2018 Florida Community Association Legislative Update

Posted on April 1, 2018 by Gerstin

The following will become law on July 1, 2018.

Fines and Suspensions – Condominiums § 718.303
Now mirrors Florida HOA law- A condominium association’s committee of unit owners who determine whether to confirm or reject a fine or suspension levied by the board must be made up of at least three members who are appointed by the board, and are not officers, directors, or employees of the association, or a spouse, parent, child, brother, or sister of an officer, director, or employee of the association. §718.303(3)(b). Fla. Stat.

Now mirrors Florida HOA law – A condominium association’s committee of unit owners who determine whether to confirm or reject a fine or suspension levied by the board must approve the fine or suspension by majority vote, otherwise the association may not impose the fine or suspension. §718.303(3)(b). Fla. Stat.

Now mirrors Florida HOA law- The condominium and cooperative association must provide written notice of any fine or suspension by mail or hand delivery to the unit owner and, if applicable, to any tenant, licensee, or invitee of the unit owner. §718.303(3)(b) Fla. Stat.

A fine approved by the committee of a condominium association is due 5 days after the date of the committee meeting at which the fine is approved. § 718.303(3)(b).

Fines and Suspensions – HOAs §720.305(2)(b), Fla. Stat.
A fine approved by the committee of an HOA, condominium, or cooperative association is due 5 days after the date of the committee meeting at which the fine is approved. § 718.303(3)(b). HOA Elections – § 720.306

If an election is not required because there are fewer or an equal number of candidates than vacancies, and nominations from the floor are not required, then write-in nominations are not permitted and the candidates will commence service on the board of directors, regardless of whether a quorum is attained at the annual meeting.

Payment of HOA Assessments – § 720.3085
The application of payments in HOA law (first to the interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees, and then to the delinquent assessment) applies notwithstanding the Uniform Commercial Code’s regulations on restrictive notations placed on or accompanying a payment. 720.3085(3)(b), Fla. Stat. This is intended to clarify existing law.

HOA Amendments to Governing Documents – § 720.306
A proposal to amend the governing documents of an HOA must contain the full text of the provision to be amended, with underlining of proposed new language and striking of proposed deleted language, unless the proposed change is so extensive and then a notation must be inserted indicating that the proposed amendment has substantial rewording. This is similar to condominium association law.

An amendment is effective when recorded in the public records of the county in which the community is located.
An immaterial error or omission in the amendment process does not invalidate an otherwise properly adopted amendment.

Required notices for amendments to the governing documents must be mailed or delivered to the parcel owner’s mailing address on the property appraiser’s website, or electronically transmitted if the parcel owner has consented in writing to receive notice by electronic transmission. 720.306(1)(g), Fla. Stat.

Communication by HOA Board Members –§ 720.303(2)(a).
Members of an HOA’s board of directors are allowed to use e-mail as a means of communication. However, a board member may not cast a vote on an association matter via e-mail. This mirrors condominium association law.

Notice of Board Meetings – Condominiums §718.112, Fla. Stat.
Condominium associations are allowed to adopt rules for noticing all board and unit owner meetings and meeting agendas on a website if the time requirements for physically posting the board meetings are met. Any rule adopted for website notice must include a requirement the association send an electronic notice in the same manner as a notice for a meeting of the members, which must include a hyperlink to the website where the notice is posted, to all unit owners whose e-mail addresses are part of the official records. Notice by website must be in addition to the other notice requirements. §718.112(2)(c)1, §718.112(2)(d)3. Fla. Stat.
A condominium unit owner who consents to receiving notice by electronic transmission is responsible for removing or bypassing any filters that block receipt of mass e-mails sent to members on behalf of the association for the purpose of giving notice. §718.112(2)(d)6. Fla. Stat.

Notice of Board Meetings – Homeowner Associations §718.112.
An HOA is allowed to give notice by electronic transmission to any parcel owner who provided written consent and a fax number or e-mail address to the HOA for such purpose. 720.303(2)(c)1., Fla. Stat.

Official Records of Condominiums § 718.111.
The deadline for condominium associations to make records available to unit owners is extended from 5 working days to 10 working days. §718.111(12)(b), Fla. Stat.
Electronic records relating to voting is included in the list of official records that must be kept by condominium and cooperative associations. §718.111(12)(a)12, Fla. Stat.
A condominium association must permanently maintain the following documents from the inception of the association (instead of just for at least 7 years):
A copy of the articles of incorporation, declaration, bylaws and rules of the association;
Meeting minutes; and A copy of the plans, permits, warranties, and other items provided by the developer at turnover. 718.111(12), Fla. Stat.

Condominium Board Members – § 718.112.
The provision that condominium association board members may not serve more than four consecutive 2-year terms is repealed. Condominium association board members may not serve more than 8 consecutive years, unless approved by an affirmative vote of unit owners representing two-thirds of all votes cast in the election or unless there are not enough eligible candidates to fill the vacancies. Board member terms are 1 year unless a longer term is permitted by the bylaws or articles of incorporation. 718.112(2)(d)2., Fla. Stat.

A cooperative director or officer is deemed to have abandoned their office if the officer or director is more than 90 days delinquent in the payment of any monetary obligation to the association. 719.106(1)(m), Fla. Stat. This mirrors condominium association law.

In residential cooperatives of more than 10 units, co-owners of a unit may not serve as members on the board at the same time unless the co-owners own more than one unit or there are not enough eligible candidates to fill vacancies on the board. 719.106(1)(a)1., Fla. Stat. This mirrors condominium association law.

Condominium Board Member Recall – § 718.112.
A board must hold a meeting within 5 business days of the unit owners’ vote or receiving a written agreement, in order to determine if the vote or written agreement is facially valid. If the board determines the vote or written agreement is facially valid, the recall becomes effective upon the conclusion of the board meeting. 718.112(2)(j), Fla. Stat.

If the board determines that the recall is not facially valid, the unit owner representative may file a petition for arbitration with the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (the “Division”), challenging the board’s determination on facial validity. 718.112(2)(j)4.

A recalled board member may challenge the facial validity of the written agreement to recall, the ballots filed, or the substantial compliance with the procedural requirements for the recall, by filing a petition with the Division. 718.112(2)(j)6.

If an arbitrator determines a board member’s recall is invalid, the recall is null and void and the board member must be immediately reinstated. A board member who successfully challenges a recall is entitled to reasonable costs and attorney fees from the respondents. An arbitrator may award reasonable costs and attorney fees to the respondents if the arbitrator determines a recalled board member’s request for arbitration is frivolous. 718.112(2)(j)6., Fla. Stat.

Condominium Websites – § 718.111.
The deadline for condominium associations to post certain documents to its website is extended from July 1, 2018 to January 1, 2019.

A condominium association’s failure to post required documents does not invalidate any action or decision of the board or its committees. 718.111(12)(g)4.

After bidding for materials, equipment, or services has closed, a condominium association must post on its website a list of bids received within the past year.

Summaries of bids for materials, equipment, or services must be posted on the website only if they exceed $500. A condominium association may post the complete copies of the bids in lieu of summaries of the bids.

Instead of posting on its website proposed financial reports to be considered at a meeting, the association must post any monthly income or expense statement to be considered at a meeting.

A condominium association or its agent is not liable for disclosing protected or restricted information unless the disclosure was made with a knowing or intentional disregard of the protected or restricted nature of the information.

Condominium Financial Reporting – § 718.111.
If a condominium association fails to comply with a request from the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation (the “Division”) to provide, within five business days, a copy of the association’s financial report to the Division and to a unit owner who reports the association’s failure to provide a copy of such report within the required time, the association may not waive the annual financial reporting requirements for the fiscal year in which the unit owner’s request was made and the following fiscal year.

Alterations or Additions to Condominium Property – § 718.113.
If a condominium’s declaration does not provide a procedure to approve material alterations or substantial additions to condominium property, then approval by 75 percent of the voting interests must be obtained before the material alterations or substantial additions to the condominium property begin. This applies to condominium associations existing on July 1, 2018. 718.113(2), Fla. Stat.

Condominium Bulk Assignees and Bulk Buyer – § 718.707.
The time limit on acquisition of parcels for classification as a bulk assignee or bulk buyer is removed, extending the applicability of the bulk assignee and bulk buyer provisions indefinitely.

Electric Vehicles in Condominium Associations – § 718.113, § 718.121.
A condominium association may not prohibit a unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area. Notwithstanding, the installation of an electric vehicle charging station is subject to a number of restrictions in the statute.
The installation of an electric vehicle charging station may not be the basis for filing a construction lien under Chapter 713, Florida Statutes, against the association, but a construction lien may be filed against the unit owner.

HB 7087

Inter-spousal Transfers: Exempts the transfer of homestead property between spouses from documentary stamp tax charges.

Multi-Parcel Ad Valorem Taxation: Among its provisions is the multi-parcel ad valorem tax initiative permitting the vertical subdivision of real property, and it also includes an abatement of taxes for residential improvements rendered uninhabitable by hurricanes during the 2017 season.

Stay one step ahead of new legislation, recent case law and new developments that impact your community association.

Name: _________________________________________________

Mailing address: ________________________________________

E-mail address: _________________________________________

Community name: ________________________________________

Position on board, if any: __________________________________
Fax this completed page to (561) 750-8185 or email the above information to joshua@gerstin.com.

2017 Pending Florida Community Association Legislation

Posted on March 24, 2017 by Gerstin

Click here for PDF version of this article

The weather outside is cool in Florida, but the heat is surely on community associations, their directors, officers and property managers in Florida’s 2017 legislative session.

SB 294 (Condos, Cooperatives, HOAs)

The bill requires associations with less than 50 units to prepare a financial report based on the association’s annual revenues. In addition, if an association fails to provide the financial report to the owners if requested, the owners are prohibited from waiving the financial report for three (3) consecutive years and must file a copy with the State for those three (3) years.

This bill eliminates the option for associations with fewer than 50 units and more than $150,000 in annual revenue to submit less comprehensive annual financial statements.
Penalizes association with enhanced financial reporting requirements if they fail to provide owners with annual financial reports upon request.

HB 295 (HOAs)

Increases penalties for not providing access to official records to $500 per day for up to 30 days.
Imposes financial liability on property managers for failing to provide proper access to association official records.
Revises the timeframe for members to take control of the board of directors from the developer.
Provides for binding arbitration of disputes involving assessments, official records, and enforcement of covenants, rules, and restrictions.
Requires home sellers to provide prospective buyers with the association’s governing documents and operating budget at least 7 days before closing, and allows buyers to terminate the contract within 3 days after receipt of the documents.

SB 318 (HOAs)

This bill provides for a new, alternative procedure for homeowners associations to preserve their governing documents under Florida’s Marketable Record Title Act.
At the first board meeting following each annual meeting of the members, the board of directors must consider whether to preserve the association’s governing documents under Florida’s Marketable Record Title Act.
At least every 5 years, homeowners association must record a notice in the public records containing specific information including, the name and address of the association, a list of its recorded governing documents, contact information for the current property manager, and a legal description of the community.

SB 398 (Condos, Cooperatives, HOAs)

Requires estoppel letters to be issued within 10 days of a request, and caps fees at $200 An additional $100 may be charged if the estoppel letter is requested on expedited basis (3 business days). An additional $200 may be charged if the owner is delinquent.
Creates a maximum fee schedule for multiple estoppel letter requests.
Requires estoppel letters to include a long list of various information beyond standard financial information.
Association must publish on their website the name and address/email address of person responsible for receiving estoppels requests.

SB 744 (Condos, Cooperatives, HOAs)

Condos

Requires bids for work to be performed be maintained in the official records for 1 year.
Eliminates the July 1, 2018 deadline to be classified as a bulk buyer or bulk assignee.

Cooperatives

Prohibits co-owners from serving on the board simultaneously in communities with more than 10 units, unless there not enough eligible candidates to fill all board vacancies.
Allows board members to communicate via email, but prohibits voting via email.
Directors and officers who are over 90 days delinquent in any monetary obligation to the association are deemed to have abandoned their position.

Condos & Cooperatives

Includes electronic records relating to unit owner voting in the list of official records of the association.
Eliminates the option for associations with less than 50 units to prepare a report of cash receipts and expenditures in lieu of complete financial statements.
Removes a restriction prohibiting associations from waiving certain financial reporting requirements for more than 3 consecutive years.
Authorizes the board to adopt a procedure for posting meeting notices and agendas on the association website.
Clarifying that associations under 75 feet high are not required to undergo fire sprinkler/life safety retrofitting and do not need to conduct an opt-out vote.
Extends the deadline to opt-out or apply for a permit for fire sprinkler/life safety retrofitting to December 31, 2018, and extends the deadline to complete fire sprinkler/life safety retrofitting to December 21, 2021.
Clarifies certain rules and procedures for fire sprinkler/life safety retrofitting.

HOAs

Allows board members to communicate via email, but prohibits voting via email.

Requires the annual budget to include reserve accounts for capital expenditures and deferred maintenance which the governing documents require the association to undertake and which exceed $10,000.
Allows a developer to waive reserves until the end of the second fiscal year after the declaration is recorded, after which, only a majority of non-developer owners can waive reserves.
Revises certain voting procedures and calculations for reserve accounts.
Imposes certain limitations on adopting budgets that exceed the prior year budget by more than 15%.
Prohibits write-in nominations at an annual meeting when no election is required because the number of candidates does not exceed the number of vacancies, unless nominations from the floor are required by the bylaws.

SB 950 ( HOAs)

Prohibiting fines from being imposed on a home for 6 months after the death of the owner.
Prohibiting late fees and interest on delinquent assessments for the first year after the death of the parcel owner.
If a fine is imposed against a home after the owner dies, the association must provide written notice to the executor of the owner’s estate at least 5 times by certified mail.

SB 1186 ( HOAs)

Specifies procedures for amending the declaration.
States that declaration amendments restricting rentals only apply to owners who consent to the amendment, or who purchase their home after July 1, 2017.

SB 1258 (Condos)

Imposes fines on board members and officers who knowingly violate any association bylaw or the Condominium Act: $250 for the first violation, $500 for the second violation, and $1,000 for third and subsequent violations. After 3 or more violations, the Department of Business and Professional Regulation may issue an order recalling the director or officer.

SB 1520 (Condos)

This bill makes it more difficult to terminate a condominium association.
Increases the minimum threshold for approving termination a condominium from 80 percent to 90 percent of the total voting interests.
Lowers the threshold for rejecting condominium termination from 10 percent to 5 percent of the total voting interests.
Expands the definition of owners who are entitled to receive fair market value for their condominium unit.

SB 1650 (HOAs)

Allows disputes relating to amendments of the governing documents to be resolved by mandatory arbitration in lieu of presuit mediation.

SB 1652 (HOAs)

Creates specific election procedures for communities with 7500 or more homes.

SB 1682 (Condos)

Prohibits attorneys from representing both an association and its management company.
Prohibits board members and management companies from acquiring units at a foreclosure sale arising from the association’s foreclosure of the unit, or via deed in lieu of foreclosure.
Adds bids for materials, equipment, or services to the list of association official records.
Allows tenants and authorized representatives of members to inspect association official records.
Any board member who knowingly, willfully, and repeatedly refuses to comply with a valid request to inspect the official records is guilty of a second degree misdemeanor
Any person who knowingly or intentionally defaces or destroys accounting records, or who fails to create or maintain required accounting records in order to harm the association or any member, is guilty of a first degree misdemeanor.
Any person who knowingly and willfully refuses to release or produce association official records to facilitate a crime or to prevent a crime from being discovered, is guilty of a third degree felony.
Requiring associations with over 500 units to post many types of official records on its website, including the governing documents, financial statements, contracts with third parties, documents to be considered at membership meetings and notices of such meetings.
Allows board members to serve 2-year terms only if permitted in the bylaws or articles of incorporation. Prohibiting board members from serving more than 4 consecutive 2-year terms unless approved by an affirmative vote of 2/3 of the entire membership
Modifies director recall procedures.
Restricts association from contracting or employing service providers in which a board member has a financial stake.
Makes it a felony to engage in fraudulent voting activities, aid another person in committing fraudulent voting activities, or help someone avoid being caught for committing fraudulent voting activities.
Prohibits any party who provides maintenance or management services to the association from owning more than 50% of the units and purchasing any property subject to a lien of the association.
Sets forth detailed disclosure requirements for directors with possible conflicts of interest
A unit owner who is 90 days delinquent can be suspended from voting only if the delinquency exceeds $1,000 and requires 30-day notice.

Subscribe to the Gerstin & Associates Newsletter

Name: _________________________________________________

Mailing address: ________________________________________

E-mail address: _________________________________________

Community name: ________________________________________

Position on board, if any: __________________________________

Fax this completed page to (561) 750-8185 or email the above information to: joshua@gerstin.com.

***Updated with Florida’s 2013 Legislative Amendments, Transition of Control of a Florida Community Association

Posted on June 14, 2010 by Gerstin

Transition of Control of a Florida Community Association

Click here to download this article as a .PDF

A wise man once said “transitions are never easy”. A wise lawyer once said “transition of control of a Florida community association are never easy and can be disastrous”.

Following is a general list of items for a community association to be aware of as they proceed towards the important process of the transition of control from a developer controlled association to that of a member controlled association. The following information is intended as general information and not legal advice. For legal advice an attorney must be consulted.

We accumulated the following information based upon our experience in representing many community associations and have found the following tasks and information is important for an association’s members to undertake and review prior to signing a release with the developer.

1. Interviewing of banks. Immediately after the transition the association should open new bank accounts. The forms necessary to open the appropriate accounts should be secured now to avoid undue delay.

2. Begin interviewing professionals, which should in the very least include:

a. Accountant;

b. Property manager;

c. Attorney; and

d. Engineer (with experience in community association transitions).

3. If the post office is diverting the mail sent to the association to an address of the developer, secure the forms to have the mail sent directly to the association.

4. Secure from the Florida Secretary of State a statement of change for the Registered Agent. This document can be downloaded from www.sunbiz.org.

5. A form known as “Request for Copy of Tax Form” should be retrieved from the Internal Revenue Service. The completion and eventual submission of this form will enable the association to obtain the previous three (3) years of tax returns after the transition of control is complete.

6. Begin identifying potential candidates for Board of Directors’ positions.

Following are a list of items that we attempt to receive from a developer during the
transition period:

a. A full and complete copy of the association’s Declaration of Covenants and Restrictions, Articles of Incorporation, Bylaws and Rules and Regulations;

b. The financial records of the association from the date of incorporation through the present date;

c. Access to, and control of, the association’s funds that remain in the developer’s bank accounts for the association;

d. Copies of all deeds to common property owned by the association;

e. Copies of the minute books from all of the meetings held by the Director;

f. Bills of sale, or receipts for, any of the association’s tangible personal property;

g. Copy of all contracts to which the association is presently a party. Such contracts typically include landscaping, property management, accounting, janitorial, etc.;

h. Name, address and telephone numbers of all contractors and/or employees that are presently being employed by the association;

i. Copies of any and all insurance policies that are presently in effect;

j. A complete list of all current home owners along with their address, telephone number and, if applicable, section or lot numbers;

k. Any and all warranties the association might possess for items such as air conditioning, the pool, etc;

l. Any and all permits issued by governmental authorities that regulate the association from the present date relating back to approximately one year prior;

m. Any leases for the common areas to which the association is a party;

n. Copy of any master keys or keys utilized for the common areas;

o. An up to date ledger sheet for each owner and any assessment payments that are in arrears as well as a full payment history for each owner; and

p. The “Official Records” of the association Florida Statute §720.303(4), lists the official records that an association is required to maintain for a period of seven (7) years. The developer is also under this duty and should have these documents in its possession. I have enclosed for your review a copy of this statute.

***2013 Florida Legislative Amendments

F.S.§ 720.303 (6)(d) Budgets. If a homeowner association developer elects to maintain a reserve account for the HOA, the developer’s budget must designate the particular purpose or use of the funds. The underlined portion below is the amended text of F.S.§ 720.303 (6)(d):

(d) An association is deemed to have provided for reserve accounts if reserve accounts have been initially established by the developer or if the membership of the association affirmatively elects to provide for reserves. If reserve accounts are established by the developer, the budget must designate the components for which the reserve accounts may be used. If reserve accounts are not initially provided by the developer, the membership of the association may elect to do so upon the affirmative approval of a majority of the total voting interests of the association. . .

F.S. § 720.307 Transition of association control in a community —Added to the threshold for an “automatic transition” to member control are a developer’s abandonment of its assessment, maintenance or construction responsibilities or if the developer files for Chapter 7 bankruptcy, enters receivership or loses title to a common area through a foreclosure. The underlined portion below is the amended text of F.S. § 720.307:

720.307 Transition of association control in a community.—

With respect to homeowners’ associations:

(1) Members other than the developer are entitled to elect at least a majority of the members of the board of directors of the homeowners’ association when the earlier of the following events occurs:

. . .

c) Upon the developer abandoning or deserting its responsibility to maintain and complete the amenities or infrastructure as disclosed in the governing documents. There is a rebuttable presumption that the developer has abandoned and deserted the property if the developer has unpaid assessments or guaranteed amounts under s. 720.308 for a period of more than 2 years;

(d) Upon the developer filing a petition seeking protection under chapter 7 of the federal Bankruptcy Code;

(e) Upon the developer losing title to the property through a foreclosure action or the transfer of a deed in lieu of foreclosure, unless the successor owner has accepted an assignment of developer rights and responsibilities first arising after the date of such assignment; or

(f) Upon a receiver for the developer being appointed by a circuit court and not being discharged within 30 days after such appointment, unless the court determines within 30 days after such appointment that transfer of control would be detrimental to the association or its members.

F.S. § 720.307 Pre-transition Board of Directors. The amendment to F.S. §720.307 also lowered the threshold for a member to serve as a director on the pre-transition Board of Directors. Members, other than the developer, are allowed to elect at least one non-developer related member to the pre-transition Board of Directors if 50% of the parcels in all phases have been conveyed to the members.

F.S. § 720.3075 Prohibited clauses in association documents–Developers. At any point pre-transition of control (not the 90% conveyed mark) a developer’s unilateral amendment to the Governing Documents will be subject to scrutiny as to its reasonableness. No longer considered reasonable or allowable are “ . . .amendments to the governing documents that are arbitrary, capricious, or in bad faith; destroy the general plan of development; prejudice the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shift economic burdens from the developer to the existing nondeveloper members.”

The above list is not exhaustive; however, by beginning to request these items the association will be in a better position as the transition progresses. Additionally, it is recommended the association accept the transition of the developer via the resignation of developer members of the Board and then placement of owner member directors after an election. At that time, developers often request the association sign a release. By signing a release the association will waive any and all rights that it might have to claims for construction defects and/or misappropriation of funds. As such, the association should have the transition of control occur and then retain the services of an accountant, an attorney and an engineer. These professionals will perform what is commonly known as “due diligence”. Without hiring these professionals there is no way the association can truly know whether or not they are aware of every issue that remains outstanding, or liability incurred by the developer, that is now an association liability.

Certain times the above referenced reports issued by these professionals have minor problems that are easily settled with the developer. Other times, there are hidden problems that would have surely gone unnoticed if it were not for the diligent work of these professionals. Either way, the association’s Board of Directors has a fiduciary duty to its members and should in the very least understand the present state of the association before signing a release with the developer.

After the reports from the professionals are returned to the association, the Board of Directors should attempt to informally negotiate with the developer for any repairs or funds they believe are owed. This informal approach should involve keeping the association’s counsel informed as to its status and, if necessary, the review of documents. If the association is successful in its negotiations, the attorney for the association, as well as that of the developer, can draft the final documents. If the negotiations are not successful, the attorney for the association should still attempt to settle the matter with the developer’s attorney with a set time period for completion. It is always better to try and settle for a fair amount then filing a lawsuit. However, sometimes it is unavoidable and a lawsuit is necessary