Buyers want homes; HOA wants improvements

Homeowner fees 'like extortion,' homeowner says


Article Courtesy of The Tampa Tribune/Channel 8


Published September 9, 2010

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WESLEY CHAPEL - Two days before closing on a house, Eugene Vrooman got bad news: If he didn't come up with $14,000, the homeowners association wouldn't allow his deal to go through.

In addition to unpaid assessments, the Bridgewater Community Association demanded money for cosmetic repairs to the home, which had been vacant for more than a year. It wanted the exterior of the 4-year-old house cleaned and painted, weeds pulled and new sod

"My wife and I were just devastated," Vrooman said. "We've been working on this deal for six months. We planned to clean up the home, but we want to do the work ourselves, not some homeowners association. This just feels like extortion."

The neighborhood may be at the vanguard of a get-tough movement by homeowners associations intent on restoration after the devastation caused by mass foreclosures. Experts know of few other associations this aggressive. But few neighborhoods have been hit harder.

Sixty-five percent of the homes were sold to investors, and all but about 160 of the 760

Eugene W. Vrooman was ready to buy this home in the subdivision until he found out there were outstanding fees being charged by the HOA.

homes - 79 percent - have faced foreclosure. Values were slashed in half, and homes fell into disrepair. There are 37 pending sales in Bridgewater, and 23 homes are on the market.

Now, the homeowners association is at loggerheads with real estate agents and buyers who want to cash in on falling prices. Some fees - such as $600 for a mailbox - are unreasonable, buyers complain. They say the association is preventing improvements in the neighborhood because it is blocking potential buyers from moving into empty houses.

But the association says this is its only chance to turn around the neglected community. Homeowners who didn't pay mortgages or dues for years should not be allowed to walk away, leaving neighbors with eyesores. Plus, the association says, it can't trust new owners to do the work after they move in.

"Any time we've offered any consideration at all, the new owner hasn't followed through," said Mark Spector, association president. "We can't negotiate."

Bills are common

Real estate and title agents question whether the association is going too far, but no one has challenged Bridgewater in court. It is typical for associations to charge lenders in distressed sales with past-due fees. Many also do maintenance on a neglected home, then send the property owner a bill.

Florida's high number of foreclosures has prompted more associations to go this route, said Ben Soloman, a lawyer with Association Law Group in South Florida who represents homeowners associations.

What's unusual about this case, though, is that the association bills for work not yet completed, Soloman said. And it doesn't provide receipts.

"I would say that is pushing it a little far," he said. "You really can't charge for something you haven't done. And you can't lien for an amount that is not currently owed."

Soloman's firm is known for its aggressive tactics in recovering money for financially strapped homeowners associations. But what Bridgewater is doing could make it vulnerable to legal challenges, he said.

Bridgewater's attorney has a different take.

"You pay contractors for work before it's done all the time," said Geraldine R. Holloway. "I freely acknowledge that their approach is novel, but I don't think there's anything illegal."

Like so many newer Bay area neighborhoods, Bridgewater is a victim of bad timing.

Homebuilder Lennar started construction in 2004, just as the building boom was heating up. Investors bought more than half the homes and rented them. Soon, there was graffiti and gang activity.

The association fired its management company, began strictly enforcing deed restrictions and charged fees for maintenance on neglected homes.

It even hired a public relations firm last year to help attract buyers to the neighborhood. Buyers came, and along with affordable homes, they discovered stiff fees.

The community started charging buyers a $400 transfer fee, then a $225 fee to release liens against the property. There is a $250 charge to prepare a letter detailing the fees owed. If buyers or sellers opt to do the work themselves, they have to pay $75 to have someone from the association review the work.

Although not all neighborhoods charge such fees, there is a wide range that lawyers consider acceptable.

The fees, the association admits, are high, but the board should be compensated for its time, Spector said. He questions why other associations aren't doing the same thing.

"I'm paying on a $400,000 mortgage when someone else walks in and pays $140,000 for the same house," Spector said. "We have people who haven't paid a payment in four years, and they want us to let them out of their bad debt. That's not going to happen."

The association's stance has led to awkward - and sometimes scary - moments.

"A guy showed up at my front door once with a gun," Spector said. "The buyer is the victim in this. I understand their frustration. But the Realtors are not doing their due diligence."

In a bad place

Tom Strocchio, the owner of the home Vrooman wants to buy, said his life is on hold because of the association's tactics. A job loss forced him into a career that pays half his former salary.

Friends encouraged him to stay in the home free while he awaited a short sale, but he didn't think that was right. He hopes the short sale will help the family get back on its feet.

"I feel this neighborhood association only cares about cash," Strocchio said.

Sharon Molnar, a real estate agent with Prudential Tropical Realty, has a pending sale in Bridgewater that looks unlikely to close. She said it took a year to get the lender to approve a short sale, a deal in which the lender agrees to accept less than the home is worth.

A letter the association sent in March shows fees of $2,668. The short-sale lender agreed to pay that amount, and a closing was set for Aug. 12. In late July, a new letter arrived. This time the bill was $11,027, citing a long list of cosmetic repairs.

The lender said no. The seller is ill, left the house a year ago and can't pay the fees. The buyer, Molnar said, wants to improve the home, but doesn't want to do the work before he owns the house.

"The young man who wants to buy is all excited and wants to get things done at the home," Molnar said. "Now it will likely go into foreclosure and will look a lot worse by the time the lender takes back the home."

But that's not something Spector worries about.

"We can maintain the exterior of vacant homes, and it will look reasonable for quite some time," Spector said.

Vrooman, the buyer who received the $14,000 bill two days before closing, said he has decided to walk away. He and his wife found another house nearby. They don't like it as much as the Bridgewater home, but he said he worries that even if he paid the homeowners association, the group would always be a problem.

"Maybe I should thank them for charging these fees," he said. "It is better I know how they are now instead of finding out after I move in."

Comment: Homeowners' stand may be shortsighted