

In some condo associations, the community has a committee that oversees the election. An association's governing documents may regulate who can run. Generally, candidates must own a condo unit.

complained about myriad of problems, from their associations not giving adequate notice of elections to not allowing some owners to run to rigging the results to favor incumbents.

While election complaints involve fewer than one percent of the 20,000 community associations statewide, they are a hot-button issue for the state Condo Ombudsman's Office, which is deluged with complaints in January and February, the peak condo election times, says assistant condo ombudsman Bill Raphan.

 

If the state finds a condo election law has been violated, DBPR can order a new election.

Raphan, who helped oversee the Parker Plaza elections, said that monitoring by the Condo Ombudsman's Office helps promote an honest election -- and a heavier turnout. Of the 125 condo elections the ombudsman's office has helped oversee since November 2005, many had significantly higher vote totals than in previous years, Raphan said.

The state requires the condo association to pay for the election monitors, which costs from $200 for buildings with a few dozen units to more than $1,000 for large complexes.

Many boards have balked at the cost. But if 15 percent or more of the owners request the ombudsman's office to monitor the election, the board must comply.

Some condo owners have asked for a state-appointed arbitrator to intervene after an election that they believe was tainted or not properly handled.

The jump in complaints, Cochran adds, also reflects a change in state rules -- which allows a state arbitrator to intervene if asked after an election is contested. The arbitrator makes a ruling and if both sides agree the issue is settled.

But the arbitration is nonbinding and a party that isn't satisfied can file a lawsuit.

Suspicious owners at the Parker Plaza Estates in Hallandale Beach demanded that the condo ombudsman monitor their election last year. All the old board members lost. Once installed, the new board discovered documents that led to the arrests in late May of the former board president, property manager and two others in an alleged multimillion-dollar kickback scheme.

''It just smelled bad to me,'' said Milton Fischgrund, who was voted off the Parker Plaza board when he questioned bids and contracts.

Some owners said they couldn't understand how the majority kept getting re-elected to the board despite wide opposition. Don Pinkus ran, but always lost. Yet many would tell Pinkus they voted for him.

''When you poll the people and find out 200 people said they voted for you, but they only counted 117 votes, you think maybe you have enemies, people lied to you, or something else,'' Pinkus said. ``We found out it was something else.''

Pinkus noticed that ballots were either mailed in or dropped off at the office run by the condo manager now charged with felony organized fraud. The votes were collected in a large, cardboard box, with a hole at the top ''big enough to stick your hand through,'' Pinkus said.

Last year, residents called in then-condo ombudsman Rizzo, who had the ballots mailed to the ombudsman. The most votes any sitting board member received was 64, said Pinkus, who became president of the new board. The new board members had vote tallies in the 200s in the 520-unit, 20-story tower.

Former board member Arline Vordermeier said she wasn't aware of any vote tampering.

''I don't know how they did that. I have no idea how that could be done,'' Vordermeier said. ``The ballots were sealed and opened up in front of us.''

'NO HANKY PANKY'

Today the board requires that ballots be mailed to an independent third party, such as the association attorney or a monitor from the ombudsman's office. ''There is no hanky panky going to happen here,'' current board secretary Sy Kessler pledged.

To ensure a good election, Bergemann advises reading the state law and condo governing documents -- and following them. ''Condo elections are pretty much regulated,'' he says. ``There are guidelines. Follow them.''

On election night, the ballots should be tallied in front of owners, Bergemann adds.

Attorney Gary A. Poliakoff, whose Fort Lauderdale-based firm represents more than 4,500 associations, said most elections run smoothly but many problems could be avoided if associations let their attorneys oversee the process to ensure it's done according to the community's bylaws and state law.

The state also has made it easier for homeowners to recall a board, with a simple majority of the residents casting ballots in favor of the change, Bergemann says.

But even recalls can be thorny. At the 440-unit Sunset Villas Phase III condominium in Miami, homeowners upset over a special assessment voted for a recall a year ago. The old board disputed some recall ballots and refused to leave.

Recall leaders then protested to the state. The wrangling went on for months -- with the issue unresolved when the board held a new election in December. An arbitrator then ruled that the recall was moot since there was a newly elected board.

Except a problem remained: 138 owners sent a petition to DBPR claiming they did not get a first notice for the elections. Maria Elena Urivazo says she and others weren't properly notified about the new election and couldn't apply to run. Only candidates in favor of the board knew about the election in time to fill out the necessary paperwork, she contends. ''That was baloney,'' she says. ``It was only for people they wanted.''

The candidates won since only 12 people sought 15 positions. State law automatically elects those running for boards if there aren't enough candidates. The new board can appoint owners to fill the remaining vacancies.

Earlier this month, DBPR found the association hadn't properly sent out notices and ordered a new election.

Association attorney Steven Fein said he hadn't heard from the board if it would challenge the DBPR order.

President Marina Ojeda did not return phone calls. Property manager Barbara Blanco, owner of the Kendall-based All Florida Management, says owners were properly notified.

At Miami Beach's Pavilion, owners say their board isn't doing needed repairs. Chunks of concrete have fallen from balconies, and a concrete wall in the garage is crumbling, says owner Priscilla Suarez.

In February, Miami Beach inspectors ordered the Pavilion association to hire an architect or engineer to evaluate the building for concrete corrosion. On March 21 the city gave the association 60 more days. But city inspector Andy Villarreal said that he found no evidence in the files that the association had complied and that the city would schedule a special master's hearing.

'LIKE A CANCER'

The corrosion, he added, "is like a cancer. It is not going to go away. It's going to get worse.''

Meanwhile, DBPR is investigating whether the six incumbent board members can declare victory by using votes they cast for common areas such as the storage closets and laundry rooms, the state's Cochran said.

''I haven't heard of such a thing,'' he said.

Andrew Nierenberg, attorney for the Pavilion association, said the board could cast vote for the areas because ''the units are owned by the association'' and the board decides for the association. He added that the developer had labeled them commercial units and hence eligible for voting.

He said counting the elevators and storage areas as voting units had been done before. He said a monitor from the condo ombudsman's office backed the decision. Assistant ombudsman Raphan said the monitor did so because the spaces on the election ballots were designated as commercial units. Usually commercial units are stores or offices in a condominium building.

Nierenberg added that "Some members of the board were elected by more than a 25 vote plurality.''

As for the building's alleged disrepair, Nierenberg said, "Millions of dollars are being spent to recondition the building.''


 

Homeowner associations have few places to go

The state offers mediation and arbitration services, but both

are nonbinding and cases may still end up in court.

 

BY DONNA GEHRKE-WHITE

 

If they have complaints about their election, condo owners can go to the Florida condo ombudsman or the Department of Business and Professional Regulation.

    

Homeowner associations typically have few options -- except court, which can be costly.

The state Department of Business and Professional Regulation ''doesn't regulate homeowner associations,'' said Mike Cochran, director of the Land Sales, Condos and Homes Division.

`What we offer is mediation and arbitration services.''

Both, however, are nonbinding and cases may still end up in court.

FOR MORE INFORMATION

For more information about condo and homeowner associations, go to the state's Department of Business and Professional Regulation website, myflorida.com/dbpr/lsc/index.shtml.

You can click to see laws or obtain complaint forms. The local office of the state's Condo Ombudsman's Office can be reached at 954-202-3234.

That can be risky -- and expensive. Owners who bring a suit may have to pick up their association's legal fees if they lose. And no matter who wins, all the owners share the association's legal expenses.

The state's condo ombudsman doesn't deal with homeowners associations, either.

Attorneys for homeowner's associations say that is just part of the problem: Many HOAs don't have elections for years in a row because associations can't get a quorum at their annual meeting.

Most homeowner association governing documents require a quorum to hold an election. The state requires homeowner's associations to have a higher quorum -- at least 30 percent -- than a condo association's 20 percent.

Attorney Gary Poliakoff favors changing that.

Considering that a city election may bring out only 10 percent of registered voters, getting 30 percent of the members of a large homeowner's association to vote can be difficult.

In election matters, the state takes a hands-off approach. It has no system to monitor HOA elections, and no ombudsman to handle complaints.

For example, homeowners in Miramar Gardens in north Miami-Dade have been asking the state for help. Even after Miami-Dade County Judge Linda Singer Stein declared the association a ''sham'' organization with ''unclean hands,'' the state said officials can't help.

''That would probably have to go to court,'' DBPR's Cochran says.

In her 2006 ruling, Judge Stein found that elections were held "with many irregularities and inconsistencies.''

Homeowner James Wimes said homeowners don't even know when their next election will be.

Robert Dugger, the property manager for Miramar Gardens, assured The Miami Herald that the association would hold proper elections in early June. County commissioner Barbara Jordan said she would monitor them.

But homeowners said they haven't gotten the required 30-day notice of the election. Dugger didn't return phone calls. His office staff didn't know when the elections would be held.

Homeowners want to vote in a new board.

Said Wimes: "We are being victimized and we need help.''


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