How Florida developers benefit from HOA fees

October 22, 2013 

At a recent meeting of my community, the developer's representative announced the turnover of the community to residents. It took an attorney and two CPA's more than an hour of explaining for the residents to understand their complicated financial relationship with the developer.

While the homes were being constructed, the developer kicked in funds to maintain the area until enough homes were built for resident maintenance fees to fully fund the budget.

Any current year that there is a budget surplus, the developer uses it to pay itself back any surplus of their funding for maintaining the community when there were only a few homes and not enough resident fees.

The developer sets the resident fee amount, and they can create a budget surplus which they can later give to themselves. Residents are aware that repeated fee hikes have contributed to surpluses which the developer has claimed.

The longer the developer stays, the more opportunities there are to employ this strategy. The accounting documents call it "due to developer." The attorney explained that under Florida law this is legal.

Many buyers hadn't thoroughly read the 200-300 pages of documents when they bought a home. The "due to developer" concept is contained there in so many words.

Residents who realized the turnover is five years late, according to Florida statutes, Chapter 720, knew there were five additional years of developer control of resident activities and budget surpluses. They hired an attorney, specializing in HOA law, who wrote the developer, citing the failure to comply with the law. Several weeks later at this meeting, the developer's representative made the turnover announcement.

I hope we take advantage of the expertise of all interested parties in the community, and work together to achieve the most beneficial, albeit long overdue, legally required transition.

Joyce Sandy


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