Two years ago, the homeowners association of Pasco County's Quail Ridge Villas got a final foreclosure judgment against a resident who owed $8,217 in delinquent fees.
At the online public auction, someone bid on the property but failed to pay. Another auction was scheduled, and again the high bidder defaulted. That happened three more times, for a total of five invalid sales in eight months.
The repeated delays hurt the association, which was unable to collect thousands of dollars in fees needed for maintenance and repairs. But they were a boon to HOA Problem Solutions, a Tampa company that had been renting out the house for the whole time that foreclosure proceedings dragged on.
Now, the company is accused of causing the delays itself.
HOA Problem Solutions "is intentionally impeding the judicial process by submitting false bids'' in order to scuttle foreclosure sales and keep collecting rent on the house, Monique Parker, an attorney for Quail Ridge Villas, alleged in a lawsuit filed in Pasco circuit court.
Many other associations have had similar experiences with the company, Clearwater attorney Brandon Mullis said. He accuses HOA Problem Solutions of an "ongoing scam'' that hurts not only the associations but also the homeowners, renters and honest bidders in foreclosure auctions.
"If what they're doing isn't illegal, it should be,'' he said.
As the Tampa Bay Times recently reported, Florida Attorney General Pam Bondi's office has launched a consumer protection investigation into HOA Problem Solutions. The office has subpoenaed lease agreements and other company records under a statute that outlaws unfair, deceptive and unconscionable business practices.
Bondi's spokesperson would not give any details. However, Mullis said it appears the investigation focuses at least in part on allegations that the company is gaming the foreclosure auction process.
"I filed a complaint with the AG's office several months ago and ... I've spoken with their office a couple of times so I'm glad things are moving forward on that front,'' he said.
The sole corporate officer of HOA Problem Solutions is Michael Chancey, whose uncle, Jimmy Chancey, appears on its website. Their attorney, Matthew Wolfe, said Friday that the company is working with Bondi's office to "amicably resolve'' the investigation and comply with "any and all'' Florida law.
HOA Problem Solutions is one of numerous property companies linked to the Chanceys. They were among the first to recognize that there was big money to be made when people fail to pay their homeowners association dues.
Like banks, associations can put a lien on a house and foreclose. Association foreclosures, though, typically move more quickly to public auction because the liens involve smaller amounts of money. By sometimes paying only a few thousand dollars in delinquent fees and other costs, the high bidder can get title to a home and rent it out until the bank completes its foreclosure and the property is sold.
Between 2011 and 2013, Chancey-connected companies obtained title to scores of Tampa Bay homes by being the high bidder at association foreclosure auctions.
But in the past few years, one of the most active companies, HOA Problem Solutions, has been getting titles directly from homeowners. Records show that it often approaches owners right after the association hits them with a final judgment of foreclosure. The company pays the owner a few hundred or a few thousand dollars to deed the property to it and walk away.
HOA Problem Solutions then puts a tenant in the house, sometimes just a few days before the foreclosure sale. At the online auction, association attorneys say, company representatives bid under various names, default on those bids and force the sale to be rescheduled so the company can keep collecting rent.
That's what allegedly happened with the home in Quail Ridge Villas in Spring Hill. Five high bidders defaulted; Parker, the attorney, said that three had the same bid number — 11578 — indicating it was the same person bidding each time. Public records do not identify the person or company linked to that number.
"Basically, the game is that HOA Problem Solutions submits false bids at the associations's foreclosure sales and intentionally fails to deposit the funds to obtain title, rendering the sale invalid and requiring the association to reset the sale again and again and again,'' Parker said. "All the while, assessments are not being paid and the association is forced to expend additional fees and costs to repeatedly reschedule the sales.''
"In our opinion, she added, "it's not only a scam, but it's interfering with the judicial process.''
The company has also found a way to make money even if an association's foreclosure sale goes through.
Sometimes, the high bid is for considerably more than the foreclosure judgment amount. In such cases, the surplus is supposed to go to the original homeowner who incurred the debt. But HOA Problem Solutions says any surpluses belong to it.
Among those who learned that the hard way are Jeanne and Jerry Hancock.
The couple fell behind in the dues on their Land O'Lakes home after Jerry Hancock, a real estate appraiser, lost his job when the market slumped. In October, they deeded the house to HOA Problem Solutions after the association got a final judgment for $9,865. The house sold at auction for $30,000, leaving a surplus of $20,135 after the association received what it was owed.
HOA Problem Solutions already had collected rent on the house. It also got the $20,135 after producing a contract showing the Hancocks had assigned it "any and all rights to surplus funds that may result from a court-ordered sale of the properties.''
The couple say, however, that the company never made it clear that there might be extra money they were entitled to.
"We're trying to buy some property now and that would have been nice to have,'' said Jeanne Hancock, a nurse. She and her husband, who is not working because of physical problems, are currently renting in Spring Hill.
Mullis, whose clients include Oldsmar's Forest Lakes Homeowners Association, is fighting HOA Problem Solutions in a case in which the company claims it is entitled to a surplus of nearly $60,000.
Earlier this year, the association obtained a $6,379 final judgment against a couple. They deeded the house to HOA Problem Solutions, which immediately began renting it out. The high bidder at the first foreclosure auction, on Jan. 15, didn't pay, forcing the auction to be rescheduled for March 4.
"That resulted in a sale of $65,100 to an unsuspecting investor who unfortunately wasn't aware that she was purchasing the property subject to the superior first mortgage,'' Mullis said.
As long as the association gets its money, Mullis said he is willing to vacate the sale so the investor won't be stuck with a house she might lose if the bank forecloses.
Moreover, he added, "I do not want to see HOA Problem Solutions recoup a $58,000 windfall after owning the property less than two months.''
HOA Problem Solutions has acquired title to homes in foreclosure in at least seven Florida counties as far off as Duval. Among its rental tenants is Nicholas McSwain, an Air Force veteran.
Last fall, he, his two children and his pregnant fiance moved from Tampa to Polk County. They leased a house for $1,050, only to discover that there were no appliances.
Then HOA Problem Solutions "bought some used appliances at a scratch-and-dent shop that have since broke,'' McSwain said.
What really bothered him, though, was when he got a letter from a law firm that represents the mortgage holder.
"They didn't tell me it was in foreclosure,'' he said of HOA Problem Solutions. "I wouldn't have signed this lease if I'd known that.''
Records show that lenders have started foreclosing on at least three other Polk County properties that the company acquired. In the meantime, it is collecting rent on all of those, too.
Contact Susan Taylor Martin at email@example.com or (727) 893-8642. Follow @susanskate