Ever since the housing bust, many Tampa Bay companies have reaped big bucks renting out homes that are in foreclosure.
Now there are signs that Florida Attorney General Pam Bondi's office is finally taking a hard look at what one real estate expert calls an "unscrupulous scam."
The office confirmed this month that it has an "active consumer protection investigation" into at least one of the companies, HOA Problem Solutions of Tampa. It recently issued subpoenas for company records under a statute that outlaws unfair, deceptive and unconscionable business practices.
Bondi's office would not give any details. In a motion responding to the subpoenas, an attorney for HOA Problem Solutions indicated the investigation might partly involve complaints from tenants renting houses and townhomes from the company.
According to the motion, the subpoenas ask the firm to turn over copies of "all lease agreements" including those in which a tenant was placed in a home within 30 days of a foreclosure sale.
Also sought are phone numbers, email addresses and other information that could be used to identify "Florida consumers whom the company contacted, solicited, offered or provided any services."
The documents requested "are overly broad, unduly burdensome and not likely to lead to admissible evidence," the motion says in seeking to modify or set aside the subpoenas.
Incorporated in 2012, HOA Problem Solutions lists Michael Chancey as its sole corporate officer. It is among scores of limited liability companies launched to temporarily acquire and rent out homes after Chancey's father, Ralph, hit on a novel way of making money from the foreclosure crisis.
Florida has 40,000 condo and homeowner associations, which can file liens and foreclose if homeowners don't pay their dues. Associations want to beat the bank to foreclosure, because a bank foreclosure usually wipes out the association's lien and leaves it with no way to recoup its delinquent fees.
In what's been called "the race to the courthouse steps," associations have an advantage. Most homeowners owe less than $15,000, so associations can file their foreclosure cases in county court instead of circuit court with its higher dollar amounts and heavier caseloads. That way associations can get a final judgment of foreclosure faster than the banks.
The time lag created an opportunity for third-party investors like the Chanceys.
Once a property goes to public auction, anyone can bid. It usually costs just a few thousand dollars to cover the delinquent association dues, court costs and lawyers' fees. The winning bidder gets title to the home and can rent out the property for months, even years, before the bank finally forecloses and the property is sold.
As the Tampa Bay Times has reported, companies connected to the Chanceys and others got title to millions of dollars worth of homes for just pennies on the dollar. Among them were a $1.2 million bayfront mansion in Apollo Beach for $10,010; a 3,700-square-foot home in north Tampa for $8,090; and dozens of single-family homes in Brandon and Riverview for less than $4,000 each.
Sometimes, however, the delinquent fees are so high that no one bids. According to its website, HOA Problem Solutions came up with an answer: In exchange for the association deeding it the property, the company would assume responsibility for repairs, maintenance and association fees. It would find tenants and split the rents with the association.
"We manage difficult HOA problems so you don't have to," says the website, which features Michael Chancey's uncle, Jimmy Chancey.
Public records, though, indicate the company sometimes bypasses the association and gets the deed directly from the homeowner. HOA Problem Solutions currently is listed as owner of 26 homes in Pinellas and Hillsborough counties. Most of them were acquired through quit-claim deeds from people like Robert Gaston, who used to live in Riverview's Summerfield community.
Last year, the homeowners association got a $9,200 judgment against him for failing to pay dues. He already had moved out of his three-bedroom, two-bath house when he got a call from HOA Problem Solutions.
"They told me they wanted to buy the home from me,'' he said. "They told me they were going to pay the association fees and they wanted to get the deed to the house and fix it up and rent it out or sell it."
Gaston said the company offered him $500 if he would sign a quit-claim deed transferring ownership. He agreed, and "they told me I had no more responsibility for the property; it's done."
If that's the case, Gaston was misled, says lawyer Robert Stern, an expert on real estate law at the Tampa firm Trenam Kemker. The main thing a quit-claim deed does is put the deed in someone else's name.
"In fact, they are not absolved of responsibility for the property," Stern said of homeowners like Gaston. "They remain contractually obligated for their note, their mortgage and all other obligations."
Gaston said he thought that deeding away the house would help him clean up his credit so he could buy another home in two years. But the association's judgment still remains on his record, possibly killing any chances of getting a loan, Stern said.
Meanwhile, there is no evidence in public records that HOA Problem Solutions has paid the association fees, either. But since the deed is now in the company's name, it could rent out the house during the months it might take the association to get a judgment against it, too.
"Unscrupulous scam is a summary of this process," Stern said.
Michael Chancey did not return calls for comment. His uncle, Jimmy, was terse when asked about the company's operations. He said he did not know anything about the attorney general's investigation. He said the company does acquire deeds from homeowners associations though sometimes under names different than HOA Problem Solutions.
"None of your business," he said.
Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate.