2007 LEGISLATIVE UPDATE
PART 4 - HOMEOWNERS ASSOCIATIONS CONTINUED
In this edition of the eLawyer, we conclude our summary of recent legislative changes that affect community associations. This edition will cover new HOA law first addressed in Part 2 of our 2007 Legislative Update.
I. HOA Assessment Collection
New section 720.3085, effective July 1, 2007, has been added to the Homeowners Association Act. For the first time, Chapter 720 now addresses in detail the collection of HOA assessments.
New Notice Requirements
Beginning on July 1, 2007, homeowners associations must give the following new notices to delinquent homeowners as part of the assessment collection process:
a. First 45 Day Notice Prior to Recording Liens:
New subsection 720.3085(4) requires that, prior to recording liens, associations must mail notices to the delinquent owners by both certified and first class mail specifically granting them 45 days to pay all amounts due.
b. Second 45 Day Notice Prior to Filing a Foreclosure Lawsuit:
New subsection 720.3085(5) then provides that, prior to filing a foreclosure lawsuit (or a suit for personal judgment), associations must mail a second 45 day notice to the delinquent owners notifying them of the associations’ intent to foreclose and collect the unpaid assessments.
Application of Effective Date
The two (2) events which will determine the application of the new law to an assessment collection matter are the recording of a lien and the filing of a foreclosure lawsuit. If a lien has been recorded (not just sent to the Clerk for recording) prior to July 1, 2007, then the first 45 day notice will not apply. Conversely, any liens not actually recorded prior to July 1, 2007 will require the first 45 day notice.
Similarly, any lien foreclosure complaint filed with the Court prior to July 1, 2007 will not require the second 45 day notice, and any not filed by that time, will.
New subsection 720.3085(6) creates a new procedure which permits delinquent owners to further delay the foreclosure process after the foreclosure lawsuit is filed. This procedure permits the owner to serve a written “qualifying offer” on the association, in which they agree to pay all delinquent assessments, along with attorneys’ fees and costs, in return for the obligation of the association to stay the lawsuit for up to 60 days.
Other Important Changes
The new law specifically authorizes associations to purchase parcels at their foreclosure sales and then hold, lease, mortgage or convey them.
The new law makes the purchasers of parcels jointly and severally liable with the seller for all assessments which are delinquent at the time of sale.
New subsection 720.3085(3) provides that if late fees are provided for in the declaration or bylaws, they may not exceed the greater of $25.00 or 5% of the amount of each installment that is paid passed the due date. Late fees are also declared not to be fines, so no hearing will be required before the imposition of such fees.
II. Financial Records at Transition (Senate Bill, Section 14)
Florida Statute 720.307(3) was amended to specify additional financial records which the developer must turn over to the homeowners association at the developer’s expense, within 90 days of transition. The financial records include:
1) All association financial records, including financial statements and source documents.
2) The financial records must include those from the incorporation of the association through the date of turnover.
3) All financial statements must be prepared in accordance with generally accepted accounting principles.
4) The records must be audited by an independent certified CPA for the period from incorporation of the association, or from the period covered by the last audit.
5) The audit must be performed in accordance with generally accepted auditing standards, per the Florida Board of Accountancy and Florida Statute 473.
6) The CPA must examine supporting documents and records to determine if expenditures were for association purposes.
7) The CPA must also determine that the developer was charged and paid the proper amount of assessments.
Note that these requirements only apply to homeowners associations with a date of incorporation after December 31, 2007.
III. Miscellaneous Changes
û Florida Statute 720.303(2)(a) has provided that meetings of the association board occur whenever a quorum gathers to conduct association business. All such board meetings must be open to all members except for meetings between the board and its attorney under certain conditions.
This section has now been amended to provide that its provisions also apply to the meetings of any committee or similar body:
1) When a final decision will be made regarding the expenditure of association funds; and
2) When the committee or similar body is vested with the power to approve or disapprove architectural decisions regarding specific residential parcels.
Note that these provisions were previously included in an alternative version of 720.303(2), enacted by a conflicting bill in 2004. It has now been repealed.
û Florida Statute 720.303(5) is amended to add a new subsection (d). This section provides that the HOA and its agent are not required to provide a prospective purchaser or lienholder (bank) with information about the subdivision or the association. The association can charge a reasonable fee not to exceed $150.00 from the prospective purchaser or lienholder, or the current parcel owner/member for providing good faith responses to requests for information on behalf of a prospective purchaser or lienholder. The association can also charge the reasonable costs of photocopying and any attorneys’ fees incurred in connection with the response.
û Florida Statute 720.303(7) is amended to increase from 60 to 90 days the time that an HOA has to prepare and complete the annual financial report after the end of the fiscal year. Within 21 days after the financial report is completed or received from a third party, but not later than 120 days after the end of the fiscal year, the association must provide each member with a copy of the annual financial report, or a written notice that a copy is available upon request and at no charge to the member. Other time periods can apply if so provided in the bylaws. This section is also amended to require that financial statements be prepared in accordance with generally accepted accounting principles as adopted by the Florida Board of Accountancy.
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 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.
©2007 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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