New HOA laws deserve support
August 11, 2013
Florida just made the job of a homeowner's association board member a lot tougher — and that's a good thing.
A new law that took effect this month requires more transparency, accountability and professionalism from the state's 14,000-plus HOA communities. And it holds to a higher standard those volunteers who serve on boards of directors — owners who can wield a lot of power over their fellow neighbors.
Board members set monthly fees, dole out fines and control community budgets. At their whim are other owners who have spent a lot of money to buy into a neighborhood and invest in a community's common areas, such as roadways and golf courses.
Requiring more from board members puts HOA law more in line with those that govern condominium associations and better protects homeowners. Highlights include:
Transparency: The new law requires HOA directors to submit the association's financial information to the Department of Business and Professional Regulation, which collects similar data from condo associations. Critics complain that making their financial ledgers publicly available will compromise their negotiating power with vendors. "People do not need to know the wealth of any community or lack of wealth," Patti Lynn, president of the Broward Coalition, a non-profit roundtable of homeowner and condo boards, told Sun Sentinel reporter Scott Travis. But condo associations have made it work. Some condos already post their budgets in clubhouses.
Accountability: The state now bars any board member from serving if he or she has been charged with felony theft or embezzlement from an association. Who can argue with keeping a fox from the hen house? Besides, a wrongly accused board member may return to office upon acquittal or after charges are dropped.
Professionalism: Practically any owner can serve on an HOA board with a winning number of votes. No experience is necessary. But the new law forces volunteers to get educated and attend certification courses. Classes help directors become familiar with laws that govern community elections, director meetings, competitive bid processes and more.
Serving on an HOA board should be encouraged, and congratulated. But there are good reasons to keep a tight leash on those who accept this duty.
Consider that in 2007, a Hallandale Beach condo community lost $3 million in a vendor kick-back scheme, pulled off by the association president and three cohorts. Last month, a condo president was caught using more than $148,000 in community cash to gamble at the Seminole Hard Rock Hotel & Casino in Hollywood. And earlier this year, an HOA president near Orlando resigned after it came to light he faced charges of fraud, grand larceny and theft. He left before he would have been forced out by HOA reforms that took effect this month.
Still, the new regulations are meeting some resistance. Critics fear they will lead to other changes, including an annual $4-per-year fee like that paid by condo owners to fund regulation and the office of an ombudsman. Frankly, paying a few dollars a year for such protection is a bargain. However, legislators should refrain from raiding condo state funds to cover budget gaps, as has happened in recent years.
The truth is there is room for further reform in HOA law. The state's Community Association Living Study Council, created by lawmakers five years ago, recommends limiting a board's ability to borrow funds or set up a line of credit without approval of members. The group also suggests expanding the jurisdiction of small claims courts to cover HOA disputes, sparing costly lawsuits. Others call for allowing unpaid fines to turn into liens for homeowners, as state law allows for condo owners. All are worthy of consideration.
Florida's HOA boards have long operated outside sensible regulation to the detriment of owners,
Now homeowners in shared communities have more protections, and more reasons to keep investing.