The firm’s latest Miami Herald column was authored by shareholder Gary M. Mars and appears in today’s edition of the newspaper. The article, which is titled “Real Estate Counselor: Owners’ Gripes Over Legit HOA Budget Increases Prove Detrimental,” focuses on a scenario that is becoming increasingly common at South Florida condominium associations and HOAs. Gary writes that highly effective and scrupulous directors are being subjected to unwarranted accusations and mistrust by unit owners who become frustrated over necessary budget increases and special assessments, causing a great deal of discord and disharmony that often exacerbate associations’ financial strains while also diminishing community appeal and property values. His article reads:
. . . Many South Florida community associations have been forced to increase their annual budgets and dues to account for today’s economic conditions, including rises in insurance and staffing costs. Some have also had to enact special assessments to raise funds for specific immediate needs, such as new roofs, elevators, HVAC systems, etc.
Associations are bound by Florida law and their own governing documents to maintain such common elements.
If they have waived the funding of reserves in the past and are unable to pay for such repairs/replacements when they inevitably arise, special assessments possibly combined with lender financing represent their only options for securing the necessary funds and beginning the work as expeditiously as possible. Boards of directors are simply left with no other recourse and must implement such assessments to meet their duties to the communities they serve.
For owners, especially those who have not been taking part in association meetings or matters, such significant increases can appear to be coming out of the blue. It is only natural for them to exhibit frustrations and concerns, especially if the new dues will cause them serious financial hardships.
However, once all the questions have been answered and an increase is shown to be completely necessary and in order, some owners continue to sow dissent by spreading false accusations of fraud and improprieties. They refuse to accept the realities of the situation, which has often been caused by the decisions of prior boards of directors to waive reserves and forgo needed repairs.
Sometimes such owners will band together with like-minded neighbors and begin stoking the community rumor mill with their false allegations of malfeasance against the current board members and/or property manager. Based on nothing more than the notion that such an increase cannot be rightful and correct, they will campaign to vote the current board members out and elect new directors who promise to somehow curtail the added costs.
Some even take it one step further by calling or emailing their favorite local news station to share their allegations, presumably in an effort to bring public exposure to bear against the purportedly unscrupulous directors. They will provide journalists with interviews making their unsubstantiated claims about their suspicions of fraud and abuse at their community, and the end result is typically a news report that casts it in a very negative light.
Such reports are likely to end up being among the first items that appear in internet searches under a community’s name for long periods of time. They will serve to steer many real estate brokers and potential buyers away, thereby driving down the property values for the owners who secured the news coverage as well as all their fellow neighbors.
Ultimately, dedicated board members and association management/professionals will be forced to devote significant time, energy and resources responding to completely baseless and unfounded allegations. These volunteers and professionals are often appalled by the temperature of the upheaval simply for doing their jobs, and sometimes great board members move on from their posts as a result to the detriment of the communities they serve. . .
Gary concludes his column by noting that major special assessments for necessary repairs/replacements can cause severe financial strains, but unit owners must be cognizant of the realities that are now unfolding at some enclaves as a result of significant shortfalls from past years. He writes that obstinately refusing to accept necessary adjustments and resorting to baseless claims of financial shenanigans by board members and/or property management can take a significant toll on associations and make difficult times even worse.
Our firm salutes Gary for sharing his insights into this growing concern for South Florida community associations with the readers of the Miami Herald.