Wednesday, April 25, 2012

Scott urged to veto bill requiring homeowners to make neighborhood repairs |

Scott urged to veto bill requiring homeowners to make neighborhood repairs |
In recent days, Gov. Rick Scott has received a digital flood of more than 1,000 emails opposing HB 1013, which would codify that homeowners are not entitled to an “implied warranty” for amenities outside their homes — damaged roads, driveways, drainage systems and the like. Many of the emails came from homeowners associations, which have amassed an organized campaign to keep the controversial law off the books. Scott received the bill last week and has one more week to decide whether to sign it.
This bill would stick CID owners with the bill for repairing and replacing faulty infrastructure bequeathed to them by the developer.  Of course, the reason cities approve and often require HOA housing is to have the developer build the infrastructure. The developer passes that cost on to the owners in the form of a higher purchase price, and the cost of maintaining it falls on the owners as well through their assessments. But what if the developer does a lousy job of building the roads or sewer system? A Florida appeals court in Lakeview Reserve HOA v. Maronda ruled that: 

"The sole issue for our review is whether a homeowners association has a claim for breach of the common law implied warranties of fitness and merchantability, also referred to as a 904warranty of habitability, against a builder/developer for defects in the roadways, drainage systems, retention ponds and underground pipes in a residential subdivision. We hold that it does and, accordingly, reverse."

Now that case is on appeal to the Florida Supreme Court. In the meantime, a helpful Republican legislator, Frank Artiles is flacking for the developers by pushing a bill that would reverse the appellate court via legislation and pre-empt the Supreme Court from affirming. 

If this bill passes, or if the Supreme Court reverses the appellate court, it will mean that owners are on the hook for all the risks associated with their private infrastructure--not just maintenance and the eventual cost of repair and replacement, but also the risk that it wasn't built correctly to begin with.


Tyler Berding said...

So let's see now, the local municipality and the developer conspire to make sure that the city has no liability for the infrastructure by dumping that on the individual owners. Then the state legislature goes a step further and immunizes the developer by taking away any legal recourse that the owners might have when the product fails. This is a rat you can smell from a mile away. Basically the Florida legislature is telling individual home buyers that it isn't enough to just buy your home--you have to continue to subsidize your developer by indemnifying him against all the mistakes he made when building the project. A transparent full-on developer's relief act if there ever was one. Is a wipe-out of liability for construction defects in individual homes on next year's Florida legislative docket? Don't be surprised. There is no logical or legal distinction between the warranty that is the target of this bill and every other developer warranty that presently exists on individual homes or condos.

Anonymous said...

It gets worse.
We (a number of homeowners) sued the HOA and developer and won - although the HOA and developer have appealed to the state supreme court.

The developer has since filed an indemnification suit against the HOA to recover the developer's attorney fees and any judgment assessed against the developer. You see the restrictive covenants imposed by the developer provide that the HOA shall indemnify the developer.

The developer and homeowners are members of the HOA, however, some members are better than others. The restrictive covenants exempt the developer from ever paying any assessments on its lots. The developer controls the HOA and thus had every ability to settle or otherwise bring the litigation to a halt.

In our case the litigation was to eliminate the developer's attempts to hold homeowners hostage to private utilities owned by or having a financial arrangement with the developer on the side. These utilities (water, gas) were economically unregulated and no one ever agreed to be a customer of these things into perpetuity. When the water stopped flowing and gas prices went through the roof, homeowners said "enough". The developer had been using its control of the HOA to prevent homeowners from choosing otherwise (e.g.,water via residential well or propane from own tank). By using the HOA, the developer caused the homeowners to incur huge litigation costs, lost at trial, and now expects the homeowners to also bear the burden of the developer's litigation expenses and any judgment against the developer via this indemnification suit.

Next time someone says "HOAs preserve property values" make sure to ask "for who" because it certainly isn't "for you".

Anonymous said...

"We (a number of homeowners) sued the HOA"

How can homeowners sue an HOA?

In October 2010, Tyler Berding told Shu Bartholomew that

"it's hard to divorce the interests of the owners from the interests of the association. Because by definition the association are the owners."

Suing your HOA is like suing yourself! It's so crazy it shouldn't be allowed.

Anonymous said...

"The developer and homeowners are members of the HOA, however, some members are better than others."

The original phrase is

"All animals are equal, but some animals are more equal than others."

Although written in 1945, George Orwell's "Animal Farm" did an incredible job of foreseeing the rise of common-liability communes (aka "communisty associatons" or "HOAs") in America 50 years later.

Many people think "Animal Farm" is a satire about Communism. And it is, since HOAs are the collective ownership of your private property. What the Soviet Union couldn't do to us with its tanks and rockets, we did to ourselves with fine print, legal fictions, private corporations, and lawyers.