Illegal Hoa In florida

Hi everyone, I recently purchased a property in Florida, the president of the hoa owns 4 of the 6 units that make up the hoa. I called the hoa president to get details on hoa fees, by-law and such, she hung up on me 2x while stating she doesn't know about the sale, so she can only speak to the owner. while searching the state corporation website we notice that the hoa has been in ADMIN DISSOLUTION FOR ANNUAL REPORT since 2010. Today I got a letter from an attorney asking for 12 months of pass due maintenance fee pls $700 in additional fees, I've owned now for 2 months and was told on the closing statement that all fees were up to date. Base on what I was told by the other owner, it seems we have a president that does what she wants when she want. How should I Proceed to get copies of the by-laws, budget and what can be done if the association if not a legal Florida corporation?

Thanks for the fast reply, I didn't know they owned 2/3rd until after the purchase, these are investment properties and are all rented out to tenants, it seems she is more upset that the previous vp/Secretary sold the unit while she was away and she didn't get the chance to buy it. I had an attorney and title insurance so we are looking into that now. I don't want to pay $2500 in fees if its going directly to her pockets. I'll make a formal request for the by-laws and budget tomorrow and see what response I get.

lol, I'm so stubborn I wouldn't sell to her, I would sell anyone else but her, does her owning 2/3 give her 1 vote per unit or is it just 1 vote?

She has 1 vote per unit.

I'll add my 2 cents although this maybe too late. The selling realtor must supply you with a copy of the HOA bylaws. Failure to do so can void a selling contract. Also too, the HOA president has a duty to supply you with a copy of the bylaws upon request. I do believe they must also supply you with a bank statement as to the assets and expenditures of the HOA if you request it. I'm not a lawyer but I've purchased 2 properties one governed by a conda HOA, the other a single family home hoa.

Messy, messy, if you are not planning on living there I like Glen's suggestion. There are always other investment properties. Being stubborn may cost you in the long run.

Paul T

Larry,

I do agree that it is certainly more problematic than I initially posted.

As I understand it, an unincorporated association is not considered a legal entity. Only a legal entity may enter into contracts, etc.

However, just as the CC&Rs may require the Association to be incorporated, it's those same CC&Rs that creates the Association, authorizes it to enforce covenants and collect assessments and requires the member to pay the assessments. Therefore, incorporated or not, these things would still be authorized.

Again, as I understand it, not being seen as an "entity" in the eyes of the law should prevent the Association from filing liens, filing legal action or entering into new contracts. I say should prevent.

In reality, a service provider (landscape, trash, etc.) will likely enter into contract without checking the status of the Association. The clerk will likely file the lien without checking the status of the Association. As long as the bills are paid, insurance policies will likely be renewed. etc. etc.

However, if something goes wrong and issues are challenged in the courts, an unincorporated Association may have some problems (what type, I don't know as I'm not a lawyer).

Larry, you have/had owned corporations. Is my understanding on the "reality" of being administratively dissolved correct?

Tim

Yep. I agree, that would certainly be the crux of the issue.


I can certainly see that an argument could be made for either side.

For me, the basis of my understanding is the fact that some States do have and allow unincorporated Associations to exist and operate (collect assessments, etc.). Therefore, I am concluding that if an incorporated Association (xyz HOA, Inc) was administratively dissolved that the Association (xyz HOA), like other unincorporated Associations, would still be able to collect assessments, pay bills, etc.. However, Like you, I also know of no case law that would support my position.

Again, I can see an argument being made on both sides (what an interesting legal battle that would be).

I was able to find the following:

2008 Article from CA law firm: What is the difference between an incorporated HOA and an unincorporated HOA? (scroll about 1/4 down the page to see this section)

Tim

Carol,

I received both, a copy of the actual bank statement from the management company working for the Condo Association and a detailed copy of the budget from the single family home hoa.

Sell it and get out. If you choose to sue the HOA and you own the property then your suing yourself. If you don't own the property then you are NOT a member of the HOA and most likely don't have a case. I'd get out now and count yourself lucky.

yep thats what I plan to do, being that she own 4/6 units most the cost of the lawsuit would fall on her, I currently own the unit So i'm going to list it at market price. Since the hoa has first right of refusal If they dont want to pay market price i'll just leave it on the open market. I also have title insurance but i dont think they would cover the renovation made to the unit since purchase.

David,

Forgot to add, thanks for the update.

Often people will post, debate the advice offered and never provide feedback if the advice used turned out to be helpful or not. I just wanted to say your update is appreciated.

Tim

Florida Statute in regards to administrative dissolution:

607.1421 Procedure for and effect of administrative dissolution.

(1) If the Department of State determines that one or more grounds exist under s. 607.1420 for dissolving a corporation, it shall serve the corporation with notice of its intention to administratively dissolve the corporation. If the corporation has provided the department with an electronic mail address, such notice shall be by electronic transmission. Administrative dissolution for failure to file an annual report shall occur on the fourth Friday in September of each year. The Department of State shall issue a certificate of dissolution to each dissolved corporation. Issuance of the certificate of dissolution may be by electronic transmission to any corporation that has provided the department with an electronic mail address.

(2) If the corporation does not correct each ground for dissolution under s. 607.1420(1)(b), (c), (d), or (e) or demonstrate to the reasonable satisfaction of the Department of State that each ground determined by the department does not exist within 60 days of issuance of the notice, the department shall administratively dissolve the corporation by issuing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. Issuance of the certificate of dissolution may be by electronic transmission to any corporation that has provided the department with an electronic mail address.

(3) A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under s. 607.1405 and notify claimants under s. 607.1406.

(4) A director, officer, or agent of a corporation dissolved pursuant to this section, purporting to act on behalf of the corporation, is personally liable for the debts, obligations, and liabilities of the corporation arising from such action and incurred subsequent to the corporation's administrative dissolution only if he or she has actual notice of the administrative dissolution at the time such action is taken; but such liability shall be terminated upon the ratification of such action by the corporation's board of directors or shareholders subsequent to the reinstatement of the corporation under ss. 607.1401-607.14401.

(5) The administrative dissolution of a corporation does not terminate the authority of its registered agent.

Basically, from my understanding, the HOA cannot do anything except pay their debts and notify people of outstanding and notify claimants of their situation. The board member would then become personally liable for the HOA expenses, and being that since it has been in dissolution since 2010, I would say that the owner is in a pretty precarious situation.

Sure you can sue, but if you want to be stubborn there is another option. If your covenants and restrictions explicitly state the name of the HOA as the HOA of the neighborhood and does not clarify how many votes a property owner receives, because the company has been dissolved for over 2 years you could legally register another corporation by that name and take control of the neighborhood writing the Articles of Incorporation and by-laws that individuals with multiple properties only receive one vote.

617.1422 Reinstatement following administrative dissolution.

(4) The name of the dissolved corporation is not available for assumption or use by another corporation until 1 year after the effective date of dissolution unless the dissolved corporation provides the department with an affidavit executed pursuant to s. 617.01201 authorizing the immediate assumption or use of the name by another corporation.

(5) If the name of the dissolved corporation has been lawfully assumed in this state by another corporation, the department shall require the dissolved corporation to amend its articles of incorporation to change its name before accepting its application for reinstatement.

Yep, I agree that that was bad advice.

It was corrected in a different thread but never applied back to this thread. Thank you for correcting that for any future reader. FL law, specifically 720.3085 2(b), allows the Association to collect any unpaid assessments that accumulated prior to the sale from the new owner. It is then the new owners responsibility to collect from the previous owner. This is unique to FL (thankfully).

David,

If they don't recognize you as the legitimate owner, will they recognize your sale to anyone but them as legitimate? I would hate for another person to be dragged into this nightmare.

I would definitely find a way to prevent them from foreclosing on you.

If this lady wants all the units, she needs to just buy them and make it an apartment complex. What a jerk.

With all due respect to how frustrating your situation has been for you, registering their INC name is nothing but an annoyance; it doesn't in any way hamper their powers as an association. They can just register a different corporate name and in the interim (before they register a new name, prior to them amending their docs to reflect the new name, etc) their operations are not hamstrung by the transition or lack of INC. Yes, they are required to be a corporation, but just because a period lapses doesn't make them powerless and, more importantly, it doesn't erase YOUR personal liability to that debt or your obligation to abide by their convenants. Sounds like you guys are now just in a good 'ol fashioned peeing contest.

Off to court we go, I listed the property for sale and got an offer, once the buyer call the Hoa to get an estoppel letter, they informed my buyer than i'm being sued due to violation of the first rights of refusal clause in the by-laws. A few days later we got served. I'll updated you guys with more info as the case progress, hopefully we get it dismissed on grounds of an illegal board.

The board is made up of husband wife and son, i'll mention to my attorney about petitioning the court. so far our defense is 1. The previous seller did give proper notice of sale, 2.selective enforcement, we found several items in the by-law that's being violated by all 3 board members.

Those clauses are actually rather common in Florida, and definitely enforceable as long as they were properly enacted. I've even seen some that have a first right of refusal for all tenancies. I find them to be way too restrictive, but I come across them often.

Selective enforcement generally only becomes a defense when a single covenant is only being enforced against some residents and not others, not in cases where certain bylaws are being enforced and others are not; the latter situation generally just renders those provisions unenforceable, for the most part. But you have counsel, so I'm sure they're making the best arguments they can.

Good luck with your situation!

So could you call the HOA's bluff? Arrange a sale for X amount and see if the HOA moves, and if not then go to the real buyer and "negotiate" a price less then X.

Kevin

Not that I agree with right of first refusal.

This tactic will not work as the approval would be a sale to John Smith as per the contract. You could not then switch to selling to Harry Jones. You would need a new contract and new approval.

Ah. I just meant in general but I am interested in hearing any conclusion for this situation.

UPDATE: we went to mediation and they settled, it ended up costing me almost 7k in attorneys fee. We both agreed to drop all lawsuits and move on, In the end it was worth fighting as this president was being a bully and wanted the unit. I had to pay all the back hoa fees and special assessments that took place while I owned the unit.

Mediation itself is actually not that expensive at all. Most mediators charge somewhere around $150-$250/hr and it goes usually for 2-4hrs. Now, most people hire attorneys for mediation which of course balloons the cost as they're going to spend several hours getting up to speed on the case, draft a pre-mediation statement, then prep for and attend the mediation, all at $250-$300/hr. But there's no requirement to have an attorney; in fact, one could argue mediation is meant to be done INSTEAD of having to hire an attorney. That $10k figure has no basis.

To the OP... glad you got your situation resolved. Sorry to hear it cost you $7k.

This is an old thread but to add:
President/VP - ok
Secretary/Treasurer-ok
President/Secretary-not OK

I know of a lawsuit that got thrown out of court when it was discovered that one of the parties was not a valid corporation.