Experts: Pinellas lawyer takes foreclosure fight to ethical edge

Clifford and Donna Kemp stand to lose their home because of an HOA foreclosure auction. They built the house in 2002. The interior of their home is now a mess of moving boxes. They say that they were offered the title back to their home for three times what they owed in delinquent fees and costs.

EDMUND D. FOUNTAIN | Times

Clifford and Donna Kemp stand to lose their home because of an HOA foreclosure auction. They built the house in 2002. The interior of their home is now a mess of moving boxes. They say that they were offered the title back to their home for three times what they owed in delinquent fees and costs.

Pinellas County lawyer Robert L. Tankel advocates showing no mercy toward property owners who fall behind on their homeowners association fees.

"If you have to sue some people, that's life," Tankel advised associations in a YouTube video.

The pitch helped Tankel secure more than 500 association clients, some of which have gone after homeowners for as little as $239.50 in unpaid fees. The swift action allows associations to foreclose on the property, kick the homeowner out, and then collect rent from a new tenant or sell the homes to third parties.

Either way, the HOA gets its money and Tankel gets a fee, usually a couple of thousand dollars. Tankel has also offered to waive his legal fee if his clients sell their properties to a company he owns.

Tankel's pugnacious style has twice landed him in trouble with the Florida Bar. And his offer to buy the properties raises several ethical questions, according to legal experts.

Tankel also handled foreclosures that helped his association clients sell or hand over 37 properties in Hills­borough County to an investor group that includes three men with prison records. The group is aggressively exploiting the homeowners association niche, as reported in a St. Petersburg Times story last week.

Tankel did not respond to calls and e-mails requesting comment for this story. In a previous interview with the Times, he acknowledged speaking with one member of the investor group but said the man and other associates of the group "are nothing to me."

Tankel vigorously defended his actions and those of his clients.

"Every board needs to make a decision,'' he said. "Bleed to death, let association fees rack up or move aggressively.''

• • •

Tankel, 54, graduated from the University of Florida's law school in 1981 and joined Becker & Poliakoff, a large condominium law firm. He went out on his own in 1995 and started to build a client base that included homeowners associations.

As many as a third of Florida's 19 million people live in so-called "mandatory membership'' communities in which homeowners must pay assessments, ranging from a few hundred to several thousand dollars a year, for the upkeep and insurance of common areas.

Though officially run by volunteer boards, the communities often hire specialized firms like Tankel's to handle legal matters and debt collections.

Tankel's aggressive tactics were on display in 2001 when he agreed to represent directors of a Tarpon Springs homeowners association who had been removed from the board by the project's developer. Tankel wrote to the new directors, falsely claiming that by serving on a developer-controlled board they would be employees of the developer and subject to personal liability if anything went wrong. The letter so unnerved the new directors that they all resigned.

The Florida Bar called the letter "harassment and intimidation.'' It also found that Tankel made a false statement when he said the association's attorney at the time had given him permission to contact the board members. In 2003, the Bar suspended Tankel for 15 days and put him on 18 months probation.

Nonetheless, Tankel's Dunedin practice continued to grow, especially as Florida's economy slumped and more homeowners fell behind on their association fees.

If owners don't pay their fees, associations are left with few options: slashing services, raising the fees or foreclosing on the delinquent homeowners. In what Tankel calls "the race to the courthouse steps," associations need to beat the bank to foreclosure because a bank foreclosure usually wipes out the association's lien, leaving it with no way to recoup its delinquent fees.

Homeowners associations have an advantage in that they can often foreclose much faster than banks. The time lag creates an opportunity for associations or third-party investors to rent out the property for months or even years before the bank finally takes back the property.

In a series of YouTube videos over the past few years, Tankel preached his "no mercy" message. His foreclosures have led to at least 20 owners in Hillsborough County losing their homes in recent months for less than $1,000 in unpaid assessments, according to public records.

Tankel even suggested that soft-hearted homeowners association directors who are reluctant to foreclose should get off the board.

"Do what you're elected to do," Tankel said in one video.

Associations have increasingly taken Tankel's advice and foreclosed on owners who don't pay their assessments. The property then goes to public auction, where anyone willing to pay the delinquent fees, plus court costs and legal fees, can get title and start renting it out. If no one bids, the association takes back the home and can rent it out itself.

Tankel has offered another suggestion. In a March 2009 YouTube video, he said many third party investors are willing to buy the properties from the associations using what's called a quit claim deed.

"I get paid, the association gets paid and that buyer becomes responsible for the upkeep and the HOA fees," he said.

That approach, while legal and used often, got Tankel in trouble again with the Florida Bar. A Citrus County homeowners association fired him in 2009, alleging he improperly deeded two lots to third parties without telling the association what he was doing. In one case, he deeded the property back to the association after disclosing he had an ownership interest in the group that had acquired it.

The Florida Bar said the transactions didn't hurt the association, but it admonished Tankel for minor misconduct in November in connection with the incident.

• • •

Tankel has also made offers to his clients to buy the properties himself.

"I own an affiliated business entity willing to purchase the property as is, pay all back assessment and the Firm will waive all attorney fees and costs,'' he wrote in a memo to clients last year.

If the association instead decided to keep the property, Tankel said he would charge it $1,500 for handling the foreclosure.

Tankel attached a disclosure citing Florida Bar rules that ban lawyers from such transactions unless the client is fully informed in writing and the transaction is "fair and reasonable'' to the client. Tankel asked the association to return the consent form in 10 days if it wanted to sell the property to his company.

Speaking generally, two experts on legal ethics said a lawyer who puts himself in such a position could be on shaky ground.

"It's almost always an unwaivable, unconsentable conflict of interest to represent both sides — seller and buyer — in a real estate transaction,'' said Amy Mashburn, a professor at the University of Florida law school. "It's inherent in such a transaction that the buyer and seller are not on the same page.''

By offering to waive fees, an attorney also could be seen as trying to pressure clients into doing something that might not be in their best interest, Mashburn said.

"I am concerned that this could be an inducement for HOAs that do not have high cash reserves to accept the conflicted offer to avoid paying an independent lawyer's fees,'' she said.

Charles Rose, who teaches legal ethics at Stetson University College of Law, said it might not be illegal or unethical to represent both a homeowners association and a prospective buyer with which the lawyer is affiliated.

"But it's getting so close to the line that it's at a minimum problematic,'' Rose said.

• • •

In his memo to clients, Tankel identified one firm interested in buying homeowners foreclosures — HOA Funding LLC, which he said is "an entity affiliated'' with his law firm. The registered agent for the Miami company is Steve Sprechman, a debt collection lawyer.

Sprechman could not be reached for comment. Despite the offer, HOA Funding has not acquired any homeowner foreclosures, according to court records.

However, several homeowner associations represented by Tankel's firm have handed over houses to third parties, notably an investor group operating under the names Prop Inc., F.Y.M. Inc., F.Y. Mortgage and P&D Resources.

The investor group includes Barry Haught, who spent 4 1/2 years in prison for defrauding Medicare out of $14 million. Haught hung up on a reporter who called him Thursday for comment. In his recent interview with the Times, Tankel said Haught contacted him roughly a year ago and asked about association foreclosures.

Tankel said he and Haught had a mutual acquaintance.

"A property manager in Hills­borough said he's a good guy,'' Tankel recalled. Tankel said it wasn't unusual for an investor like Haught to contact an attorney handling foreclosures, but Tankel said he didn't share any information.

Haught's group has acquired 71 homes and condos in Hillsborough County in the past eight months, the St. Petersburg Times reported last week. More than half of those properties came from homeowners associations Tankel represents, records show.

In some cases, the group acquired the properties at public auction. In other cases, the association deeded the properties to the group in transactions in which the purchase price does not appear in public records.

Among those transactions was Clifford and Donna Kemp's house in Brandon.

The Hickory Lake Homeowners Association got a final judgment of foreclosure on the house in February. Clifford Kemp attended the March 11 foreclosure auction at the Hillsborough County Courthouse hoping to pay the lien and get title.

Before he realized it, the auction ended. The association took back the property for $100.

About a week and a half later, the Kemps said, Haught came to the house and told them they could stay if they paid him $1,375 in rent. On April 7, the homeowners association deeded the house to P&D Resources, the company Haught said he was with.

The Kemps thought it was odd that Haught acted as if he owned the house when he had yet to get title to it. Then they recall a remark he made when he first approached them in March.

"These were his exact words," said Clifford Kemp. " 'If you had bid (at the auction) I would have kept on bidding because it was stacked against you. This was already decided before we went to auction.' ''

The Kemps have hired a lawyer to help them fight eviction. It irks the couple that they may lose the house over an association judgment of $3,374 — $2,350 of which was for Tankel's legal fees.

Susan Taylor Martin can be reached at (727) 893-8642. Kris Hundley can be reached at khundley@sptimes.com or (727) 892-2996.

Experts: Pinellas lawyer takes foreclosure fight to ethical edge 07/01/11 [Last modified: Saturday, July 2, 2011 10:19pm]

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