During the 2014 Legislative Session, a number of bills were adopted which will have an impact on community associations. The three (3) bills which will likely have the most impact are outlined herein.
I. GENERAL COMMUNITY ASSOCIATION BILL – House Bill 807:
Among the new legislation adopted by the 2014 Legislature is House Bill 807, which contains provisions affecting condominiums, cooperatives and homeowner’s associations. The changes provided by this Bill will be effective July 1, 2014.
Timeshares v. Vacation Rentals: Revisions were made in Chapter 509 of Florida Statutes, relating to Public Lodging Establishments, removing or excluding timeshare projects from the restrictions relating to such establishments.
For Condominiums:
Repair and Rental of Abandoned Units: Section 718.111(5) has been revised to create a new subsection (b), which provides authority for an association, at the discretion of the board, to enter an abandoned unit to inspect the unit and adjoining common elements. If determined necessary, the association may also make repairs to the unit or the common elements serving the unit, repair mold, turn on utilities or otherwise maintain, preserve or protect the unit and adjoining common elements. The new provision defines “abandoned” to include a unit that is subject to a foreclosure action and no tenant appears to have resided in the unit for at least 4 continuous weeks without prior written notice to the association, or if no tenant appears to have resided in the unit for 2 consecutive months without prior written notice and the association is unable to contact the owner or determine the whereabouts of the owner after reasonable inquiry. Unless an emergency condition exists, associations must provide at least 2 days written notice of the intent to enter the unit to the owner at the last address reflected in the association records, or by email if the owner has consented to receive notice by electronic transmission. Any expenses incurred by the association may be an assessment against the unit. Authority is provided for the association to obtain a receiver to lease the abandoned unit for the benefit of the association, using the rental income to offset against the costs and expenses incurred, as well as unpaid assessments and associated costs.
Insurance – Repair Obligation Clarified: Section 718.111(11) F.S., regarding insurance, has once again be revised. Subsection (j) now provides that in the absence of an insurable event, any repairs that are required will be by either the association or the unit owner, in accordance with the declaration or bylaws.
Official Records and Unit Owner Directories: Section 718.111(12) F.S., has been revised regarding certain Official Records. Subsection (c)5. was modified to clarify that all telephone numbers may be included in a Directory, although an owner may choose to not have their numbers listed (i.e., opt-out). It also added a provision that allows an owner to consent to the disclosure of additional contact information by the association (i.e., opt-in). A new sub-section (f) has been added which requires outgoing board or committee members to relinquish all official records and property of the association in the outgoing director or committee person’s possession or control, to the incoming board within five (5) days after the election. The Division of Condominiums is authorized to impose a civil penalty against an individual who fails to timely deliver the records and/or property.
Board or Committee Meeting Participation: Section 718.112(2)(b)5 F.S., has been revised to update and expand board or committee member participation in a meeting by telephone to add real-time videoconferencing, or similar real-time electronic or video communications as an acceptable way for a Board or Committee member to attend, be counted toward quorum and vote.
Board Member Communications: Section 718.112(2)(c) F.S., authorizes board members to use email as a means of communication but clarifies that board members may not cast a vote on an association matter via email.
Removal of the Association as an intervening owner for purposes of determining the obligations of a new owner for past due assessments: Section 718.116(1)(a) F.S., has been revised to provide that the term “previous owner” relative to the joint and several obligations to the association for unpaid assessments does not include an association that acquires title to a delinquent property through foreclosure or by deed in lieu of foreclosure. However, the liability of a present owner (typically a third party purchaser in a lender foreclosure) is limited to unpaid assessments that accrued before the association acquired title. Interest, late fees, attorney’s fees and costs incurred by the association in foreclosing on the unit, or any assessments which came due while the association held title to the unit, will not be the present owner’s obligation.
Limitation on Attempt to Terminate a Condominium: Section 718.117 F.S., has been revised to add that if a plan of termination of a condominium fails to receive the required approval vote, the plan shall not be recorded and a new attempt to terminate the condominium may not be proposed for 180 days after the date of the failed plan was first given to all owners.
Elimination of the Community Association Living Study Council: Section 718.50151 F.S., which created the Community Association Living Study Council, has been repealed, without replacement, due to a lack of interest from unit owners. Consequently, this Council no longer exists.
Extension of Bulk Sales Buyer Act: The expiration date for Section 718.707 F.S., relating to benefits provided to bulk assignees and bulk buyers of condominium units, has been extended from July 1, 2015 to July 1, 2016.
For Cooperatives:
Official Records and Owner Directories: Section 719.104(2)(c)5 F.S., was modified to clarify that all telephone numbers may be included in a Directory, although an owner may choose to not have their numbers listed (i.e., opt-out). It was also revised to allow an owner to consent to the disclosure of additional contact information by the association (i.e, opt-in). A new sub-section (e) has been added which requires outgoing board or committee members to relinquish all official records and property of the association in the outgoing director or committee person’s possession or control, to the incoming board within five (5) days after the election. The Division of Condominiums is authorized to impose a civil penalty against an individual who fails to timely deliver the records and/or property.
Financial Reporting: Section 719.104(4) F.S., was revised relative to financial reports, extending from 60 days to 90 days following the end of the fiscal year to prepare and complete or contract with a third party to prepare and complete a financial report for the preceding year. Within 21 days after the report is completed and delivered to the association, but no later than 120 days after the end of the prior fiscal year, the association is required to provide each member a copy of the annual financial report, or a written notice that a copy is available upon request at no charge. A new subsection (b) has been added to provide for specific types of reports to be provided depending upon the total annual revenues of the association. Unless otherwise provided in the by-laws of the association, for revenues of between: $150,000 and $299,999, a compiled financial statement is required; $300,000 and $499,999 a reviewed financial statement is required; and, over $500,000 an audited financial statement is required. These requirements may be reduced by a vote of a majority of the voting interests present at a duly called meeting. However, this reduction may not be done more than 3 consecutive years. If the total annual revenues are less than $150,000, the association must minimally prepare a report of cash receipts and expenditures.
Additionally, subsection (c) provides that if the cooperative is fewer than 50 units, there is no requirement to meet the minimum standards indicated above based upon the revenues of the association. In this event, only a statement of cash receipts and expenditures is required, unless the association documents require otherwise. The Statute identifies specific accounts which must be included in the report.
A new subsection (d) to Section 719.104 F.S., has been added to provide that if at least 20% of the unit owners petition the board for a greater level of financial reporting that required by the Statute, a membership meeting must be held within 30 days of the receipt of the petition by the board to present the issue. At that meeting, a vote of a majority of the voting interests present will require the association to prepare an amended budget or adopt a special assessment to pay for the higher financial report, regardless of any provision in the community documents otherwise.
Board Member Eligibility: Section 719.106(1)(a) F.S., has been revised to add a new subsection 2 (and renumbering subsection 2 to subsection 3), which provides that an individual who has been suspended or removed from the board by the division, or is delinquent in the payment of any monetary obligation due to the association, is not eligible to be a candidate for board membership and may not be listed on the ballot. A director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property is automatically suspended from office. The board is to fill any such vacancy until the end of the suspension or the term of the vacant seat. If the charges are resolved without a finding of guilt or a plea of guilty or nolo contendere, the director or officer is to be reinstated for the remainder of his or her term. A person who has been convicted of any felony is not eligible for board membership unless the individual’s civil rights had been restored for at least 5 years from the date such person seeks election to the board.
Emergency Powers: Section 719.128 F.S., has been added to provide clear emergency powers for the board during a state of emergency, which include:
* conduct board and membership meetings after notice of the meetings and board decisions is provided in as practicable a manner as possible.
* cancel and reschedule an association meeting.
* designating assistant officers, who are not directors, to step into the shoes of an officer in the event an officer is incapacitated or unavailable.
* relocate the principal office of the association.
* enter into agreements with counties and municipalities to assist with debris removal;
* implement a disaster plan before or immediately following the event for which a state of emergency is declared, which may include turning or shutting off elevators, electricity, water, sewer, security systems or air conditioners.
* based upon advice of emergency management officials or upon advice of licensed professionals retained by the board, determine any portion of the property unavailable for entry or occupancy.
* require the evacuation of the property in the event of a mandatory evacuation order in the area. If an owner or occupant fails to evacuate, the association is immune from liability to person or property.
* mitigate further damage, including taking action to contract for the removal of debris and to prevent or mitigate the spread of mold, regardless of which party is responsible by the governing documents or law to insure or remove fixtures and personal property.
* contract, on behalf of an owner, for items or services for which the owner is otherwise responsible, but which are necessary to prevent further damage to the property. Owner is responsible for reimbursing the association and the costs incurred may be charged to the owner as an assessment against that owner.
* levy special assessments without a vote of the owners.
* borrow money and pledge association assets as collateral without a vote of the owners.
For Homeowner’s Associations:
Handicap Accessibility to Board Meetings: Section 720.303(2)(a) F.S. has been revised to provide that a meeting of the board must be held at a location that is accessible to a physically handicapped person if requested by a physically handicapped person who has a right to attend the meeting.
Official Records and Owner Directories: Section 720.303(5)(c)5 F.S., was modified to clarify that all telephone numbers may be included in a Directory, although an owner may choose to not have their numbers listed (i.e., opt-out). It was also revised to allow an owner to consent to the disclosure of additional contact information by the association (i.e., opt-in).
Handicap Accessibility to Membership Meetings: Section 720.306(1)(a) F.S., has been revised to add that a meeting of the members must be held at a location that is accessible to a physically handicapped person if requested by a physically handicapped person who has a right to attend the meeting.
Amendments to Governing Documents: Section 720.306(1)(b) has been revised to indicate that if a copy of a proposed amendment is provided to the members before it is voted on and passes, and is not changed, the association will not be required to send a copy of the recorded amendment to all members of the association. Instead, the association may send a notice to all members that the amendment was adopted, identifying the official record book and page number of the recorded amendment, and that a copy of the amendment is available to any requesting member at no charge. This notice may be send electronically to an owner who previously consented to receive notices electronically.
Emergency Powers: Section 720.316 F.S., has been added to provide clear emergency powers to homeowner association boards in the event of a state of emergency, which include:
* conduct board and membership meetings after notice of the meetings and board decisions is provided in as practicable a manner as possible.
* cancel and reschedule an association meeting.
* designating assistant officers, who are not directors, to step into the shoes of an officer in the event an officer is incapacitated or unavailable.
* relocate the principal office of the association.
* enter into agreements with counties and municipalities to assist with debris removal;
* implement a disaster plan before or immediately following the event for which a state of emergency is declared, which may include turning or shutting off elevators, electricity, water, sewer, security systems or air conditioners.
* based upon advice of emergency management officials or upon advice of licensed professionals retained by the board, determine any portion of the property unavailable for entry or occupancy.
* mitigate further damage, including taking action to contract for the removal of debris and to prevent or mitigate the spread of mold, regardless of which party is responsible by the governing documents or law to insure or remove fixtures and personal property.
* levy special assessments without a vote of the owners.
* borrow money and pledge association assets as collateral without a vote of the owners.
II. COMMUNITY ASSOCIATION MANAGER BILL – House Bill 7037:
Among the new legislation adopted by the 2014 Legislature is House Bill 7037, which contains provisions affecting community association property managers, condominiums, cooperatives and homeowner’s associations. The changes provided by this Bill will be effective July 1, 2014.
The new legislation primarily: (1) defines new management tasks; (2) creates statutory forms for pre-foreclosure collection-related activities; and, (3) addresses the legal relationship between the manager and the association.
1. Defines New Management Tasks: Revisions were made in Chapter 468 of Florida Statutes, relating to licensed Community Association Managers. The identification of the tasks that fall within the definition of “community association management” in Section 468.431(2) F.S., have been expanded to include:
* determining the number of days required for statutory notices;
* determining the amounts due to the association; collecting amounts due before filing a civil action;
* calculating the votes required for a quorum or to approve a proposition or amendment;
* completing forms related to the management of a community that have been created by statute or a state agency (See #2 below);
* drafting meeting notices and agendas;
* calculating and preparing certificates of assessment and estoppel certificates;
* responding to requests for certificates of assessment and estoppel certificate;
* negotiating monetary or performance terms of a contract subject to approval by an association;
* drafting pre-arbitration demands;
* coordinating or performing maintenance for real or personal property and other related routine services involved in the operation of the community; and,
* complying with the governing documents of the community and/or requirements of law.
2. Creates Statutory Forms:
For condominiums, Section 718.116(5) F.S., has been amended to provide for a statutory form to use for a Release of Lien. Section 718.116(6) F.S., has been amended to provide a statutory form for use in providing a notice of intent to foreclose a lien. Section 718.121(4) F.S. has been revised to provide for a statutory form first notice of intent to file a lien.
For cooperatives, Section 719.108(4) F.S., has been revised to provide statutory forms for a notice of intent to file a lien; a notice of contest of lien; and, a release of lien. It also includes requirements of how a lien is to be prepared and a limitation on the life of the lien to one (1) year.
For homeowner’s associations, Section 720.3085 F.S., has been amended to provide a statutory form of a release of lien; a notice of intent to record a claim of lien; and, a notice of intent to file a foreclosure action after the lien has been filed.
3. Legal Relationship Between Manager and Association: Section 468.4334 F.S. has been added to the Statute relative to professional practice standards and liabilities for managers and management companies. It identifies the CAM or the management firm as the agent of the association based upon a written contract. The manager and/or firm is required to discharge the duties performed on behalf of the association loyally, skillfully, and diligently; dealing honestly and fairly; in good faith; with care and full disclosure to the community; accounting for all funds; and not charging unreasonable or excessive fees. The new Statute allows a contract between the association and the manager or firm to provide that the association indemnifies and holds harmless the manager and/or firm for ordinary negligence resulting from the manager or firm’s act or omission that is the result of an instruction or direction of the association. Such indemnification does not extend to an act or omission of the manager that violates a criminal law; derives an improper personal benefit; is grossly negligent; or is reckless, in bad faith, with malicious purpose, or is in a manner exhibiting wanton and wilful disregard of human rights, safety, or property.
III. NON-RESIDENTIAL CONDOMINIUM BILL – Senate Bill 440
Among the new legislation adopted by the 2014 Legislature is Senate Bill 440, which contains provisions affecting only condominium associations, and more specifically, the non-residential condominium. The changes provided by this Bill will be effective July 1, 2014.
The Bill amends Chapter 718 to provide that the following requirements will no longer apply to vacation, timeshare or commercial condominium associations (i.e., the non-residential condominium):
* the requirement to respond to a written inquiry filed by certified mail (Section 718.112(2)(a)(2) F.S.)
* the prohibition against voting by general proxy and prohibition of proxy voting for the election of directors (Section 718.112(2)(b)(2) F.S.)
* limitations on board member terms (i.e., they do not automatically expire at the annual meeting) (Section 718.112(2)(d)(2) F.S.)
* the prohibition on co-owners of a unit serving on the board simultaneously (Section 718.112(2)(d)(2) F.S.)
* the requirements to be eligible to run for the board (Section 718.112(2)(d)(2) F.S.)
* the requirement that board member elections take place by written ballot or voting machine. (Section 718.112(2)(d)(4), F.S.)
* the requirement for board member certification within 90 days of being elected or appointed to the board (Section 718.112(2)(d)(4)(b), F.S.)
* the requirement for mandatory non-binding arbitration, unless specifically provided for in the declaration of the nonresidential condominium (Sections 718.112(2)(k) and 718.1255(6), F.S.)
* the fire sprinkler retrofit opt-out provisions (Section 718.112(2)(l), F.S.)
* the ability to opt out of the requirements of Section 553.509(2), F.S., dealing with the Americans with Disabilities Act Standards for Accessible Design (Section 718.112(2)(l)(4), F.S.)
* the requirement to adopt hurricane shutter specifications and other hurricane protection (Section 718.113(5) F.S.)
* the requirement for phase condominiums (Section 718.403 F.S.)
Additionally, similar to HB 807 language, Section 718.707 F.S., regarding bulk assignees and bulk buyers in distressed condominiums has been amended to extend the application of the Statute for an additional year, through July 1, 2016.
The information presented herein is for informational purposes only and is not intended, nor should it be considered, the providing of legal advice. Should you have any questions about any of the information contained herein, please contact your Association counsel.