This session of the Florida Legislature had some unusual results. Two large bills dealing with condominium and homeowners associations (Senate Bills 1184 and 2984) were both approved. Although identical in many areas, these bills contain some crucial differences, including the effective dates. We are seeking clarification from Tallahassee as to these issues but, as of this writing, it appears most provisions become effective 10/1/04 but some may be effective 6/23/04. These two bills are a combined 168 pages so we can only present a brief overview of the major changes in this space. Many of the changes dramatically increase the regulation of homeowners associations. We will also touch on a few other bills which affect community association issues. Instructions for viewing the full text of the new laws can be found at the end of this issue.
1. Creation of Advisory Council - It’s ba-ack. Dissolved in 1982, the Advisory Council has been recreated to receive input from the public and make recommendations for changes in the condominium laws and rules. The Council members will be appointed by the Governor (3), the President of the Senate (2) and the Speaker of the House (2).
2. Creation of the Office of the Condominium Ombudsman - The Ombudsman will be an attorney admitted to the Florida Supreme Court and appointed by the Governor. 'It is the intent of the Legislature that the ombudsman act as a neutral resource for both the rights and responsibilities of unit owners, associations, and board members.' The Ombudsman can make recommendations for legislation relative to division procedures, rules, functions, etc. including procedures for filing, investigating and resolving consumer complaints. The Ombudsman will monitor and review procedures and disputes concerning elections or meetings and can recommend that the division pursue enforcement action. The last and most controversial section provides that 15% of the voting interests may petition the Ombudsman to appoint an election monitor to attend the annual meeting and conduct the election, at the Association’s expense. This monitor can be a division employee, a licensed attorney, or a person specializing in condominium election monitoring.
3. Rental Restrictions - New Section 718.110(13) provides that 'any amendment restricting unit owners’ rights relating to the rental of units applies only to unit owners who consent to the amendment and unit owners who purchase their units after the effective date of that amendment.' This appears to be a reaction to consumer complaints to the Select Committee on Condominium Governance and the Supreme Court’s ruling in the Woodside case expanding associations’ amendment powers. Amendments recorded prior to the 10/1/04 effective date should not be affected.
4. Information Provided to Prospective Purchaser or Lienholder - The association or its agent cannot be held liable for information provided in good faith to a prospective purchaser or lienholder if the information provided contains the written statement 'The responses herein are made in good faith and to the best of my ability as to their accuracy.'
5. Frequently Asked Questions and Answers - In comical yo-yo fashion, the legislature reinstated a provision that was repealed in 2002 which entitles prospective purchasers to a copy of the Q&A sheet from a non-developer seller. The clauses required to be included in the contract for sale are also revised to include the Q&A sheet in the list of documents which must be provided or the contract is voidable.
6. Miscellaneous - Section 718.112(2)(l) now allows limited proxies or ballots to be used in a vote to forego retrofitting of fire sprinkler systems, and revisions are made to requirements for the meeting notice, the vote results notice, and evidence of compliance. The definition of 'developer' is revised in 718.103. House Bill 129 requires all elevators in buildings six or more stories high to be keyed to a master key for their emergency response region (existing buildings have until 7/1/07 to comply). Section 718.1085 is created allowing unit owners to vote to forego retrofitting of handrails and guardrails in a residential condominium designated as 'housing for older persons', but an association cannot forego retrofitting of common areas (defined as stairwells and exposed, outdoor walkways and corridors) in a building more than 75 feet high.
When is an HOA a CONDO? We’re getting there, Folks! Definitions of 'department' and 'division' were added to 720.301, and the Homeowners Association Act now includes specific references to the Condominium Act, particularly with regard to recall of directors and arbitration procedures.
1. Dispute Resolution - Election disputes must be submitted to the Division for mandatory binding arbitration pursuant to 718.1255. Most other HOA disputes including use of or change to a parcel or common property, meeting issues, records access, and document amendments are now required to go through mandatory mediation with the Division prior to filing a court action. Interestingly, the filing fee for HOA arbitration and mediation is $200 (rather than the $50 fee for condominiums). In 34.01(1)(d), county courts are given concurrent jurisdiction with circuit courts over HOA disputes subject to mediation. The following unusual addition was made to 720.303(1): 'An association of 15 or fewer parcel owners may enforce only the requirements of those deed restrictions established prior to the purchase of each parcel upon an affected parcel owner or owners.' Though inartfully drafted, we believe the intent is to prohibit any retroactive application of newly adopted restrictions against existing owners in small associations, another likely reaction to the Woodside case.
2. Recall of Directors - Very similar to the Condominium Act, HOAs now have a 'cookbook' to follow for recalling members of the board of directors. Recall disputes must be submitted to the Division for mandatory binding arbitration pursuant to 718.1255 and 718.112(2)(j).
3. Board and Member Meetings - Many provisions substantially similar to the Condominium Act were adopted concerning notice of meetings, members rights to attend meetings, the procedure for getting items placed on the agenda, and rules for speaking at board and members meetings.
4. Financial Reports / Official Records / Disclosure Summary - HOAs now have substantially the same financial reporting requirements as condominiums – compiled, reviewed or audited based on total annual revenues – and the same opportunity for the membership to vote to increase or decrease the level required. The statute requiring a Disclosure Summary was moved from 689.26 to 720.601, the language in the disclosure was revised, and the basis for voiding a contract for violation thereof was clarified. The disclosure summary required by 720.601 and 'all other written records of the association not specifically included in the foregoing which are related to the operation of the association' are added to the list of official records which the association must maintain. Inspection and photocopying rights were revised.
5. Revival of Expired Covenants - In a bill that died but found new life at the end of the session, deed restricted communities in which the restrictions have expired due to the Marketable Record Title Act may revive the expired restrictions by the approval of a majority of the affected owners. The specific procedural requirements are exhaustive and include obtaining the approval of the Department of Community Affairs, but a majority vote is feasible and provides hope to older communities whose restrictions were extinguished by MRTA. Unbelievably, new section 720.405(5) allows a parcel owner to file suit within one year of the effective date of the new law to 'opt out' of any revival of the restrictions if judicially determined that it would 'unconstitutionally deprive the parcel owner of rights or property.' There are those who feel a future legislative session will repeal or seriously overhaul the new law.
6. Developer Issues - A section is added to 720.303(8) prohibiting a developer from using association funds to defend an action filed against the developer or developer-appointed board members, even when the subject of the action concerns the operation of the developer-controlled association. Section 720.602 is created providing remedies similar to 718.506 for damages incurred by purchasers who rely on false or misleading information published by the developer.
7. Miscellaneous - Section 720.3055 is created to require HOAs to obtain competitive bids for products or services which exceed 10 percent of the total annual budget, but contracts for professional services (attorneys, accountants, managers, etc) are exempted. Section 720.305(2) is amended to provide that a fine shall not become a lien, but does provide for prevailing party attorneys fees in any action to recover a fine. A hodge-podge of provisions were added to 720.304 including expanded provisions for displaying flags (mirrors Condo Act), installation of access ramps by parcel owners, right to display signs for security services, and a prohibition against SLAPP suits (Strategic Lawsuits Against Public Participation) filed against parcel owners.
A significant piece of legislation (SB1208) amending the Timeshare Act was approved and became effective June 10, 2004. The bill was 126 pages in length and contains amendments too numerous to recap here. Any readers affected by the Timeshare Act are encouraged to download the entire bill. Also, Section 74 of SB2962 applies to timeshare foreclosure actions and limits to 15 the number of timeshare estates which may be consolidated into a single foreclosure suit. It also significantly reduces the filing fee for a consolidated timeshare foreclosure action.
ALL COMMUNITY ASSOCIATIONS
The law providing conditional immunity from civil liability for persons who acquire an automated external defibrillator device is amended to specifically apply to condominium, cooperative, homeowner, time share, and mobile home associations. Associations who acquire a defibrillator should comply with the conditions found in 768.1325(3) to receive this immunity. The new law further provides that insurers may not require a community association to carry medical malpractice insurance and may not exclude damages resulting from the use of the defibrillator from general liability coverage.
Chapter 558, Florida Statutes, which was created by last year’s Legislature, is substantially revised by HB1899 which became effective July 1, 2004. A comprehensive review of the changes is beyond the scope of this article, but be aware that significant changes were made to, among other things, the definitions of 'claimant', 'construction defect', 'dwelling', 'service' and 'subcontractor'; the periods of time required for notices and for site inspections; provisions and procedures for destructive testing of the property; and exchange of available discoverable evidence. Almost every timeframe was enlarged to give more time to respond, especially as pertains to claims involving associations representing more than 20 parcels (ie. contractor now has 75 days rather than 25 to send written response to initial claim). Again, anyone involved in or contemplating an action for construction defects is encouraged to obtain and read the entire bill.
Future editions of The Association e-Lawyer will explore in more depth some of the legislative changes addressed herein and the practical applications and ramifications we anticipate. In closing, we encourage you to contact your association counsel for additional information and advice regarding these voluminous pieces of legislation. The bills discussed in this article can be viewed online by navigating to www.flsenate.gov and entering the bill number in the (Jump to Bill) block on the left. You can then scroll down and click on the final version (Enrolled or ER) of the bill and view it in html or PDF format. Until next time ....
The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne and Daytona Beach, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition prepared by Harry W. Carls, Esq. of Taylor & Carls, P.A. The information contained in The Association e-Lawyer should not be acted upon without professional legal advice.