This last session of the Florida Legislature spent a great deal of effort changing the laws that affect the operation of Florida community associations and affect the people who own property in those communities. Some of the bills the legislature sent to Governor Crist for approval have not yet become law, while some have become law and will be effective on July 1, 2008.

In this issue of BackerReport, we will focus on a bill that has become law that will affect condominium associations. Watch for future issues of BackerReport to address the changes to homeowners association operations and more condo changes as they are approved by the Governor or otherwise become law.

We have summarized the amendments that are most pertinent and applicable to most condominium associations. There are other sections of the Condominium Act which were amended which are not summarized here. Some can be rather complex and beyond the ability of this author to succinctly explain within the limits of this email. As circumstances arise during the course of the year, you will likely need to communicate with your association's legal counsel to determine the effect of the various new amendments to the Act.

DIRECTOR VOTING

Under prior law a condominium director who was present at a meeting of the Board of Directors would be presumed to have accented to an action taken by the Board of Directors unless that director abstained from voting because of an asserted conflict of interest. In other words, unless a condominium director identified a specific conflict of interest which prevented him from casting a vote on a particular matter, the failure of that director to vote would have constituted a "yes" vote. Section 718.111(1)(b) has been amended to provide that a director who abstains from voting on any action taken on a corporate matter shall be presumed to have taken no position with regard to the action (Stay tuned for another amendment on the horizon that may alter this new law before you blink).

OFFICIAL RECORDS

The Condominium Act has always provided that a condominium association has an obligation to maintain the official records of the association. A new amendment to Section 718.111(12)(a) now goes a bit further. Under the new statute, any person who willingly or intentionally defaces or destroys accounting records required to be maintained by the Condominium Act or who willingly or intentionally fails to create or maintain accounting records required to be maintained by the Act is personally subject to a civil penalty. For the first time, the Condominium Act now provides penalties for not maintaining or creating the accounting records required by the Act.

Another section of the official records portion of the Condominium Act has been amended to address the issue of how long associations are required to maintain their records. Previously, bids that the association obtained for contracts were required to be kept for a period of only one year. Pursuant to the new statute, the official records of the association shall be maintained for at least seven (7) years. Since they deleted the one (1) year language for bids, bids for various contracts must now also be maintained for the same seven (7) years as all of the other official records. Another amendment to that same section requires that the records of the association be made available to a unit owner within forty-five (45) miles of the condominium property or within the county where the condominium is located. The association may comply with the language concerning making the official records available for inspection by unit owners by offering an option of making the records of the association available to a unit owner either electronically via the Internet or by allowing the records to be viewed in electronic format on a computer screen and printed upon request.

PERSONAL INFORMATION

In an apparent effort to protect unit owners' identity, social security numbers, driver's license numbers, credit card numbers and other personal identifying information are excluded from the information that an association is required to provide to unit owners. The amendments to the Act specifically provide that material shall not be accessible to unit owners.

FINANCIAL REPORTING

718.111(13) has been amended to provide that the Division of Land Sales and Condominiums is required to adopt rules setting forth uniform accounting principles and standards to be used by all associations. The amendments to the Act provide that the rules shall include, but not be limited to, uniform accounting principles and standards for stating the disclosure of at least a summary of the reserves, including information as to whether such reserves are being funded at a level sufficient to prevent the need for a special assessment and, if not, the amount of assessments necessary to bring the reserves up to the level necessary to avoid a special assessment.

Most readers of BackerReport are aware that the Condominium Act provides different levels of required financial reporting based upon the associations' total annual revenues. The statute also previously provided that a majority of the voting interests present at a meeting of the association could authorize a level of reporting less than that which the Condominium Act otherwise required. Previously, the unit owners' approval to adopt a lesser reporting standard had to occur prior to the end of the fiscal year and was effective only for the fiscal year in which the vote was taken. An amendment to the Act now provides that the approval may also be effective for the following fiscal year. The Statute was also amended to prevent an association from waving the financial reporting requirements of the Act for more than three (3) consecutive years.

VOTING

Some condominium associations own units that are used by an association manager or are used as guest apartments. Other condominiums have what are known as "phantom" units; units that are identified in the Declaration of Condominium, but were not actually built. Under a new amendment to Section 718.112, no voting interest or consent right allocated to a unit owned by the association shall be exercised or considered for any purpose whether for a quorum, an election or otherwise. The statute is silent about whether those units should be excluded from the total number of units when considering whether a proper percentage approval has been obtained.

BOARD MEETINGS

Previously, there was no procedure contained in the Condominium Act which would compel a board of directors to include a matter on its agenda that the board did not want to address. Under a new amendment to section 718.112, twenty percent (20%) of the voting interests at an association may petition the Board to address an item of business. If twenty percent (20%) of the voting interests petition the Board to address an item of business, the Board is required to address the item on its agenda at the next regular Board meeting or a special meeting of the Board held no later than sixty (60) days after receipt of the petition. The Condominium Act required for a number of years that notices of meetings at which regular assessments would be considered contain a statement that assessments would be considered. The new amendment to the Condominium Act requires that notice of any meeting in which regular or special assessments against unit owners are to be considered for any reason shall specifically state that assessments will be considered and the nature, estimated costs and description of the purposes for such assessments.

The Act now requires that, if the bylaws of the association are silent as to the location of the annual meeting, the annual meeting must be held within forty-five (45) miles of the condominium.

DIRECTORS' TERMS

Previously, the Condominium Act provided that, if there is no provision in the bylaws for terms of the directors, the terms of all of the directors would expire on the election of their successors at the annual meeting. The Act has now been amended to provide that the terms of all members shall expire at the annual meeting and such board members may stand for reelection unless otherwise permitted in the bylaws. In the event that the bylaws permit staggered terms of no more than two years and upon approval of a majority of the total voting interests, the association board members may serve two (2) year staggered terms.

If no person is interested in or demonstrates intention to run for the position of a board member whose term has expired according to the provisions of the Act, the board member whose term has expired shall automatically be reappointed to the board and need not stand for reelection. The Act was also amended to provide that, in condominium associations of more than ten (10) units, co-owners of a unit may not serve as members of the board of directors at the same time. In other words, a husband and wife who are both owners of the same unit may not serve on the board together even if they are elected by the unit owners. The Act has been amended to provide that a person who has been suspended or removed by the Division of Land Sales and Condominiums pursuant to provisions of the Act or who is delinquent in the payment of any fee or assessment is not eligible for membership. Also, a person has been convicted of a felony in this state or in a United States District or Territorial Court or who has been convicted of any offense in another jurisdiction that would be considered a felony if committed in this state, is not eligible for Board membership unless the felon's civil rights have been restored for a period of no less than five (5) years as of the date on which the person seeks election to the board.

This lawyer finds it fascinating that the legislature spent so much time and energy re-drafting this portion of the Condominium Act. It is a curiosity since this author is unaware that there had been a rash of felons desiring to serve on condominium boards of directors.

Section 718.112 has been amended to require that those unit owners who nominate themselves to serve on the Board of Directors sign a certification form prepared by the Division of Land Sales and Condominiums attesting that the nominee has read and understands the governing documents of the Association and the provisions of the Condominium Act and applicable rules. That signed certification is required to be mailed with the candidate's information sheet with the second notice of annual meeting.

BUDGETS

Section 718.112(2)(f) has been amended to require that the proposed annual budget of the association identify "estimated revenues and expenses" rather than simply common expenses. Under the former statute, the proposed budget only required an identification of the common expenses in a detailed form. With the new amendment, the annual budget must reflect estimated revenues and expenses in detail.

RESERVES

The Condominium Act currently provides that the unit owners of a condominium may vote to waive or limit the amount of statutory reserves that the unit owners must fund during a given year. The Condominium Act has been amended to require that proxy questions related to waiving or reducing the funding of reserves or using the existing reserve funds for purposes other than purposes for which the reserves were intended must contain a statement in capitalized, bold letters in font larger than any other used on the proxy ballot as follows: Waiving of Reserves, in whole or in part, or allowing alternative uses of existing reserves may result in unit owner liability for payment of an unanticipated special assessments regarding those items.

DELINQUENT DIRECTORS OR OFFICERS

Section 718.112(2)(n) now provides that a director or officer more than ninety (90) days delinquent in the payment of regular assessments shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law. Subsection (o) was also amended to provide that a director or officer charged with a felony, theft or embezzlement offense involving the association's funds or property shall be removed office, creating a vacancy in the to be filled according to law. While the director or officer has such criminal charges pending, he or she may not be appointed or elected to a position as a director or officer. The statute provides that, should the charges be resolved without a finding of guilt, the director or officer shall be reinstated for the remainder of his or her term of office if any remains when the charges are resolved.

RECEIVERSHIP

Previously, the Condominium Act provided that if an association failed to fill vacancies on the board sufficient to constitute a quorum as required by the bylaws, any unit owner may apply to the Circuit Court for the appointment of a receiver to manage the affairs of the association. Amendments to that section of the Condominium Act have been made to require that the owner who would otherwise have had the opportunity to file an application for the appointment of a receiver to now give notice of the intent to file that action using a procedure that is specified explicitly in the amendment to the statute. The statutory notice is required to be posted at the condominium property and sent by certified mail or personal delivery to each unit owner in the condominium. The apparent intent of the statute is to prod the owners into electing or appointing a proper board of directors to avoid the appointment of a receiver.

RELIGIOUS DECORATIONS AND HURRICANE PROTECTION

The Condominium Act previously required that every board of directors adopt hurricane shutter specifications for each building for each condominium operated by the association and require that each include the color, style and other factors deemed relevant by the board. The Act retains that language and now adds additional language which was intended to clarify previously confusing language in the statute. The amendments clarify some matters and make other matters even more confusing. Generally speaking, the statute was amended to permit the board, with the approval of a majority of the voting interests of the condominium, to install hurricane shutters or other hurricane protection that complies with or exceeds the applicable building code. The amendment was apparently an attempt to authorize the association to install hurricane protection other than shutters. The requirement that the voting interests of the condominium approve the installation of the hurricane protection does not apply if the maintenance, repair and replacement of hurricane shutters or other forms of hurricane protection are the responsibility of the association pursuant to the declaration of condominium.

STRUCTURAL INSPECTION

The Act was amended to require that any condominium building greater than three stories in height be inspected at least every five years to provide a report under seal of an architect or engineer authorized to practice in Florida attesting to required maintenance, useful life and replacement costs of the common elements. A majority of the voting interests present at a properly called meeting of the association may waive the inspection requirement except that the waiver must occur prior to the end of the five (5) year period and is effective only for that particular five (5) year period.

RELIGIOUS SYMBOLS

The Condominium Act has been amended to provide that an association may not refuse a unit owner's request for an accommodation to attach a religious object to a mantle or a frame. The religious object may not exceed three inches (3") wide, six inches (6") high and one and one-half inches (1.5") deep. Even though the statute does not specifically mention the type of religious object the amendment was intended to address, the size limitations make it apparent that the amendment was specifically targeted to allow Jewish unit owners to affix a mezuzah on the frame of their door.

ASSESSMENT COLLECTIONS

The Condominium Act was amended in Section 718.121 by adding a subsection (4) that requires that the association notify a unit owner thirty (30) days in advance that it intends to file a lien against a unit owner's unit. Historically, the first demand letter sent to a unit owner in collections could be sent by regular mail and the second letter indicating the association's intent to foreclose a claim of lien was sent by certified mail. With the amendment of the statute, it is a better procedure to send the initial letter by certified mail and specifically indicate that the association intends to record a claim of lien if the amounts are not paid.

SLAPP SUITS

SLAPP is an acronym for Strategic Law Suits Against Public Participation. SLAPP suits are those suits that are filed against individuals in order to stifle their right to instruct their representatives and petition for redress of grievances before various governmental entities. The legislature included a section in the Condominium Act in Section 718.1224 which is described as intending to protect unit owners from suits that are filed when association members are sued by individuals, business entities or governmental arising out of a condominium unit owner's appearance or presentation before a government entity on matters relating to the condominium association. The legislature indicated in the statute that it finds and declares that prohibiting such law suits by governmental entities, business entities and individuals against condominium unit owners who address matters concerning their condominium association will preserve the fundamental state policy of opposing SLAPP suits, preserve the constitutional rights of condominium unit owners and insure the continuation of representative government in the state. The statute provides for various procedures that one may use if one believes that he is subject to a SLAPP suit and prohibits condominium associations from expending association funds in prosecution of SLAPP suits against condominium unit owners.

ASSOCIATION EMERGENCY POWERS

Section 718.1265 has been created to provide for an association to operate in the event of a state of emergency. The statute provides that, under certain circumstances where a state of emergency has been declared pursuant to another state statute in the locale where the condominium is located, may perform various functions of the association. The emergency powers section of the Act authorizes the board to conduct meetings with more limited notice requirements and otherwise perform various acts that may be necessary during a state of emergency. The statute is rather lengthy and a more detailed description of the rights of a board to act during a state of emergency may be obtained from your association's legal counsel.

DEVELOPER DISCLOSURE

Section 718.301 of the Condominium Act has been amended to require that a developer provide the association with a report concerning various structural elements of the condominium. The amended statute provides that, at the time the unit owners other than the developer elect a majority of the members of the board, the developer must deliver to the association at the developer's expense a report included in the official records of the association under seal of an architect or engineer authorized to practice in Florida attesting to required maintenance, useful life, and replacement costs of various portions of the common elements.

DEVELOPER AGREEMENTS

Section 718.3025(1)(f) of the Condominium Act was amended to invalidate contracts between parties contracting to provide maintenance or management services with an association if the contract does not disclose any financial or ownership interest that a board member or any party providing maintenance or management services to the association holds with the contracting party.

Section 718.3026(3) now provides that contracts or other transactions between an association and one or more of its directors or any corporation, firm, association or entity in which one or more of its directors are directors or officers or are financially interested must comply with financial disclosure requirements contained in Section 617.0832 and those disclosures must be entered into the written minutes of the meeting. Approval of such a contract with interested directors or officers requires the affirmative vote of two-thirds of the directors present. The members of the association have the ability to cancel such a contract with the majority vote of the members present.

FINING COMMITTEES

Section 718.303(3) was amended to provide that the fining committee that hears issues concerning violations by unit owners, occupants, licensees or invites must be made up of other unit owners who are neither board members nor persons residing in a board member's household. Previously, the statute only required that the committee be made up of other unit owners. Under the new statute, directors or others who live in the director's household may not serve on the fining committee.

OFFICIAL RECORDS PRODUCTION

The Condominium Act has historically provided broad rights to unit owners who desired to inspect and copy official records of the association. Section 718.501(1)(d)5 was added to provide unit owners with even more power to obtain copies of association official records. The new statute provides that, if a unit owner presents the Division of Land Sales and Condominiums with proof that the unit owner has requested access to official records in writing by certified mail and that after ten (10) days the unit owner again made the same request to access the official records in writing by certified mail and another ten (10) days lapsed since the second request without the Association producing access to the records as required by the Act, the Division shall issue a subpoena to the association requiring production of the requested records.

DISCLOSURE TO PROSPECTIVE PURCHASERS

Section 718.503(2)(a) previously provided that a seller of a condominium unit had to provide each prospective purchaser a current copy of the declaration, articles of incorporation, bylaws and rules of the association along with financial information required by 718.111 and a frequently asked questions and answers document required by section 718.504. The statute has been amended to provide that, after January 1, 2009 the prospective purchaser shall also be entitled to receive from the seller a copy of a governance form. The form is to be provided by the Division of Land Sales and Condominiums and is required to summarize governance of condominium associations. The Division's form is required to address a list of subjects including the role of the Board in conducting the affairs of the association and various responsibilities of the board as otherwise provided in the Condominium Act.

Backer Law Firm is pleased to introduce you to Attorney Rita Rosato Pitassi who has joined our firm. In addition to providing general counsel and litigation services to the firm's community association clients, Attorney Pitassi will be heading up the Firm's new Labor Law Section. Please feel free to contact Ms. Pitassi with any questions.