How HOAs abuse power to impose fines

By Deborah Goonan, Independent American Communities

 

Another week, another report of HOA lunacy. The latest story comes from Seven Oaks Property Owners Association (SOPOA) in Wesley Chapel, Florida.

According to a report by Kendra Conlon, WTSP, SOPOA’s management company Associa, working with an attorney from Bush Ross, is now threatening to foreclose on the home of Joe DiVierde, over a $1,000 fine for not painting his mailbox.

WTSP reports that Bush Ross says it mailed notices of violation and late payment, but DiVerde has been able to prove that the HOA letters went to the wrong address – that of his ex-girlfriend, who moved out of the home in 2014. However, because DiVerde did not paint the mailbox and pay the fine pursuant to previous notices, Bush Ross is now demanding $1,818.94 , and has placed a lien on the property, giving the SOPOA the option to foreclose, unless the parties can agree to a settlement.

WTSP also notes that Bush Ross is the same law firm that foreclosed on the property of Luis and Tina Lopez in Riverview, over a single missed annual POA fee of $150. (If you missed that story, see here, here, and here.) After more than a year of incredible stress and several trips to court, Bush Ross dropped the foreclosure a few weeks ago, after Attorney Ryan Torrens, defense for Lopez’s, was able to prove that the HOA’s attorney failed to follow proper court procedure for filing the payment plan.

Here’s the latest report about Seven Oaks homeowner Joe DiVerde.

HOA could foreclose on home over unpainted mailbox

Kendra Conlon, WTSP 6:14 PM. EDT June 23, 2017

Paint your mailbox, pay a $1,000 fine or we’ll foreclose on your house.

That’s the message a Wesley Chapel homeowners’ association is sending to homeowner Joe DeVirde.

The problem is DiVerde says he didn’t get the notice, until it was too late. Now, an address mix-up and some chipping paint could cost him his home.

“Basically what this comes down to is my mailbox,” says DiVerde. Diverde never imagined his mailbox could cause so many problems.

“It’s pretty insane. It’s unreal,” says DiVerde.

Associa, the property management company for Seven Oaks subdivision, believed his mailbox needed painting and sent out a warning notice last August.

It would’ve been an easy fix, but the letter went to DiVerde’s ex-girlfriend, who hasn’t lived there in years.

Read more (Video):

http://www.wtsp.com/news/local/hoa-could-foreclose-on-home-over-unpainted-mailbox/451655455

 

Now let’s delve into the details a bit.

First of all, if you watch the WTSP video closely, or check County public records (as I did), you will note that the fine has been assessed with regard to a commercial vehicle being parked in the driveway. The mailbox paint was indeed another issue addressed, as seen in the WTSP video, but it does not appear to be the official source of the $1,000 fine as noted in SOPOA’s lien against DiVerde’s property.

Here is a screenshot of the Pasco County public record of the lien filed. By H. Web Melton III, Esq. of Bush Ross on February 24, 2017:

 

Now, whether a $1,000 was imposed due to chipped paint on a mailbox or parking a pickup truck painted with a business logo in the driveway, it’s still pure lunacy. (You can see the truck in question backing out of the driveway in the WTSP video.)

Neither one of these restrictive covenant (CC&R) violations is likely to reduce property values. And the amount of the fine – $1,000 – is arbitrary in relation to the nature of the offense.

Horrors! A neighbor might have to look at DiVerde’s vehicle that he uses to earn a living! There goes the neighborhood! 

Regardless of the nature of the violation, according to DiVerde, SOPOA admits that more than one written notices were mailed to the wrong address. That means DiVerde was not proeprly notified of the violation or any money owed until he received the notice of lien at the correct address.

And while DiVerde has been trying to sort out this mess, additional interest and attorney fees have been piled onto the disputed debt. The total now stands at more than $1,800.

 

How unpaid fines morph into past due assessments

Notice that the lien lists a $72 annual assessment payment that is past due. How did that happen?

Is DiVerde a “deadbeat,” to use the vernacular of many in the association management industry?

Probably not.

It just so happens that I have written a previous article explaining how Florida Statute  uses a priority of payment scheme to apply partial payments to interest, fees, and costs before applying any payment toward the actual assessments due. Combine this draconian law with delayed written notice to the homeowner, and you can see that when DiVerde paid $69 for the annual assessment (as seen on the WTSP report…apparently DiVerde did not know that the fee increased to $72 for 2017), that money went to pay interest, late fees, and attorney fees first. There was no money left over to pay the current assessment due, let alone the disputed $1,000 fine.

And, of course, once the assessments become past due, an association governed community can file a notice of lien after 60-90 days, depending on their official collection policy.

 

Now the reader may be thinking, “is this priority of payment scheme legal?” And, incredibly, the answer is YES, according to FL Statute 720.3085. 

And this is exactly why Legislative reform is necessary.

Meanwhile, DiVerde may be forced to seek legal counsel to get the foreclosure lien removed from his property, due to the fact that he never received proper notification and, presumably, an opportunity to resolve the issues before the homeowners association filed the lien.

(Note: Laws governing priority of payment for HOA assessment collection differ in other states, but quite a few have Statutes very similar to Florida’s.)

Is this extortion?

Have you noticed a common theme? Like the Lopez family, DiVerde is likely to end up paying interest, late fees, and attorney fees, just to get his HOA to leave him alone. Yes, the total amount due might be negotiable. According to WTSP, Attorney Torrens negotiated that the HOA cut their fees in half for the Lopez family.

But that begs the question: if the Association erred in its bookkeeping, invoicing, or notification, why should homeowners have to pay off the HOA attorney to save their homes?

How do association-governed community organizations benefit from fleecing their members? The answer is, they do not benefit. Instead, HOA collection attorneys benefit. Also, perhaps management companies benefit from service fees earned for mailing violation notices, if that happens to be part of the contract.

 

Seven Oaks is a CDD plus a POA

Seven Oaks Community Development District is a local government entity.

The Seven Oaks Community Development District (The District) is an independent special purpose unit of local government established pursuant to and governed by Chapter 190, Florida Statutes. The district encompasses roughly 2.75 square miles of land, and is home to over 3,500 people!

The District includes thousands of homes, several large businesses, apartment complexes, office parks, and at the center of the community, a 4.5 million dollar recreation center owned and operated by the District.

Exercising its powers as a local government, the District uses an operation and maintenance budget of approximately 3.5 million dollars per year to operate and maintain common areas, recreational facilities, public roadways, storm water management systems, street lighting, landscaping, public amenities and more. To finance the District’s budget and bond repayments, a non ad-valorum tax assessment is collected along with other property taxes each year.

The Seven Oaks Community Development District is governed by a five seat Board of Supervisors who all reside within Seven Oaks and are elected by voters residing in the community. Each Supervisor serves a four year term.

Source: http://www.sevenoakscdd.com/about-us/

In other words, the POA exists only to provide a nonessential function – enforcing the CC&Rs and Architectural Standards.

All the important maintenance functions are handled by the CDD.

The POA’s prirmary mission is to find violations and eradicate them. Of course, this provides a perverse incentive for POA service providers – management companies and attorneys – to abuse the association-governed community’s legal right to impose fines by way of a unilateral procedure, bypassing traditional judicial due process.

Quite often, the people on the board / violations committee team are the ones who decide to impose a fine against a homeowner or resident. However, common sense tells us that these people are likely to be biased, particularly if they happen to know and dislike a particular homeowner.

Add to the equation a manager or attorney that is likely to personally profit from imposing a fine, and you have the perfect recipe for abuse of power.

I leave the reader to ponder: why should HOAs be allowed to impose fines?