2006 Legislative Update

LEGISLATIVE UPDATE 2006

    The 2006 Session of the Florida Legislature has now ended, and a number of bills became law which will effect condominium and homeowners associations throughout the State. In this issue, we will outline and briefly describe the bills which became law. In future e-Lawyers, we will describe in more detail particular statutes, and finally, we will review legislation which did not pass, but could easily resurface at next year’s session.

    House Bill 7121 - This Bill addresses some of the conditions which occurred during the recent hurricane seasons. It applies to high rise condominiums and cooperatives, defined as 75 feet or higher, which contain at least one (1) non-service elevator. A non-service elevator is one not used exclusively for service personnel. The new law requires an association to provide an alternate power source for at least one (1) non-service elevator. The alternate power source can consist of an on-site generator with an on-site fuel supply. The generator must have the capacity to provide sufficient electricity for not only the elevator, but also any existing fire alarm system and the interior lighting for the building’s common areas, for a specified number of hours each day over a five (5) day period. This Bill also requires an association to keep maintenance records for the alternate power equipment and quarterly inspection records for life safety equipment. The new law also requires high rise condominium and cooperative associations to create an 'emergency operations plan' that specifies association operations before, during and after an emergency, such as a natural disaster. The plan must include a life safety plan for evacuation, maintenance of the electrical and lighting facilities, and provisions for the health, safety, and welfare of the residents.

    Note: Under the provisions of this new law, by the end of this calendar year, a high rise association must provide the local building inspection agency with engineering plans that provide for the alternate power system. By the end of calendar year 2007, all modifications must be completed and the alternate power system must be operational and verified as such by local building inspectors. There is no established deadline for an association to complete its emergency operations plan. This is not necessarily a good thing, because the requirement as contained in the new law was effective July 1, 2006. Associations should move with all reasonable dispatch to draft their emergency operations plan.

    House Bill 7079 - This Bill specifically authorizes the Board of Directors of a homeowners association as defined in Florida Statute 720 to elect to have state traffic laws enforced by local law enforcement agencies on private roads controlled by the association. The election must be by a majority vote.

    House Bill 1443 - This Bill provides for the use of electronic or facsimile filing of certain construction lien applications and other documents. Agencies which accept such filings must provide a searchable internet database.

    House Bill 1089 - This Bill reduces the statute of repose for construction defects claims from fifteen (15) years to ten (10) years. This Bill also clarifies when superfunded reserve accounts are required for the conversion of existing improvements into condominiums.

    House Bill 1139 - This Bill amends Florida Statute 558 which applies to claims for construction defects, and requires the claimant to give specified, written notice to potential defendants and an opportunity to remedy the defects, as a precondition to filing a lawsuit. Previously this statute only applied to residential real property. The new law applies the required procedure to construction defects claims concerning any and all real property.

    House Bill 65 - This Bill deals with the procedure for disbursement of surplus funds which may result from the sale of real property as a result of a foreclosure action. Among other provisions, this Bill requires the Clerk to include in a certificate of disbursement after the sale, any available surplus amounts. When a bank forecloses a mortgage, and a community association is a junior lien holder, the Bill requires any claims for surplus funds resulting from a judicial sale to be filed within sixty (60) days after the sale in order to be valid. The Bill creates a rebuttable legal presumption that the owner of the property, as of the date of the filing of a lis pendens, is entitled to any surplus funds resulting from a foreclosure sale, unless some other person proves entitlement to the funds.

    Of particular interest, House Bill 391 which was supported by many community association organizations was passed unanimously in both the House and the Senate. This Bill contained a large number of provisions which affected condominiums, homeowners associations, and cooperatives. This Bill extended the expired documents reinstatement procedures under the Marketable Record Title Act to voluntary (non 720) homeowners associations; provided a simplified procedure for condominium associations to obtain the consent of mortgagees when amending documents; and contained provisions relating to mandatory mediation of HOA disputes, reserve accounts for HOA’s, procedures concerning the architectual review function, and provisions concerning a developer’s guarantee of HOA common expenses.

    Unfortunately, House Bill 391 also included a provision extending the date after which local authorities could require the retrofit of residential condominium’s common areas with a fire sprinkler system from 2014 until 2025. This provision, along with the proposed change to the system for mandatory mediation of HOA disputes, caused Governor Bush to veto the Bill on June 27, 2006. The Governor’s primary objections were the '. . . arbitrary postponement of an already distant time frame . . .' which presented an unacceptable safety risk with regard to retrofitting of fire sprinkler systems; and the Bill’s effect of replacing the 'mandatory' HOA mediation program with voluntary pre-suit mediation not administered by the Department of Business and Professional Regulation.

The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition was 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. The opinions expressed herein are as of the date hereof, and this law firm undertakes no obligation to advise the Association of subsequent changes in the law.

©2006 Taylor & Carls, P.A. All Rights Reserved.
The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
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LEGISLATIVE UPDATE 2006 -
(continued)
 
    This is the second e-Lawyer in a series which examines the 2006 legislation which impacts Florida condominium and homeowner associations. In the last issue (Volume V, Issue 13) we briefly reviewed the major bills passed by the Legislature for 2006. In this and the next issue, we will examine these bills in more detail. In the final issue in the series, we will outline those bills which did not pass or were vetoed, but could easily resurface next year.
 
HOUSE BILL 7121
 
    The 2004 and 2005 hurricane seasons raised a number of issues which the Florida Legislature examined in the 2006 session concerning disaster preparedness, response and recovery. As a result of hearings conducted on these issues, the Legislature passed House Bill 7121 which will make gasoline supplies more readily available following a disaster, improve the survivability and functioning of County Emergency Operation Centers, fund the updating of regional hurricane evacuation plans, expand disaster education for the public, and create programs to increase the availability of supplies, equipment and commodities needed immediately following a disaster.

    With regard to Florida condominiums and cooperatives, the Bill amends Florida Statute 553.509 which deals with vertical accessibility in buildings. The Bill applies to any person, firm, or corporation that owns, manages, or operates a high-rise residential multi-family dwelling, including a condominium. The building must be at least seventy-five (75) feet high, measured from the lowest level of vehicle access to the highest occupied floor. Although every building is different, and the seventy-five (75) feet measurement is controlling, this is approximately six (6) stories.

ALTERNATE POWER SOURCE

    The Bill requires at least one (1) public elevator in a high-rise building that is capable of operating on an alternate power source for emergency purposes. This requirement only applies to a 'public' elevator as defined in Florida Statute 399.035. If the building contains one (1) elevator that is restricted by a key or other device to a limited number of people, and the building has another elevator which can be used by the public, then only the public elevator is covered under this Bill. If the only elevator in the building is restricted by key or similar device, so that it is also used by vendors, contractors, guests and other members of the public, then it, too, must meet the requirements of this Bill. If a building has an elevator that is used only for the transportation of freight, then it is not covered by the Bill. If an elevator is used both for freight, employees and passengers, it must comply.

    The alternate power must be available so that all residents can have access to the building for a specified number of hours each day for a five (5) day period following a disaster or other emergency that disrupts the normal supply of electricity. While there is no definition of 'alternate power source', the two (2) systems mentioned are an available generator and fuel source on the property, or a current guaranteed service contract for equipment and fuel to operate the elevator on an 'on-call basis within twenty-four (24) hours after a request.'

    In addition to operating one (1) elevator, the alternate power source must also be capable of powering any connected fire alarm system in the building, and providing emergency lighting to interior lobbies, hallways, and other portions of the building used by the public.

    The Bill contains deadlines. Verification of engineering plans providing for the alternate power source must be furnished to the local building inspection agency by December 31, 2006. By December 31, 2007, the local building inspectors must verify both installation of the alternate power system and its operational capability. This information will be reported to the county emergency management agency.

    Each newly constructed residential multi-family dwelling that is at least seventy-five (75) feet high and contains a public elevator must have at least one (1) public elevator capable of operating on an alternate power source. Verification of the operational capability of such a system must be provided by the local building inspector to the county emergency management agency before a certificate of occupancy for the newly constructed building will be issued.

ELEVATOR INSPECTION REQUIREMENTS

    New requirements were also added to the annual elevator inspection required by State law. Certified elevator inspectors must now confirm that all installed generators required by the new law are in working order; that current inspection records for the generators are posted in either the elevator machine room or in another conspicuous place; and that a generator key is present in a lock box posted at or near the installed generator.

    If a building does not utilize an installed generator, the elevator inspector must then confirm that appropriate pre-wiring and switching capabilities are present, and that a statement is posted in the elevator machine room or other conspicuous place which confirms that a guaranteed contract exists for alternate power services on an on-call basis within twenty-four (24) hours after request.

    The Bill also requires that other written records be maintained. Any contracts for alternative power generation equipment must be maintained on site. Quarterly inspection records of life safety equipment and alternate power generation equipment must be posted in the elevator machine room or in another place conspicuous to an elevator inspector. These quarterly inspection reports must confirm that the equipment is both properly maintained and in good working condition. These inspection records and a written emergency operations plan (discussed below) must be available for periodic inspection by local and state government agencies.

COST TO IMPLEMENT

    The legislative history for this Bill indicates that the purchase of an alternate power source generator should cost approximately three hundred dollars to five hundred dollars ($300 to $500) per kilowatt, with the wattage varying depending on the size and requirements for each building. If a building chooses to utilize a service contract, the legislative history estimates that the purchase and installation of a transfer switch should be approximately six thousand dollars to ten thousand dollars ($6,000 to $10,000) depending on building specifications. No estimate is given for the actual cost of an on-call service contract, with the legislative history indicating that this will vary depending on the requirements, size and specification of each building. As a practical matter, vendor bids in your area will determine the actual costs.

EMERGENCY OPERATIONS PLAN

    Finally, the Bill also requires a high-rise condominium or cooperative to create an 'emergency operations plan' that specifies association operations before, during and after an emergency, such as a natural disaster. The Bill requires that the plan include a life safety plan for evacuation, maintenance of the electrical and lighting facilities, and provisions for the health, safety, and welfare of the residents. There is no additional guidance in the Bill, and the legislative history does not indicate that the Legislature contemplates the drafting of a model plan by any state agency. It is possible that the State Division of Emergency Management of the Department of Community Affairs might be of assistance. FEMA has a website which provides a guide to state and local governments for drafting emergency operations plans. While this is not directly applicable, it is 279 pages long and does contain information which can be useful for a condominium or cooperative in drafting its own plan. This website is located at http://www.fema.gov/plan/gaheop.shtm. There is no specific deadline for completing a plan, but the Bill, and requirement for a plan, took effect July 1, 2006. Associations for condominiums and cooperatives covered by the Bill should proceed without delay to draft their plan.

The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition was 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. The opinions expressed herein are as of the date hereof, and this law firm undertakes no obligation to advise the Association of subsequent changes in the law.

©2006 Taylor & Carls, P.A. All Rights Reserved.
The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
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LEGISLATIVE UPDATE 2006 - PART III
 
    This is the third e-Lawyer in a series which examines some of the 2006 legislation which impacts Florida condominium and homeowner associations. In this issue we will continue our examination of some of these Bills in more detail. In the next and final issue in the series, we will outline those bills which did not pass or were vetoed, but could easily reappear at next years session.
 
HOUSE BILL 1089

    Most of us are familiar with the statute of limitations, a law which specifies the time period within which a lawsuit must be filed. Failure to file within the specified time period means that the claim is lost forever. With regard to claims for construction defects (founded on the design, planning, or construction of an improvement to real property) the statute of limitations is four (4) years. This period begins to run from the latest of several events, most commonly the issuance of a certificate of occupancy or the date of actual possession of the real property by the owner. In the case of condominiums, the statute of limitations only begins to run on the date of transition of control of the board from the developer to non-developer unit owners. The impact of the statute of limitations on a potential claimant is moderated by the latent defect provision. When a construction defects claim involves a latent, or hidden, defect, the statutory four (4) year time period runs from the time the defect is actually discovered, or should have been discovered with the exercise of due diligence.

    A less familiar provision, the statute of repose, also limits the ability of a condominium or homeowners association to bring a claim for construction defects. The statute of repose establishes a time period within which an action must be commenced, with no extensions based on hidden defects or any other cause. Prior to this new law, the statute of repose for construction defects claims in Florida was fifteen (15) years. This time period runs from the latest of the following dates:

    The date of actual possession by the owner;
    The date of issuance of a certificate of occupancy;
    The date of abandonment of construction if the project is not completed;
    The date of completion or termination of the contract between an engineer, architect or licensed contractor and their employer on the project (usually the developer).

    The new law reduces the statute of repose from fifteen (15) years to ten (10) years. While ten (10) years still seems like an extended period, it is important to note that developers usually control condominium and homeowner associations for several years after the events listed above from which the statute of repose begins to run.

    The statute of repose, commonly an afterthought in planning construction defects claims, must now receive the same careful attention as the statute of limitations. The new law does provide that any claim that would be barred as a result of the new law can still be filed before July 1, 2007.

    The new law also provides that the extensive, implied statutory warranties contained in Section 718.203 of the Condominium Act do not apply where construction of an improvement is commenced prior to its designation by the developer as a condominium (a conversion). In such a situation, the developer is required to post a bond (this is a rarity), superfund certain reserve accounts, or if such reserve accounts were not funded properly, then the improvement is covered by the much more limited statutory warranties of Section 718.618.

HOUSE BILL 7079

    This bill added language to Florida Statute 316.006 which deals with the jurisdiction to control traffic. The new law provides that the Board of Directors of a Chapter 720 homeowners association may, by majority vote, elect to have state traffic laws enforced by local law enforcement agencies on private roads owned or controlled by the Association.

    This is a somewhat curious addition to Section 316.006 because the existing version of the law already provided that a county or municipality could exercise jurisdiction over a private road if the municipality or county entered into a written agreement with the party which owned or controlled the private road.

    There is no legislative history to provide guidance in interpreting this provision. A direct reading suggests that a Chapter 720 homeowners association could unilaterally elect to have local law enforcement agencies enforce state traffic laws on the association’s private roads. It is very doubtful that this was intended by the legislature, particularly in light of the pre-existing language which is still present in Section 316.006 which makes it voluntary for a municipality or county to assume such jurisdiction. The most likely interpretation of the new provision is that Chapter 720 associations must still obtain a written agreement from a municipality or county before local law enforcement will enforce state traffic laws on private roads.

    It may well be that some municipalities or counties in negotiating a written agreement with homeowners associations were unsure whether a board of directors had the authority to authorize such an agreement without a vote of the members. If nothing else, the new law clarifies that a majority vote of the board of directors can make that decision on behalf of the Chapter 720 association.

HOUSE BILL 65

    This new law deals with the procedure for disbursement of surplus funds which may result from the judicial sale of real property pursuant to a mortgage foreclosure action. It is not unusual for a community association to discover, when trying to collect delinquent assessments, that the mortgage on the property is also delinquent and a foreclosure lawsuit is pending. In those situations where the mortgage is superior to the association’s lien, the association usually awaits the outcome of the foreclosure. If the mortgage foreclosure results in a judicial sale of the real property, the proceeds are used to satisfy the debt to the foreclosing mortgagee, and any surplus is retained by the clerk.

    As we are all aware, in recent years real property values have risen dramatically throughout many areas of the state. One of the results of this increase in market value is that a judicial sale will result in proceeds which exceed the amount of the debt owed to the mortgagee. Previously, Florida case law provided that the foreclosing court must determine the priorities for distributing any such surplus, but the statutory judicial sale law did not specify the procedures to be followed.

    The new law requires the clerk to include any available surplus amounts in a certificate of disbursement which is issued after the judicial sale. Any claims for these surplus funds, including those by community associations, must be filed with the court within 60 days after the date of sale in order to be valid. The bill also creates a rebuttable legal presumption that, unless some other person proves entitlement to the surplus funds, they are deemed to belong to whoever owned the foreclosed property at the time a lis pendens is recorded in the public records. A lis pendens is a notice recorded along with the mortgage foreclosure lawsuit advising anyone interested in the property that a foreclosure action is pending and may affect the title to the property.

HOUSE BILL 1139

    This bill amended Florida Statute 558 which applies to claims for construction defects. The existing law required a claimant to give specified, written notice to potential defendants and an opportunity for the defendants to remedy the defects, as a precondition to filing a lawsuit. In addition to an opportunity to remedy the defects, potential defendants have the right to perform inspections and tests, under certain conditions, of the defective property. The primary affect of the new law is to extend all the requirements of Florida Statute 558 to commercial, as well as residential, real property. It is important to note that as with the existing law, the new law applies not only to construction defect claims a community association might have against a developer, but also to claims against a contractor who performs repair work for an association.

SENATE BILL 676

    No review of the 2006 legislative session would be complete without an examination of this new law. The legislative history for this bill makes the following finding: 'Currently, no pie is designated as the official state pie.' Apparently, this legislative oversight could no longer be tolerated. The new law designates Key Lime Pie as the Official Florida State Pie.

    According to the legislature, Key Lime Pie is one of the most enjoyed desserts in Florida, indeed the nation. The key limes utilized in this dessert are named after the Florida Keys where they originated. The first Key Lime Pie was baked in the 1850's in south Florida.

The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition was 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. The opinions expressed herein are as of the date hereof, and this law firm undertakes no obligation to advise the Association of subsequent changes in the law.

©2006 Taylor & Carls, P.A. All Rights Reserved.
The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
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LEGISLATIVE UPDATE 2006 - PART IV

    In the final issue of our series on 2006 Legislation, we examine some of those bills which did not pass, or were vetoed. These bills represent more than a minor, historical record, because several will almost certainly reappear next year.
 
HOUSE BILL 391
 
    House Bill 391 passed unanimously in both the House and Senate, but was vetoed by the Governor because it extended required retrofitting of common areas with fire sprinkler systems from 2014 to 2025; and because of changes to the 'mandatory' mediation of certain homeowner association/member disputes.
   
    This Bill contained many beneficial provisions supported by community associations and almost certainly will pass in some form next year. Among its major provisions were the following:
  • Would have allowed associations not governed by Florida Statute 720 to utilize the revitalization procedures for governing documents which had expired under the Marketable Record Title Act. Currently revitalization is only available if an association is governed by Florida Statute 720. Voluntary residential associations and associations which govern commercial and industrial developments currently require one hundred percent (100%) approval for revitalization.
  • Would have simplified the procedure by which condominiums could obtain approval from mortgagees for proposed amendments to association documents. Currently many mortgagees have no objection to a proposed amendment, but simply ignore repeated association requests for approval. Among other things, this Bill would have provided that the failure of a mortgagee to respond to a request for consent to a proposed amendment within sixty (60) days would be deemed to be consent.
  • In 2004 the Legislature passed two (2) Bills, both of which amended Florida Statute 720.303(2) containing slightly different versions of procedures for homeowner association board and committee meetings. House Bill 391 would have repealed one (1) of these versions to restore consistency to Florida Statute 720. 
  • The current Homeowners Association Act provides that an association must prepare an annual budget, with little additional regulation. This Bill would have amended Florida Statute 720.303(6) to add substantial regulation to the homeowners association budgeting process. While the Bill does not go so far as to mandate reserves as is the case with condominium budgets, it would require a special notice to homeowners if the homeowner association is required to maintain property and no reserves are included in the budget. If reserves are required by the HOA’s documents, or the HOA voluntarily includes reserves, many of the requirements for reserve accounts applicable to condominiums would then apply to HOA’s under this Bill. 
  • The new Bill would have provided that any homeowner who prevails against an HOA in litigation and is awarded prevailing party attorneys fees could also be awarded an additional amount to cover that homeowner’s pro-rata assessment levied by the association to pay the fees. 
  • The Bill would have required Developers, as part of the transition of control of the Board of Directors of an HOA, to obtain an audit of the financial records conducted by an independent CPA to determine that the Developer was billed, and paid, the proper assessments. This provision would have brought HOA transition very close to the procedures required of condominiums. 
  • The Bill would have amended Florida Statute 720.308 to incorporate into HOA’s Developer guarantees of common expenses found in condominium law. Currently 720.308 provides for guarantees of common expenses if provided for in the Declaration, but it lacks many of the essential details included in the Condominium Act which prevent the Developer from circumventing the purpose of Developer guarantees of expenses. That purpose is to excuse the Developer from payment of assessments for Developer-owned lots if the Developer does not raise assessments against non-Developer lot owners and pays any budget shortfalls which may occur.
SENATE BILL 586
 
    This awful Bill fortunately did not make it out of committee, but this is the second year that it has raised its ugly head. This Bill would have provided that a condominium association could not institute a lien foreclosure action or an action to recover a money judgment for delinquent condominium assessments until the amount due equaled or exceeded $2,500.00. The Bill also would have removed the association’s right to recover its reasonable attorneys fees incurred in such litigation. It also would have required a written notice of 180 days instead of the current 30 days before entry of a foreclosure judgment.

HOUSE BILL 1441

    This Bill would have requested the Chief Judges of Judicial Circuits for Hillsborough and Pinellas County to establish 'home courts' in order to provide a simplified court procedure for disputes related to covenants and restrictions. The pilot program would have included HOA’s and Condominiums, and would have created a system of magistrates to render findings concerning such disputes.

HOUSE BILL 543

    This Bill would have amended Florida Statute 718.117 with regard to the termination of a condominium. A condominium could be terminated under the Bill by a 'plan of termination', regardless of any contrary provision in the Declaration of Condominium, where either eighty percent (80%) of the members approve the plan, or where fewer than twenty percent (20%) of the members fail to vote to disapprove the plan. The procedure would apply where the cost to repair a condominium exceeds the combined fair market value of all units in the condominium or where it becomes impossible to operate or reconstruct the condominium in its prior configuration because of land use laws. The Bill contains detailed requirements for what must be included in the plan. It creates the office of 'Termination Trustee' which can be the association. The Termination Trustee would be vested with board powers and would hold title to the condominium property. The Bill permits one of several methods to allocate to the units the proceeds of any sale, and gives any unit owner or mortgagee the right to contest a termination plan. This Bill was vetoed by the Governor. Opposition to the Bill focused on the ability of eighty percent (80%) of a condominium’s owners to force termination and sale.


FIRM NEWS: The law firm of Taylor & Carls, P.A. is pleased to announce that as of September 1, 2006, Patrick C. Howell and Elizabeth Lanham-Patrie have become Partners with the firm.


The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition was 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. The opinions expressed herein are as of the date hereof, and this law firm undertakes no obligation to advise the Association of subsequent changes in the law.

©2006 Taylor & Carls, P.A. All Rights Reserved.
The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
To unsubscribe to this service, please reply to this address
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