Introduction: Devon-Aire Homeowners Association #3

Millions of people live in communities managed by homeowners associations across this country. More than one million of those live in Florida. For many, a thought lingers in the back of their minds; “Who's the homeowner here, me or that so-called “management” Gestapo?”

For good reason.

In recent years in Nevada more than one hundred HOAs came under federal investigation for corrupt practices. In Clark County, Nevada, nearly ninety percent (90%) of land converted from Bureau of Land Management (BLM) desert to “livable” neighborhoods is then managed by an HOA. Since investigations began two prominent journalists, one police lieutenant and another HOA officer were murdered under circumstances directly or indirectly related to HOA investigations.

The problem is money.

Giving money to an HOA is comparable to a classroom of third-graders dropping their lunch money into a box on their teacher's desk. The expectation, that when lunch time comes they'll have their meal. But there are no assurances they'll get what they pay for, as the teacher leaves that lunch-money box unattended and takes her break in a teachers' lounge. Some or all of the students' money can disappear, yet that teacher will not be held accountable.

You would think that there are rules in place to protect money put into an HOA. There are. But who pays close attention to assure that those rules are followed?

Homeowners in this economy of recent decades are busy. Mostly they have been two working adults, or one single adult working long hours away from home, or retired people who hope to squeeze as much enjoyment out of remaining years as possible. This is a recipe for apathy, especially for those who opt to live in HOA communities. Hands-off maintenance is a strong appeal. Before signing a contract to buy a place they are sold on the idea of worry-free management. “Don't worry about your lawn, we take care of that for you.” And they are told, “Don't concern yourself with replacing your roof or keeping your streets maintained; we do that for you too.” It's music to their ears.

Then, after settling in, weird things begin to happen; some of these go unnoticed for years. Perhaps they have an overnight guest from out of town. When he or she, perhaps a daughter visiting from college, goes out to take a drive in the morning the car that got her there is gone. Oops! No one mentioned that after many years of dormancy the HOA board or the management company acting on its own decided to enforce parking regulations through a new towing contract. The car has been towed. It happens.

Now an irate homeowner has reason to question, “why was that other car parked down the street or around the corner not towed?” It happened to be owned by a friend of a board member, but who knew? It happens.

And yes, there are rules in place to prevent this sort of thing from occurring, but rules require that people pay attention, and that people get involved in order to make them work. Yeah, rules; this is what a whimsical or corrupt management agent relies on to justify towing a car or company van one day but not the previous week. It's called “selective enforcement” and it happens every day of the year in the HOA world.

It matters, and not just to a few who end up either docilely paying hundreds, even thousands, of dollars in unconscionable fees, sometimes to avoid being tossed out of their homes. Unfair fee assessments should be a concern of every homeowner or resident in an HOA community. One reason is that management can change, and an owner who seemed exempt from enforcement one day could find him or her suddenly assessed a bundle of fines that they had no warning were coming. No warning, no risk, right? But sudden enforcement happens to residents in HOAs without even a slight change in lifestyle. 

Then, an Association can be sued for selective enforcement, and lose. It happens. The HOA can be fined in court. Unfortunately when this happens management seeks to pass the hat; all the owner-members are expected to pay for mistakes made by management. If financial reserves are not adequate to pay the penalty a special assessment is made, passing the financial responsibility over to each member.

No one likes special assessments any more than you like a flat tire on a highway.

Getting back to that teacher with the box full of lunch money, homeowners typically are like third-graders when it comes to HOA fees. They grudgingly pay, grumble about it from time to time as they do when thinking of the IRS and a tax bill, then forget it until reminded again. Perhaps they look at their budget and say, “Oh, yeah … those damned fees. At least I don't have to mow the grass … no time for that.” But there is an enormous difference between taxes paid to government and HOA fees. We have no input into how a government spends money, but a dues-paying homeowner has a right to know exactly where his or her dues are spent.

You might think that lawn service spread over a large number of properties would bring an economy of scale; prices for each should be lower. Not when a corrupt board or management company approves a three-year contract for twice a competitive market rate. Who benefits? It could be a board member or two receiving kickbacks from the lawn service provider. It could be a management company agent getting a kickback, and it could be both the management company and a board member. It happens.

In the case of Devon-Aire Homeowners Association #3, the president of the board of directors held an unscheduled, clandestine meeting with an electrical contractor, Patrick A. The contractor was told that in order to keep his scheduled jobs, he had to increase the price of each installed light by $75. Patrick didn't want to do it, but thinking that this was to be a one-time deal, he consented. He needed the work. But the job expanded from a few lamps to over a hundred, and the inflated invoices increased by more than $8,000. But Patrick didn't keep a dime of that extra $8,000. He was paid according to his original bid amount. The management company then paid the difference to the Devon-Aire HOA #3 president, Jose Hoyos, whose scheme this was, with cooperation of Florida Property Management Group, FPMG.

Although it's impossible to say whether or not FPMG kept any of that excess money taken from the Association members, because FPMG refuses, as of the date of this writing, to release financial records, there are other ways that FPMG stands to benefit from corrupt practices like this.

It has been rumored that FPMG had received a management fee of “$14 per home” in Devon-Aire HOA #3 to manage common areas. How exactly FPMG was awarded a contract in this amount is unclear. It is not even certain that FPMG ever had a contract with Devon-Aire HOA #3 before a clandestine, unscheduled meeting occurred at the home of a board member. One story goes that one FPMG manager, Nery, visited a board member's home unannounced one evening, along with Jose Hoyos and Ligia Cortez, also a mystery board member, to coerce that board member to sign a contract he had not read. Extraordinarily, that contract was to be between FPMG and Devon-Aire HOA #3. This stealth meeting was like a home invasion to the board member who later said he had not heard from nor seen another board member, especially the HOA president Hoyos, during the previous two years. Now they demanded his immediate endorsement on an unread contract. 

Currently, although formally requested, no one in the membership interested in its details has a copy of that management contract. The principle FPMG manager, Javier, who goes by “Jay,” told two very interested HOA members late in 2015 that the rate paid to FPMG is $11 per home. The exceedingly skeptical board member whose home was invaded for that stealth contract meeting asserts that FPMG stills receives $14 per unit in 2016. Without access to financial records there is no way to verify this. But Jay and FPMG play exceedingly elusive games when it comes to providing financial records for Devon-Aire HOA #3. Six weeks after a formal request by multiple members, and a ten-day mandatory compliance deadline, Jay and Nery  have not turned over a single record. You would think Jay, Nery and FPMG are hiding something.

A contract is a CONTRACT. It specifies terms. Two weeks after a formal request for records, Jay turned up a the door of a couple of members who happened to have requested documents from his company, FPMG. It was Christmas Eve, 2015. He wasn't expected. His office is about 25 miles away, not an easy drive in Christmas Eve traffic. For all that trouble, you would think he was there to provide documents. But he wasn't.

Rather than meet his legal and fiduciary responsibilities, Jay was visiting members to talk about his expertise as a property manager. He is, after all, a CAM – Certified Association Manager. He's a professional. He knows what his fiduciary responsibilities are. But he won't turn over documents. Instead, Jay was very concerned that that pair of curious members distance themselves from an outside property manager who might be giving them advice. And, Jay said in his ever-elusive manner, the exact fee per house is flexible; it could be $6 per unit, it could be $8 per unit. Jay's latest demand was to keep a contract with Devon-Aire HOA #3 by asserting that he would beat any other bid by one dollar per unit, no matter the price. In other words, Jay will say whatever is music to members' ears as long as they stop asking for hard information about contracts, bank records, meetings and methods of management. Essentially, whatever it takes to make questions go away.    

To be continued ...