A professor at Florida International University, Ali Bustamante said that illegal fees are a reminder that South Florida’s poor and middle class are not able to keep up in a real estate market “distorted by out-of-town cash.”
“High application fees are potentially discriminatory by crowding out low-income and low-middle-income renters who can’t afford to put down $300 fees.” Bustamante said. “It’s a huge foot on the scale.”
“These buildings are processing applications all day every day,” said a Miami-based realtor, Stavros Mitchelides. “And you don’t get your money back if you’re not approved.”
Attorneys at Parker Waichman LLP are actively reviewing potential lawsuits on behalf of individuals who are seeking legal information on illegal business practices.
Examining the $100 Application/Transition Cap
Mitchelides came upon a mention of the $100 cap in a real estate industry trade magazine. He reached out to the Florida Realtors’ legal hotline and was told his clients could file civil lawsuits against condo associations or contact the state attorney general and the Tallahassee agency that regulates condos. Mitchelides commented that it seemed too small an amount to sue over, and “realtors don’t want to spend all day filing complaints.” Mitchelides then contacted the Miami Herald.
The Herald analyzed home listings on a database for realtors known as the Multiple Listing Service (MLS). It discovered that in Miami-Dade, 46 percent of condos listed for rent or sale required a fee of over $100 per applicant.
The cities with the most condos available were all in Miami-Dade and had a high rate of illegal fees: Miami (48 percent), Miami Beach (40 percent), Sunny Isles Beach (50 percent) and Aventura (44 percent). The biggest markets in Broward had an exceedingly lower rate of illegal fees: Fort Lauderdale (12 percent), Hallandale Beach (29 percent), Hollywood (24 percent), and Pompano Beach (23 percent).
Associations are permitted to charge people applying to buy or rent a unit a maximum of $100 per person. The fees are nonrefundable and meant to cover the costs of interviews, background, and credit checks. However, many buildings hit tenants and buyers with fees from between $125 and $625, according to lease and purchase applications examined by the Herald.
Moving-in and other charges are also tacked on by some associations that may reach hundreds of dollars. In a few condos that allow pets, even the moving-in of pets are subject to extra charges of $100 or more.
State law appears to clearly prohibit fees above $100. The alleged illegal fees may lead to class action lawsuits against property management companies and associations.
A series of reports appeared in El Nuevo Herald on the heels of these allegations. The reports documented alleged corruption at South Florida condo associations, including allegedly rigged elections and contracts given without fair bidding.
At the expense of middle-market housing, developers build luxury high-rises, causing rents across South Florida to skyrocket. The area is now one of the country’s least affordable places to rent or buy, despite a new push for downtown rental buildings. Professor Bustamante says, “the property owners have all the leverage.”
A sales manager of a furniture company lamented, “Miami is already a rip-off when it comes to cost of housing and this is more salt in the wound with no real system of … tenants’ rights.”
Hiking up the Price
The Florida Condominium Act prohibits condo associations from applying 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 linked to applications, background checks, screening, and move-in fees, have to be clearly stated in a condo’s official documents.
In addition, the law states that married couples should be treated as one person and pay $100 in total. Dependent children or people renewing their leases should not be charged.
It appears the rules are largely ignored. To apply for a lease in one popular neighborhood near Wynwood, Florida, a renter must pay a $200 application fee, plus a $350 “processing” fee, and only money orders are accepted. At another condo development, the association charges $260 for new applicants. Another development charged an additional “registration and orientation” fee of $125, $175 for “administrative review,” and $225 to move in and out, aside from the $100 application fee.
The applications are usually handled by property management companies who profit from the high fees. The associations also make extra money. Most of the condo associations did not respond to requests for comment, but one company that did respond complained that the $100 fee does not cover the costs of background checks.
Legal experts consulted by the Herald say, “the statute is clear and associations are gouging applicants.”
Legal Advice Concerning Illegal Business Practices
Parker Waichman LLP has had years of experience representing clients in illegal business practice lawsuits. The firm offers free, no-obligation legal case evaluations to anyone seeking legal information. We urge you to contact us at 1-800-YOURLAWYER (1-800-1968-7529).