South Florida condo boards rip off consumers with high application fees
By NICHOLAS NEHAMAS
03 June 2016
Biscayne charges tenants $100 to apply, $300 to move in and $250 to
register a pet, all non-refundable. State law caps so-called transfer
fees for condos at $100. Walter Michot
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.
Illegal fees are another reminder that South Florida’s poor and middle
class can’t keep up in a real-estate market distorted by out-of-town
cash, said Ali Bustamante, a professor at Florida International
“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,” he said. “It’s a huge foot on the scale.”
As developers build luxury high-rises at the expense of middle-market
housing, rents across South Florida have skyrocketed. The region is now
one of the nation’s least affordable places to buy or rent, although a
new push for downtown rental buildings could help out.
Still, Bustamante said, “the property owners have all the leverage.”
Jason Wood, a sales manager at a furniture company, said he was charged
$125 to apply to the Mirador 1200 condo in Miami Beach in 2012. He paid
with a cashier’s check.
A person at the Mirador’s front desk said the fee is now $150.
“I am currently looking for a new place and see all over they advertise
fees of $200 to $300,” Wood said. “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.”
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.”
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. Any transfer fees —
including charges associated with background checks, screening and
move-in fees — have to be clearly stated in a condo’s governing
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.
“These buildings are processing applications all day every day,” said
Stavros Mitchelides, a Miami Beach-based Realtor. “And you don’t get
your money back if you’re not approved.”
Isola on Brickell Key charges $200 per applicant. The Henderson and
Helen Marr in Miami Beach each charge $150. So does 401 Blu, although
it gives spouses what seems like a discount: $200 per couple. (By law,
they should only have to pay $100.)
“I have a lot of clients where $100, $150 is a lot of money,” said
Mitchelides, who only recently learned the up-charges were illegal. “A
lot of these people are renters. It’s not fair. I had a girl who
couldn’t afford more than $1,400 per month [in rent] and her
application fee was $250.”
Mitchelides was thumbing through a real-estate industry trade magazine
last month when he happened upon a mention of the $100 cap. He called
the Florida Realtors’ legal hotline and was advised his clients could
file civil lawsuits against the condo associations or complain to the
state attorney general and the Tallahassee agency that regulates condos.
“Obviously, no one is going to sue over that amount,” Mitchelides said.
“And Realtors don’t want to spend all day filing complaints.”
Instead, he called the Herald.
The newspaper analyzed home listings on a database for Realtors called
the Multiple Listing Service. It found that in Miami-Dade, 46 percent
of condos listed for rent or sale say they require a fee of more than
$100 per applicant.
The entries on the database are made by Realtors, not condo associations, and may not always be accurate.
“I think it’s higher,” Mitchelides said.
In Broward, only 22 percent of condos asked application fees higher than $100.
The cities with the most condos on the market were all in Miami-Dade
and had high rates 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 much lower rates of illegal fees: Fort
Lauderdale (12 percent), Hallandale Beach (29 percent), Hollywood (24
percent) and Pompano Beach (23 percent).
Almost none of the condo associations mentioned in this story returned
requests for comment. Neither did several management companies at
buildings that charge more than $100 per applicant, including KW
Property Management, First Service Residential, Quest Management and
Aqua Management. One company that did respond complained that the $100
fee doesn’t cover the costs of background checks.
And Fredrick Rotstein, property manager for the Isola condo tower,
wrote in an email that the association “will be immediately reviewing
our ‘transfer fees’ and will make sure that they are in compliance with
the applicable statute.”
It’s up to board members to audit their rules and have counsel make
sure they’re compliant with the law, said Jonathan Goldstein, a Miami
attorney. “They shouldn’t take for granted that management companies or
previous boards had in place leasing policies that were compliant with
the governing declaration, municipal ordinances or Fair Housing Act
regulations,” he said.
Unlike condo associations, homeowners’ associations — which govern
planned communities of single-family homes — can charge whatever they
wish. Condo associations can also legally assess fees for estoppel
letters and mortgage questionnaires.
The condo statue doesn’t apply to landlords at rental apartments, who
have been known to gouge tenants with high fees, according to a WSVN
investigation last year.
Sticking it to foreigners
Some condo associations single out foreign buyers for higher fees,
reflecting the added costs of a background check on someone who’s lived
At Sunset Palms West in Kendall, international buyers must pay a fee of
$150. At 801 Meridian on the Beach, the fee soars even higher: $350 for
a foreign buyer.
Pets get squeezed, too.
900 Biscayne in downtown Miami charges tenants $100 to apply, $300 to move in and $250 to register a pet, all nonrefundable.
Consumers generally don’t know they’re being overcharged.
Only 13 people filed complaints about the high fees in Miami-Dade and
Broward counties over the last year, according to the Florida Division
of Condominiums, Timeshares and Mobile Homes. In five cases, the
division sent “letters providing education” to the associations.
Asked if application, move-in and pet fees of more than $100 violated
Florida law, a spokesman for the division declined an interview but
emailed the relevant section of the Florida Condominium Act.
The state Legislature raised the limit from $50 to $100 in 1990.
Saul Gross, president of Miami Beach-based Streamline Properties, said
$100 was hardly enough to cover the costs of doing background checks.
He said state legislators set the limit “before Airbnb and the short
term rental epidemic [and] before Associations realized if they weren’t
careful about approving tenants, it would interfere with the quality of
life of the long-term unit owner residents.”
Streamline charges $150 application fees at at least two buildings it manages in Miami Beach.
Gross said he believes the statute caps transfer fees at $100 but allows higher charges for credit checks.
(A post on the condo division’s website states “the maximum charge allowable is $100 per applicant.”)
In a video posted on his Facebook page after this story was published,
Jose Pazos disputed that the $150 application fees charged by his
Pazos-Robaina Association Management Firm were illegal.
“Now I’m going to aggressively lobby the Florida legislature for the
upcoming session to increase ... to make sure that what we’re doing is
beyond reproach,” Pazos said. “That’s what we’re going to do now.”
If anyone were hoping that management companies and associations would
drop their fees to $100, Pazos continued, “that’s not happening. That
is not fiscally responsible for the rest of the owners of that
condominium or for the business owners who own the management
And Lynda Horvat, an attorney for Neighborhood Property Management,
said if the fees are paid directly to the management company, and not
to the association, the law doesn’t apply.
“Property management companies lawfully charge associations to perform
services, which include but are not limited to processing tenant
applications, conducting background checks and interviewing tenants,”
Horvat wrote in an email. “The service charges paid to the property
management pursuant to its contract with the association are not
That reading seems to contradict a 2008 warning letter the division wrote to a Broward condo.
Transfer fees “include such items as clerical fees, fees paid as a part
of an applicant’s credit or background check or screening process and
move-in fees,” the letter states.
“The Division takes the position that a mandatory fee, which an
association requires an owner, purchaser or leasee to pay in connection
with the sale or lease of a condominium unit is a transfer fee,” it
“Charging more than $100 per person is a violation of Florida statute,”
said Miami attorney Josh Rubens. “The money should be refunded.”
Condo rip-off: Tenant sues association over
By: Nicholas Nehamas
21 November 2016
A tenant is suing a Miami condo association over its excessive application and move-in fees, saying they violate state law.
The lawsuit is the first of several class-actions that attorneys say
they plan to file against condo associations over high fees. In June,
the Miami Herald reported that condo boards routinely charge consumers
hundreds of dollars more than state law allows. Florida statute caps
the amount condos can charge to apply and move in at $100 per person.
In a suit filed Friday in Miami-Dade County Circuit Court, August
Lasseter says he was billed $625 in non-refundable fees when he signed
a lease for a unit at one of the two high-rise towers at Quantum on the
Bay last year. The charges broke down to $100 for a background check,
$175 for “administrative review,” $125 for registration and $225 for
“I questioned it at the time, but it’s not like you really have a
choice,” said Lasseter, 37, who runs a modeling agency. “They say you
pay it or you don’t move in.”
Attorneys for the board, which was highlighted in the Herald’s initial
story as the condo with the highest fees, said they had not yet been
served and couldn’t comment.
The Florida Condominium Act prohibits condo associations from charging
fees of more than $100 per applicant “in connection with the sale,
mortgage, lease, sublease, or other transfer of a unit.” (Married
couples are considered one person and children are exempt.)
Such fees are known as “transfer” fees because they concern the transfer of a unit from one owner or tenant to another.
“It’s shocking that associations are intentionally and knowingly
charging these fees when they are improper even after the public
attention from media coverage,” said Aaron Resnick, an attorney who is
handling the suit. “It’s black-and-white. The law can’t be any clearer
on what you’re allowed to do and what you’re not allowed to do. ...
Knowledgeable condo associations and property management companies have
been flouting the law for years. It’s a shame that it will take
lawsuits to end this practice.”
Resnick is working with South Florida attorneys Joshua Spector and Jonathan Feldman to file more suits across the states.
“We’ve identified condo associations from Tallahassee to Jacksonville
and Orlando to Tampa, but Miami is the most prevalent,” he said. “And
we’ve found it’s not just the expensive condos that are doing this,
it’s across the board. The wrong is the same, but the impact is even
greater [on poorer residents].”
Lasseter’s lawsuit says Quantum’s fees also constitute a violation of
Florida’s Deceptive and Unfair Trade Practices Act. It seeks to have
Quantum pay damages and restitution to Lasseter and those who join his
claim, and asks a judge to stop the association from charging more than
Rents at the complex at 1900 N. Bayshore Dr. in Edgewater range from
$1,500 for a studio to $4,250 for a three-bedroom penthouse.
A Herald analysis of Realtor data this summer found that nearly half of
condos listed for sale or rent in Miami-Dade County asked more than
$100 in fees. In Broward, 22 percent of condos charged illegally high
fees. A search in November showed roughly the same numbers.
Property management companies argue the law does allow for charges of
more than $100, if the charges come from a third party, not the
association. And they say background checks have grown more expensive
since the cap was set in 1990.
But legal experts consulted by the Herald say the statute is clear and
associations are gouging applicants. The Division of Florida
Condominiums, Timeshares and Mobile Homes confirmed that the $100
transfer cap is meant to include all non-refundable fees for background
checks, registration, move-in, pets, elevator usage and other charges
requested by condo boards and their representatives.
(The rules don’t apply to homeowners’ associations and rental apartments.)
Background check companies told the Herald they usually charge between
$20 and $45 for individual tenant screening, and offer discounts for
bulk commercial accounts from condos.
But international clients can be significantly more expensive, said
Robert Sanchez, vice president of Miami-based United Screening
Services. Checks on people from Russia and Latin America, where many
Miami condo buyers come from, can range as high as $175, Sanchez said.
Even so, “the law is the law,” said Stavros Mitchelides, the Miami
Beach Realtor who first alerted the Herald to the problem of
overcharging. “If state law says the fee can’t exceed $100 for a single
person or a married couple, then you shouldn’t be able to go around the
law just to make money off of applications from everyone else. I find
it extremely disturbing.”
The extra charges make it even more difficult for locals to find a home
in South Florida, already one of the nation’s most expensive housing
Mitchelides says he repeatedly told the Miami Association of Realtors about the problem but never heard back.
After the Herald’s initial story came out, Josť Pazos, who runs a
prominent South Florida property management firm, disputed the
newspaper’s findings in a Facebook video and said he would lobby the
Florida Legislature on the issue.