Monday, June 13, 2016

Miami-Area HOAs & Property Management Firms Running "Application Fee" Racket? Media Probe Finds Apparent Illegal Gouging Of Prospective Condominium Buyers & Renters With Exorbitant Upfront Fees In Excess Of $100 Legal Limit Under Florida Law

In South Florida, the Miami Herald reports:
  • Condo associations across South Florida are ripping off consumers with high application fees in violation of state law, a Miami Herald investigation has found.

    Associations are allowed to charge people applying to buy or rent a unit a maximum of $100 per person. The nonrefundable fees cover the costs of interviews, background and credit checks. But many buildings gouge tenants and buyers with fees anywhere between $125 and $625, according to lease and purchase applications reviewed by the Herald.

    Some associations also tack on moving-in and other charges that run into the hundreds of dollars. At a few condos that allow pets, even residents’ furry friends have to cough up fees of $100 or more.

    In Miami-Dade County, nearly half of condo listings show application fees exceeding $100, from fancy high-rises in Miami Beach to run-of-the-mill units in Kendall, according to a Herald analysis of a database used by Realtors. The problem exists in Broward County too but is less widespread.

    All in all, the high fees could lead to class-action lawsuits against associations, attorneys say.

    “State law seems to pretty clearly prohibit fees in excess of $100,” said Jason Kellogg, a Miami attorney who specializes in condo association law. “This sounds like a major racket. ... The cost of owning or renting a condo in South Florida is expensive enough without associations fleecing residents with illegal fees.”

    The revelation follows a series of reports in El Nuevo Herald documenting corruption at South Florida condo associations, including rigged elections and contracts awarded without fair bidding.
    Jacking up the price

    The Florida Condominium Act prohibits condo associations from charging so-called transfer fees of more than $100 per applicant “in connection with the sale, mortgage, lease, sublease, or other transfer of a unit.” Those fees — including charges associated with applications, background checks, screening and move-in fees — must be clearly stated in a condo’s governing documents.

    The law also states that married couples should be treated as one person and pay a total of $100, and prevents associations from charging dependent children or people renewing their leases.

    But the rules are widely flouted.

    To apply for a lease at 2 Midtown in the popular neighborhood near Wynwood, a renter must pay a $200 application fee, plus a $350 “processing” fee. Only money orders are accepted.

    At the Pavillion in mid-Beach, the association charges $260 for new applicants.

    An extra $160 might seem like small change, but it adds up. The Pavillion has 408 units. About 200 of them are rented out at any given time, according to a tenant information package.

    At larger buildings, the benefits for management and associations are even greater. Quantum on the Bay in Edgewater has nearly 700 units. The association charges tenants a $100 application fee plus $125 for “registration and orientation,” $175 for “administrative review” and $225 to move in and out.

    Property management companies usually handle the applications and profit from high fees. The associations also make extra cash.
For more, see South Florida condo boards rip off consumers with high application fees (State law says condo associations shouldn’t charge fees greater than $100 per applicant, But nearly 50 percent of Miami-Dade condo listings ask more).

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