President vs Prior Management company

Hello. I hope somebody can help us as we have a hot mess on our hands.

We own an investment property in a community in Miami, Florida. Other than an issue with roofs after a hurricane 10 years ago it's been a great investment. I will admit to never attending board meetings or even voting. Last November a fellow owner told us something was going on in the community that we should know about. Excuse our long explanation with details but here's the sequence of events:

Without warning, approval or communication the President removed the CAM in November of 2016 who had been running the property for over 10 years. He removed their bank access and hired some fly by night company with no experience.

When we asked around owners who live there said the president was spending money left and right without any kind of discretion or approval.

The new CAM was a terrible mess and somehow failed to communicate or transition well resulting in over 80k of maintenance checks now being due. We made repeated attempts to call but they would never answer so we visited their offices and were told that the community was now without funds.

The prior CAM sent a 5 page email to owners stating that the accounts were turned over with 190k prompting alarm and rumors.

We forwarded the email to the new CAM and demanded to see the last 5 months of financials. 15 days with no response we filed a complaint with the DBPR. It took the CAM 45 days to make those available. What we found was terrible. The new CAM was not depositing maintenance checks and pulling from Reserves. The statement from the old CAM that we had 190k in funds was not exactly true. There was 190k in funds, but we had a 160k loan but with an assessment reserve account with only 17k left.

A small group mobilized and filed over 10 DBPR complaints and started a Recall campaign to remove our board in attempts of removing the new management company and performing a full audit and possible criminal investigation. But Yearly elections were only a month away so the recall effort was put on hold.

6 owners in our group submitted candidacy and were accepted. However when ballots showed up none were on there . When confronted the CAM stated they were disqualified because they were delinquent in payments in the last 90 days. Suspiciously, the current board was fine.

The week before elections the DBPR responded saying they were investigating our elections. A group of 10 owners hired a lawyer and we managed to convince the CAM to postpone the elections. In place of elections the yearly meeting was held to discuss community concerns. In that meeting the CAM brought in a CPA who presented their own audit stated that in 2015 the community took out a loan for $280k that would be paid by assessments covering that same amount, but that the prior CAM wrote checks for in excess of $700k basically using the loan, our assessment funds and almost all our reserves. Our president claimed he was only signing checks and had no idea we were over budget.

In the meeting the CAM stated that their would likely be another assessment to cover the loan and help rebuild reserves. They also stated 80k in back dues would be sent to collections. There are rumors water and trash pickup payments are now past due. Additionally angry owners in the meeting complained that the CAM would never respond and about many new problems in the community now.

Hearing about the meeting the prior CAM sent another long email accusing our President of being responsible for the over spending stating he selected all contractors, negotiated all deals and signed all contracts and checks. He showed examples of jobs that would previous cost the community $5k recently costing $20k. The President is yet to respond to those allegations. Own new CAM and under pressure President agreed to pay for an independent audit.

Our new CAM still owes us access to two years of financials and contractor contracts.

Elections are scheduled for 2 months now.

DBPR will soon be contacting us about our CAM's failure to make information available to us in the legally required time frame.

As mentioned previously , we are in Miami, Florida. What legal options are available to us? Anything criminal or legal we can? Can we tap into any HOA insurance or get help if we think there is fraud? We don't have enough support yet to pay for a lawyer. The DBPR seems slow and limited.

I don’t think you can wait two months – if everything you said is true, this board (all of them) need to go as soon as possible. It’s great you’re getting help from the DBPR, but while they’re working on what this bunch did or not, you still need a competent board to make decisions on behalf of the community. This board isn’t that – they, like everyone else in the community, stood there and did nothing while the president did whatever he wanted. When they’re gone, the new board will need to consider if they need to take legal action against them, while they’re getting a handle on the money.

Have you read your documents to see if it addresses board recalls or how special homeowner meetings are called? You’ll probably need a certain number or percentage of homeowners to sign a petition to call a meeting – whatever it is, get your group together and start walking around the community.

By the way, you don’t need to get approval from the property manager to hold any meetings or elections– they work for the association, not the other way around. As long as you follow your documents, the board should call the special homeowners meeting and if they don’t hold it anyway. Be sure to keep the DBPR representative updated on your efforts because you don’t want to interfere with what they’re doing
There may been six people in your group who were ineligible to vote (the documents typically suspend voting rights of delinquent homeowners), but depending on the size of your community, that may not matter if everyone else participates. If those homeowners want to have a say in who gets elected to the board, tell them to pay up (they have that legal obligation regardless).

Brace yourself for fee increases (big ones) and special assessments (hopefully no more than one, but you may need a few) to get the money issues straightened out. You do need to pursue the $80K in delinquencies, so a review of your collection policies is probably in order – look at those with the association attorney to see what your best options are (yes, you may have to foreclose on a few).

You will need to ditch this property manager, so you’ll want to start by looking at their contract to see what they’re supposed to do vs. what they did, because it will probably be necessary to take legal action against them (if DBPR does that for you, hooray – especially if you get a settlement). The new board should check the Community Association Institute website and order some of their education materials on how to select a property manager. There are other materials covering a variety of HOA issues and best practices such as rules enforcement, selecting contractor and reserve studies (if yours is underfunded, you’ll probably need one so you can prepare the budget accordingly)..

I wish you and your community luck – things may get worse before they get better, but if this is what’s necessary for you to turn things around, get in, sit down and buckle up. Here’s the lesson you and your fellow homeowners are learning the hard way, so you’d better pay attention - when you live in a HOA, you CANNOT just pay your fees and go on about your business. This tends to be a bad habit among owner occupants and investor owners, so regardless of what the others do, I suggest you start attending meetings once in a while and make a point to get to ALL of the annual meetings so you’ll get to know the board and they will know you. In fact, you may want to consider running for the board yourself – it may mean a little more work for you, but you’re a homeowner and no one will care about your home more than you.

If you're a condo association FS 718.5012 says, in part, "Fifteen percent of the total voting interests in a condominium association, or six unit owners, whichever is greater, may petition the ombudsman to appoint an election monitor to attend the annual meeting of the unit owners and conduct the election of directors."

Are you a condo association? How many unit owners in all? You should petition for an election monitor. If your next elections are 2 months away the DBPR is probably not going to concern itself with complaints about previous elections.

What do you mean the recall fell short by "10 forms"? Do you mean votes?

Have people submitted their names to appear on the ballot at the upcoming election? Are they all paid up?

Keep records of everything that happens with regard to the election. Unfortunately, it's hard to keep an eye on all that long-distance and organize your fellow owners to take action, but there you are. Good luck. It's almost certain that you won't get the local authorities to press criminal charges.

JCPI

A recall is all well and good but as you have less than 60 days to Annual Meeting and BOD Elections, your best chance at gaining control is to concentrate on winning seats on the BOD. Assuming 1 of the present 3 is good and willing to rerun then you only need to capture 1 the remaining 2 spots. Worst case you need to capture 2 of 3 spots.

Recalls get nasty even when enough votes are there to do so, especially when someone hires an attorney to contest the recall. Put your efforts into winning seats on the BOD, not a recall.

Thanks! I'm a technology person and have documented everything I can in a forum. We have a way to SMS and email blast almost all owners and I'm working on way to allow them to easily e-sign and email or SMS the RECALL. The way the original recall signatures were collected was door to door and by phone and that apparently was not enough. We have unique challenges here... Tech savvy this community is not.