Webinar: The 2013 Florida Legislative Session: Analysis of the Impacts on Community Associations

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  • Condominiums & Cooperatives (HB 73) Updates to the Safety Code for Existing Elevators and Escalators, ASME A17.1 and A17.3, which require Phase II Firefighters’ Service on elevators may not be enforced until the elevator is replaced or requires major modification. This will apply to elevators in condominium or multi-family residential buildings. The current law requires that the upgrades be completed by no later than July 1, 2015. This proposed change will allow the owner of the elevator to delay making upgrades until the elevator is replaced or requires major modification.
  • Condominiums (HB 73) Clarifies that the association is responsible for damage that is insured by the association and which is damaged by an insurable event . Statute used to say that any portion of the condominium property that must be insured by the association against casualty loss which is damaged by a casualty shall be reconstructed by the association as a common expense. Statute was amended in 2010 to change the terms “casualty loss” and “casualty insurance” to “property loss” and “property insurance.” However, there was a glitch in the 2010 bill because it also removed the phrase “damaged by a casualty” in the section which makes the association responsible for certain casualty damage. The change to Section 718.111(11)(j) corrects this glitch by clarifying that the association’s responsibility is for damage caused by an insurable event.
  • Condominiums & Cooperatives & Homeowners’ Associations (HB 73) An association shall allow a member or his/her authorized representative to use a portable device to make an electronic copy of the official records in lieu of the association’s providing a copy of such records. The association may not charge a member or his/her authorized representative for the use of a portable device.
  • Condominiums & Cooperatives & Homeowners’ Associations (HB 73) An association shall allow a member or his/her authorized representative to use a portable device to make an electronic copy of the official records in lieu of the association’s providing a copy of such records. The association may not charge a member or his/her authorized representative for the use of a portable device. An association may print and distribute to parcel owners a directory containing the name, parcel address and telephone number of each parcel owner. However, an owner may exclude his or her telephone number from the directory by so requesting in writing to the association.
  • Primary changes involve bringing over official records provisions in the Condominium Act to the Cooperative Act such as the following: The records must be maintained for 7 years and within 45 miles of the cooperative property or within the county The records may be made available to a unit owner electronically via the internet or by allowing the records to be viewed in an electronic format on a computer screen and printed upon request. The association is not responsible for the use or misuse of the information provided unless the association has an affirmative duty not to disclose such information pursuant to Chapter 718. The failure to permit inspection entitles any person to prevailing party attorney’s fees and costs from the person in control of the records who, directly or indirectly, knowingly denied access to the records. Any person who knowingly or intentionally defaces or destroys required accounting records, or who knowingly or intentionally fails to create or maintain required accounting records, with the intent of causing harm to the association or one or more of its members, is personally subject to a civil penalty. The association shall maintain adequate copies of the required year-end financial statement to ensure their availability to unit owners and prospective purchasers.
  • Adds to the Cooperative Act the following records that shall not be accessible to unit owners, similar to the Condominium Act: Any record protected by the lawyer-client and any record protected by the work-product privilege. Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health, and insurance records. Social security numbers, driver license numbers, credit card numbers, e-mail addresses, telephone numbers, emergency contact information, any addresses of a unit owner other than addresses provided to fulfill the association's notice requirements, and other personal identifying information of any person, excluding the person's name, unit designation, mailing address, and property address. (But see above regarding owner directories). Any electronic security measures that are used by the association to safeguard data, including passwords. The software and operating system used by the association which allows manipulation of data, even if the owner owns a copy of the same software used by the association.
  • Homeowners’ Associations (HB 73) Personnel records of association or management company employees are not accessible for inspection by members or parcel owners. The current statute does not mention management company employees.
  • Homeowners’ Associations (HB 7119) the official records shall be maintained for at least 7 years and within 45 miles of the community or within the county. at the option of the association, the official records may be made available to a parcel owner electronically via the Internet or by allowing the records to be viewed in electronic format on a computer screen and printed upon request. The association may charge a member for the costs required for personnel to retrieve and copy the records if the time spent retrieving and copying the records exceeds one-half hour and if the personnel costs do not exceed $20 per hour. Personnel costs may not be charged for records requests that result in the copying of 25 or fewer pages. The current law allows “reasonable costs for personnel fees.” reduces the copy charges for official records from .50 to .25 per page. If the records requested to be copied exceed 25 pages in length, the association may charge the actual cost of copying, as supported by the vendor invoice.
  • Condominiums & Homeowners’ Associations (HB 73) Changes the thresholds for the financial reporting requirements as follows: Compiled financial statements are required for annual revenues of $150,000 or more, but less than $300,000 (previously $100,000 to $200,000). Reviewed financial statements are required for annual revenues of at least $300,000, but less than $500,000 (previously $200,000 to $400,000). Audited financial statements are required for annual revenues of $500,000 or more (previously $400,000). Associations with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures (previously $100,000). An association that operates fewer than 50 units, regardless of the association’s annual revenues, shall prepare a report of cash receipts and expenditures (previously 75 for condominiums).
  • Deletes the requirement for an owner vote before the board members may serve two-year terms, as long as the association’s articles of incorporation or bylaws provide for two-year terms. This would permit condominium boards to serve two-year terms (staggered or non-staggered) as long as provided in the articles or bylaws.
  • Condominiums (HB 73) The association secretary must retain a director’s written certification or educational certificate for five years after a director’s election or for the duration of the director’s uninterrupted tenure, whichever is longer. The current law only requires that the written certification or educational certificate be kept for five years after the director’s election.
  • Cooperatives (HB 73) & Homeowners’ Associations (HB 7119) Within 90 days of being elected or appointed, each new director shall certify in writing that he or she has read the association’s bylaws, articles of incorporation, proprietary lease, and current written policies; that he or she will work to uphold such 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 the written certification, the newly elected or appointed director may submit a certificate of having completed the education curriculum administered by an education provider as approved by the division within 1 year before or 90 days after being elected or appointed. The educational certificate is valid and does not have to be resubmitted as long as the director serves on the board without interruption. A director who fails to timely file the written certification or educational certificate is suspended from the board until he or she complies. The board may temporarily fill the vacancy during the period of suspension. The director’s written certification or education certificate shall be retained and is available for inspection for 5 years after a director’s election or the duration of the director’s uninterrupted tenure, whichever is longer. Failure to have such certification does not affect the validity of any board action.
  • Condominiums & Cooperatives & Homeowners’ Associations (HB 73) If the board of directors fails to duly notice and hold the required board meeting after being served with a recall petition, or fails to file a petition for arbitration challenging the recall, the unit owner representative may file a petition for arbitration pursuant challenging the board’s failure to act. The petition must be filed within sixty (60) days after the expiration of the applicable 5 full business day period. The arbitrator’s review of such a petition for arbitration is limited to the sufficiency of service on the board and the facial validity of the written agreement or ballots filed. A board member who has been recalled may file a petition for arbitration pursuant to Section 718.1255 challenging the validity of the recall. The petition for arbitration must be filed within sixty (60) days after the recall is deemed certified. The Division may not accept a petition for recall arbitration regardless of whether the recall was certified, when there are sixty (60) or fewer days until the scheduled reelection of the board members sought to be recalled or when sixty (60) or fewer days have not elapsed since the election of the board members sought to be recalled.
  • Condominiums (HB 73) The current statute permits the board to install hurricane shutters, impact glass, or code-compliant windows. The intent of the change is to allow the board to install code-compliant doors or other types of code-compliant hurricane protection, in the same manner as is currently allowed with respect to hurricane shutters, impact glass, and code-compliant windows. A vote of the owners is not required if the maintenance, repair and replacement of such items are the responsibility of the association pursuant to the declaration of condominium. The changes also address credits to unit owners when the association installs hurricane protection. For example, a unit owner who has previously installed impact glass or code compliant windows or doors that comply with the current applicable building code shall receive a credit when the impact glass or code compliant windows or doors are installed. This change clarifies that owners receive a credit only when the same type of hurricane protection is installed.
  • Condominiums & Cooperatives & Homeowners’ Associations (HB73) When an association suspends the right for failure to comply with any provision of the governing documents, or reasonable rules of the association, such suspension does not apply to limited common elements intended to be used only by that unit, common elements needed to access the unit, utility services provided to the unit, parking spaces, or elevators. The current statute already provides that these types of use rights may not be suspended for failure to pay a monetary obligation. This change extends that prohibition to those instances where suspension of use rights is for the failure to comply with the governing documents.
  • Cooperatives & Homeowners’ Associations (HB 73) Incorporates the mortgagee consent provisions adopted in the Condominium Act in 2007. Provides for a streamlined method of obtaining mortgagee consent.
  • Homeowners’ Associations (HB 7119) every CAM, or the association when there is no CAM, shall report to the Division by November 22, 2013, the name of the association, the FEIN number, the mailing and physical address, the number of parcels, and the total amount of revenues and expenses from the annual budget of the association. if the association is still under the control of the developer, the information provided to the division shall also include the name and address of the developer and the number of parcels owned by the developer. The reporting requirement shall be a continuing obligation on each association until the required information is reported to the division. Department of Business and Professional Regulation (DBPR) shall establish and implement, by no later than October 1, 2013, a registration system through an Internet website that will allow the reporting to take place through the website. DBPR shall, by no later than December 1, 2013, submit a report to the Governor, the President of the Senate, and the Speaker of the House of Representatives providing HOA data reported. DBPR shall adopt administrative rules to implement these requirements. the reporting requirement will expire on July 1, 2016, unless reenacted by the Legislature.
  • Homeowners’ Associations (HB 7119) if the association enters into a contract or other transaction with any of its directors or a corporation, firm, association that is not an affiliated homeowners’ association, or other entity in which an association director is also a director or officer or is financially interested, the board must: comply with the requirements of s.617.0832. enter the disclosures required by s. 617.0832 into the written minutes of the meeting. Approve the contract or other transaction by the affirmative vote of 2/3rds of the directors present. At the next regular or special meeting of the members, disclose the existence of the contract or other transaction to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages or other penalty for such cancellation.
  • Homeowners’ Associations (HB 7119) an officer, director or manager may not solicit, offer to accept, or accept any good or service of value for which consideration has not been provided for his or her benefit or for the benefit of a member of his or her immediate family from any person providing or proposing to provide goods or services to the association. If the board finds that an officer or director has violated this provision, the board shall immediately remove the officer or director from office. The vacancy shall be filled according to law until the end of the director’s term of office. However, an officer, director, or manager may accept food to be consumed at a business meeting with a value of less than $25 per individual or a service or good received in connection with trade fairs or education programs. Homeowners’ Associations (HB 7119) an officer, director or manager may not solicit, offer to accept, or accept any good or service of value for which consideration has not been provided for his or her benefit or for the benefit of a member of his or her immediate family from any person providing or proposing to provide goods or services to the association. If the board finds that an officer or director has violated this provision, the board shall immediately remove the officer or director from office. The vacancy shall be filled according to law until the end of the director’s term of office. However, an officer, director, or manager may accept food to be consumed at a business meeting with a value of less than $25 per individual or a service or good received in connection with trade fairs or education programs.
  • Homeowners’ Associations (HB 7119) a director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property is removed from office. The board shall fill the vacancy according to general law until the end of the period of the suspension or the end of the director’s term of office, whichever occurs first. If the charges are resolved without a finding of guilt or without acceptance of a plea of guilty or nolo contendere, the director or officer shall be reinstated for any remainder of his or her term of office. An association member who has such criminal charges pending may not be appointed or elected to a position as a director or officer.
  • Homeowners’ Associations all associations to maintain insurance or a fidelity bond for all persons who control or disburse funds of the association in an amount to cover the maximum funds that will be in the custody of the association or its management agent at any one time. The term “persons who control or disburse funds of the association” includes, but is not limited to, persons authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The cost of such insurance or fidelity bonding shall be of the association. The requirement for such insurance or fidelity bonding may be waived annually by a majority of the voting interests present at a properly called meting of the association.
  • Homeowners’ Associations (HB 7119) Within 30 days after recording an amendment to the governing documents, the association shall provide copies of the amendment to the members.
  • Homeowners’ Associations (HB 7119) Members other than the developer are entitled to elect at least a majority of the members of the homeowners’ association when the following events occur: upon the developer abandoning or deserting its responsibility to maintain and complete the amenities or infrastructure as disclosed in the governing documents. upon the developer filing a petition for bankruptcy under Chapter 7 of the Bankruptcy Code. upon the developer losing title to the property through foreclosure or the transfer of a deed in lieu of foreclosure, unless the successor owner has accepted an assignment of developer rights and responsibilities first arising after the date of such assignment. upon a receiver for the developer being appointed and not being discharged within 30 days after such appointment, unless the court determines within 30 days after such appointment that transfer of control would be detrimental to the association or its members. Members other than the developer are entitled to elect at least one member of the board if 50% of the parcels in all phases of the community which will ultimately be operated by the association have been conveyed to the members;
  • DEVELOPER AMENDMENTS Homeowners’ Associations (HB 7119) Prior to turnover, the right of the developers to amend the governing documents is subject to a test of reasonableness, which prohibits the developer from unilaterally making amendments to the governing documents that are arbitrary, capricious, or in bad faith; destroy the general plan of development; prejudice the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shift economic burdens from the developer to the existing nondeveloper members.
  • ASSOCIATION LIABILITY FOR UNPAID ASSESSMENTS Homeowners’ Associations (HB 7119) the term “previous owner” shall not include an association that acquires title to a delinquent property through foreclosure or by deed in lieu of foreclosure. The present parcel owner’s liability for unpaid assessments is limited to any unpaid assessments that accrued before the association acquired title to the delinquent property through foreclosure or by deed in lieu of foreclosure. This is intended to address the Aventura Management, LLC v. Spiaggia Ocean Condominium Association case and when the association takes title to a delinquent parcel through foreclosure or by deed in lieu of foreclosure. The intent is to allow the association to demand past due assessments from the owner that takes title to the property after the association.
  • MORTGAGE FORECLOSURES Condominiums & Cooperative & Homeowners’ Associations (HB 87) HB 87 includes an important provision for associations that will allow associations to move stalled mortgage foreclosure cases by filing for an expedited order to show cause procedure. The primary changes in the bill include: · Banks will have one (1) year to enforce a deficiency judgment. The current law gives banks five years to enforce a deficiency judgment. · A deficiency judgment may not exceed the difference between the judgment amount or, in the case of a short sale, the outstanding debt, and the fair market value of the property on the date of the sale. · Requires banks to file certain documents when filing a foreclosure action, including a certification that the bank is in physical possession of the original promissory note, or an affidavit of lost, destroyed, or stolen instrument. · Provides for the finality of a mortgage foreclosure judgment by stating that if a party seeks to set aside, invalidate, or challenge a final judgment of foreclosure, the claim shall be for monetary damages only, if, among other things, the property has been acquired for value by a person not affiliated with the foreclosing lender or the foreclosed owner. · Provides that if a junior lienholder (including a condominium, cooperative or homeowners’ association) requests an order to show cause be entered, the judge shall immediately review the request and if the file meets the requirements of the statute, the judge shall issue an order directed at the other parties to show cause why a final judgment of foreclosure should not be entered. The law already allows a bank to file such a request for an order to show cause. The bill would extend this right to other lienholders.

Transcript

  • 1. May 16, 2013Presented byYeline Goin, Esq.With Special Guest Rep. George R. Moraitis, Jr.Moderated by Lisa A. Magill, Esq.The 2013 Florida Legislative SessionAnalysis of the Impacts on Community Associations
  • 2. Today’s PresentersYeline Goin, Esq.Executive DirectorCommunity AssociationLeadership LobbyHon. George R. Moraitis, Jr.Florida House of RepresentativesLisa A. Magill, Esq.Moderator
  • 3. HB 73: ELEVATORS
  • 4. Elevator Upgrades – Condominiums andCooperatives (HB 73) Existing elevators will not need to comply withmandatory Phase II Firefighters upgrades until theelevator is replaced or requires major modification. Previous, elevator upgrades were required to bemade by July 1, 2015.
  • 5. HB 73: INSURANCE
  • 6. Insurable Events – Condominiums (HB 73) Clarifies that the association is responsible fordamage that is– insured by the association and– that is damaged by “an insurable event”.
  • 7. HB 73: OFFICIAL RECORDS
  • 8. Portable Devices – Condominiums,Cooperatives & HOAs (HB 73) Portable device may be used to copy official records. No charge for copies when a portable device is used.
  • 9. Directories – Condominiums,Cooperatives & HOAs (HB 73) Association may print and distribute directory. Owner may request exclusion of phone number inwriting.
  • 10. New Record Requirements – Cooperatives (HB 73) Records to be maintained for 7 years/within 45 miles. Records may be made available electronically. Failure to permit inspection has penalties, includingattorney fees and costs. Destruction/failure to maintain document has civilpenalties. Copies of year-end financial statement must be madeavailable to owners and prospective buyers.
  • 11. Protected Records – Cooperatives (HB 73) Attorney/client or work product privilege. Personnel records. Certain personal information of owners. Security data (passwords). Software or Operating System used by association.
  • 12. Personnel Records – HOAs (HB 73) Personnel records of association or managementcompany employees are not to be inspected byowners. This protection is new for management companyemployees.
  • 13. Official Records – HOAs (HB 7119) Records to be maintained for 7 years/within 45miles. Records may be made available electronically. Personnel costs for copies/retrieval. Copies reduced from .50 to .25/page. Actual outside vendor cost if more than 25 pages.
  • 14. HB 73: FINANCIAL REPORTING
  • 15. Financial Reporting – Condos & HOAs (HB 73) Compiled financial statements required for annual revenues$150,000-$300,000. Reviewed financial statements required for$300,000-$500,000. Audited financial statements for>$500,000. Report of cash receipts and expenditures for<$150,000, and all associations of less than 50 units,regardless of annual revenues.
  • 16. HB 73: BOARDS OF DIRECTORS
  • 17. Board Member Terms & Qualifications-Condominiums (HB 73) Governing documents can provide for two yearterms, which negates the need for owner vote.
  • 18. Director Certification/EducationalCertificates – Condominiums (HB 73) Association secretary must retain certification for 5years after election or the duration of the director’sterm, whichever is longer.
  • 19. New Board Certification Requirement –Cooperatives (HB 73) & HOAs (HB 7119) Written certification within 90 days of election thatboard member has read and will uphold governingdocuments. Or participate in a board member education course. Board member is suspended until he/she complies. Certificate to be maintained for 5 years afterelection, or duration of tenure. Board action not affected by failure to getcertification.
  • 20. Elections- Timeshares (HB 73 & HB 7025) Timeshares do not have to follow the “two-notice”system that applies to condominiums.
  • 21. Elections – Condominiums, Cooperatives & HOAs (HB 73) Any challenge to the election process must takeplace within 60 days after the results areannounced.
  • 22. Elections – HOAs (HB 7119) Nominations from the floor are not required ifnominations are submitted in advance of themeeting. Election is not required unless more candidates arenominated than vacancies exist.
  • 23. Recalls – Condominiums, Cooperatives& HOAs (HB 73) If board doesn’t act on a recall petition, ownerrepresentative can challenge the failure. Petition must be filed within 60 days after board failsto act. Recalled board member may file a petition forarbitration to challenge the validity of recall within 60days after recall certified. No recall petitions accepted by Division if 60 days orfewer until next election or if 60 days or fewer havenot elapsed since election.
  • 24. Hurricane Protection – Condominiums(HB 73) Board can now install code-compliant doors or otherprotection also. Vote of owners not required if doors are theassociation responsibility. Credit to owner for installed hurricane protection.
  • 25. Suspension of Use Rights – Condominiums,Cooperatives & HOAs (HB 73) Suspension of use rights for failure to comply withgoverning documents does not apply to– Limited common elements used only by that unit– Common elements needed to access unit– Utility services provided to unit– Parking spaces– Elevators
  • 26. Mortgagee Consent for Amendments –Cooperatives & HOAs (HB 73) Incorporates the mortgagee consent provisionsalready in the Condo Act.
  • 27. Reporting to DBPR – HOAs (HB 7119) Every CAM/HOA must report identifying informationto Division by 11/22/13. DBPR will have online registration system by10/1/13. DBPR will submit HOA report to Governor by12/1/13. One time requirement. Sunsets on 7/1/16.
  • 28. Contracts with Board Members – HOAs(HB 7119) Contracts with Board Members– Must comply with F.S. 617.0832.– Enter disclosures into written minutes of meeting.– 2/3 vote of directors’ affirmative vote required.– Next meeting of members, contract maybe canceledby majority vote.
  • 29. Goods or Services of Value to BoardMembers – HOAs (HB 7119) No kickbacks. Cause for removal of officer or director. May accept food to be consumed at a businessmeeting with a value of less than $25 or goods andservices at trade fairs or education programs.
  • 30. Criminal Charges Against BoardMember- HOAs (HB 7119) Director or Officer who is charged by information orindictment with embezzlement/theft is removed fromoffice. If resolved without a finding of guilt, thedirector/office shall be reinstated. Member who has such criminal charges pending isineligible for position.
  • 31. Insurance and Fidelity Bond for BoardMembers – HOAs (HB 7119) Insurance or fidelity bond required to covermaximum funds in association’s custody. Covers all persons who control or disburse funds ofthe association. May be waived annually by vote of the owners.
  • 32. Amendments – HOAs (HB 7119) Copies of amendments must be provided tomembers within 30 days after recording.
  • 33. Developer Turnover Affecting BoardMakeup – HOAs (HB 7119) Members entitled to elect majority of board when– Developer abandons responsibility for amenities orinfrastructure.– Developer goes into Chapter 7 bankruptcy.– Developer loses title through foreclosure.– Receiver is appointed for developer. At least one non-developer member when 50% ofunits have been sold.
  • 34. Developer Amendments – HOAs (HB 7119) Prior to turnover, developer’s amendments togoverning documents must be reasonable.
  • 35. Association Liability for UnpaidAssessments – HOAs (HB 7119) An association that acquires title through foreclosureis not liable for unpaid assessments. Intent is to allow association to demand past dueassessments from next owner.
  • 36. Mortgage Foreclosures – Condominiums,Cooperatives & HOAs (HB 87) Banks will have one year to enforce a deficiencyjudgment. Limits on deficiency judgment. Requires certain documents from bank when filing aforeclosure action. Foreclosure judgment is final. Association’s order to show cause shall be reviewedimmediately by judge.
  • 37. Questions & AnswersYeline Goinygoin@becker-poliakoff.comRep. George MoraitisLisa Magilllmagill@becker-poliakoff.com
  • 38. www.callbp.comwww.floridacondohoalawblog.comwww.becker-poliakoff.com