State Senator Alan Hays proposes bill to reform homeowners associations

Article Courtesy of The Ocala Star Banner

By Bill Thompson

Published February 11, 2013

State Sen. Alan Hays has proposed a wide-ranging bill designed to curb abuse within homeowners associations.

The Umatilla Republican seeks to empower state regulators to investigate residents’ complaints about bad behavior by their developers or HOAs and, if necessary, punish the developers or the associations’ officers for violations.

The bill also offers other initiatives designed to address the commonly expressed grievances of homeowners under the management of an HOA.

Hays, whose district includes Summerfield and The Villages in Marion County, has long heard complaints from local homeowners about the ill-run operations of such groups, whether the community is still controlled by the developer or under an HOA board.

In an interview Friday, Hays credited Marion County residents with helping motivate him to adopt this cause, but added that their gripes were shared by people far beyond the county line.

“We have gotten many, many complaints from across the state, and I just felt it was time to put some fairness in the process” of governing HOAs, Hays said.

But his bill has split advocates for residents within HOA-managed communities who have been arguing for reform.

Under Hays’ legislation, regulators would be able to investigate complaints while the developer still controls the community. Once the development is turned over to the homeowners, state investigators would be limited to complaints about financial issues, elections and access to the HOA records.

The measure grants broad authority to investigators to obtain records and locate witnesses with relevant information about the complaint.

The state also would have the power to fine developers, the board, or its individual members up to $5,000 for each violation of the provisions of Hays’ bill, or any orders handed down by the agency.

Beyond the newly proposed regulatory powers, Hays called attention to other key features of the bill, including provisions regarding HOA elections, the creation of an ombudsman’s office and the establishment of a timeline for the developer to render control of the community to its residents.

Hays said he has heard residents complaining about developers not surrendering control when they are supposed to, or about board members misappropriating HOA funds or still on the board despite having a criminal past.

“That type of thing has to stop,” Hays said.

To do that, he wrote several other initiatives into the bill. For example, with the consent of 15 percent of the homeowners, the state could appoint someone to monitor the elections for HOA board directors. The bill also contains restrictions for voting by proxy and spells out conditions for electing board members.

Under Hays’ bill, candidates would be required to announce their bid 40 days before the election, would be automatically disqualified if they are delinquent on their fees or a convicted felon whose civil rights have not been restored for at least five years and would be elected only if at least 20 percent of the parcel owners participate in the election.

Hay’s bill also requires board members, once elected, to certify that they have actually read the rules they are supposed to enforce.

The job of the Tallahassee-based ombudsman will be to serve as the liaison between the state, the HOAs and the residents, to help resolve disputes within the communities and to implement a training and education program for both board members and residents.

The measure also establishes a network of mediators to hear disputes between residents and HOAs, and expands the conditions whereby residents may take control of their subdivision from the developer.

Hays proposes that the new regulators and their duties be funded by a $4-per-unit fee for HOA-governed communities with more than two lots.

And, the new authority would be reflected in the name of the oversight agency. Hays’ bill would add homeowners associations to the title of the Division of Florida Condominiums, Timeshares and Mobile Homes — an agency under the state Department of Business and Professional Regulation.

The agency already includes HOAs in its regulatory purview, but its jurisdiction is limited to arbitrating disputes over board elections and recall votes.

If the new agency comes to pass, Hays said he expects residents of HOA-governed communities to begin “unloading” their pent-up frustrations on the new regulators. Yet, he added, he has strong confidence in Secretary Ken Lawson, the top administrator of the Department of Business and Professional Regulation, to manage the workload.

Advocates for homeowners, however, are divided over whether the new agency will make a dent in the alleged abuse.

On its website, the Cyber Citizens for Justice, a DeLand-based group, is advocating Hays’ bill, which was modeled on a similar law affecting condominium associations, as the answer to settling problems faced by those in HOA communities.

“It is not fair that 1.4 million condo owners can call an 800 number and get their complaints handled, while about 2.5 million owners of properties located in HOAs must hire a lawyer and go to court for even the simplest of complaints,” the group notes. “Many associations waste outrageous legal fees in lengthy court battles, money that could be spent to cover regular bills.”

Hays’ reforms “will not cost the state of Florida a dime; but it will surely help to rebuild the reputation our state once had for being The Sunshine State,” the group maintains.

Hugh Haggerty of Ocala, who is part of the United Focus Group, a local organization devoted to promoting homeowners’ rights, said his group was disappointed Hays did not contact people in Marion County before introducing the bill.

Haggerty asserts that the bill would simply add more unnecessary bureaucracy, create loopholes for developers and doesn’t stop what his group refers to as “homeowner trafficking.”

The group maintains that developers saddle residents with costs that are ill-explained or unjustified and then exhausts the homeowners’ time and funding fighting the residents’ complaints.

“It does nothing to solve the problem,” Haggerty said.