Monday, March 13, 2017

State lawmakers from Miami-Dade submit condo reform law | Miami Herald

State lawmakers from Miami-Dade submit condo reform law | Miami Herald: "After decades of struggling against a condo regulatory system that experts say perpetuates impunity and makes it easy to commit fraud, thousands of condominium owners in Florida may finally see substantial changes in state laws.

Earlier this month, state senators and representatives from Miami-Dade filed a bill that includes 21 reforms to Chapter 718 of the Florida statutes. The reforms seek to correct gaps in the laws and establish criminal penalties for some irregularities in the administration of condos.

The plan classifies falsification of documents, an offense that now carries no legal consequences, as a third degree felony and sets prison terms. It also criminalizes electoral fraud, such as the falsification of signatures on ballots for condo boards of directors, and refusing access to administrative records with the intent to cover up crimes.

The proposal came one year after el Nuevo Herald and Univision 23 published a series of investigative stories on condo abuses in South Florida
, like electoral fraud, falsification of signatures, conflicts of interest, embezzlement and cases of fraudulent bidding.

The series also exposed the lack of enforcement by authorities, from local police departments who refused to investigate allegations of fraud, to widespread negligence at the state agency in charge of enforcing condo laws and regulations and investigating complaints."


HOAs and condo association private governments are vulnerable to embezzlement and fraud, as well as election fraud and manipulation, because in many situations there is virtually no oversight of their actions. Often only a handful of owners are even paying attention to what the association is doing, there is no public disclosure of finances, and state and local governments rarely take an interest in financial oversight of associations. Obviously there should be criminal penalties for fraud and embezzlement, and local prosecutors should take these cases seriously instead of telling people to to away and file a civil suit. But the threat of criminal prosecution alone won't solve the problems. There need to be other incentives, such as some form of mandatory public disclosure of association finances--not just to people who have already signed a contract to buy, and more free or low-cost education programs for all owners.

Also, we need to keep in mind that the rule of law only works in any society if  99% of the time arrest and prosecution are unnecessary.  Informal norms have to govern people's behavior so that they behave legally without having any contact with enforcement authorities. Most of the time that is true of association directors and officers, but if we want to improve this situation then a lot more sunlight on association finances is necessary.


robert @ colorado hoa . com said...

“It also criminalizes electoral fraud”

So H.O.A. election fraud isn’t actually a crime in Florida!? Where have we heard this before? Oh yes, on this very blog , about five years ago (06/04/2012):

“But in response to the scam, the Legislature has made it a felony to fraudulently alter the results of an HOA election.”

“How's that for a lack of oversight? Until recently, it wasn't a crime in Nevada to rig an HOA election.”

At this rate, H.O.A. electoral fraud should be illegal in the remaining 48 states by the year 2257.

For those unaware of the Nevada scandal, there were 38 guilty pleas, 4 convictions, and the mysterious deaths of 4 witnesses in that federal investigation of H.O.A. voting fraud. The first suspect to plead guilty was Steve Wark, former chairman of the Nevada G.O.P.

IC_deLight said...

... and what industry trade group fights tooth and nail against disclosure and access to records? CAI. Management companies lobby through CAI to try to prevent owner access to records. One might ask why CAI wants to maintain an environment that is conducive to fraud, embezzlement, and other similar schemes.

robert @ colorado hoa . com said...

“It also criminalizes electoral fraud”

It will be interesting to see how far this goes in a state where the Republican Party controls the legislature and the governorship. Although Republicans have policy proposals to combat electoral fraud — whether real or perceived — in public elections and labour union elections, they have nothing but praise for H.O.A. elections, holding them up as fair and just models of how a democracy should function.

This pollyannaish attitude by conservatives (and libertarians) prompted some guy named Evan McKenzie — you may have heard of him — to write that

I get so tired of hearing all the free marketers and industry flacks talking about how HOAs are local democracies.” (06/21/2008)

and that

Many CID elections are straight out of a banana republic” (06/22/2008).

robert @ colorado hoa . com said...

Evan McKenzie posted…The plan classifies falsification of documents, an offense that now carries no legal consequences” … “But the threat of criminal prosecution alone won't solve the problems” … “we need to keep in mind that the rule of law only works in any society if 99% of the time arrest and prosecution are unnecessary.

In 2005, the Colorado legislature enacted SB 05-100. One provision concerned H.O.A. elections, and required “the use of secret ballots for all board member elections and, at the request of one or more owner, for votes on other issues for which the owners are entitled to vote.” The H.O.A. law firm HindmanSanchez celebrated the lack of enforcement provisions on its “HOA Legi-Slate” blog (January 24, 20016):

Colorado is not alone in its requirement that board member elections take place by secret ballot. California not only requires a secret ballot to be used for board member elections, but section 1363.03 of California's civil code goes into great detail on how this should be done. This law outlines the procedure for associations to use for directed proxies and mail-in ballots in a secret ballot election. Colorado board members may find the described procedures helpful in determining how to conduct their elections using secret ballots. This detailed Californian law is illustrative of the current trend of state legislators to manage many of the details of association operations that are arguably best left up to the board. While helpful as suggested methods of implementing secret ballot requirements, we in Colorado should feel fortunate that our legislature still has trust in our state's board members to comply with the new requirement.” (emphasis added)

which prompted reader Lucius Day to observe

That's strange. We don't ‘trust’ the states motorists to observe the speed limit in school zones or to stop for stop signs unless they know there is a good possbility of being ticketed. Why should there be any expectation board members will comply with any requirements that are inconvenient or frustrating.

Michael D. Dake said...

I like the comment "more free or low-cost education programs for all owners"

What organizations, if any, are currently providing this education? I agree that the average consumer has no idea what he or she is getting into when buying into association-governed property. I would like to be part of the solution. Where do I sign up?

robert @ colorado hoa . com said...

Florida Owners Enraged With Last Minute Change to Proposed Law

In a last-minute change to the proposed Florida condo law reforms, lawmakers leading the project eliminated criminal penalties for association managers who refuse to hand over documents to which the owners are entitled.

The move sparked the ire of some condominium owners and activists who believe that sanctioning should be the most important part of the reforms.

“We return to the same and consider it a lack of respect, after we were hopeful that we would finally have the law on our side to fight against fraud and corruption,” said Maryin Vargas, owner of a Miami apartment and leader of the Reform Florida group. “That punishment would be the first step.”
. . . .