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Grand Jury Finds that the State of Florida Has Failed to Protect Condo Owners from Fraud

On February 6th, 2017, the Miami Herald published a report from a Miami-Dade County Grand Jury that concluded that the Florida Department of Business and Professional Regulation (DBPR) has repeatedly failed to protect condo owners from fraud and mismanagement. Within the report, the grand jury noted that the state agency appears to be ill-equipped to resolve, correct or prevent the recurring problems of condo-related fraud in our state.

The Condo Business Has Been Booming in South Florida

The popularity of condos has been on the rise on Florida for several decades. Even as the housing crisis hit the state hard in 2007-2008, the number of occupied condos continued to climb. Currently, there are more than 1.6 million condos in the state of Florida, and 300,000 of these are located in Miami-Dade County and Broward County. Unfortunately, as the amount of condos in South Florida has risen, so has the amount of fraud.

What the Grand Jury Found Regarding Condominiums and Fraud

Chapter 718 of the Florida Statutes regulates condominiums in the state. Under this statute, as well as other sections of Florida law, condo developers, management companies and operators have many different legal duties to treat individual condo owners fairly. The Miami-Dade County grand jury found a pattern of incidents where companies were falling far short of their legal responsibilities. Some of the most common fraud-related complaints were as follows:

  • Denial of information: In many cases, individual condo owners were not provided access to records related to their condo ownership. Under state law, records should be provided within ten business days once they are requested. The failure to keep and furnish records in accordance with state regulations opens up an opportunity for fraudsters.
  • Conflicts of interest: The grand jury also found many different cases in which there were severe conflict of interest issues. This was a problem both with condo boards as well as within companies developing and managing condo properties. Unfortunately, conflicts of interests often led people and organizations to take advantage of their position to the detriment of individual owners.
  • Lack of integrity in elections: Most condo boards are filled with members who were elected but other condo members. Unfortunately, in many instances, these elections were themselves fraudulent.

These three specific common issues, as well as other types of condo-related fraud, were allowed to persist in part because the Florida Department of Business and Professional Regulation has done such a poor job following up on condo-related fraud and enforcing state law. This report raises serious questions about what types of reforms are needed to address this long-term problem. If you were a victim of condo fraud, or any other type of fraud, you cannot rely solely on state law enforcement agencies. You need to take proactive steps to protect your own legal rights and financial interests.

Our Firm Helps Fraud Victims

At Pike & Lustig, LLP, our team handles a wide variety of business litigation issues including both landlord-tenant litigation and business and consumer fraud claims. To learn more about how we can help you in your case, please contact our West Palm Beach office today at (561) 291-8298. Additionally, we have also opened a new office in Miami to better serve clients throughout South Florida.

Resources:

miamiherald.com/news/local/community/miami-dade/article131156184.html

miamiherald.com/latest-news/article131151509.ece/BINARY/20170206132239718.pdf

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0718/0718.html

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