Homeowners need more legal resources to fight corrupt HOA boards

For many homeowners, living in a homeowner association (HOA) provides a sense of community and protection of property values. But in some cases, homeowners find themselves at the mercy of corrupt boards of directors who misuse homeowner funds and engage in unethical behavior. When homeowners try to fight back, they often find that they are unable to afford legal representation, leaving them with few options for recourse. As a result, it is crucial that laws are established to empower homeowners and enable them to investigate and take action against boards of directors who engage in corrupt practices.

The recent case of the Hammocks Community Association highlights the severity of the problem. In this community, several board members were arrested for stealing homeowner funds. But for years before the arrests, homeowners tried to remove the board of directors, only to face retaliation in the form of bogus fees, the suspension of owner rights and meritless lawsuits. When it finally reached a judge that acted, assessments had been raised 400%, millions of dollars had been stolen, and countless owners had been victimized. The situation was so extreme that the entire board was removed, and a receiver was appointed to take over immediately. We need to act now to ensure that the catastrophic level of corruption reached at the Hammocks is not necessary to get a court’s attention in the future.

As a senior partner at The Morgan Law Group, I represent community associations throughout Florida. I currently represent the Advisory Committee of the Hammocks and advise and assist them and the receiver on HOA matters. This has given me an inside look into the struggles that homeowners face when dealing with corrupt boards of directors in their HOAs.

One of the biggest issues that homeowners face is a lack of resources to effectively combat a corrupt board of directors. Numerous homeowners have sought legal counsel to investigate their board of directors, only to learn that they cannot afford legal representation. Even worse, if a homeowner loses the legal battle, they could face foreclosure, attorney’s fees, and court costs.

Depending on the circumstances, even Florida’s homestead exemption may not prevent foreclosure of an HOA lien.

The current system of dealing with corrupt boards of directors is flawed. On the one hand, homeowners cannot afford legal representation and fear retaliation. On the other, the corrupt board uses the owners’ funds to pay for their legal defense. Lawyers willing to fight an association for an owner are hard to find because there is no clear path to a contingency recovery of attorney’s fees.

The need for a change is evident. A law should be passed that empowers homeowners to investigate boards of directors suspected of stealing homeowner funds without fear of retaliation. If the owner prevails, all the owner’s attorney’s fees are reimbursed. If the owner does not prevail, fees would be awarded only if the owner’s claim was without substantial fact or legal support. This is the same standard to award fees when accusing someone of stealing under the civil theft statute. This would ensure that homeowners are not penalized for trying to hold corrupt boards accountable.

Additionally, legal fees should be permitted for the significant amount of legal work and investigation necessary to prepare and file the lawsuit, which is especially true in the case of a recall requiring the collection of sometimes thousands of recall ballots. Allowing legal fees for this work plus a risk multiplier would make it more feasible for attorneys to take on these cases on a contingency basis, which would make legal representation more accessible for homeowners to combat corrupt boards of directors.

The system should be reformed to ensure that the tragic level of corruption that occurred in the Hammocks never happens again. Homeowners should have the necessary resources to investigate corrupt boards of directors without fear of retaliation or foreclosure, and legal fees should not be prohibitive to seeking justice. It is time for Florida to take additional action to protect homeowners and their communities from corrupt boards of directors.