Florida Statute 720 Amendment Needed

Started by JohnG9 • 8 replies • 3685 views

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JohnG9 (Florida)
Posts: 16

Posted:

My HOA is Developer controlled and has in the past 1-2 years violated FS 720 in the following areas:

1. Levied non-proportional assessments. Namely assessed 253 members an additional $30 and 31 members $0.
2. Has not uniformly applied the collection policy in the covenants.
3. Used money in the reserves for operating expenses.

The money from the reserves was replaced after the developer was confronted with the fact and potential criminal charges were implicated. The other 2 incidents were not resolved because the process for resolving disputes with a developer controlled HOA is costly and non-binding until a formal law suit is pursued, which adds more costs to the HOA membership.

The bottom line is that the developers know that pursuing this kind of unlawfull acts will probably not happen and therefore do as they wish with near impunity.

I'm looking to get FS 720 amendent to included binding arbitration similar to the Condo Association statute. I have found that there needs to be more than one voice in the dark. Members of my HOA will send e-mails/letters to our state representatives asking for help. Would any other HOAs be willing to send requests for help on this issue?

MaryA1 (Arizona)
Posts: 7,043

Posted:

John,

What do your docs say about applying assessments? Are they applied uniformly to each lot or do some lots pay may/less than others? I checked out the 720 statute and I don't see how it was violated based upon what you stated. Here it is for your ref:

720.308 Assessments and charges.--

(1) ASSESSMENTS.--For any community created after October 1, 1995, the governing documents must describe the manner in which expenses are shared and specify the member's proportional share thereof.

(a) Assessments levied pursuant to the annual budget or special assessment must be in the member's proportional share of expenses as described in the governing document, which share may be different among classes of parcels based upon the state of development thereof, levels of services received by the applicable members, or other relevant factors.

JohnG9 (Florida)
Posts: 16

Posted:

Mary,

Our covenants specify that there are 2 classes of member in the HOA, Developer and non-developer. The covenants further state that only the developer is exempt from assessments. The non-proportional assessment, i.e., $30 assessment was on 253 non-developer members. The 31 members not assesed were also non-developer members. What I did tell you was that the 31 members not assessed the $30 are lots owner a a builder and the developer is on the Board of that builder.

The other issue regarding non-uniform application of the collection policy also involves the 31 builder's lot. That builder owes about $40,000 to the HOA. The Board of Directors is going to write it off as bad debt without taking any action to try to collect the money.

Bottom line is this. The development I live in has 3 entities: The Developer, the Builder, and the HOA, each having a different name by virture of the Article of Incorporation file with the state. One person controls all 3 entities. That person does not and will not apply the provisions of FS 720 to the builder or the developer. That includes, annual assessments, special assessments, liens for non-payment, etc.

John

DonnaS (Tennessee)
Posts: 5,671

Posted:

John,
What is the "about $40,000 owed to the HOA from? The builder/developer according to your docs "is exempt from assessments. According to what you have posted so far, he is exempt. Builders are always the CLASS A members and members who have bought into the HOA are the CLASS B members. Once you have an official turnover, there will be only 1 class of members and that will be "B" the owners.

He must comply with this Statute however.

720.3086 Financial report.--In a residential subdivision in which the owners of lots or parcels must pay mandatory maintenance or amenity fees to the subdivision developer or to the owners of the common areas, recreational facilities, and other properties serving the lots or parcels, the developer or owner of such areas, facilities, or properties shall make public, within 60 days following the end of each fiscal year, a complete financial report of the actual, total receipts of mandatory maintenance or amenity fees received by it, and an itemized listing of the expenditures made by it from such fees, for that year. Such report shall be made public by mailing it to each lot or parcel owner in the subdivision, by publishing it in a publication regularly distributed within the subdivision, or by posting it in prominent locations in the subdivision.

(8) ASSOCIATION FUNDS; COMMINGLING.--

(a) All association funds held by a developer shall be maintained separately in the association's name. Reserve and operating funds of the association shall not be commingled prior to turnover except the association may jointly invest reserve funds; however, such jointly invested funds must be accounted for separately.

(b) No developer in control of a homeowners' association shall commingle any association funds with his or her funds or with the funds of any other homeowners' association or community association.

(c) Association funds may not be used by a developer to defend a civil or criminal action, administrative proceeding, or arbitration proceeding that has been filed against the developer or directors appointed to the association board by the developer, even when the subject of the action or proceeding concerns the operation of the developer-controlled association.

DonnaS (Tennessee)
Posts: 5,671

Posted:

John,
More info from the Statutes.

720.308 Assessments and charges.--

(1) ASSESSMENTS.--For any community created after October 1, 1995, the governing documents must describe the manner in which expenses are shared and specify the member's proportional share thereof.

(a) Assessments levied pursuant to the annual budget or special assessment must be in the member's proportional share of expenses as described in the governing document, which share may be different among classes of parcels based upon the state of development thereof, levels of services received by the applicable members, or other relevant factors.

(b) While the developer is in control of the homeowners' association, it may be excused from payment of its share of the operating expenses and assessments related to its parcels for any period of time for which the developer has, in the declaration, obligated itself to pay any operating expenses incurred that exceed the assessments receivable from other members and other income of the association.

Under #1,a. it says that the a share may be different among classes of parcels. b. says that the developer MAY be excused from payments for his parcels.

JohnG9 (Florida)
Posts: 16

Posted:

Donna,

The Developer is the Class A member. All other members are Class B. The Builder is NOT the developer. 31 parcels were deeded from the Developer to the Builder which made him a Class B member. It is the Builder who owes the $40,000. In fact, in 2006 the Builder paid his assessments, but not in 2007 and 2008. In addition, an amendment to the covenants redefined Developer to include any developer controlled bulders. In this case the Developer owns the Builder, therefore the builder is under the control of the Developer and now exempt from assessments. The amendmant does not, however, go in the arrears. Therefore the $40,000 is still owed.

John

JohnG9 (Florida)
Posts: 16

Posted:

Donna,

One more point of data. Many people, including members of this HOA, equate Developer and Builder as the same. They use the terms interchangeably. That is not the case here. As an example, the Developer is "Developer, Inc." and the builder is "Builder, Inc." Only "Developer, Inc." is exempt.

John

DonnaS (Tennessee)
Posts: 5,671

Posted:

John,
If there's a will, there's a way for them to slink out of the financial responsibility to the HOA. The sad news is that the Developers have been protected from lawsuits by the HOAs and many older documents still have that language in them.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By JohnG9 on 05/17/2009 12:27 PM
Donna,

The Developer is the Class A member. All other members are Class B. The Builder is NOT the developer. 31 parcels were deeded from the Developer to the Builder which made him a Class B member. It is the Builder who owes the $40,000. In fact, in 2006 the Builder paid his assessments, but not in 2007 and 2008. In addition, an amendment to the covenants redefined Developer to include any developer controlled bulders. In this case the Developer owns the Builder, therefore the builder is under the control of the Developer and now exempt from assessments. The amendmant does not, however, go in the arrears. Therefore the $40,000 is still owed.

John

John,

I believe it could be argued that the amendment is retroactive to the start of the HOA, unless it specifically states otherwise. IMO, the normal procedure IS for the builder(s) to be under the control of the developer. In many instances the developer is the builder.

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