HOA Board - Ignoring Fiscal Responsibility? What is next step? (Florida)

I'm looking for input as to who I should reach out to within Florida agencies to escalate the matter below. I'll try to be brief, but I want to try to share the pertinent details.

Our HOA Board is currently filled by members that the developer has designated. All the seats are filled by members who are officers within the developer. The HOA Chairman is direct report to the CEO of the developer. So as one would expect the developer calls the shots for now.

However, the community has a contract for internet service which the HOA Board is not adhering to, at least based on my understanding of the contract. I should also point out that the contract for internet services is with a company (GIG LLC) that is also tied to the developer CEO (he is principal of GIG LLC).

The contract clearly states that the monthly fee is $30/month (paid for in the assessments). There are stipulations as to what is allowed for increases such as increases in taxes and fees. The monthly cost jumped from $30 to $35 as reflected in our assessments.

I had asked the Property Manager for reconciliation of the cost (how it went from $30 to $35), he provided an explanation that was based on what the GIG LLC billed them. I requested an explanation as to how charges increased. After many emails back and forth I escalated this matter to the Chairman. The Chairman, after taking weeks to research the matter, responded that it was due to increase allowed by terms of the contract of 5% annually, that this was an accumulation of increase over the past 3 years. I provided information to the Chairman that the increase was not each year, but occurred last year and went from $30 to $35, well in excess of the 5% allowed (the increase is also only allowed if the internet provider has increased their price, so it is not just a blanket 5%). I had requested that Chairman provide proof of their review of the contract terms and current billing, which he said he'd get back to me.

Roll ahead several more weeks, and with constant reach out by me the Chairman then responded that the increase was due to upgrade that the community received, increasing the bandwidth rate. While the community had indeed received the upgrade, it came with an announcement from the developer that the upgrade was for free (I have emails and also have a link that the developer had posted with the announcement).

I shared this information with the Chairman and he was going to research this again. 3 weeks past and I followed up again and the Chairman told me he would get back to me soon. That's been 2 weeks.

It's been 3 months since this matter was initially escalated. It's clear that the HOA Board is ignoring the financial responsibilities by paying increased fees for internet without doing their own due diligence. Additionally, when this matter has been brought to them they have tried to pacify the inquiry my providing details that are just wrong.

While it's only $5 per homeowner, when you look at the number of homes involved it's some serious cash that GIG LLC is being overpaid. What is recommended next steps on resolving this matter?

Thanks in advance for any guidance and recommendations.

Hi, Robert. FS 720.309 says,

"Any contract entered into by the board may be canceled by a majority of the voting interests present at the next regular or special meeting of the association, whichever occurs first. Any member may make a motion to cancel such contract, but if no motion is made or if such motion fails to obtain the required vote, the contract shall be deemed ratified for the term expressed therein."

If your developer still controls the board and the majority of voting interests then the homeowners just have to live with it, I'm afraid. FS 720.309 also says,

"... any contract that ... is made by an association before control of the association is turned over to the members other than the developer, and that provides for the operation, maintenance, or management of the association or common areas, must be fair and reasonable."

I assume you're saying that a 16.66% monthly increase where the contract calls for a maximum increase of 5% is "unreasonable". I would agree with that. Unfortunately, with FS 720 Homeowners' Associations in Florida there aren't any Florida agencies that will help you in this sort of dispute. Your only recourse may be to file a lawsuit.

Seems a bit crazy that FL doesn't provide any recourse for homeowners when contracts are signed between affiliated companies and then terms of the contract aren't followed. So what then is purpose of any contract? Not shooting the messenger, thanks for your response.

There are provisions in FS 720 deal with conflicts of interest, such as your directors binding the HOA to a contract with a business they have an interest in. While not illegal, the conflict must be disclosed and the contract approved by 2/3 board vote. If the developer controls the board then that's not really a stumbling block.

FS 720.309 refers to FS 202.11 for definitions of "communications services" which, in my opinion, are somewhat convoluted. Regardless, HOAs may contract for bulk service and classify the cost as a common expense to be shard equally by all owners whether or not the governing documents provide for such services.

You can try the dept. of consumer protection or the state AG's office (both, in my opinion, worthless in FL when it comes to actually protecting consumers). It is an election year, though, so maybe ginning up some bad publicity might get somebody's attention.

LOL ... That is why when my mom was looking to potentially purchase a vacation home in FL I specifically stated to her if she purchased one with the developer still under control I would put my foot up her tail end. I would contend FL allows excessive developer control which in some other states would be considered potential real estate fraud. FL citizens need to fight for better rights for Owners and Secured Creditors.