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The firm’s latest Miami Herald “Real Estate Counselor” column was authored by Michael Toback. The article, which is titled “Coverage of HOA’s Collections Efforts Over 20-Cent Shortfall Fosters Negative Image of Associations,” focuses on how a Volusia County community’s efforts to collect on a 20-cent shortfall became the focus of two local TV news stories that fueled the negative image of community associations for overzealous enforcement. His article reads:
Horror stories about life under the rule of a community association are not hard to find. New Florida laws governing associations’ imposition of certain fines were enacted this year and are now in effect, largely as a result of the negative image associations have developed for overzealous rules and enforcement. It is incumbent upon all associations to do their part to avoid fueling the prevailing narrative working against them, but it appears at least one Volusia County community and its board of directors did not get the memo.
At least that is the takeaway from a recent report by the Orlando ABC affiliate (www.wftv.com) regarding the Venetian Bay Homeowners Association in New Smyrna Beach. The report, which was a follow-up on a prior story that the station aired a couple of months earlier, focused on the board of directors’ decision to move forward with its collections efforts over a 20-cent shortfall in the payment of owner Carolyn Babcock.
The segment details how Babcock was paying the household bills for the first time while her husband was in a nursing home, which caused her to be late with the payment of her monthly HOA dues. While she ultimately paid the bill – including the association’s late fee – her payment was short by 20 cents, apparently because she missed a line item for that minimal sum in the detailed invoice.
Babcock says she went to the management office with 20 cents to try to pay the shortage, but they refused to accept a cash payment for an outstanding balance. The purported end result was that she received late charges of $30 per month for the next three months.
“I don’t feel that it’s right, absolutely not,” Babcock states in the report. “I said they can come and arrest me. Sorry, but who’s going pay $90 for a 20-cent interest?”
The station’s initial report ended with her indicating she would be appealing the fine, and its recent follow-up is about the association’s final decision. The association’s letter to Babcock reads:
“After much discussion with the board of directors, it has been determined that none of the outstanding fees will be waived and for fees to no longer accumulate, the balance must be paid within thirty (30) days . . . The board feels ample opportunity was given for payment and that it wouldn’t be fair to others who paid on time.”
The letter concludes by indicating the bills will continue, and the HOA will ultimately resort to collections efforts that could result in actions against her property.
While the Venetian Bay HOA and all Florida community associations have a right to charge late fees as provided for within their respective governing documents and the applicable Florida Statutes, that does not mean that an association should not exercise its reasonable business judgment in the application of such late fees, including taking into account what appears to have been an honest mistake by a dues-paying owner.
Directors have a fiduciary duty to act in the best interests of the communities they serve, and negative news reports such as the two that have now aired on this case undoubtedly shed an unfortunately negative light on a community’s image that could possibly adversely affect its homes’ property values. Plus, enforcing these fees by imposing a lien and taking Babcock to court would entail convincing a local county court judge that the $90 fee over a 20-cent delinquency and the ensuing foreclosure action was reasonable, which is an uncertain outcome for a potentially costly litigation.
Michael concludes his article by noting that Florida enacted new laws this year to stop HOAs from imposing pickup truck parking bans as well as fines for apparent minor infractions such as leaving garbage bins at the curb too long. He suggests that these and other new laws were likely spurred by cases such as this of associations’ perceived overreach in their rules, fines and enforcement measures, and he advises associations to do their part to help avoid fueling the negative image that some communities have helped to create.
Our firm salutes Michael for sharing his insights into the takeaways from these recent news stories with the readers of the Miami Herald. We write about important matters for community associations in this blog and our Herald column, which appears every two weeks on Sundays, and we encourage association directors, members and property managers to click here and subscribe to our newsletter to receive our future articles.