On the home front: Tamarac man's brush with foreclosure prompts move to change laws on homeowner association fees
By Tom Collins. 
Article courtesy of American Lawyer Media L.P.

 
Jan 2, 2001 

Miami, FL - George Stroker rushed to his Tamarac home from Jackson Memorial Hospital in Miami, where his wife, Cheryl, lay dying of cancer, scooped up a mountain of bills, and returned to the hospital to start writing checks. 

One of the checks he wrote just before Cheryl Stroker died in October 1999 went to the Woodlands Homeowners Association. Stroker thought he owed four payments of $67 to the association, covering overdue monthly maintenance fees for the couple's home. 

Stroker was wrong. By the time the association served him with lien and foreclosure notices in February 2000, the $268 bill had ballooned to more than $6,000 and would nearly cost him his home. 

Stroker's dilemma is not unusual. 

Potentially thousands of other property owners find themselves similarly entangled by state laws that permit overdue charges by homeowner and condominium associations to balloon by applying past-due payments to interest charges, late fees, collection costs and attomey fees, leaving the overdue balance to roll over and swell. 

Attomeys who represent associations says it's only fair. But a Fort Lauderdale lawyer is outraged by the situation and some local legislators say they want to change it. 

"It's unconstitutional as hell," says F. Blane Cameal, the attorney who defended Stroker and more than three dozen similar cases, many of them pro bono. 

Stroker concedes he didn't pay attention to the bills as soon as he should have. He had other things on his mind. 

"Little did I know -- or little did I pay attention to, because I was caring for my wife -- they had turned it over to a collection agency and an attorney," Stroker says. 

Carneal, who helped negotiate a settlement that let Stroker keep his house, usually fights the fees by disputing the amount owed or finding flaws in a plaintiff's case. But after spending many Sundays in the library studying the laws protecting associations, he's concluded they're unfair and illegal. 

Now he plans to argue in at least one of three pending cases that the laws violate both the Florida and the U.S. constitutions. 

For starters, Carneal says, applying overdue money to late fees and other charges strips the judiciary of its constitutional authority. Only a judge can decide when one party in a dispute has prevailed and is entitled to reimbursement of legal fees. 

That determination is also subject to the 14th Amendment guarantee of due process. The delinquent homeowner gets a bill piled high with extra-judicial charges before he's had his day in court. 

Can a challenge succeed? 

"So far as I know, it has not been ruled unconstitutional," says Jim Mullins, senior management analyst with the state's Division of Land Sales, Condominiums and Mobile Homes, "nor am I aware of any charges of unconstitutionality." 

Robert Kaye, senior partner in the Fort Lauderdale firm Kaye & Roger, also has doubts. 

The law governing condominium associations has been assailed with legal challenges, Kaye said, "and I can't recall a single successful attempt." 

Kaye, whose firm has represented condominium associations in collection matters, says the language that requires unit owners to pay legal fees is a contractual obligation that has held up in court. 

"Generally speaking, courts were not in favor of associations foreclosing just to cover attorney fees," Kaye says, "but it was generally inequitable for the condominium association to incur legal fees when it was the unit owner who failed to make timely payments in the first place." 

Michael Gelfand, senior partner in the West Palm Beach firm Gelfand & Arpe, says the law is also designed to protect other homeowners in an association. 

If someone defaults on maintenance fees with no remedy for the association, Gelfand says, "all the other owners are providing a no-interest, unsecured loan." 

Carneal noted that prioritizing interest and such ahead of principal was once an accepted lending practice too. It was called "pyramiding" or "piggybacking," he says, and was outlawed by the Federal Trade Commission. 

"If the pyramiding of interest is unconscionable," Carneal says, "why not the pyramiding of late fees?" 

Carneal says the law clearly benefits attorneys over unit owners, and even over condominium associations, but he's not convinced the statute was designed to line attorneys' pockets. 

"I think it is designed to maximize the leverage against the individual unit owner," he says. 

On that, State Rep. Ron Greenstein, D-Coconut Creek, agrees. 

Greenstein, whose district includes Tamarac, is not familiar with the specifics of the Stroker case, but says that the law governing homeowner- and condominium associations must be re-examined. 

"They have more powers than the president of the United States when it comes to your life," says Greenstein, "and I would be a proponent of this man's position." 

Another legislator, state Rep. Roger Wishner, D-Sunrise, says the law should strike a balance between protecting associations and requiring associations to handle delinquencies more reasonably. 

A former president of a homeowner association himself, Wishner shares Carneal's concerns about due process and thinks the state may need to set caps on what attorney fees may be recovered from unit owners. 

"This is definitely something we need to look at and come up with a reasonable solution," Wishner says. He plans to examine the statutes and develop proposals to amend them. 

Carneal says the impact of any new legislation would be substantial. Broward County alone has 3,300 condominium associations that house thousands of seniors and disabled persons living on fixed incomes. 

Ideally, he says, the statute should be worded to reverse the order of who gets paid first: The money should first go toward interest, administrative late fees and the pastdue assessment, then collection costs and attorney fees. 

Stroker kept his home, but continued to fight, contacting area legislators and asking them to encourage legislation changing the rules. He hopes action will be taken in the next session to alter the law and protect homeowners from losing their homes, as he nearly did. 

"The case was settled, literally, the day before the house would have been sold on the courthouse steps," Stroker says. 

Stroker said his neighbors couldn't believe how close he came to losing his home so soon after losing his wife. 

"Most everyone came back with the same retort: 'They can't sell your house,'" he says. "They can."