The Legislative Session for 2010 has produced a few significant changes to Chapter 720 F.S. affecting Homeowners’ Associations. The following is a summary of these changes and an identification of the particular affected sections. Please note that this summary is not intended to be an exhaustive explanation of the intricate detail of the changes nor is it to be considered complete legal advice on the subject. It is recommended that if there are any questions regarding any of these changes, you contact this office for further discussion.
Among the most important revisions, Senate Bill (SB) 1196 incorporates changes to Official Record maintenance and inspection requirements; limitation on compensation of officers and directors; further clarification regarding flagpole placement and maintenance; suspension of use rights for delinquent owners; changes for voting procedures, incorporating an absentee ballot process; clarification on filling vacancies on the board; obligating tenants to pay rent directly to associations under specified circumstances; allowing associations to acquire leaseholds and other real property interests; and, limiting special assessments by a developer board.
By way of clarification, changes were made to Sections 617.0721 (member voting), 617.0808 (removal of directors) and 617.1606 (access to records) in the Florida Not-For-Profit Corporations Act, to specifically state that the provisions of these Sections do not apply to homeowners’ associations.
Section 720.303(2) was revised to clarify when meetings of the board or a committee with its attorney are closed to the membership. Section 720.303(5)(a) has been amended to require that requests for access to inspect the Official Records be submitted by certified mail, return receipt requested. Subsection (c) was revised to allow for charges in the inspection process to be passed on the inspecting owner to include reasonable costs involving personnel fees and charges at an hourly rate for vendor or employee time during the inspection. Records of the association that are exempted from owner access were expanded to include personal identification information of owners, specifically identifying social security numbers, driver’s license numbers, credit card numbers, email addresses, telephone numbers, emergency contact information, and any addresses of a parcel owner other than as provided to fulfill association notice requirement; any electronic security measures used to safeguard data, including passwords; and, software and operating system used by the association which allows manipulation of data.
Section 720.303(6) was again amended relative to reserves. A limitation is provided for reserve accounts established in a manner not provided for in the Statute. If a reserve account is established pursuant to the Statute, it may be terminated by a vote of a majority of the total voting interests. Language required to be included on the annual budget relative to reserves has been revised, depending upon the circumstances.
A new subsection 720.303(12) has been added, which prohibits compensation of officers, directors and committee members for services performed in those capacities, and further prohibits the ability to benefit financially from services to the association in any other way, subject to specified exceptions. Among the exceptions include participating in financial benefits that accrue to all or a significant number of the members; reimbursement of out of pocket expenses; recovery of insurance proceeds; any fee or compensation authorized by the governing documents; any fee or compensation authorized in advance by a vote of the membership. Developer representatives are also excepted.
Section 720.304(2)(b) has been amended to require a flagpole and display of the flag to be subject to all building codes, zoning setbacks and other applicable governmental regulations, as well as certain restrictions set forth in the governing documents.
Section 720.305 has been revised to allow for the suspension of use rights to common areas and facilities if an owner is delinquent for more than 90 days in paying a monetary obligation to the association, which continues until the monetary obligation is paid in full. The requirement that such authority be contained in the governing documents has been removed. The suspension would not apply to portion of the common areas that must be used to provide access to the parcel or utility services provided to the parcel. Before use rights may be suspended, it requires notice and a hearing for the suspension, like with fines. Any such notice must also be sent, if applicable, to any tenant, licensee, or invitee of the parcel owner. The provisions of (b), which did not require notice and a hearing for suspension of use rights has also been deleted.
A potentially helpful change to Section 720.305(2) is in new language that is added that limits fines of less than $1,000.00 from becoming a lien against the property. If the governing documents allow for fines in an amount greater than $1,000.00, these fines may be secured with a lien against the property under this provision, if the declaration so provides.
A new subsection 720.306(8)(b) has been added to provide for a procedure for the use of absentee balloting for association elections. The procedure uses the method that has been used in condominiums since 1992, having an inner envelope containing the ballot placed in an outer envelope that contains the identifying information of the voting owner. This process is only to be used when the authority to do so is contained in the governing documents.
Section 720.306(9) has been revised to provide for clarification in filling vacancies on the board. It provides that unless otherwise set forth in the bylaws, a vacancy on the board that occurs before the expiration of a term may be filled by the affirmative vote of the majority of the remaining directors, even if there is less than a quorum (or only one). Alternatively, the board may hold an election to fill the vacancy, which is done in the same fashion as the annual election. Unless the bylaws provide otherwise, any individual appointed or elected to fill the vacancy serves for the unexpired term of the seat being filled. This new provision does not affect the procedures for recall.
A new subsection (8) has been added to Section 720.3085, which provides for the authority of an association to collect rent from a tenant occupying a property that is delinquent to the association in any monetary obligation. The association is required to make written demand on the tenant, with a copy to the owner, and may only collect rent to the extent of the unpaid monetary obligation to the association. If the tenant does not pay, the association may evict the tenant as if the association was the landlord. However, the statute does not provide for the ability of the association to assess the costs involved against the lot. It also contemplates the possibility of a receiver collecting the rent.
Section 720.31(6) has been added to allow for associations to enter into agreements to acquire leaseholds, memberships, and other possessory or use interests in lands or facilities. These would entail buying out land leases from developers, country clubs, golf courses, marinas, submerged land, parking areas, conservation areas and other recreational facilities. The procedure for doing so is set forth in the new provisions, including voting requirements for the owners.
A new Section 720.315 has been added to limit the ability of a developer to impose a special assessment prior to the turnover of control of the association. A vote of the owners other than the developer is required in order for such an act to take place.
We understand that there are numerous and significant changes made for 2010 and that the synopsis set forth herein is to provide an overview of the changes that most appreciably affect association operations. If you have further questions regarding any of the new provisions, please contact this office.
