Summary of 2017 Florida Condominium and Homeowner Association Legislation

By Susan P. Bakalar, Esq.

During the legislative session which ended on May 5, 2017, the Florida legislature passed 5 bills which will become law on July 1, 2017 unless some or all of the proposed bills are vetoed by Governor Rick Scott. The proposed bills are Senate Bill 398, House Bill 653, House Bill 1237, Senate Bill 1520 and House Bill 6027. The following information comes directly from The Florida Senate and the following url can be used to search for any of the Bills noted below [https://www.flsenate.gov/Session/Bills/2017].

Senate Bill 398:

The bill revises requirements for estoppel certificates for condominium, cooperative, and homeowners’ associations. Under current law, when an ownership interest in a condominium unit, cooperative unit, or homeowners’ parcel is transferred, the new owner is jointly and severally liable with the previous owner for unpaid assessments owed to a condominium, cooperative, or homeowners’ association. Unpaid assessments may also become a lien on the property. Purchasers may request that the seller provide an estoppel certificate from the condominium, cooperative, or homeowners’ association to protect against undisclosed financial obligations so that title to the property may be transferred free of any lien or encumbrance in favor of the association. An estoppel certificate certifies the amount of any total debt owed to the association for unpaid monetary obligations by a unit or parcel owner as of a specified date.

The bill specifically:

*Revises the period in which an association must respond to a request for an estoppel certificate from 15 days to 10 business days.
*Requires an association to designate on its website a person or entity with a street or e-mail address for receipt of a request for an estoppel certificate.
*Provides an estoppel certificate delivered by hand, mail, or e-mail has a 30-day effective period, and a certificate sent by regular mail has a 35-day effective period.
*Identifies the persons who may complete the estoppel certificate on behalf of the board or association.
*Specifies the information the association must provide in the estoppel certificate.
*Prohibits an association from charging a fee for an amended estoppel certificate, and provides a new effective period of 30 days or 35 days, depending on the method used to deliver the amended certificate.
*Provides an association waives the right to collect any moneys owed in excess of the amounts set forth in the estoppel certificate from any person, and his or her successors and assigns, who in good faith relies upon the certificate.
*Prohibits an association from charging a fee for preparing and delivering an estoppel certificate that is requested, if it is not delivered within 10 business days.
*Authorizes the use of a summary proceeding pursuant to s. 51.011, F.S., to compel compliance with the estoppel certificate requirements for a cooperative association, as existing law provides for condominium and homeowners’ associations.
*Permits an association to charge a maximum fee of $250 for the preparation and delivery of an estoppel certificate, if there are no delinquent amounts owed to the association.
*Permits an association to charge an additional $100 fee for an expedited estoppel certificate delivered within 3 business days after a request for an expedited certificate.
*Permits an association to charge an additional maximum fee of $150, if there is a delinquent amount owed to the association.
*Specifies the maximum fee an association may charge when it receives simultaneous requests for estoppel certificates for multiple units or parcels owned by the same person and there are no past due monetary obligations owed to the association.
*Provides a lender or purchaser who pays for the preparation of an estoppel certificate may not waive the right to reimbursement if the closing does not occur and the prevailing party in a suit to enforce a right of reimbursement shall be awarded damages, attorney fees, and costs.
*Authorizes a cooperative to charge a fee for preparing and delivering an estoppel certificate but the authorization must be established be a written resolution adopted by either the board or a written management, booking, or maintenance contract.
*Requires the Department of Business and Professional Regulation to adjust the estoppel certificate fees for inflation every five years, rounded to the nearest dollar, and to publish the adjusted amounts on its website.

If approved by the Governor, these provisions take effect July 1, 2017. The bill can be found at https://www.flsenate.gov/Committees/BillSummaries/2017/html/1569

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House Bill 1237

The bill makes two main categories of changes relating to the regulation and operation of condominium associations. The changes:

*Define and prohibit or restrict activities constituting a conflict of interest which may be
detrimental to the unit owners of a condominium.
*Increase access to records by unit owners.

These changes are substantially based on a final report by a Miami-Dade County grand jury, titled, Addressing Condo Owners’ Pleas for Help: Recommendations for Legislative Action. The grand jury found that the existing statutes do not sufficiently restrict self-dealing by members of the boards of condominiums or sufficiently deter other forms of misconduct such as election fraud. Additionally, the grand jury found that the existing statutory mechanisms are insufficient to force condominium associations to make their official records available to unit owners in a timely manner.

Conflicts of Interest

The bill prohibits conflicts of interest among those who are responsible for operating a condominium as follows:

*Attorneys are prohibited from representing both the board of a condominium association and the management company of the association.
*Members of the board or the management company for a condominium association that is not a timeshare condominium are prohibited from purchasing a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments or from taking title to the unit by deed in lieu of foreclosure.
*Condominium associations that are not timeshare condominiums are prohibited from contracting with a service provider that is owned or operated by a board member or a person who has a financial relationship with a board member, or a close relative of a board member or officer.

The bill also prohibits a party that contracts to provide maintenance or management services or a board member of the party from owning more than 50 percent of the units of the condominium or from purchasing a property that is subject to a lien by the association.

Additionally, officers and directors of a condominium board are required to disclose activities that may reasonably be construed to be a conflict of interest. In some cases, the officer or director engaged in a conflict of interest must choose to no longer pursue the activity creating the conflict or withdraw from office. Otherwise, the board must remove the officer or director.

Access to Association Records

The bill requires condominium associations to keep additional records and generally to take actions to make those records available to unit owners as follows:

*A condominium association must maintain bids for materials, equipment, and services as part of its official records.
*A condominium association must permit renters to inspect and copy the association’s bylaws and rules.
*A condominium association must provide an annual report to the Department of Business and Professional Regulation listing the financial institutions at which it maintains accounts, and unit owners may obtain the report from the department.
*A unit owner may give notice to the Division of Condominiums, Timeshares, and Mobile Homes (division) of the Department of Business and Professional Regulation that an association has failed to mail or hand deliver to the unit owner a copy of the most recent financial statement after a request. The division must then give the association notice that it must comply with the request. If the association fails to comply with that request within 5 business days, the association may not prepare less complex financial statements than the statutory default requirements for 3 years.
*An officer or director of a condominium who is charged with certain crimes relating to the condominium generally may not access association records without a court order while the charges are pending.
*A condominium association having 150 or more units must post copies of most of its official records on its website, but the records must be inaccessible to the general public.

If approved by the Governor, these provisions take effect July 1, 2017. The bill can be found at https://www.flsenate.gov/Committees/BillSummaries/2017/html/1652

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House Bill 653

The bill revises requirements for the governance and operation of condominium, cooperative, and homeowners’ associations.

Regarding fire safety and lifesafety systems in condominium and cooperative buildings, the bill:

*Permits condominium or cooperative associations having a building 75 feet or less in height to vote to forego retrofitting the building with fire sprinklers.
*Permits two-thirds of the voting interests in a building higher than 75 feet to vote to forego retrofitting with fire sprinklers.
*Permits an association that votes to forego retrofitting a building with a fire sprinkler system to also forego retrofitting with an engineered lifesafety system.
*Permits professional engineers also to provide condominium or cooperative associations with a certificate of compliance with fire and lifesafety system requirements (current law allows licensed electrical contractors and electricians to provide the certificate).
*Requires condominium and cooperative associations that have not installed sprinklers in the common areas of buildings of three stories or more to mark these buildings with a sign or symbol approved by the State Fire Marshal to warn persons conducting fire control and other emergency operations about the lack of a sprinkler system in the common areas.

Under existing law, condominium, cooperative, and homeowners’ associations must prepare annual financial statements. The complexity of these statements is based upon the annual revenues of the association. Associations having larger revenues must prepare more complex financial statements. The members of these associations, however, may vote to allow the association to prepare less complex financial statements than otherwise required by law but not for more than three consecutive years. The bill repeals the three-consecutive-year limit on allowing a condominium or cooperative association to prepare less complex financial statements. Current law does not limit the ability of homeowners’ associations to prepare less complex financial statements.

The bill also repeals the provisions of law that require condominium, cooperative, and homeowners’ associations having fewer than 50 units or parcels to prepare a report of cash receipts and expenditures. This change will require these associations to prepare annual financial reports based on annual revenues, unless the association votes to prepare a less complex financial statement.

Regarding homeowners’ and cooperative associations, the bill specifies the board members of each type of association may communicate by e-mail, but not vote by e-mail. Condominium law already includes a similar provision.

Regarding the management and governance of condominium associations, the bill:

*Prohibits an officer, director, or manager of an association from accepting a “kickback” from a person providing or proposing to provide goods or services to the condominium.
*Provides forgery of a ballot envelope used in a condominium election or the forgery of a voting certificate constitutes the crime of forgery under existing law.
*Provides theft or embezzlement of the funds of a condominium association is theft under existing law.
*Provides refusal to allow inspection of an official record that is accessible to members is punishable as the crimes of tampering with physical evidence and obstruction of justice.
*Provides an officer or director charged with certain crimes relating to the condominiums may not access condominium records without a court order while the charges are pending.

*Prohibits an association from hiring an attorney who represents the association’s management company.
*Prohibits members of the board or the management company for a condominium association that is not a timeshare condominium from purchasing a unit at a foreclosure sale resulting from foreclosure of the association’s lien for unpaid assessments or from taking title to a unit by deed in lieu of foreclosure.
*Requires associations maintain as an official records bids for materials, equipment, or services.
*Permits a member’s authorized representatives to inspect and copy association’s official records.
*Permits renters to inspect and copy the bylaws and rules.
*Effective July 1, 2018, requires condominium associations with 150 or more units to post copies of certain official records on their websites.
*Prohibits condominium associations from using a debit card to pay association obligations.
*Repeals the July 1, 2018, deadline for the classification as a condominium bulk buyer or bulk assignee.

Additionally, regarding access to records, the bill requires condominium associations to mail or hand deliver, without charge, a copy of the most recent financial report within five days of a written request. The bill provides a process for a condominium unit owner to give notice to the Division of Condominiums, Timeshares, and Mobile Homes (division) that an association has failed to do so after a request. The division must give the association notice it must comply with the request. If the association fails to comply within five business days, the association may not prepare less complex financial statements than the statutory default requirements for three years.

The bill makes the following changes affecting the optional termination of a condominium to:

*Decrease the threshold to veto a termination from 10 percent to 5 percent of the voting interests;
*Increase the minimum time period before a successive vote on a termination plan to 24 months, instead of 18 months as under current law;
*Prohibit an optional termination of a condominium created by conversion (such as from an apartment complex) until 10 years after conversion; and
*Decrease the minimum percentage of ownership of units in a condominium that requires a sworn, written disclosure of that ownership interest in the plan of termination.

Regarding cooperative associations, the bill strips a director or officer of the board of a cooperative association of his or her post if he or she is more than 90 days delinquent in paying any money due the association. As to cooperative associations having more than 10 units, the bill prohibits co-owners of a unit from serving simultaneously on the association’s board, unless the co-owners own more than one unit or there are not enough eligible candidates.

Regarding homeowners’ associations, the bill:
*Authorizes associations to adopt rules, with certain conditions, for providing notice of board meetings in the association’s website.
*Provides if an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required pursuant to this section or the bylaws, then write-in nominations are not permitted and such candidates shall commence service on the board of directors, regardless of whether a quorum is attained at the annual meeting.
* Clarifies existing law that the accrual of interest on unpaid assessments, and the application of payments to interest, late fees, collection costs and associated reasonable attorney fees, and the delinquent assessment, in that order of priority, controls over any restrictive endorsement, designation, or instruction placed on or accompanying a payment, including any purported accord and satisfaction (that the parcel owner paid a lesser amount in full satisfaction of the amount due) pursuant to s. 673.3111, F.S.

If approved by the Governor, these provisions take effect July 1, 2017. The bill can be found at https://www.flsenate.gov/Committees/BillSummaries/2017/html/1573

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Senate Bill 1520

The bill revises the requirements for the optional termination of a condominium. Regarding optional terminations, current law requires 80 percent of a condominium’s voting interests must approve a plan of optional termination, regardless of what a condominium’s governing documents may provide. The bill reduces from 10 percent to 5 percent the percentage of voting interests necessary to veto a termination plan.

The bill also increases the minimum time periods between successive votes on a termination plan. If 5 percent or more of the voting interests of a condominium reject a plan of termination, a subsequent plan may not be considered for 24 months, instead of 18 months as under current law.

The bill also expands the requirement that a termination plan disclose to the unit owners when a person owns a significant portion of the condominium. Specifically, the plan must include written, sworn disclosures of the identity of any person or entity that owns or controls at least 25 percent (instead of 50 percent, as in current law) of the condominium units. Moreover, the bill also requires the written, sworn disclosures of any natural person or persons who, directly or indirectly, own or control 10 percent (instead of 20 percent as under current law) or more of the artificial entity or entities that constitute the bulk owner.

Regarding optional terminations, the bill increases consumer protections by:

*Entitling all persons whose condominium unit is their homestead to be paid at least the original purchase price paid for their units; and
*Requiring approval of a termination plan by the Department of Business and Professional Regulation.

Additionally, the bill expressly states the amendments made by the bill to s. 718.117, F.S., are intended to clarify existing law, are remedial in nature, and are intended to address the rights and liabilities of the affected parties, and apply to all condominiums created under the Condominium Act.

If approved by the Governor, these provisions take effect July 1, 2017. The Bill can be found at https://www.flsenate.gov/Committees/BillSummaries/2017/html/1582

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House Bill 6027

The bill provides substantively identical changes to the annual financial reporting requirements for condominium, cooperative, and homeowners’ associations.

Under existing law, these associations must prepare annual financial statements. The complexity of these statements is based on the annual revenues of the association. Associations having larger revenues must prepare more complex financial statements. The members of these associations, however, may vote to allow the association to prepare less complex financial statements than otherwise required by law but not for more than three consecutive years. The bill repeals the three-consecutive-year limit on allowing a condominium or cooperative association to prepare less complex financial statements. Current law does not limit the ability of homeowners’ associations to prepare less complex financial statements.

The bill also repeals the provisions of law that require condominium, cooperative, and homeowners’ associations having fewer than 50 units or parcels to prepare a report of cash receipts and expenditures. This change will require these associations to prepare annual financial reports based on annual revenues, unless the association votes to prepare a less complex financial statement.

In addition, the repeal of the provision of law that requires condominium associations having fewer than 50 units to prepare a report of cash receipts and expenditures is also contained in CS/CS/HB 1237 (CS/CS/SB 1682 by Rules Committee, Regulated Industries Committee, and Senators Garcia, Rodriguez, Artiles, and Campbell).

If approved by the Governor, these provisions take effect July 1, 2017. The Bill can be found at https://www.flsenate.gov/Committees/BillSummaries/2017/html/1563