Legislative Update of New Community Association Laws

By June 30, 2017Memos, News
Legislative Update

The following is our post-Session report on residential housing law changes from the 2017 Legislative Session.  The Governor has taken final action on the measures. The full text of each bill, as well as applicable legislative staff reports, are available on the legislative web sites (www.flsenate.gov; www.myfloridahouse.com; and www.leg.state.fl.us.).    Note:  HB = House Bill.  SB=Senate Bill.  All changes are effective as of July 1, 2017.

NOT FOR PROFIT CORPORATIONS (Chapter 617) (Applicable to condominium, homeowner and cooperative associations)

No changes.

CONDOMINIUMS – (Chapter 718)

1. Kickbacks – 718.111(1)(a)/HB1237.  Any officer, director or manager accepting “kickbacks” can be criminally charged.  Note:  The term “kickback” is not defined.

2. Ballot Tampering, Embezzlement and Access to Official Records – 718.111(1)(d)/HB1237.  Forgery of a ballot envelope or voting certificate, embezzling funds, and the destruction or refusing to allow inspection or copying of official records are crimes.

3. Conflict of Interest – 718.111(3)(b)/HB1237.  An Association cannot hire an attorney who represents the Association’s management company.   Comment:  This will create issues when the management contract requires the Association to indemnify and defend the management company and manager in lawsuits brought against them while working for the Association. 

4. Purchase of Units – 718.111(9)/HB1237.  Except in a timeshare condominium, a board member, manager or management company cannot purchase a unit at the association’s lien foreclosure sale or accept a deed in lieu of foreclosure resulting from unpaid assessments.  Comment:  This prohibition can be easily circumvented by setting up a separate entity or use of a “strawman.”

5. Bids and Official Records – 718.111(12)(a)17/HB1237.  Clarifies that bids are to be kept as official records for 7 years.

6. Renters and Official Records – 718.111(12)(c)1/HB1237.  Clarifies that an owner’s  authorized representative can inspect records.  Gives a renter of a unit the right to inspect and copy the association’s “bylaws and rules.”   Comment:  What about the Declaration?

7. Website – 718.111(12)(g)/HB1237.  By July 1, 2018, an association with 150 or more units, except timeshares, must post digital copies of most of its official records on its website.  The website must contain a section accessible only to unit owners and the Association must provide a username and password upon request.   Notices of meetings must also be posted on the first page.

8. Financial Reporting – 718.111(13)(b)2/HB1237.  The exception that condominiums with fewer than 50 units are exempt from preparing a compilation, review or audit, regardless of revenues, has been removed.

9. Financial Reporting – 718.111(13)(c)3/HB6027.  The prohibition against waiving the financial reporting requirement for more than three years in a row has been eliminated.

10. Debit Cards – 718.111(15)/HB1237.  An association and its officers, directors, employees and agents may not use a “debit card” issued in the name of the association or billed directly to the association.  Use of such a card for purposes other than legitimate association expenses is deemed credit card fraud.  Comment:  So which is it?  You can’t have debit cards but if you use what you are not allowed to have for an improper purpose it’s fraud?  Note: The Statute does not define debit card and does not expressly include credit cards.

11. Term Limits – 718.112(2)(d)2/HB1237.  A board member may not serve more than four consecutive 2 year terms unless approved by 2/3 of the total voting interests or unless there are not enough eligible candidates to fill the vacancies.  Comment:  Appears that there is no limit on the number of 1 year terms a person may serve.  Also, there is question if this applies to prior service before July 1.

12. Recalls – 718.112(2)(j)1/HB1237.  The Board is no longer required to file for arbitration if it does not certify the recall.  Comment: There are differing interpretations as to the purpose of this change but it appears that if the Board fails to certify the recall the burden to file for recall arbitration falls on the owners voting for the recall.

13. Service Provider Conflicts – 718.112(2)(p)/HB1237.  An association may not employ or contract with any service provider that is owned, or operated by a board member or with any person who has a financial relationship with a board member or officer or relative with the third degree of blood or marriage of a board member or officer.  This does not apply if the officer, director or relative owns less than 1% of the company.

14.  Estoppel Letters – 718.116(8)/SB398.  Time to issue estoppel reduced from 15 calendar days to 10 business days.  Association must designate on its website a person or entity to received estoppel requests.  Estoppel letter must contain certain enumerated information required by the statute.  A form letter is created in the Statute.  Estoppel certificate must be “good” for 30 days and 35 days if sent via regular mail.  Fee for issuing certificate is waived if estoppel is not delivered within 10 business days.  Maximum fee for estoppel letter is $250.  Additional $100 may be added if expedited estoppel is requested.  Additional $150 may be added if the account is currently delinquent.  If estoppel certificate is issued for owner of multiple units, then max fee is capped.  The estoppel letter fee must be established by Board resolution or in the management contract.  Statutory fees will be adjusted for inflation every 5 years.

15. Termination – 718.117/SB1520.    Termination must be approved by the Division after it is approved by 80% of the unit owners.   10% voting no threshold has been reduced to 5%.  Ability to vote to terminate again after a failed vote increased from 18 months to 24 months.  The homesteaded unit voting no requirement that they be paid at least the original purchase price now includes all owners, not just an original purchaser from the developer.  Identity disclosure requirement for owners owning 50% of the units has been lowered to 25%.  The Division must now also approve the plan within 45 days of filing.

16. Arbitration – 718.1255(4)/HB1237.   Arbitrators must be attorneys licensed at least 5 years and have mediated at least 10 disputes involving condominiums within the past 3 years,  mediated at least 30 disputes of any nature in the last 3 years, or they must be board certified in real estate or condominium law.  The arbitrator must conduct a hearing within 30 days of being assigned a case.  Arbitration decisions must be rendered within 30 days of the hearing.  Failure to render the decision in 30 days can result in loss of certification.

17. Management – 718.3025(5)/HB1237.  A party providing maintenance or management services to a residential condominium may not purchase a unit at the association’s lien foreclosure sale.   If the management or maintenance company owns 50% or more of the units, then a majority of the other unit owners can vote to cancel the contract.  See:  718.111(9) – Item 4 above for comparison.

18. Conflicts of Interest – 718.3027/HB1237.  Directors, officers, and their relatives must disclose conflicts of interest.  A rebuttable presumption that a conflict exists if a director, officer, or relative within the third degree of blood or marriage:  1. enters into a contract with the association; 2. holds an interest in company that conducts business with the association.  See: 718.112(2)(p) – Item 12 above for comparison.

19. Suspension of Voting Rights – 718.303(5)/HB1237.  Voting rights can only be suspended if the person owes the association $1,000 or more and the debt is unpaid for more than 90 days.   Proof of the debt must be provided to the member at least 30 days before the suspension can take effect.

20. Receivers – 718.303(8)/HB1237.   A receiver may not exercise voting rights of units it is controlling.

21.      Ombudsman – 718.5012(5)/HB1237.  The ombudsman has the express power to review secret ballots cast in an election.

22. Financial Reporting – 718.71/HB1237.  An association shall provide an annual report to the department containing the names of the financial institutions with which it maintains accounts.  The report is available to owners from the department upon request.

COOPERATIVES (Chapter 719).

1. Financial Reporting – 719.104(4)(b)4/HB6027.  The prohibition against waiving the financial reporting requirement for more than three years in a row has been eliminated.

2. Financial Reporting – 719.104(4)(c)1/HB6027.  The exception that cooperatives with fewer than 50 units are exempt from preparing a compilation, review or audit, regardless of revenues, has been removed.

3. Estoppel Letters – 719.108/SB398.  Time to issue estoppel reduced from 15 calendar days to 10 business days.  Association must designate on its website a person or entity to received estoppel requests.  Estoppel letter must contain certain enumerated information.  A form letter is created in the Statute.  Estoppel certificate must be “good” for 30 days and 35 days if sent via regular mail.  Fee for issuing certificate is waived if estoppel is not delivered within 10 days.  Maximum fee for estoppel letter is $250.  Additional $100 may be added if expedited estoppel is requested.  Additional $150 may be added if the account is currently delinquent.  If estoppel certificate is issued for owner of multiple units, then max fee is capped.  The estoppel letter fee must be established by Board resolution or in the management contract.  Statutory fees will be adjusted for inflation every 5 years.

HOMEOWNER ASSOCIATIONS (Chapter 720).

1. Financial Reporting – 720.303(7)(b)2/HB6027.  The exception that associations with fewer than 50 lots are exempt from preparing a compilation, review or audit, regardless of revenues, has been removed.

2. Estoppel Letters – 720.30851/SB398.  Time to issue estoppel reduced from 15 calendar days to 10 business days.  Association must designate on its website a person or entity to received estoppel requests.  Estoppel letter must contain certain enumerated information.  A form letter is created in the Statute.  Estoppel certificate must be “good” for 30 days and 35 days if sent via regular mail.  Fee for issuing certificate is waived if estoppel is not delivered within 10 days.  Maximum fee for estoppel letter is $250.  Additional $100 may be added if expedited estoppel is requested.  Additional $150 may be added if the account is currently delinquent.  If estoppel certificate is issued for owner of multiple units, then max fee is capped.  The estoppel letter fee must be established by Board resolution or in the management contract.  Statutory fees will be adjusted for inflation every 5 years.

TIMESHARES (Chapter 721)

  1. Timeshares – 721/HB818.  Revises the definition of the term “interest holder” to clarify that the term does not include certain parties to a certain multisite timeshare plan; revises requirements for the termination of a timeshare plan; specifying the percentage of votes required to extend the term of a timeshare plan under certain circumstances, etc.

MISCELLANEOUS 

1. Statute of Limitations – 95.11(3)(c)/HB377.   For the purposes determining when the 4 year statute of limitations to sue for construction defects runs from completion of the contract the term “completion of the contract” is defined as “the later of the date of final performance of all contracted services or the date that final payment “comes due” without regard to the date final payment is made.”

DISCLAIMER:  The foregoing is a summary of the statutory changes and should not be relied on as legal advice or a complete explanation of the changes.  Every situation is different and you should seek qualified legal advice before relying on the foregoing.