web site notice: this section will be undergoing major revisions as content is added. August 14, 2011.
"Since HOAs are very local and small, participants are often neighbors
and hence have incentive to settle disagreements in a civil manner."source: "Free-Market Alternatives To Zoning" Independence Institute. February 28, 2009.
Here are a few "isolated incidents" of H.O.A. corporations exercising their right to the property of their mandatory members.
As time permits, I will be adding stories to this page.
Until then, see Keith Jarrow's "Are HOA Foreclosures A Necessary Tool Or Extortion Racket?" (July 2010) for more examples.
Michael Clauer. 2008 - 2010
While he was commanding over a hundred men in Iraq during the war, Captain Michael Clauer's H.O.A. foreclosed on his $300,000 house -- which was paid for free-and-clear of a mortgage -- over an $800 dispute. Click on "Walter Duranty" in the side bar for more details.
Darin and Michelle Roberts. July 2011.
The developer never reported the sale of the house to the H.O.A., so the new homeowners -- Darin and Michelle Roberts -- were never billed for association dues. Five years later, the H.O.A. sends them a retroactive bill for nearly $975, which they didn't have at the time. The H.O.A. started piling on lawyer fees until the bill was over $6,000. Because if a homeowner doesn't have $975, it makes perfect business sense for an H.O.A. to add thousands of dollars in additional fees.
More than five years after they moved into a new home in Ranlo, Darin and Michelle Roberts got a retroactive bill for homeowners association dues they’d never paid, but apparently never knew they owed.
That was in 2009.
And two years after ongoing legal discussions and failed payment arrangements, the couple and their two children are boxing up their belongings and preparing to move. The Mountain View HOA board foreclosed on their house in April, and sent a notice July 11 that the family had 10 days to vacate.
Michelle Roberts says her family fell victim to an HOA board that refused to recognize the financial hardship they were experiencing. The board held them to unfair expectations of paying not only the original dues that were in arrears, she said, but also the charges that mounted from attorney hours, court filings and assessments.
Additional fees have taken the $975 they originally owed for HOA dues and mushroomed their debt to more than $6,000. It’s money they don’t have, she said.
. . .
HOA dues in Mountain View are $175 a year. But the HOA board realized in early summer 2009 no dues had been paid since the family moved in. That’s apparently because the house was built by the now-defunct company KB Homes, which built some lots in the subdivision but never reported the sales of the homes, Sellers said. So an annual bill was never sent to 104 Ranlo Ave.
“Often builders are exempt from assessments, so they’re not paying,” he said. “So until the association or manager gets notice from the builder that the home has been sold, they have no reason to know someone’s in there and should be paying (HOA dues).”
Roberts said she and her husband were shocked to learn they owed $975.
. . .
The two parties worked out a written payment installment agreement that led to the foreclosure being dismissed.
But by that time, the filing fees and associated attorney costs had jacked the Roberts’ debt up to some $3,000.
Roberts said she and her husband were frustrated by the additional costs they incurred. Each time they requested a new payment plan, they were charged $45. Fees for the filings and the work done by paralegals and attorneys mounted.
“It’s like they were saying that $888 we had to beg, borrow and steal to get to them was a drop in the bucket,” she said. “The attorneys are billing you every time they do anything.”
. . .
Jim Lane. August 2011.
The Gilead Ridge H.O.A. began foreclosure proceedings against Mr. Lane, who ended up paying the fine to avoid losing his house.source: "Local Man Wants To Limit H.O.A. Powers" Herald Weekly (Huntersville, North Carolina). August 4, 2011.
The trouble started when Lane planted flowers in the corner of a small park within his neighborhood, a violation of his homeowners association rules. He felt the flowers would spruce up the park, which he viewed as unsightly and unkempt. But the board of the association disagreed and fined Lane $100 with a $100-a-day late penalty.
“When I was fined for planting flowers in the common area across from my home, I thought it was a joke,” Lane explained.
That initial fine blossomed into a bill of more than $9,000, including attorney’s fees when the homeowner’s association placed a lien on his home for not paying the fine."
Robert Tankel is an attorney
who represents more than 500 H.O.A.s in Florida. He specializes in
foreclosing upon homeowners, and selling the homes to business partners who then rent out the homes without
paying the mortgage lender. Eventually, the mortgage lender forecloses
upon his clients, but that is a process that can take months or years.
During that time, Mr. Tankel and his partners are making a profit by collecting rent from
the homes he foreclosed upon."It's called capitalism. It's the free market." said Mr. Tankel of his business.
Kris Hundley and Susan Taylor Martin of the St. Petersburg Tampa Bay Times did a series about his practice in the summer of 2011.
In just eight months, Barry Haught and his business associates have acquired 71 properties in Hillsborough County with a market value of $8.2 million.
Total purchase price according to public records: just over $220,000.
Haught's group is among a new breed of investors who have found an unusual niche: buying properties foreclosed on by homeowners associations because the residents didn't pay their dues. Given so many struggling homeowners and the abundance of HOAs in Florida, the potential for profit is great.
. . .
"We're the new way of buying and selling real estate," Pruse said. "We're an epidemic."
And it's all perfectly legal.
. . .
Florida has 40,000 homeowner and condo associations, many of them struggling to pay for even routine maintenance because so many owners have fallen behind on their fees. As a result, lawyers are advising associations to foreclose quickly to limit their losses.
. . .
Homeowners associations want to beat the bank to foreclosure, Tankel said, because a bank foreclosure usually wipes out the association's lien, leaving it with no way to recoup its delinquent fees.
In what Tankel calls "the race to the courthouse steps," associations have an advantage.Because most homeowners owe less than $15,000, associations can file their foreclosure cases in county court instead of circuit court with its higher dollar amounts and heavier caseloads. That way the associations can get a final judgment of foreclosure in as few as 270 days compared with the 617 days it now takes for the average bank foreclosure in Florida.
The time lag creates an opportunity for third-party investors like the Chanceys and Haught. Once a property goes to public auction, anyone has the right to bid. It usually costs just a few thousand dollars to cover the delinquent association dues, court costs and lawyers' fees. The winning bidder gets title to the home and can start looking for tenants.
If there are no bids at the auction, the association can then negotiate a private sale with a third party. The Haught-Chancey group has acquired about a third of its properties through such transactions, in which the price paid is not part of the public records.
"It's called capitalism,'' Tankel said. "It's the free market."
. . .
In another case, Tim McMurry, president of PowerNet Credit Union, said his staff was puzzled when a borrower who was current on his credit union mortgage called in April to ask why he had gotten a foreclosure notice.
It turned out that the notice was from the man's homeowners association. By the time he realized what was going on, his house had been sold. The buyer: Prop Inc.
The homeowner was just $890 in arrears to the South Pointe of Tampa Homeowners Association, but with interest, court costs, and attorneys' fees of $2,250, his total had spiraled to about $3,700. That's how much Prop Inc. paid for the three-bedroom, two-bath property in April.
Prop Inc. evicted the homeowner in early May and leased the house to Melissa Wollam, her two children and her mother. The family, who saw Prop Inc.'s rental sign on a street pole, were relieved when they got a year's lease at $1,150 a month without a credit check.
. . .
By buying homeowners association foreclosures and moving people into the homes, Pruse said investors gain so much leverage over lenders that they can practically name their price if they want to buy the property outright.
"Banks aren't in the drivers' position anymore," Pruse said. "The HOA's attorneys love us because they get paid (when we buy). But once we get in, the HOAs hate us because we control who moves in and out. They want 'pretend millionaires' instead of working-class people or a woman with nine children."
. . .
source: "Real Estate Investors Beat The Banks To Profit On Foreclosures" St. Petersburg Tampa Bay Times. June 26, 2011
source: "Experts: Pinellas Lawyer Takes Foreclosure Fight To Ethical Edge"
Pinellas County lawyer Robert L. Tankel advocates showing no mercy toward property owners who fall behind on their homeowners association fees.
"If you have to sue some people, that's life," Tankel advised associations in a YouTube video.
The pitch helped Tankel secure more than 500 association clients, some of which have gone after homeowners for as little as $239.50 in unpaid fees. The swift action allows associations to foreclose on the property, kick the homeowner out, and then collect rent from a new tenant or sell the homes to third parties.
Either way, the HOA gets its money and Tankel gets a fee, usually a couple of thousand dollars. Tankel has also offered to waive his legal fee if his clients sell their properties to a company he owns.
. . .
Homeowners associations have an advantage in that they can often foreclose much faster than banks. The time lag creates an opportunity for associations or third-party investors to rent out the property for months or even years before the bank finally takes back the property.
In a series of YouTube videos over the past few years, Tankel preached his "no mercy" message. His foreclosures have led to at least 20 owners in Hillsborough County losing their homes in recent months for less than $1,000 in unpaid assessments, according to public records.
. . .
Associations have increasingly taken Tankel's advice and foreclosed on owners who don't pay their assessments. The property then goes to public auction, where anyone willing to pay the delinquent fees, plus court costs and legal fees, can get title and start renting it out. If no one bids, the association takes back the home and can rent it out itself.
Tankel has offered another suggestion. In a March 2009 YouTube video, he said many third party investors are willing to buy the properties from the associations using what's called a quit claim deed.
"I get paid, the association gets paid and that buyer becomes responsible for the upkeep and the HOA fees," he said.
. . .
Tankel has also made offers to his clients to buy the properties himself.
"I own an affiliated business entity willing to purchase the property as is, pay all back assessment and the Firm will waive all attorney fees and costs,'' he wrote in a memo to clients last year.
. . .
Among those transactions was Clifford and Donna Kemp's house in Brandon.
The Hickory Lake Homeowners Association got a final judgment of foreclosure on the house in February. Clifford Kemp attended the March 11 foreclosure auction at the Hillsborough County Courthouse hoping to pay the lien and get title.
Before he realized it, the auction ended. The association took back the property for $100.
About a week and a half later, the Kemps said, Haught came to the house and told them they could stay if they paid him $1,375 in rent. On April 7, the homeowners association deeded the house to P&D Resources, the company Haught said he was with.
The Kemps thought it was odd that Haught acted as if he owned the house when he had yet to get title to it. Then they recall a remark he made when he first approached them in March.
"These were his exact words," said Clifford Kemp. " 'If you had bid (at the auction) I would have kept on bidding because it was stacked against you. This was already decided before we went to auction.' ''
The Kemps have hired a lawyer to help them fight eviction. It irks the couple that they may lose the house over an association judgment of $3,374 — $2,350 of which was for Tankel's legal fees.
St. Petersburg Tampa Bay Times. July 03, 2011.Walter Olson and Ted Frank, who run a web site called Overlawyered.com, self-described as "Chronicling the high cost of our legal system," have not reported on the house-stealing business model of Robert Tankel or any other H.O.A. lawyer. Ever.