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BackerReport is a periodical addressing topics of interest to community associations in South Florida and is provided as a service to the clients and friends of Backer Law Firm, P.A. All articles are written by attorneys of Backer Law Firm, P.A. (unless otherwise indicated) and are protected by copyright. It is important to note that court decisions discussed in this newsletter are sometimes subject to change as the parties pursue further appeals or other remedies. The articles that discuss court cases in this newsletter are based upon the courts' decisions that are released when the newsletter was written.
The Florida Legislature made a number of
changes to both the Condominium Act and the
Homeowners Association Act which were
recently approved by Governor Crist. Many of
the changes to these statutes did little to
change the substance and meaning of the
statutes. For example, the legislature
replaced the word "shall" with the word
"must" in a number of instances and replaced
the word "which" with the word "that" in
another slew of changes. Other than these
relatively minor and, arguably, meaningless
changes, the legislature approved a number of
more substantive changes. I have highlighted
the various more important changes and
separated them with headings below:
Elevator Safety Act
The Elevator Safety Act was amended to
provided that updates to the code requiring
modifications for Phase II Firefighters'
Service on existing elevators as amended into
the Safety Code for Existing Elevators and
Escalators may not be enforced on elevators
in condominiums, cooperatives or multifamily
residential buildings that were issued a
certificate of occupancy by local building
authorities as of July 1, 2008 for five (5)
years or until the elevator is replaced or
requires major modification, whichever occurs
first. The exception provided in that
Amendment does not apply to a building for
which a certificate of occupancy was issues
after July 1, 2008.
Clarifications to Chapter 617 (Not for
Profit Corporate Act)
The legislature approved a number of
amendments to Chapter 617 to clarify that
certain sections of that statute which apply
to most corporations not for profit do not
apply to condominiums, homeowners
associations or cooperatives. For example,
the sections of 617 that apply to the removal
of directors were specifically excluded for
application to condominiums, cooperatives and
homeowners associations. Also, Section
617.1606 now provides that the section
617.1601 through 617.1605 concerning access
to records does not apply to corporations
that are a condominium association,
homeowners associations or cooperative.
Condominium Insurance Policies
An Amendment to Section 627.714 was
approved that specifically requires that
insurance policies issued to condominium unit
owners include at least a $2000.00 property
loss assessment benefit.
Fire Prevention Code
Section 633.0215 of the Florida Fire
Prevention Code was amended to provide that a
condominium, cooperative or multifamily
residential building that is less than 4
stories in height and that has a corridor
providing an exterior means of egress is
exempt from the requirement to install a
manual fire alarm system under Section 9.6 of
the Life Safety Code. The Condominium Act was
amended to provide that a condominium
association is not obligated to retrofit the
common elements, association property or
units in a residential condominium with a
fire sprinkler system if the building has
been certified for occupancy by the
applicable governmental agency and if the
unit owners have voted to forego retrofitting
by the affirmative vote of a majority of
voting interests in the condominium. For
those where the owners have not voted to for
go the retrofitting, the statute now provides
that the local authorities having
jurisdiction may not require completion of
the retrofitting with a fire sprinkler system
before the end of 2019. The statute has been
amended to provide that by December 31, 2016,
an association that is not in compliance with
the requirements for a fire sprinkler system
and has not voted to forego retrofitting of
such a system must initiate an application
for a building permit for the required
installation with the local government having
jurisdiction demonstrating that the
association will be compliant by December 31,
2019. The statute has also been amended to
provide that, if there has been a previous
vote to forego retrofitting, a vote to
require retrofitting may be obtained at a
special meeting of the unit owners called by
a petition of at least ten percent (10%).
Definition of "Developer"
A number of controversies have arisen
where unit owners, including lenders, have
acquired a number of units in a condominium
and have been construed to be "developers",
as defined by the Condominium Act. An
amendment to Section 718.103 (16)
specifically excludes a bulk assignee or a
bulk buyer of units as defined in Section
718.703 from being construed as a developer
Condominium Insurance
Amendments were made to the portion of the
Condominium Act concerning a condominium
association's obligation to purchase
insurance. The word "hazard" was deleted
from the statute and replaced with the word
"property" with regard to the type of
insurance that an association must obtain.
The Act still requires that such insurance be
purchased by the association for the full
insurable value, replacement cost or similar
coverage based upon the replacement cost of
the property as determined by an insurance
appraisal or an update of a prior appraisal.
The Act now clarifies that the replacement
cost must be determined at least once every
thirty-six (36) months.
The statute prior to the recent amendment
already required that the Board of Directors
establish the amount of the deductible at a
meeting of the board. The former statute
required that the notice of the meeting had
to state the proposed deductible, the
association's available funds and the
assessment relied upon the Board. The entire
notice requirement was deleted from the
statute. The statute was also amended to
delete the specific list of requirements for
condominium association insurance policies
and was replaced with a simple reference to
Section 627.714, Fla. Stat. A condominium
unit owner's insurance policy must comply
with the requirements of that section. The
statute also now deleted the requirement that
an association obtain evidence of each unit
owner's purchase of the required insurance.
While the statute still requires that owners
obtain insurance, it is no longer necessary
that the condominium association obtain proof
that the owners have complied with their
legal obligations.
Condominium Official Records
Prior to the amendment, the Condominium
Act required that an association maintain as
a part of its official records a current
roster of all unit owners and their mailing
addresses, unit identification, voting
certifications and, if known, telephone
numbers. The Statute also required that an
association maintain electronic mailing
addresses and the numbers designated by unit
owners for receiving notice sent by
electronic transmission of those unit owners
consenting to receive electronic transmission
of such notices. The amendment to the
statute requires that, if a unit owner
revokes his prior consent to receipt of
notice by electronic transmission, his
electronic mailing address and telephone
number must be removed from the association's
records. Interestingly, the amendment to the
statute requires that the telephone number be
deleted along with the email address if the
owner revokes his consent to receive notice
by electronic transmission. There is no
explanation in the statute as to why the
telephone number would need to also be
deleted simply because the owner revokes
consent to receive electronic notice.
The Condominium Act requires that various
pieces of information be kept among the
association's Official Records. There are
various provisions in the statue that exclude
specific types of information from the
records that an association must make
available to unit owners. For example,
certain attorney-client privileged materials
are not a part of the Official Records.
Information obtained by an association in
connection with the approval of a lease, sale
or other transfer of a unit are not a part of
the association's Official Records which are
subject to inspection. Medical records of
unit owners and unit owners' social security
numbers, drivers' license numbers and credit
card numbers were among the association's
records which were not available for
inspection by other unit owners or their
agents. Amendments to the statute now also
exclude personnel records of employees,
including but not limited to disciplinary,
payroll, health and insurance records, from
those records which are subject to inspection
by unit owners. Also, the statute now
excludes unit owners' email addresses,
telephone numbers, emergency contact
information, addresses of the unit owners
other than as provided to fulfill the
associations' notice requirements and other
personal identifying information of any
person, excluding the person's name, unit
designation, mailing address and property
address from those records which are among
the association's Official Records available
for inspection by other unit owners. The
statute was also amended to provide that the
associations is not responsible for the use
or misuse of the information provided to an
association member or his or her authorized
representative pursuant to the compliance
requirements of the statute unless the
association has an affirmative duty not to
disclose such information pursuant to other
sections of the statute. The fact that the
amendment to the statute only relieves an
association from potential liability from
misuse of information when the information is
required to be disclosed illustrates how
important it is that an association keep
those records which are not subject to
inspection segregated from other records so
that they are not mistakenly distributed to
unit owners.
Condominium Reserves
The Condominium Act requires that all
associations prepare and complete or contract
for the preparation and completion of a
financial report for the preceding year
within ninety (90) days after the end of the
association's fiscal year. The statute also
has language which requires the Division to
adopt rules setting forth uniform accounting
principles and standards to be used by
associations for their financial reporting
requirements. The statute has been amended
to also require that the Division rules
include standards for presenting a summary of
association reserves, including a good faith
estimate disclosing the annual amount of
reserve funds that would be necessary for the
association to fully fund reserves for each
reserve item based on the straight-line
accounting method. The disclosure is not
applicable to reserves funded using the
pooling method. Under the old statute,
associations that operated fewer than fifty
(50) units were only required to prepare a
report of cash receipts and expenditures in
lieu of a financial statement irrespective of
how much revenue that association has
annually. The statute has been amended to
expand that exception to condominiums with
fewer than seventy-five (75) units.
Condominium Directors' Terms
The legislature attempted to clarify
language contained in the last version of the
Condominium Act which limits directors' terms
to one year. The amendment to the statute
still limits the terms of directors to one
year unless the bylaws permit staggered terms
of not less than two years and there is an
approval by a majority of the total of voting
interests. The new language provides that,
if the number of board members whose terms
have expired exceeds the number of eligible
members "showing interest in or demonstrating
an intention to run for the vacant positions"
each such board member whose term has expired
is eligible for reappointment. Since it is
not possible for someone to run for a seat on
the board without providing a written notice
of intention to run, I am not certain what
the legislature means by "showing interest
in" running for a vacant position. The
statute does not indicate how an association
is able to determine whether someone has
shown an interest in running for the board
where they have not provided a written notice
of intention to run. In any event, the
amended language does very little except to
confirm that the one year term limit was not
intended to prevent directors whose terms
have expired from staying on the board where
there are not adequate candidates for the
board. The Act was also amended to clarify
that co-owners of a unit may not serve as
members of the board at the same time unless
they own more than one unit or unless there
are not enough eligible candidates to fill
the vacancies on the board at the time of the
vacancy. Current law provides that a person
who has been suspended or removed by the
Division from the board of directors or who
is delinquent in the payment of any fee or
assessment (more than ninety (90) days
delinquent) may not serve. The statute has
been amended to extend the disqualification
of a potential candidate if the candidate is
delinquent in the payment of fines or regular
or special assessments for more than ninety
(90) days.
The Condominium Act has been amended to
provide that a director or officer of the
association who is more than ninety (90) days
delinquent in the payment of any monetary
obligation due the association shall be
deemed to have abandoned the office, creating
a vacancy in the office to be filled
according to the law. Previously, the
suspension only applied to those directors or
officers who failed to pay regular
assessments to the association. It is
important to note that this section of the
Act does not provide that the abandonment of
office created by the delinquency may be
cured to allow the directors back on the
board like the statute does for those who
have failed to comply with the certification
requirement. It may be reasonably concluded
that the legislature did not intend for a
director to be able to pay the amounts owed
the association in order to reinstate his
position on the board.
Condo Candidates' Certification
Under the old law, candidates for the
board of directors were required to sign a
certification form attesting to the fact that
he or she had read and understood the
governing documents of the association and
the provisions of the Condominium Act. That
requirement has been repealed by the recent
amendment to the Act. While the
certification is not necessary to be filled
out by the candidates, a new section has been
added to the Act which requires that newly
elected or appointed directors certify in
writing to the secretary of the association
that he or she has read the association's
declaration of condominium, articles of
incorporation, bylaws and the current written
policies within ninety (90) days of being
elected to the board. The new director must
certify that he or she will work to uphold
the 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.
In lieu of providing the written
certification, the newly elected or appointed
director may submit a certificate of
satisfactory completion of the educational
curriculum administered by a
Division-approved condominium education
provider. If a director fails to file the
written certification or educational
certificate, he or she is suspended from the
board until he or she has complied with that
requirement. The person appointed to fill
that vacancy fills the seat only for the
period of suspension.
Communication Services
Under old law, if provided in the
Declaration, the cost of a master antenna
television system, cable television service
may be construed as a common expense of a
condominium. The statute has now been
amended to provide that the cost of
communications services as defined in Chapter
202, including information services or
Internet services may also be provided by a
bulk contract and billed as a common expense.
Assessment Collections
One of the more frustrating aspects of
operating a condominium association arises
when a unit owner who is delinquent in the
payment of monies owed the association rents
his unit and refuses to pay the association.
A new amendment to the Condominium Act
provides that, if the unit is occupied by a
tenant and the unit owner is delinquent in
paying any monetary obligation due the
association, the association may make a
written demand that the tenant paid the
future monetary obligations related to the
unit to the association and the tenant is
required to make the payment. The statute
provides that the demand is continuing in
nature and the tenant must pay the monetary
obligations to the association until the
association releases the tenant or the tenant
discontinues tenancy in the unit. In
addition to the requirement that the tenant
pay the association, the amendment to the
statute authorizes the association to issue
notices under the Landlord-Tenant Act if the
association was a landlord without imposing
other landlord-type duties upon the
association.
Suspension of Use Rights
The Condominium Act was amended to provide
that, if a unit owner is delinquent for more
than ninety (90) days in paying a monetary
obligation due to the association, the
association may suspend the right of the unit
owner or the unit's occupant, licensee or
invitee to use the common elements, common
facilities or any other association property
until the monetary obligation is paid. The
amendment does not apply to limited common
elements intended to be use only by that unit
and does not apply to common elements that
must be use to access the unit including
parking spaces or elevators. The fourteen
(14) days advance notice and opportunity for
a hearing which would be required for a fine
or a suspension for some purpose other than
the nonpayment of assessments does not apply
when the suspension is being imposed for the
failure of an owner to pay assessments. In
addition to suspending the rights of an owner
or occupant of a unit for failure to pay
assessments, an amendment to the Act also
provides that the association may suspend the
voting rights of a member when the member has
failed to pay any monetary obligation due the
association which is more than ninety (90)
days delinquent.
Bulk Assignees
The legislature has acknowledged a number
of problems with the existing language in the
Condominium Act and Administrative Code which
have created legal issues for lenders that
have acquired multiple units in condominium
communities. Because of the definition of
"developer" some lenders who have acquired
title to many units in a particular
condominium have been construed as a
successor developer which imposes a number of
legal obligations upon the property owner.
The legislature adopted what is known as the
"Distressed Condominium Relief Act" and it is
found in Section 718.701 and the sections
that follow. The amended language is too
extensive for succinct discussion here, but,
suffice it to say that the intent of the
legislature is to relieve certain entities
who will be construed as bulk assignees from
the obligations of the developer as described
in the condominium documents and the
Condominium Act. These bulk assignees will
be liable for all of the duties and
responsibilities of the developer under the
declaration and the Condominium Act except
those obligations which are specifically
described in the new statute. Among the
items that the bulk assignees are not
responsible for include warranties for work
done prior to the acquisition by the
assignee, liabilities of the developer board
taken prior to the bulk assignment and
liabilities arising out of the former
developer's failure to fund assessments or to
resolve budgetary deficits. Whether a party
has acquired sufficient units to be construed
as a bulk assignee under the statute needs to
be evaluated on a case by case basis with the
assistance of your association's legal counsel.
Homeowners Association Changes
HOA Board Meetings
Section 720.303 was amended to clarify
that meetings between the Board or a
committee and the association's attorney to
discuss proposed or pending litigation or
meetings of the board held for purpose of
discussing personnel matters are not required
to be open to the members other than
directors. Previously, the statute could
reasonably be interpreted to require that the
meetings concerning personnel matters may
only be held without being open to other
members where the association's attorney was
present. With the amendment, it is clear
that the attorney need not be present to have
meetings concerning personnel matters without
having it open to other lot owners.
Document Inspection
The homeowners' association statute was
amended to require a lot owner to submit a
request to inspect the association records by
certified mail, return receipt requested in
order to create the rebuttable presumption
that an association has failed to comply with
the requirement to make documents available
to lot owners. Previously, only written
request was required in order to create that
rebuttable presumption. Apparently, there
was some concern that lot owners were
falsifying their written requests. With the
requirement that the request be provided by
certified mail, there will be less
controversy about whether an actual written
document inspection request was submitted.
If a lot owner desires copies of records
that are produced by the association and the
association has a copier, it may charge up to
fifty cents ($0.50) per page. If the
association does not have a photo copy
machine available where the records are kept
or if the records requested to be copied
exceed 25 pages, the association may have
copies made by an outside vendor or the
association's management company personnel
and the association may charge the actual
cost of copying, including any reasonable
costs involving personnel fees and charges at
an hourly rate for the vendor or employee
time to cover administrative costs to the
association or vendor.
The statute was also modified to clarify
those records which are not available to lot
owners. Associations' employee records
included but not limited to disciplinary,
payroll, health and insurance records, are
not available for lot owner inspection.
Social Security numbers, driver license
numbers, electronic mailing addresses,
telephone numbers, emergency contact
information and addresses for parcel owners
other than as provided for association notice
requirements and other personal identifying
information of any person are not included
among the records that must be provided to
lot owners.
Reserves
If a homeowners association's budget
provides for accounts for deferred
maintenance, including, but not limited to
funds for capital expenditures and deferred
maintenance, but those accounts are not
created or established pursuant to paragraph
(d) of the statute, a specific disclaimer
must be included for the preceding fiscal
year that discloses that those reserves were
not funded.
Directors' Compensation
A new section was added that prohibits the
compensation of directors, officers or
committee members of a homeowners
association. The statute specifically
prohibits directors, officers or committee
members from benefiting in any way
financially from services rendered the
association. There are a number of
exceptions which include, for example, a fee
or compensation which is authorized by the
governing documents and any fee or
compensation which is authorized in advance
by a vote of the majority of the voting
interests voting in person or by proxy at a
meeting of the members.
Suspension of Use Rights
Section 720.305 was amended to provide
that, if a member is delinquent for more than
ninety (90) days in paying a monetary
obligation due the association, the
association may suspend the rights of the
member or the member's tenants, guests or
invitees or both from using the common areas
and facilities until the monetary obligation
is paid. The provisions regarding the
suspension of use rights do not apply to
portions of the common areas that must be
used to provide access to the parcel or
utility services provided to the parcel.
Interestingly, even though this section of
the Homeowners Association Statute mirrors in
some respects a similar provision in the
Condominium Act, the amendment authorizing
the suspension of use rights in the
Homeowners Association Statute does not state
that the suspension may be done without
providing fourteen (14) days notice of an
opportunity of a hearing before a committee.
It appears that, in the homeowners
associations' context, the suspension of use
rights for failing to pay still requires a
fourteen (14) day notice and an opportunity
for hearing.
Homeowners Association Elections
The Homeowners Association Act was amended
to provide for election procedures that had
previously been absent from the statute. Now,
the statute provides that, if the governing
documents permit voting by secret ballot by
members who are not in attendance at a
meeting of the members for the election of
directors, those ballots must be placed in an
inner envelope which much be delivered to the
association in an outer envelope that
identifies the name of the member, the lot
for which the vote is being cast and the
signature of the lot or parcel owner casting
the ballot. The Act was also amended to
authorize the nomination of a lot owner to
serve on the Board prior to the election if
the election process allows voting by
absentee ballot. The amendment to the
statute is silent about how or when a person
must nominate himself prior to the election.
Filling of Vacancies on the Board
A new section in 720 now provides that,
unless otherwise provided in the bylaws, any
vacancy occurring on the Board before the
expiration of a term may be filled by an
affirmative vote of the majority of the
remaining directors even if the remaining
directors constitute less than a quorum.
Alternatively, the statute authorizes the
Board to hold an election to fill the vacancy
in which case the election procedures must
conform to the requirements of the governing
documents. The amended statute provides
that, unless otherwise provided in the
bylaws, a board member appointed or elected
to fill a vacancy is appointed for the
unexpired term of the seat being filled.
Collection of Rent from Tenants
A new subsection has been added to Section
720.3085 which authorizes an association to
collect rent from the tenant who occupies a
unit when the property owner has failed to
pay assessments. The statute authorizes the
association to demand that the tenant pay all
future monetary obligations relating to the
parcel to the association. Certain specific
notice requirements must be made in order for
the association to take advantage of this new
section.
Limitation on Developer Special
Assessments
A new section 720.315 was added to Chapter
720 to prohibit a board of directors that is
being controlled by the developer from
levying special assessments unless a majority
of the parcel owners other than the developer
have approved the special assessment by a
majority vote at a meeting called of the
membership where a quorum is present.
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