Florida bill seeks to strengthen state supervision over condo, HOA fraud
“There is a law … but there’s no one to enforce it”

Article Courtesy of The Real Deal

By Lidia Dinkova

Published November 25, 2023


Florida lawmakers will once again consider a bill aimed at strengthening regulation of condo and homeowner associations.

The proposal is the latest attempt to address allegations of corruption at communities governed by associations. Residents for years have sounded the alarm with claims that their boards of directors, sometimes with the aid of property managers and association attorneys, are running authoritarian-like regimes riddled with misappropriation of funds, election fraud and bullying of those who speak out.

This spring, in response to the Hammocks case in which five people were arrested and charged with a multimillion-dollar fraud, the legislature took up bills aimed at increasing oversight over associations. But by the time property managers, contractors and other private interests were done lobbying, lawmakers passed a law stripped from most of the beef in the original bills.

Now, the legislature will vote on a new proposal at its session next year. Senate Bill 426, filed by Sen. Ileana Garcia, would target an issue residents claim stands in their way of taking down corruption: state administration’s lack of power to enforce laws and oversee association dealings.

Residents “go to the city of Miami, they go to the county, they go to DBPR [Florida Department of Business and Professional Regulation] and nothing happens,” Garcia, whose district is in north Miami-Dade County, said at a Senate Regulated Industries Committee meeting last Tuesday.

“We have a lot of work to do, and I think the hardest part is trying to recuperate their faith in this system. Once again, where do we start? What do we do? And we need to do it right away.”

Currently, two laws govern associations: The Condo Act, or Chapter 718, and the HOA statute, or Chapter 720. The Florida Department of Professional and Business Regulation is the state authority that investigates complaints, though residents have told The Real Deal they feel the agency’s powers are limited and they are left with no other options but to pursue lawsuits at their own expense.

Under the Condo Act, DBPR can investigate issues related to operating budgets and reserves, elections, access to records, budgets and other financial meeting notices, and structural reserve studies. DBPRs powers are limited and the division often shoots down their complaints citing its lack of jurisdiction, according to residents who spoke with TRD.

The division has more than 100 employees and a track record of closing nearly all filed complaints, a DBPR spokesperson said, but they also noted the state can only investigate within its legally vested power as outlined by the statutes.

The new bill would implement a Condominium Fraud Investigation Pilot Program in the Condo Act. The program would have the authority to contract with companies that employ investigators with experience in financial fraud cases, as well as to conduct audits and issue subpoenas. If investigators suspect criminal activity, then the complaints would be forwarded to state attorneys’ offices.