If you own one of Florida’s more than 1.5 million condo units and are having issues with a potentially malfeasant condo board, “good luck” getting help from the government.
That’s the refrain that Spencer Hennings, who served as the state’s condominium ombudsman from July 2020 to April 2023, repeated Tuesday.
He said it with frustration, not delight. The way Florida statutes are now written, he said, wrongdoers on the boards of condo towers and homeowner associations (HOAs) have wide loopholes through which to evade punishment or removal, rendering his former office as something of a “toothless tiger” along with other agencies under whose purview residential collectives fall as well.
“The current system is very good if the board are good actors, but if the board is corrupt and if the board are bad actors — and this is a very small minority of condominium associations — it is my opinion that the current system is not (effective),” he said.
“Unit owners basically have no rights, (and if board members are) stealing money, if they’re concealing records (or) doing something nefarious, good luck asking them to step down. Their response is going to be, ‘Sue me.’”
Hennings’ comments came during a panel discussion before the Senate Regulated Industries Committee on condo governance and regulation. Of the six speakers addressing the committee, none disputed his assertion that enforcement in Florida needs an overhaul.
They included John Perikles, deputy chief of the economic crimes at the Miami-Dade State Attorney’s Office, which last November spearheaded the arrest of four ex-HOA members in the county’s Hammocks neighborhood who looted roughly $2 million from association coffers.
It took Perikles’ unit half a decade to nab the criminals — despite having subpoena power, support from four judges and other government resources — not because, he said, “there were no specific crimes outlined in the Florida condo or HOA statutes until very recently.”
That changed somewhat this year after lawmakers unanimously passed a Homeowners’ Association Bill of Rights in response to the scandal, but none of the new strictures extend to condo boards and their management companies.
Perikles was part of a grand jury investigation that in 2017 declared there was a “crisis with condominiums.” While there have been some positive changes since, he said, they’re “mostly on the margins.”
“If you’re a corrupt board member of a condo or HOA, there’s still plenty of profitable business for you to do,” he said, “and there’s little chance of being caught.”
There’s also little chance of getting ousted unless residents spend six figure sums on it, said Hennings, who dealt with the Hammocks case as well. He said he called the HOA’s lawyer and never got a call back. The HOA manager refused to cooperate with him too.
“They said, ‘Go lick paint,’ … and that’s because the ombudsman’s office doesn’t have the ability to make them have an election (or) remove them from the board if they don’t work with us,” he said. “They say, ‘Well, we’d rather not be monitored. We’d rather not have you involved, so we’re just not going to answer your call.’ That doesn’t seem right to me.”
Hennings offered a “practical guide for how to be a corrupt board member in a condominium association and stay there forever.”
Once elected to a condo board, he said, a member can be removed in one of two ways. One is by the board’s annual election. The other is through a recall process that requires agreement by a majority of unit owners.
Either way, corrupt board members have a relatively simple way to stay put: They just don’t leave, and neither state nor local authorities have much power to eject them.
In disputes over such matters, the Department of Business and Professional Regulation (DBPR) sends in an arbitrator. Close to 400 arbitrator petitions were filed in the most recent fiscal year, DBPR Secretary Melanie Griffin told the committee.
But any decision an arbitrator reaches is nonbinding. They don’t have the power to enforce their orders.
“What happens is you’re a corrupt board member. The unit owners have you recalled. You ignore it. It went to arbitration. The arbitrator sides with the unit owners. You ignore that. You tell the unit owners, ‘Hire a lawyer. Take me to court. Good luck.’ This could cost hundreds of thousands of dollars out of the unit owners’ pockets, by the way,” he said.
“So, we go to circuit court, (which) could take two years. We’re already six, seven months after the (condo board) election, and after a few months, the next year’s election is going to roll around, and at that point the circuit court has to dismiss the case because the new election is about to happen and the old case is moot. This has happened time and time again.”
To fix the issue, Perikles said, state lawmakers need to strengthen criminal sanctions against people who destroy condo records and create additional ones punishing kickbacks board members may accept from contractors. Right now, it’s the associations that face fines, not individual board members.
DBPR also needs an officer capable of properly investigating claims of corruption by condo boards.
Hennings, meanwhile, said the Legislature should empower the condo ombudsman to call off or require a condo or HOA board election and to remove board members if they don’t comply.
“The way it is now, where they can just ignore the ombudsman and get away with it? Not adequate,” he said.
Sen. Jennifer Bradley, who last year successfully sponsored a condo safety reform bill in the aftermath of the June 2021 Champlain Towers South collapse in Surfside, noted that Tuesday’s panel discussion could have happened nearly a decade ago with little substantive difference.
In light of the numerous changes her measure is making, she said, it is imperative that the state give condo owners a reasonable chance to comply without running into management and governance issues that make doing so harder.
Bradley said she’s been drafting legislation for months to address the concerns raised Tuesday and others that stakeholders have brought to her attention this year.
“We cannot ask the condo owners across the state of Florida to navigate this new reality of making sure their buildings are secure and that they’re in good financial health with their hands tied behind their back, with officials not being able to help them, law enforcement not having a clear avenue to step up and shut down bad actors, DBPR (not) having the jurisdiction they need to meaningfully (oversee) folks that they regulate,” she said.
“I can assure you that we’ve been working on (a) bill since the end of last Session (to address) jurisdiction, conflicts of interest, access to records, election education, updating (association) websites — all included — and I look forward to filing that soon so that we don’t have to continue to have these meetings 10 years from now.”
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