2017 Florida Condominium and Homeowner Association Legislative Update

2017 was a big legislative year for community associations, especially condominium associations.  Following is an overview of the 2017 legislation directly impacting Florida’s condominium and homeowner associations.

Click here for the .pdf version.

Condominium & Homeowner Associations

Financial Reporting Requirements

HB 6027, full text of the law can be found here.  Law goes into effect July 1, 2017.

The exemption for condominium associations with less than 50 units and homeowners associations containing less than 50 parcels from providing yearend financial statements prepared by an independent accountant has been eliminated.

Condominium associations with fewer than 50 units and homeowner associations of less than 50 parcels can no longer opt to prepare a report of cash receipts and expenditures in lieu of financial statements.  These associations must comply with financial reporting requirements based upon the association’s revenues.

The prohibition on condominium associations waiving financial reporting requirements for more than three (3) years was eliminated.

 Estoppel Certificates

SB398, full text of the law can be found here.  Law goes into effect July 1, 2017.

Associations have 10 business days to issue an estoppel certificate after receiving a written or electronic request from an owner, mortgagee or their designee. A fee cannot be charged if the estoppel certificate is not delivered within ten business days.

Estoppel certificates must be returned to the requestor (mailed, email or fax) on the day they are issued.

If an estoppel certificate is hand delivered or sent by electronic mail it has to be valid for 30 days; estoppel certificates sent by regular mail have to be valid for 35 days.

-Only board members, authorized agents or representatives (attorneys, accountants, etc.) of the association or the association’s management company can issue an estoppel letter.

The association’s website must list the designated person or entity, with a street or e-mail address, for the receipt of estoppel requests.

Association’s are permitted to amend their estoppel certificates but they cannot charge for the amended estoppel certificate.

Associations cannot collect any money owed in excess of the amount specified in the estoppel certificate.

The Association’s ability to demand the payment of the estoppel certificate fee prior to the anticipated closing of a real estate transaction remains in effect.

Associations can charge up to $400 for the preparation and delivery of an estoppel certificate if, on the date of issuance, delinquent amounts are owed to the association. Otherwise, the Association cannot charge more than $150.00.  Upon request for an expedited estoppel certificate, an additional $100.00 can be charged if the expedited estoppel certificate is produced within three business days.

The statute lists a sliding scale of estoppel certificates charges for owners with multiple units.

The following information is required to be in an estoppel certificate:

  • date of issuance;
  • name(s) of unit/parcel owner(s);
  • unit/parcel designation and address;
  • parking or garage space number;
  • attorney’s name and contact information if the account is delinquent and has been turned over to an attorney for collection;
  • the fee for preparation and delivery of the estoppel certificate;
  • name of the requestor; and
  • assessment information and other information, including:
      • regular periodic assessment amount and frequency;
      • date for which the regular periodic assessment is paid through;
      • next installment due date and amount;
      • itemized list of all assessments, special assessments, and other money currently owed or to become due after issuance of the estoppel certificate;
      • other fees, such as capital contribution fees, resale fees, transfer fees, etc.;
      • whether there are any open violations of rules or regulations;
      • whether association approval of transfer of the unit/parcel is required and, if so, whether the board has approved the transfer;
      • whether there is a right of first refusal and, if so, has the right been exercised;
      • list and contact information for any other associations of which the unit/parcel is a member;
  • contact information for all insurance maintained by the association; and signature of an officer or authorized agent of the association.

Condominiums Only

HB 1237, full text of the law can be found here.  Law goes into effect July 1, 2017.

Directors.

Unless approved by an affirmative vote of two-thirds of the total voting interests of the association or there are not enough eligible candidates to fill the vacancies on the board, a board member may not serve more than four consecutive 2-year terms.

Recalls.

Boards are no longer required to certify a recall or initiate arbitration proceedings for not doing so.  Boards are required to a meeting within 5 business days after receipt of a written recall agreement.

Recalled board members must turn over to the association all records and property of the association within 10 business days after the recall vote.

Voting Rights.

Only monetary obligations more than 90 days delinquent totaling more than $1,000 can an association suspend a member’s voting rights. The delinquent member must be provided 30 days notice accompanied by proof of the delinquency before such suspension takes effect.

Receiver cannot vote on behalf of a unit owner if the owner’s unit was placed in receivership to protect/benefit the association.

Conflicts of Interest.

An association cannot hire an attorney who also represents the association’s management company.

Board members, the property manager and the property management company are prohibited from purchasing a unit at an association foreclosure sale or accepting a deed in lieu of foreclosure.

Associations are prohibited from hiring service providers owned (at least 1% of equity shares) or operated by a board member, any person who has a financial relationship with a board member, or a close relative of a board member.

Officers and directors must disclose to the board any activity that may be construed as a conflict of interest. A rebuttable presumption of a conflict of interest exists if a director, officer, or relative of a director or officer enters into a contract for goods or services with the association or holds an interest in a business entity that conducts business with the association or proposes to enter into a contract with the association.

Any proposed activity that may be a conflict of interest must be subject to a board vote. The meeting notice agenda for such vote must list the proposed activity and all transactional documents (contracts) related to the proposed activity must be attached to the meeting agenda.

If the board votes against the proposed activity, the director or officer must notify the board in writing of his or her intention not to pursue the proposed activity or to resign from the board. If the board finds that an officer or a director has violated this provision, the officer or director is automatically deemed as being removed from office.

Official Records.

Bids for materials, equipment or services are considered part of an association’s official records.

In addition to unit owners, designated representatives of unit owners may inspect and copy condominium documents and records. Tenants may inspect and copy only the association’s rules and by-laws.

Associations with 150 or more units must post copies of certain specifically designated official records on its website, be inaccessible to the general public.  Does not go into effect until July 1, 2018.

Websites.

Condominium association with 150 or more units must maintain a secure website containing the following items:

  • Owner password and login.
  • The secure portion of the website must contain all condominium documents, rules and regulations, management and other agreements to which the association is a party, annual budget and proposed annual budget, financial reports and board certifications.
  • The ability to post on the front page of the website, or a separate subpage labeled “Notices”, which is linked to and visible from the front page. Documents to be considered or voted upon by the board or the owners must also be posted.

Financial Reports.

Condominium associations with less than 50 units are no longer exempt from the financial reporting requirements applicable only to larger condominiums.

Unit owners are entitled to the most recent financial report within 5 business days after the receipt of a written request.

Annually, associations are required to report to the DBPR all of the financial institutions at which it maintains accounts.  A copy of the submission is obtainable upon receipt of a written request by a member.

Criminal Penalties added to F.S. §718

Association officers, directors or manager may not solicit or accept kickbacks from vendors.

Voting certificate or ballot envelope forgery is now considered a crime.

Destroying official records or hindering their access in furtherance of a crime is punishable as a crime in F.S. § 918.13 or as obstruction of justice pursuant to Florida Statutes, Chapter 843.

An office or director charged with one of the above crimes must be removed from office and cannot be appointed, elected or have access to the association’s official records without a court order.  If the charges are resolved without a finding of guilt, the officer or director must be reinstated for the remainder of his or her term of office, if any.

Debit Cards.

Associations and their officers, directors and employees are prohibited from using a debit card issued in the name of the association, or which is billed directly to the association, for the payment of any association expense. Using a debit card in violation of this law, for a non-association expense, can be prosecuted as credit card fraud (confusing, poorly drafted statute)

Ombudsman.

If necessary to assist with an investigation of election misconduct, the Ombudsman can open and review ballots that are otherwise supposed to be cast in secret.

Condominium Terminations

SB 1520, full text of the law can be found here.  Law goes into effect July 1, 2017.

Provides for termination of a condominium when the community is no longer economically viable;

Requires affirmative vote of 80% or more of the owners and negative vote of no more than 5% of the voters;

Requires approval of the termination by the Division;

Requires a waiting period of 24 months to propose a subsequent plan of termination after rejection of a previous plan;

Requires the identity of the person or entity that owns or controls 25% or more of the units;

Requires the identity of the natural persons who own 10% or more of the entity which owns or controls 25% or more of the units;

Carries an effective date of July 1, 2007 – 10 years before the legislation was passed and signed into law.

Noteworthy Veto
Condominium Fire Sprinklers

Under current law, local governments are barred from requiring sprinkler retrofitting of condominium buildings (three stories or more) before the end of 2019.  Owners can also vote to opt-out of retrofitting sprinklers, but are not able to opt out of  the installation of alternative fire safety systems known as “engineered life safety systems”.  The legislation vetoed by Governor Scott would have postponed the retrofitting requirement until 2022 and would have allowed owners to opt-out of both retrofitting sprinklers and the installation of “engineered life safety systems”.

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

 

 

2017 Pending Florida Community Association Legislation

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.

 

Stay Informed, Subscribe to the Gerstin & Associates Newsletter

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.

The Complete Beginner’s Guide to Drones in Community Associations

news-skye-aerotain

Background
Can Florida community associations prohibit drone use? What can a community association do to minimize legal liability if it decides to prohibit or permit drones? Drone usage is only going to increase over time. Acting now to intelligently regulate usage is the best way to safeguard members and increase property values.  Following are some pointers to get your community association started in the right direction and ahead of the curve.

In 2015, the Florida legislature passed the “Freedom from Unwanted Surveillance Act” (“Act”). Located at Section 934.50 of the Florida Statutes, the Act limits the use of drones by governmental and private entities. The Act prohibits operating a drone with a camera to record privately owned real property or the occupant of that property in violation of that person’s reasonable expectation of privacy. If a person cannot be seen on a property by anyone at ground level, a reasonable expectation of privacy exists.

The Act exempts the use of drone cameras by a person who is in a profession licensed by the state, to perform reasonable tasks within the scope of practice or activities permitted under that person’s license.  Theoretically, a licensed community association manager could use a drone camera to check for violations within the community. Also exempted are “cargo delivery drones” if the drone and its operator are in compliance with the Federal Aviation Administration (“FAA”) regulations. For recreational drones, the FAA has only issued an advisory to stay below 400 feet, within the sight of the operator and away from airports.

How Can/Should Community Associations Regulate Drones?

a)    Banning Drones is Not a Good Idea. As with satellite dishes and emotional support pets, outright bans imposed by community associations are often overruled.  Avoid having to amend your governing documents if a legislator undertakes drones as a personal cause by using reasonable Rules to regulate drone use in your community association.

b)    Prohibit Landing Drones on Common Areas (homeowner associations only). Owners should be prohibited from directing commercial delivery drones to land on a common area. Otherwise, the Association can be subject to liability if a drone related accident occurs. Malfunctioning drones crashing, packages dropped on people and landing on people and pets are only a few of the possible drone safety hazards.

c)    Common Area Landing Site (Condos Only). Due to limited space within condominium associations and the nature of high-rise buildings, condominium owners are unable to direct drones to land on their own property.  Instead of having a condominium unit owner place himself and others in danger by trying to land a drone on his/her patio or balcony, consider establishing a common area landing site.  Safeguarding the site with warning signs and a fence, far away from a crowded space, could minimize potential safety hazards of wandering owners. Considering the time and effort it takes to alter a common area, the sooner a condominium association begins the process, the better off it will be.

d)    Restrict Delivery Times. As with land based parcel deliveries, associations should pass Rules that limiting drone delivery times.  Permissible drone delivery times should be during the day at times when most residents are at work or away from their homes. Due to noise concerns consider banning drone deliveries on weekends.

e)    Liability: associations should consider amending their governing documents to limit the association’s liability for damages to persons or property relating to drone deliveries. The act of ordering a drone delivery should be considered the conduct that signifies the owner’s agreement to indemnify the association for damages to persons or property related to his/her drone delivery.

icon-stay-informed

Stay one-step ahead of new legislation, recent case law and new developments that impact your community association by subscribing to the Gerstin & Associates Community Association Newsletter.  Please complete and fax the following to: (561) 750-8185 (no cover page needed).

Name: ____________________________      Association name: _____________________
Position at the association (director, property manager, etc.) _____________________
Email address: ______________________     Telephone number: __________________

The 2016 Insider’s Guide to Newly Proposed Florida HOA, Condo & Property Management Laws

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The 2016 Florida Legislative Session will begin on January 12, 2016. In Florida’s House of Representatives, three bills seeking to drastically alter the governance and operation of HOAs and property managers have already been filed.

Florida 2016, HB 653, grants authority to the Division of Condominium, Timeshares, and Mobile Homes to regulate homeowner associations in a manner similar to condominium associations

Florida 2016,HB 665-Property Managers:  seeks to place stricter licensing requirements and disciplinary proceedings on property managers and property management companies.

Florida HB 2016 667  seeks to combine HOA statutes (720), condo statutes (718) and cooperatives statutes (7210) into one body of law entitled “Common Interest Communities Act”.

None of these pending bills have a Senate companion.

Florida Supreme Court Issues Ruling Regarding Property Managers

Charged with administering Florida’s laws regarding the Unauthorized Practice of Law, the Florida Supreme Court recently issued an opinion stating the following tasks must be performed by an attorney:

• draft a claim of lien and satisfaction of claim of lien;

• prepare a notice of commencement;

• determine the timing, method and form of giving notices of meetings;

• determine the votes necessary for certain actions by community associations;

• address questions asking for the application of a statute or rule;

• advise community associations whether a course of action is authorized by statute or rule;

• prepare a certificate of assessments due once a delinquent account is turned over to the association’s lawyer;

• prepare a certificate of assessments due once a foreclosure against the unit has commenced;

• prepare a certificate of assessments due once a member disputes in writing the amount owed;

• draft amendments (and certificates of amendment that are recorded in the official records) to declaration of covenants, bylaws and articles of incorporation when members have to vote on these documents;

• determine the number of days to be provided for statutory notice;

• modify limited-proxy forms promulgated by the state;

• prepare documents concerning the right of the association to approve new prospective owners;

• determine affirmative votes needed to pass a proposition or amendment to recorded documents;

• determine the number of owners’ votes needed to establish a quorum;

• draft pre-arbitration demand letters;

• prepare construction lien documents;

• prepare, review, draft and have substantial involvement in the preparation and execution of contracts, including construction, management and cable television contracts;

• identify, through the review of title instruments, the owners to receive pre-lien letters; and

• oversee any activity that requires statutory or case law analysis to reach a legal conclusion.

Full opinion available here sc13-889 .

 

 

New Proposed Federal Regulation: Amateur Radio Antennas & Towers Must Be Allowed in Your Community Association

Presently pending in the United States Congress, H.R. 1301 is a bill proposed to protect the installation and use of amateur radio antennas and towers in community associations.  According to the bill, “[t]here is a strong Federal interest in the effective performance of amateur radio stations established at the residences of licensees”.  In regard to a community association’s restrictive covenants, the bill applies existing FCC policy used when dealing with State restrictions on antennas and towers to community association declarations.  The bill would, among other things, require community association “to permit erection of a station antenna structure at heights and dimensions sufficient to accommodate amateur service communications.”   H.R. 1301 would also apply to private office parks and essentially any privately owned land with use restrictions related to amateur radio antennas and towers.

 

The full text of the bill is available here: HR Bill 1301, United States Congress, Amateur Antennas and Towers.

Hidden Dangers–10 Declaration Provisions Every Community Association Must Change

10 Declaration Provisions Every Community Association
Must Change

Click here to download the full report.

 

  1. The Magic Language Exception. Known as the “Magic Language Exception”, inserting the words “as amended from time to time” after a Declaration’s statement of adherence to Florida law allows the Declaration to automatically adapt to changes in Florida law. Failing to incorporate the Magic Language Exception into a Declaration often times results in the loss of income from, and the benefits of, changes in Florida’s law related to the collection of delinquent assessments. Coral Isles East Condominium Assoc. v. Snyder, 395 So. 2d 1204 1981.

 

  1. The percentage for passage of an amendment is too high. Many associations are stuck with damaging and confusing Governing Documents because the threshold of affirmative votes for an amendment is too high. Consider amending your Governing Documents to a lower threshold of affirmative votes needed to pass an amendment in the future.

 

  1. Requiring tenant approval without the authority to do so.  Many community associations require pre-approval of tenants without the authority to do so in their Governing Documents. Undertaking an action (and possibly collecting a fee to do so) without the requisite authority can result in an expensive lawsuit.

 

  1. Enforcing Outdated and Illegal Provisions. Banning solar panels, improper age restriction enforcement (16 instead of 18), banning satellite dishes or improper debt collection techniques are only a few of the many outdated provisions in the Governing Documents of many community associations. Lack of intent and ignorance of the law is not a defense if the association is sued. Guidance to the Board of Directors and the amendment of these provisions should be undertaken.

 

  1. Failing to Rein in Rentals. Community associations, especially condominium associations, that do not limit renting in their communities may scare away lenders from lending to owners or may lose their FHA accreditation. Consider a Declaration amendment restricting new owners from renting until at least two years after their purchase.

 

  1. Releasing Homes Purchased at a Foreclosure Auction From Delinquent Assessments. Although Florida law limits a lender’s liability for past due assessments, the same restriction does not apply to third party purchasers at a foreclosure auction, unless otherwise stated in your association’s Governing Documents. Consider amending all provisions that release third party purchasers of a foreclosed home from payment of past due assessments.

 

  1. Borrowing limits. Many older community associations have bank borrowing limits set at amounts so low such loans would only be obtainable from a payday lender. Consider eliminating or increasing borrowing limits.

 

  1. Spending Limits. As a way to attract buyers in an era of “community association board’s waste money” many developers incorporated into their Governing Documents limits on the amount a Board of Directors can spend without owner approval. Unfortunately, the effects of inflation and increase costs have locked many of these community associations into unrealistic spending limits. Consider eliminating or increasing the amount your Board of Directors can spend without first obtaining owner approval by inserting an amendment that allows for a per year increase formula based on inflation.

 

  1. Unattainable Quorum. Florida law limits the percentage required for a members’ meeting quorum to 30% of the members. Nevertheless, many community associations are still unable to attain a quorum to conduct important business. Consider an amendment that lowers the required quorum for a member’s meeting below 30%.
  2. Regulating Guests. Associations with guests residing in units in the absence of an owner or approved tenant often find themselves ill prepared when a problem arises.  Declaration provisions relating to the use of homes by guests in the absence of an owner or approved tenant stops people from circumventing rental restrictions. Consider an amendment stating guests can only occupy a unit so many times per year. Another approach to dealing with long-term guests (e.g., guests staying for more than 30 days) is to require them to be screened in the same manner as tenants.

 

For a free analysis of your association’s community association Governing Documents please complete and fax the following to: (561) 750-8185 (no cover page needed) A representative from Gerstin & Association will contact you to set up your community association’s free Governing Document analysis.

 

Name: ____________________________

 

Association name: _____________________

 

Position at the association (director, property manager, etc.) _____________________

 

Email address: ______________________,

 

Telephone number: __________________

2014 Florida Community Association Legislative Update, Governor Scott signs HB 7037

Governor Scott signs HB 7307 containing significant changes to the services a CAM (property manager can perform).  HB7037 becomes effective July 1, 2014 and effects only Florida condominiums. The newly expanded CAM duties include:

  • Collecting delinquent assessments prior to the filing of a civil action.
  • Completing forms related created by statute or by a state agency.
  • Drafting letters of intended action, calculating and preparing certificates of assessments.
  • Estoppel letters.
  • Negotiating association contracts.
  • Drafting pre-arbitration demands.

The Bill also contains examples of new required forms.  The new forms are for use with collection of condominium association assessments. Conspicuously absent from the bill were provisions lessening or mitigating the common law liability if a CAM violates the Fair Debt Collection Practices Act. Instead condominium associations remain ultimately responsible .

The full text of the bill is available by clicking the following link: HB 7037-cam bill

Check back each day for more analysis as Governor Scott continues to sign or veto legislation affecting Florida’s community associations.

2013 Florida Community Association Legislative Update

Rick-Scott-signs-bill-April-22

The past legislative session was an extremely busy one for both homeowner and condominium associations.  Initial legislative proposals ranged from an entire rewrite of Chapter 720 to a depository scheme to collect assessments that would have been a disaster. In the end, at least for this past legislative session, Florida’s community associations avoided disaster.  Most, but not all, of the recently passed Florida legislation affecting Florida’s community association’s are reasonable. The hardest hit group in this year’s legislative session is by far homeowner developers. The full text of each passed bill can be found at: www.flsenate.gov; www.myfloridahouse.com; and www.leg.state.fl.us.

Homeowner Associations

Officers and Directors

F.S. § 720.3033 Officers and Directors.- This past legislative session there many changes to the laws governing homeowner association officers and directors.  Both Homeowner association Boards of Directors and their property managers should immediately update themselves on these new legislative changes to avoid unknowingly running afoul of the law. The underlined portion below is the amended text of F.S. § 720.3033:

720.3033  Officers and directors.—

(1)(a)  Within 90 days after being elected or appointed to the board, each director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of covenants, articles of incorporation, bylaws, and current written rules and policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. Within 90 days after being elected or appointed to the board, in lieu of such written certification, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved education provider within 1 year before or 90 days after the date of election or appointment.

(b)  The written certification or educational certificate is valid for the uninterrupted tenure of the director on the board. A director who does not timely file the written certification or educational certificate shall be suspended from the board until he or she complies with the requirement. The board may temporarily fill the vacancy during the period of suspension.

(c)  The association shall retain each director’s written certification or educational certificate for inspection by the members for 5 years after the director’s election. However, the failure to have the written certification or educational certificate on file does not affect the validity of any board action.

(2)  If the association enters into a contract or other transaction with any of its directors or a corporation, firm, association that is not an affiliated homeowners’ association, or other entity in which an association director is also a director or officer or is financially interested, the board must:

(a)  Comply with the requirements of s. 617.0832.

(b)  Enter the disclosures required by s. 617.0832 into the written minutes of the meeting.

(c)  Approve the contract or other transaction by an affirmative vote of two-thirds of the directors present.

(d)  At the next regular or special meeting of the members, disclose the existence of the contract or other transaction to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other penalty for such cancellation.

(3)  An officer, director, or manager may not solicit, offer to accept, or accept any good or service of value for which consideration has not been provided for his or her benefit or for the benefit of a member of his or her immediate family from any person providing or proposing to provide goods or services to the association. If the board finds that an officer or director has violated this subsection, the board shall immediately remove the officer or director from office. The vacancy shall be filled according to law until the end of the director’s term of office. However, an officer, director, or manager may accept food to be consumed at a business meeting with a value of less than $25 per individual or a service or good received in connection with trade fairs or education programs.

(4)  A director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property is removed from office. The board shall fill the vacancy according to general law until the end of the period of the suspension or the end of the director’s term of office, whichever occurs first. However, if the charges are resolved without a finding of guilt or without acceptance of a plea of guilty or nolo contendere, the director or officer shall be reinstated for any remainder of his or her term of office. A member who has such criminal charges pending may not be appointed or elected to a position as a director or officer.

(5)  The association shall maintain insurance or a fidelity bond for all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this subsection, the term “persons who control or disburse funds of the association” includes, but is not limited to, persons authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any insurance or bond. If annually approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive the requirement of obtaining an insurance policy or fidelity bond for all persons who control or disburse funds of the association.

Homeowner Association Members

 

720.306 Meeting of the Members; voting and election procedures; amendments —Nominations from the floor at Annual Meetings are no longer required and an election is not required unless there are more candidates than vacancies. Further, all members are now required to receive amendments to the governing documents within 30 days of their passage.

720.303 (5) Inspection and Copying of Records. Official records must be maintained for at least 7 years and have to be made available to parcel owners for inspection and copying within 45 miles of the community or within the county in which the association is located. The Association has 10 business days after receipt by the board or its designee of a written request. Records can be made available electronically. Owners can scan or photograph the records at no charge (if they use their scanner or camera). Copying rates and personnel charges were also amended.

(5)        INSPECTION AND COPYING OF RECORDS.—The official records shall be maintained within the state for at least 7 years and shall be made available to a parcel owner for inspection or photocopying within 45 miles of the community or within the county in which the association is located within 10 business days after receipt by the board or its designee of a written request

The association shall allow a member or his or her authorized representative to use a portable device, including a smartphone, tablet, portable scanner, or any other technology capable of scanning or taking photographs, to make an electronic copy of the official records in lieu of providing the member or his or her authorized representative with a copy of such records. The association may not charge a fee to a member or his or her authorized representative for such use of a portable device.

The association may impose fees to cover the costs of providing copies of the official records, including, without limitation, the costs of copying and the costs required for personnel to retrieve and copy the records if the time spent retrieving and copying the records exceeds one- half hour and if the personnel costs do not exceed $20 per hour. Personnel costs may not be charged for records requests that result in the copying of 25 or fewer pages.

Assessment Collection

 

F.S. § 720.3085 Payment for assessments; lien claims. The most positive and important change this legislative session was legislation designed to correct or overrule the Court’s decision in the case of Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc. HB 7119 amends F.S.§ 720.3085 and allows Florida homeowner associations to collect assessments, that were past due upon its ownership of a home, from a subsequent owner. The underlined portion below is the amended text:  

720.3085         Payment for assessments; lien claims.—

(2)

(b)        A parcel owner is jointly and severally liable with the previous parcel owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the present parcel owner may have to recover any amounts paid by the present owner from the previous owner. For the purposes of this paragraph, the term “previous owner” shall not include an association that acquires title to a delinquent property through foreclosure or by deed in lieu of foreclosure. The present parcel owner’s liability for unpaid assessments is limited to any unpaid assessments that accrued before the association acquired title to the delinquent property through foreclosure or by deed in lieu of foreclosure.

F.S. § 468.436 CAM Disciplinary Proceedings.  This law was amended to classify a Community Association Manager’s violation of either Chapt. 720, 719 or 718 as a violation subject to a disciplinary proceeding by the Department of Business and Professional Regulation. For the overwhelming amount of law abiding Community Association Managers, this legislative amendment should not be a cause for concern. The underlined portion below is the amended text of F.S.§ 468.436 (7):

Violating any provision of chapter 718, chapter 719, or chapter 720 during the course of performing community association management services pursuant to a contract with a community association as defined in s. 468.431(1).

Homeowner Association Developers

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.”

F.S. § 720.303 (13) Reporting Requirements — Homeowner associations are now required to register with the Division of Florida Condominiums, Timeshares, and Mobile Homes.  Whether this will lead to enhanced regulation similar to condominiums, and its associated higher cost of compliance, is yet to be seen.  The legislation is due to expire in 2016.

F.S. §720.303(7) Financial Reports. Mandatory financial report thresholds for homeowners’ association were increased as follows:

  1. Compilation increased from $100,000 to $150,000.
  2. A financial review increased from $200,000 to $300,000; and
  3. An audit increased from  $400,000 to $500,000.

F.S. §720.303(10)(g) Directors: Recall.  A petition to challenge a homeowner’s association failure to act on a recall petition must be filed within 60 days from the end of the Board of Directors five day review period.

F.S. §720.305(2)(a) Suspensions. The suspension of  an owner’s common area use rights cannot  extend to the  common elements needed to access the unit, utility services to the unit, parking spaces, and elevators.

F.S. §720.306(1)(d) Amendments: Mortgages. After July 1, 2013, mortgage holders rights to approve or disapprove of amendment is limited to a negative notice and limited rights to contest.

F.S. §720.306(6) Meetings: Speaking.  Advanced notice is not required for a homeowner association member to speak at a Board of Directors’ meeting.

 F.S. §399.02(9) Elevators. The  July 1, 2015 deadline for retrofitting elevators  is removed. However, certain renovations to an elevator may require  compliance even in the event of a replacement or major modifications are required for compliance.

Condominium Associations Only

 

 Financials. F.S. §718.111(13).  A condominium developer is required to provide financial two years after recording of the  surveyor’s certificate.

Budgets. F.S. §718.1112(2)(f).   Up until the second fiscal year a condominium developer  can vote for reserves up until the second fiscal year after recording of a surveyor’s certificate.

Transition. F.S. §718.301(1). Transition can occur as late as seven years after the recording of the surveyor’s certificate.  without an accompanying assignment of developer rights.

Hurricane Protection.  F.S. §718.113(5)(a).  A condominium association’s board of directors has the authority to install hurricane resistant protection extends to doors and other items.  authority to install additional hurricane resistant protection is extended to include doors and other similar  hurricane protection. A code compliant unit entitles the unit owner to a credit for assessments levied related to installation of hurricane protection

Suspensions. F.S. §718.303(3). The suspension of  an owner’s common area use rights cannot  extend to the  common elements needed to access the unit, utility services to the unit, parking spaces, and elevators.

Insurance.   F.S.  §718.111(11)(g)2.   If a condominium owner does not undertake required work, the association may do so and assess the owner for the expense.

Records. F.S. §718.111(12). Condominium association members may use their own equipment, without charge, to copy Association records. Excluded records from disclosure includes personnel records of the Association and its management company. Absent a written request for exclusion, Homeowner association’s can print a community directory with each member’s name, address and telephone number, unless the member request to be excluded.

Financial  Reports.    §718.111(13).  Mandatory financial report thresholds for condominium associations were increased:

  1.      Compilation increased from $100,000 to $150,000.
  2.      A financial review increased from $200,000 to $300,000; and
  3.      An audit increased from  $400,000 to $500,000.

 

Directors: Terms & Qualifications.  §718.112(2)(d)2.  Authorization for condominium association directors staggered terms can be authorized by an association’s articles of incorporation, as well as tits by-laws. Any owner that owes money to the association is ineligible to run for the Board of Directors and his/her name should not be on the ballot.

Directors: Recall. §718.112(2)(j). A petition to challenge a condominium association failure to act on a recall petition must be filed within 60 days from the end of the Board of Directors five day review period. The challenge can be through arbitration.

 

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

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