Florida Developer Accused of Running ‘Zombie HOA’ for 20 Years

Homeowners at a townhome complex in Homestead, FL, are taking the developer of the complex to court for allegedly failing to transfer HOA control over to the homeowners.

In fact, homeowners in the Villa Portofino East complex—which consists of 117 townhomes—claim that the developer has been in control of the HOA for 20 years after the units were sold, collecting dues from residents but holding an iron grip on the HOA's governance.

Control and decision-making authority over Florida residential communities governed by associations are supposed to transfer from the developer to the homeowners once the statutory turnover requirements have been met.

But affiliates of developer Prime Homes at Villa Portofino East—tied to developer Larry Abbo's Prime Group and PMG Asset Services—have appointed their representatives and employees to the HOA board for the past two decades, according to the lawsuit filed in Miami-Dade Circuit Court last month by residents Edney Del Risco, Eliseo Moreno, and Madeline Garcia. 

The developer-controlled board and its attorneys have reportedly told homeowners that the requirements for transferring control of the association have not yet been met.

However, Risco, Moreno, and Garcia—who have co-owned a townhome at Villa Portofino East since 2022—strongly disagree.

"They are not the only owners in the community with these concerns; they are the ones who chose to file," their attorney, Eduardo Gomez, tells Realtor.com®

Transfer troubles

Under Florida's Homeowners' Association Act, homeowners become entitled to elect a majority of the association's board within three months after 90% of the parcels in all phases of the community ultimately operated by the association have been conveyed to members or other owners who are not affiliated with the developer.

Risco, Moreno, and Garcia allege that the developer-controlled HOA improperly included transferred land in its calculation of residential parcels to delay the turnover of control to homeowners.

On June 26, 2024, the Villa Portofino East Community Development District transferred two parcels to Prime Hotel Group at Homestead, LLC, according to the lawsuit.

Although those parcels are now slated for commercial use as the site of a new hotel, the HOA allegedly continues to count them as residential parcels when calculating whether the statutory threshold for homeowner control has been met or not.

"The developer now appears to treat the same parcels two different ways, depending on which calculation favors it: residential when that helps prolong developer control of the HOA, commercial when that helps justify the hotel expansion," says Gomez.

That alleged dual treatment is part of what the lawsuit seeks to challenge.

"Our position is that the developer has manipulated the parcel count through a series of post-closing land transfers to keep itself artificially below the threshold for nearly two decades," says Gomez. "The math, as we read it, does not support continued developer control."

Lawsuit also raised maintenance issues

The lawsuit also alleges that the developer-controlled HOA has failed to adequately maintain the complex.

"The complaint identifies inoperable access gates; an unsafe pool, fountain, and pergola; broken paver walkways; fence damage; and degraded stormwater infrastructure, among other items," says Gomez. "The Association is obligated to maintain these features under the governing documents—the residents are the ones funding it through their assessments."

The HOA monthly assessment was $285.05 going into 2026, according to Gomez, but was reduced to $252.51 in April.

HOA turnover problems persist

Florida attorney Chad D. Cummings of Cummings & Cummings Law, who is not involved in the case but has examined the situation, tells Realtor.com: "The developer turnover process fails more often than most people realize. This was a major problem during the 2008–09 downturn when many developers went bankrupt, creating 'zombie HOAs,' and the issue is starting to rear its head again."

Cummings says turnover should be measured in months or years, not decades.

"The longer a developer holds control, the more financial risk accumulates for homeowners," he says. "There is an inherent conflict of interest between developers who want to minimize expenses to maximize their ROI and homeowners who desire that funds are expended to maintain the community and protect future resale value and ensure amenities and infrastructure are maintained."

When the developer turnover process breaks down, Cummings says the obvious risk is the effect on property values.

"Whenever we are dealing with a zombie HOA, property values will take a hit," he warns. "Knowledgeable buyers will run in the other direction."

Realtor.com reached out to PMG's attorney, Geoffrey C. Bennett, but did not hear back.