Condo Crimes & Conflicts of Interest

A Florida Bill creating additional costs and burdens for condominium associations may become law.

By:  Lisa Magill, Esq.

lmagill@kbrlegal.com

(954) 928-0680

I believe most Floridians support toughing up on abuses in condominium associations.  The Division of Florida Condominiums, Timeshares and Mobile Homes and law enforcement should have the tools they need to ferret out theft, forgery, self-dealing, conflicts of interest or other wrongdoings and punish those purposely violating the law.  That goes without saying.

However, Florida CS/HB 1237, approved unanimously on April 20, 2017 by the Civil Justice and Claims Subcommittee contains provisions seemingly intended to increase transparency, but likely will increase costs and administrative burdens for condominium associations.  These additional costs will be passed through to the members, leading to budget increases for those communities with more than 150 units.

Association records maintenance is very important for compliance with regulatory requirements.  Each and every owner’s right to inspect Official Records must be preserved.  After all, the unit owners ultimately pay the bills.  Are the existing laws adequate?  Pursuant to the current statutes, members are entitled to request access to a host of records including financial records, meeting minutes, contracts and correspondence.  Associations that fail to provide access are subject to penalties and exposure for opposing party attorney fees.  The statutes also call for civil penalties against any individual who defaces, destroys or intends to cause harm to the members by failing to create or maintain the records listed in Section 718.111(12), Florida Statutes.

Disputes concerning maintenance and access to records cause a tremendous amount of strife in community associations.  In some cases, association leadership may be somewhat lax so the records are not maintained exactly as contemplated by Statute.  Leadership efforts to purposely withhold access to Official Records also does happen from time to time.  On the other hand, condominium unit owners frequently use their record inspection rights to harass and annoy board members and management.

This Bill, if adopted, would require condominium associations to also allow renters access to certain records.   Associations with more than 150 units will be required to post (upload) copies of the following documents on an association website created for this purpose.  Associations without websites or use of websites, web portals or web pages will need to create them or hire third-parties to do so.  The website must contain:

  1. The recorded declaration with all amendments;
  2. The recorded bylaws with all amendments;
  3. The articles of incorporation with all amendments and current rules;
  4. All management contracts, leases or other contracts where the association is a party of which unit owners have obligations;
  5. Summaries of bids for materials, equipment or services;
  6. The adopted annual budget and any proposed budget to be considered at the annual meeting;
  7. The year-end financial reports required by statute;
  8. Each director’s self-certification or evidence of participation in a Division approved educational program;
  9. All contracts or transactions between the association and any director, officer, corporation, firm or any other entity in which an association director is financially interested;
  10. Conflict of interest disclosures; and
  11. Notices and agendas for both membership and board meetings.

Who will perform these services?  Will volunteers undertake these obligations?  What if the leadership isn’t computer or internet savvy?  Many associations will need to rely upon vendors to perform these services or expect management to absorb these responsibilities.  Management companies may have to hire additional staff to account for the extra work load.  All of this translates to increased costs to the associations and, as a result, the unit owners.

Additionally, associations will have to file a report with the DBPR containing the names of all the financial institutions with which it maintains accounts on an annual basis.

This Bill dramatically changes recall procedures and apparently eliminates the ability for a board to not certify a recall and then submit it to arbitration.  Admittedly, many recall efforts that should be certified by the board wind up in arbitration.  That is unfortunate but, at the conclusion, the rightful board controls operations.  Eliminating recall arbitration after a board fails to certify the recall means that wrongfully removed board members will have to defend their positions as individuals.  Board members will either have to accept their fate or file a petition for arbitration at their own expense.

This Bill is very close to being passed.  You only have a short time to contact your legislators if you believe these procedures will negatively impact condominium associations.  If you have any questions regarding these issues, please contact this office.