Complaint to State of Florida
Complaint to be submitted to the state of Florida.
We are owners at Edgewater Beach Resort in Panama City Beach, FL and we have a concern about our Board of Directors. Specifically, we are concerned about a real estate transaction made in March 2019 by the HOA, Vice President. It appears that the issues surrounding this transaction were known by some, but not all, of the board members. We have other questions that haven’t been answered and during the 2/14/2020 board meeting, a motion was made, and passed, to increase the budget line item for legal expenses. It was stated that attorney fees are increasing because of all the questions people are asking and the cost of the special called owners meeting that was requested by over 140 owners.
The board is led by President, James Bailey. He has been the board president for several years with no break in service. The vice president of the board is Jack Janssen. He too has been on the board for several years with no break in service. Jack Janssen is also a licensed real estate agent. According to Mr. Bailey, Janssen serves as our Assessment Recovery Chairman, appointed by Mr. Bailey, in charge of collecting and processing delinquent HOA fees. Bailey states in an email to me (Exhibit E), “Jack Janssen is our Assessment Recovery Chairman. I started that committee when the housing market went south. There were 40 condos that went under water., Jack works hand in hand with Brian Hess (HOA attorney) on recovering our money. The board is given a list of arrears from Brian and what court action has been filed. At present there is one or two that are in foreclosure. Jack has done a wonderful job…Jack checks with Brian almost weekly and checks the courthouse proceedings almost daily…We are well covered as Mr. Sparks and I are also very much in the loop.”
In March 2019, Janssen (VP of our HOA Board of Directors and Assessment Recovery Chairman), purchased an Edgewater Beach Resort condo V3205. This property was approximately $15,000 behind in assessments. The owner of this property passed away. Mr. Janssen contacted the executor of the estate (the owner’s son) and offered to purchase the property for $100,000. According to the executor, he was assured by Jansen that the back-assessment fees, interest and penalties would be taken care of. The $100K offer was approximately 55% of the market value. Had the association foreclosed on this condo, the condo would have most likely sold for more than $100K, but more importantly the association would have received all the back assessments.
Recently, an owner sent a letter to the Board of Directors asking for a copy of the March 2019 account statement for Villa Unit 3205. Brian Hess, the HOA attorney sent the owner the statement and replied in part, “as you are apparently aware, Mr. Janssen received a discount of $7,198.01 at the time of his purchase.” Mr. Hess also stated that, “You should also know that when the Association agreed to discount this unit it was unaware that Mr. Janssen was the buyer. The Association was told by Mr. Janssen that he had a buyer who wanted to know if he could discount the balance due. It was only after the closing when the Association received its check that the Association learned that it was Mr. Janssen who received the discount. At that time, Tom Sparks (Resort Collection Management) approached me about the appearance of impropriety of Mr. Janssen’s position as a Board Member.” Apparently the board thought that they would have awarded a discount to a third party but according to the letter, “Janssen would be advised that the Association was not happy with his lack of candor and that he was never to request a discount again for any unit which he himself would be a purchaser.” He continues, “The Association would not have granted the discount to Mr. Janssen had it been known he was the buyer”.
At a board meeting on 2/14/2020 Mr. Janssen resigned from the board citing personal and family reasons.
Here are some questions that we have.
During the September 14, 2018 board meeting, Brian Hess asked about V3205, “is the association renting this unit?” Tom Sparks (Management Company) said it is not rentable. Brian Hess said, “then I will move forward on that one also.” Tom Sparks said, “ we need to go after all of them”. As far as we can tell, a lien was never filed, even after 18 months of non-assessment payment. We are attempting to obtain more information.
During the March 8, 2019 Board Meeting (Exhibit D), 7 days after Janssen closed on V3205, Janssen said, “every three months we have to send out letters to owners who haven’t paid 30-days in advance before we file a lien. We sent 66 letters out at a cost of over $3,000. Later he says, “This is the way it goes every three months.” We find that the last lien on V3205 was Oct. 3, 2013, even though they were ~18 months delinquent. We have requested copies of letters and liens on V3205, to confirm, but have not received them.
- Was a letter sent to the owner of V3205 as suggested in the minutes?
- Was a lien filed on V3205 as suggested/instructed in the minutes?
- We see no evidence of giving discounts nor do we see discounts mentioned or approved in board meetings. We have asked for any and all information on the policy and actual discounts granted. This information has not been received.
Mr. Hess’ letter to Mr. Siebe states, “The Association has a policy of providing discounts on delinquent units that are or may go into foreclosure. The rationale is the bank would only owe one percent of the original mortgage balance or one year’s assessment, whichever is less. The Association believes that by providing discounts in these instances the Association receives a larger amount and gets a paying owner in the unit quicker than might otherwise be the case.”
Mr. Hess states in his letter that numerous liens and foreclosures were filed on condo V3205.
- The last lien we can find was on 10/03/2013. We were not able to find any records where the Association filed a foreclosure.
- We have asked the Association to give us a list of foreclosures for this condo
Mr. Hess states that when the board found out about Mr. Janssen’s request for a discount that, “the Association was not happy with his lack of candor and that he was never to request a discount again for any unit which he himself would be the purchaser.”
- Why wasn’t this conversation and decision documented in the minutes?
- Why were some board members unaware of what Mr. Janssen did?
- Why were some board members still unaware of this until they received the copy of Mr. Hess’ letter a year later?
- Why did the board tell Janssen to “never ask for a discount again for any unit which he himself would be a purchaser?” Why didn’t they include property he (as a real estate agent) was involved in?
- Why wasn’t he required to pay the remaining balance once you determined it was Mr. Janssen?
- Did the board members, that were aware of what Mr. Janssen did, faithfully discharge their fiduciary responsibility to the association’s members
- There is no evidence that Mr. Janssen was told the board was unhappy. In fact, they allowed him to run for reelection in September (he was reelected).
- Who consulted with whom and who had the authority or who made the decision that the only thing that was required was to inform Mr. Janssen to never request a discount again?
- Mr. Hess states that, “the Association has a policy of providing discounts on delinquent units that are or may go into foreclosure. The rationale is the bank would only owe one percent of the original mortgage balance or one year’s assessment, whichever is less. The Association believes that by providing discounts in these instances the Association receives a larger amount and gets a paying owner in the unit quicker than might otherwise be the case.” We find no policy nor mention of discounts granted. We have asked the association to provide us any information he may have.
We’ve asked a lot of questions, but we don’t have all the answers. We need your help. We request that you investigate these concerns and help us obtain answers to questions that we can’t get. We also ask you to determine if any Florida laws have been violated including, but not limited to some board members failure to faithfully discharge their fiduciary responsibility to the association’s members. .