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As to the title of this article, anyone familiar with Senate Bill 4-D and the newly required milestone inspection reports and structural integrity reserve studies primarily applicable to condominium and cooperative buildings three stories and higher knows that material alterations, special assessments, and the authority to borrow funds are not mentioned in the legislation. So why write this article about those subjects? Because the milestone reports and structural integrity reserve studies will no doubt also lead to both expected and unexpected required repairs and replacements. In effectuating such repairs and replacements, an association’s board of directors needs i) the ability to approve material alterations under certain circumstances that sometimes arise in connection with such work, ii) the ability to levy special assessments to pay for the work, and iii) the authority to borrow money that is often needed to pay for such repairs and replacements so that the special assessment payments can be amortized over time, thereby lessening the financial strain on the owners.
In the event the needed repairs and replacements require material alterations to the condominium common elements or cooperative property, an important question that arises is, is the approval of the members required? The relied-upon definition of what constitutes a “material alteration” comes from Sterling Village Condominium Inc. v. Breitenbach, 251 So. 2d 685 (Fla. 4th DCA 1971). It means to “palpably or perceptively vary or change the form, shape, elements, or specifications of the common elements in such a manner as to appreciably affect or influence its function, use, or appearance.”
Let’s first examine the relevant legislation concerning material alterations. As to condominium associations, §718.113, Fla. Stat., provides, in relevant part, that
Maintenance of the common elements is the responsibility of the association… Except as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements or to real property, which is association property, except in a manner provided in the declaration as originally recorded or as amended under the procedures provided therein. If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced….
As to cooperative associations, §719.1055, Fla. Stat., provides in relevant part that
unless a lower number is provided in the cooperative documents or unless such action is expressly prohibited by the articles of incorporation or bylaws of the cooperative, … material alterations or substantial additions to such property by the association shall not be deemed to constitute a material alteration or modification of the appurtenances to the unit if such action is approved by two-thirds of the total voting interests of the cooperative. [emphasis added]
With all of this in mind, what if the required repairs stemming from the milestone report or structural integrity reserve study include necessary (meaning not voluntary) material alterations? If the governing documents do not vest such decision making to the board of directors, which is relatively rare, is the vote of the membership required? The short answer is that it depends on the facts and circumstances at hand. It is patently clear that merely because the replacement product is less expensive than replacing the item with the same product, that does not justify obviating the membership vote when required. See George v. Beach Club Villas Condominium Assoc., 833 So. 2d 816 (Fla. 3rd DCA 2002). For example, replacing a cedar shake roof with asphalt shingles due to cost considerations is not a sufficient reason to not obtain membership approval when otherwise required.
However, under the right circumstances the board can rely on the “necessary maintenance exception,” which evolved from a series of cases further discussed below. Before explaining further, the board should always consult with the association’s legal counsel to ensure a concurrence of opinion before proceeding with the work based on this “necessary maintenance exception” legal theory. There is a balance in the analysis which must be undertaken in that the association is responsible for the maintenance of the common elements as compared against when such maintenance may require a vote of the membership due to a material alteration. Based on the “necessary maintenance exception,” when it is clear that the material alteration is needed to complete the required maintenance, the board likely has the authority to proceed with the work without membership approval. Therefore, in our view, it would be beneficial for the legislature to codify this extremely important “necessary maintenance exception” into the Florida Statutes.
Regarding material alterations, in Tiffany Plaza Condominium Association, Inc. v. Spencer, 416 So. 2d 823 (Fla. 2nd DCA 1982), without the required vote of the owners, the board of directors opted to construct a rock revetment wall in the sand between the condominium’s seawall and the mean high-tide line. The area in question was part of the association’s common elements. Owners who were unhappy with the decision of the board (including the assessment to fund this project) sued the association. The association defended itself on the basis that the rock revetment was not an alteration or improvement of a common element but rather was part of the required maintenance, repair, and replacement of a common element that the association had responsibility for under several provisions of the declaration, its bylaws, and statutes. While the trial court agreed with the plaintiff owners, the Second District Court of Appeal reversed the trial court decisions and held that
If, in the good business judgment of the association, such alteration or improvement is necessary or beneficial in the maintenance, repair, or replacement of the common elements, all unit owners should equally bear the costs as provided in the declaration, bylaws, and statutes.
Further, the court held that
from the cited provisions of the declaration, it is clear to us that the association could properly assess all unit owners for the replacement or repair of the beachfront common element if it was damaged by erosion or otherwise. Likewise, it seems to us that if, in the good business judgment of the association, alteration or improvement of the beachfront by addition of a rock revetment would protect the beach from damage and the necessity of subsequent repair or replacement then that cost should also be borne equally by all unit owners.
In Ralph v. Envoy Point Condominium Association, Inc., 455 So. 2d 454 (Fla. 2d DCA, 1984), condominium owners objected to an assessment passed by the board of directors for the purpose of constructing a vertical seawall extension. The court held that, in view of the competent evidence from which it could be determined that the vertical extension of the seawall was necessary to protect the common elements, the board of directors of the condominium association was authorized to construct the extension without the necessity of the vote of the condominium unit owners, which was required by the condominium documents for alterations or improvements.
Regarding special assessments, in yet another case, Cottrell v. Thornton, 449 So. 2d 1291 (Fla. 2d DCA, 1984), condominium owners brought suit against the president of a board of directors of a condominium association after the board assessed the members to pay for the cost of fixing problems with a canal system, roadway, and swimming pool. The court examined the authority of the board to make decisions when a vote of the members would otherwise be required. It is clear from reading this case that the court received evidence regarding the condition of the canals which were filling due to erosion, excess weed growth, and pollution from excess runoff; that lots were gradually crumbling away into the canals; that the swimming pool was built on soil which was not de-mucked prior to construction and then floated up; and there were cracks on the floor and side walls of the pool and its deck. In fact, the pool was closed to any type of pedestrian traffic due to the unsafe conditions. The roadways had large and severe potholes. There was testimony during the proceedings that the canal needed to be drained, scraped, de-mucked, and lined with sea bags to make the seawalls secure and that the roads needed to be resurfaced.
After the board put its plan into action and levied the assessment, the plaintiffs who sued claimed the repairs constituted material alterations of the common elements. The president of the board argued that only necessary repairs and replacements were authorized by the board. The issue presented on appeal was whether the proposed changes constituted substantial additions/alterations or were necessary repairs. Here, the appellate court relied on the findings of the trial court which found that
because necessary repairs were planned, not material alterations, the trial court found the board of directors was authorized to make assessments against the unit owners without holding a vote.
The trial court also held that the restoration was “necessary to prevent further damage to the common elements,” and, as such, the board had the authority to proceed without a vote of the owners. This ruling is in line with the “necessary maintenance” principle previously provided in the above-referenced cases.
It is extremely important when examining whether a vote of the membership is required to perform material alterations that each project be separated into its core constituent components so as to avoid an argument that a particular part of the project was in fact a material alteration requiring a vote of the membership. If part of a concrete restoration project included material alterations which were unavoidable under the circumstances, but a part of the project also included voluntary aesthetic changes, those aesthetic changes would likely require approval of the membership (subject, of course, to the provisions in the governing documents or relevant legislation) even though the other part of the project did not.
In Bailey v. Shelbourne Ocean Beach Hotel Condominium Association, Inc., et al., 307 So. 3d 74 (Fla. 3rd DCA 2020), the board of directors levied special assessments to the tune of 30 million dollars for two rounds of construction projects. The first round of construction included elevator modernization; exterior painting; repairs to the porte cochere, pool and lobby; installation of a sewage lift station; and installation of impact-resistant balcony doors. The second round of construction included window repairs, installation of safety railing, replacement of unit doors, pool paver repairs, hardening of the beach entrance, and reinforcement of the substructure beneath the townhomes. Several condominium unit owners argued, among other things, that the association violated Chapter 718 F.S. by its failure to secure unit owner approval for the construction projects that amounted to a material alteration of the common elements and that a prior vote of the membership regarding a material alteration is required. The court held that regarding two particular parts of the project, the board of directors violated the Statute when it assessed unit owners for the cost of material alterations based on 75 percent of unit owners ratifying the construction projects after completion because §718.113(2)(a), Fla. Stat., requires approval before beginning construction. The court further held that although the majority of items completed during construction constituted necessary maintenance, and thus were properly assessed by the board, there was a genuine issue of material fact as to whether pool pavers and reinforcement of substructure underneath the townhomes were necessary maintenance items.
As to a board’s authority to borrow money to fund necessary repairs or replacements, there is no Florida case law or other legal authority that directly stands for the proposition that a board of directors can borrow such funds when the governing documents would otherwise require a vote of the membership to do so. Therefore, this, too should be addressed in a future legislative bill.
A board should never consider relying on the theories of the aforementioned cases without first consulting with its legal counsel regarding the applicability of those cases to the facts at hand and to better understand the risks involved.
With all of this in mind, it would be extremely helpful for additional legislation to be adopted by the Florida legislature that clearly
(Reprinted with permission from the January 2023 edition of the “Florida Community Association Journal”.)
Despite the Florida legislature’s best efforts, there nevertheless remains confusion with the interpretation of Senate Bill 4-D (SB 4-D), which provides for condominium and cooperative milestone inspections and structural integrity reserve studies. The purpose of this article is to draw attention to many of these glitches in hopes that the 2023 Florida legislature will address these issues by passing a glitch bill to provide needed and worthwhile clarity for Florida’s community association board members affected by this game-changing legislation. First, a couple of glitches applying to the entirety of SB 4-D are addressed, followed by the glitches related to the required milestone report, and then glitches related to the structural integrity reserve study requirements are addressed. This article does not go into detail explaining the requirements of SB 4-D as that was the subject of a prior article from August 2022 FLCAJ, which can be easily found and read HERE.
Glitches Related to the Entirety of SB 4-D
The term “common areas” is used throughout SB 4-D. While this is appropriate for cooperatives, it is not appropriate in the context of condominiums. Chapter 719, Florida Statutes, applicable to Florida’s cooperatives, defines “common areas” as the portions of the cooperative property not included in units. But, as to condominiums there is no similar definition. Rather, Chapter 718, Florida Statutes, applicable to condominiums, uses the term “common elements” to refer to portions of the condominium property not included in the units. This clarification should be made.
Is SB 4-D so very substantive in nature such that “Kaufman language” should be required for its provisions to apply? Obviously, the intent is that the entirety of SB 4-D should apply to all existing and future condominium and cooperative associations. (By way of oversimplification, “Kaufman language” refers to a provision set out in a declaration which makes patently clear that all legislation upon becoming effective, applies to the association. For example, in “This declaration is subject to Chapter 718, as it is amended from time to time, the italicized text is the “Kaufman language.”) There is language in SB 4-D which suggests that the milestone inspection is applicable regardless of Kaufman language. But, there is no equivalent in regard to the requirements of the structural integrity reserve study. In any event, additional clarity should be provided which makes it patently clear that regardless of Kaufman language, all of the requirements set out in SB 4-D apply.
Glitches Related to the Milestone Report
The milestone inspection applies to condominium and cooperative buildings that are three stories or higher, with a notable exception for single-family, two-family, or three-family dwellings with three or fewer above-ground habitable stories. Why does this exception only apply to the milestone report and not the structural integrity reserve study? Any resulting glitch bill should also include that single-family, two-family, or three-family dwellings with three or fewer above-ground habitable stories are exempted from the need for a structural integrity reserve study.
Also, what about commercial condominiums and cooperatives? If a condominium building is taller than three stories, let’s say a 50-story tower, and is a mixed-use building where there are both commercial components, residential components, and even components belonging to a master association; and as a part of the declaration of condominium, certain floors are exempted from the definition of the condominium at issue, then is the entire building subject to the milestone inspection or only those floors which are designated as part of the condominium as determined by a review of the declaration of condominium? Also, what if the condominium does not touch ground, as in a vertical subdivision where the condominium may not begin until the 10th floor of a building? Is the entire building subject to the milestone inspection or only those floors which are included within the condominium subdivision?
SB 4-D is patently clear that a milestone inspection must be performed within 180 days of receipt of notice from local government. But, what if the association already prepared its milestone report in conformity with the statutory deadlines, which are either 30 years from the date of the certificate of occupancy issuance; 25 years from the date of the issuance of the certificate of occupancy if the building is within three miles of a coastline; or by December 31, 2024, if the building is already 30 years past its issuance of the certificate of occupancy? Must that association have another milestone report completed or even expend association funds updating its existing report? In addition, why shouldn’t a condominium or cooperative building that is already 25 years past the issuance of its certificate of occupancy and is within three miles of the coastline also have its initial milestone report completed by December 31, 2024?
The milestone inspection requirements refer to “story” and “stories” without providing any meaningful guidance as to what it means. Is the below-grade parking structure to be included within the definition? How about an above-grade parking structure? Is the term “story” only to apply to habitable stories? Is the definition of the term “story” (i) a part of the building that comprises its different levels, which is situated above or below other levels; (ii) the space between a floor and a ceiling, or (iii) the definition of the term “story” which is used in the Florida Building Code as follows: “that portion of a building included between the upper surface of a floor and the upper surface of the floor or roof next above”?
What is a “coastline”? Section 376.031 of the Florida Statutes, as referred to in SB 4-D, defines a coastline as “the line of mean low water along the portion of the coast that is in direct contact with the open sea and the line marking the seaward limit of inland waters, as determined under the Convention on Territorial Seas and the Contiguous Zone.” If the statutory definition is applied, then many buildings likely intended to be subject to the 25-year requirement will be instead subject to the 30-year requirement.
Glitches Related to the Structural Integrity Reserve Study
The structural integrity reserve study, otherwise referred to as the “SIRS,” must be completed by all Florida condominiums and cooperatives with buildings that are three or more stories by December 31, 2024. With this in mind, if the association receives its SIRS after it adopts its 2025 annual budget, but prior to the December 31, 2024, deadline, it means that the SIRS reserves will not actually be funded until the association’s 2026 annual budget is implemented. This is not the likely intent of the legislation and should be clarified as to whether this is permissible. The Division of Florida Condominiums, Timeshares, and Mobile Homes (the Division) has intimated that it will require the SIRS reserves to be included in the association’s 2025 budget. If that is going to be the case, then this absolutely must be clarified in a future glitch bill. Governmental agencies cannot adopt laws in contravention to existing legislation. If they take such a stance, then they will have a significant uphill battle if later challenged in a court of law with regard to such a position. Hopefully, a glitch bill will address this issue.
If an association receives its SIRS prior to December 31, 2024, and includes the results in its 2025 budget, so long as the membership vote to waive or reduce the reserves is taken prior to the December 31, 2024, deadline, then ostensibly the 2025 required reserves could be waived or reduced. Is this an intended result of the legislation? It should be clarified.
The SIRS requirements apply to condominium and cooperative buildings three stories or higher. Once again, the definition of a “story” needs to be addressed to provide needed clarity.
The items required to be reserved for (if the SIRS requirement applies) include the following:
Can the aforementioned items be “pooled” from the outset, or is a vote of the membership required to do so? (In short, pooling reserves assumes not all of the components will break at the same time and there will be sufficient funds on hand when needed for each of the components’ major repairs and/or replacement.) What if the association already has a reserve pool which includes the roof, paving, and painting and now desires to include that pool as a part of the new pool for the items listed above; is a vote of the membership needed to combine the pools? Not only is clarification needed in this regard, but the association needs to make sure there is a clear record of which components are in each pooled reserve. It is reported that the Division takes the position that the aforementioned reserves can be pooled in one or more pools. Perhaps they will clarify this when adopting administrative rules. However, such clarification would be better suited in a glitch bill.
Effective December 31, 2024, the members of a unit-owner controlled association may not determine to provide no reserves or less reserves for the aforementioned reserve items. With that in mind, consider the following: The board adopts the 2024 budget in November of 2023. Thereafter, on December 1, 2023, the unit owners vote to waive or otherwise reduce the required reserves. Will this be considered a violation? Sources indicate that it will not; however, this too should be addressed in a glitch bill.
While the likely intent of SB 4-D was to require fully funded reserves for the items listed above for buildings having three or more stories, SB 4-D provides that the members of a unit-owner controlled association cannot vote to waive or reduce reserves for those items set out above, without exception for buildings with fewer than three stories. This should be clarified in a glitch bill.
Whether intended or not, the requirement prohibiting the unit-owner controlled association from reducing or waiving the reserves for the items listed above applies to ALL condominiums and cooperatives, not just those three stories and higher. If this was not intended, then it should be clarified that condominium and cooperative associations that are not required to have the SIRS should be able to continue to waive and reduce reserves.
What does a “fully funded” reserve” mean, fully funded for the particular year or sufficient funds on hand for the cost of replacement? The answer to this question truly depends on whom you ask and in which state they reside. In Florida, as applied to condominium and cooperative associations, a fully funded reserve refers to whether the association is properly funding the right amount for the year in question. It does not refer to whether the reserve account has the total sum required for the component’s replacement. For example, assume the reserve item in question has a replacement cost of $100,000 and a life of 10 years. The association has been reserving $10,000 per year each year, and it is year seven. The budget denotes the $10,000 reserve for year seven, too. Therefore, this component is fully funded. A different example includes the same component that has a replacement cost of $100,000 and a life of 10 years. In this example, the association has never reserved for the item, and it is year seven, meaning there are three years left before the component will need to be replaced. With this in mind, the fully funded amount to be included in the budget would be $100,000.00 divided by the remaining three years, which is $33,333.33. Any amount less than that would mean the reserve item is not fully funded for that year. In any event, a definition for the term “fully funded” would provide some much-needed clarity.
Regarding the requirement to reserve for the foundation, exterior walls, flooring, and load bearing columns: will these items ever need replacing? It is doubtful. However, serious and expensive repairs may be incurred. SB 4-D should be clarified in this regard.
Regarding the requirement to reserve for windows: what if the unit owners are responsible for the windows and not the association? Why should the association have to reserve for window replacement if the association is not responsible for the windows? Therefore, clarity is needed.
The SIRS can be performed by any person qualified to perform such study. However, the visual inspection portion of the SIRS must be performed by a Florida licensed engineer or architect. The qualifications required to perform the non-visual portions of the SIRS needs to be addressed in a glitch bill.
SB 4-D does not require that the SIRS be provided to every owner. Shouldn’t it? This should be addressed in a glitch bill.
By no means are the above items all of the glitches contained within SB 4-D. However, by minimally addressing at least these items, the 2023 Florida Legislature will be doing the owners of Florida’s condominium and cooperative units a great service.
(Reprinted with permission from the December 2022 edition of the “Florida Community Association Journal”.)
Per a May 26, 2022 email we received from CAI: This week the Florida legislature was in special session and condominium safety was one of three initiatives addressed. CAI Florida Legislative Alliance is pleased to announce that SB 4D – Building Safety Act for condominium and cooperative associations passed unanimously through both the House and Senate on May 24th and 25th respectively, after a powerful and heartfelt appreciation for the sponsors, Sen. Jennifer Bradley (R-5), Senator Jason Pizzo (D-38) and Rep. Daniel Perez (R-116) was expressed by Members in both the House and Senate. Governor DeSantis signed the bill on May 26th. This bipartisan legislation is the result of tireless advocacy by you, our membership; thanks to your determination, CAI Florida Legislative Alliance was able to work with legislators in both chambers to craft an effective condo safety bill that will protect Floridians. CAI representatives were in Tallahassee this week during the legislature’s special session and were the only ones to speak on behalf of the new bill.
The legislation includes a framework largely based on CAI public policy recommendations for:
Associations will have two years to comply with these requirements. CAI will be working closely with policymakers before the bill takes effect in 2024 to be certain the new requirements and directives are workable and practical for Florida’s impacted associations.
Since June 24, 2021, the tragic collapse of Champlain Towers South where 98 people perished and many others lost their homes, CAI mourned, prayed, and committed to doing whatever we could to make sure this never happened again. Following the collapse, CAI members and volunteers worked closely with Florida Sens. Jennifer Bradley and Jason Pizzo, as well as Rep. Daniel Perez to lead the efforts to pass this important legislation.
The comprehensive legislation makes certain that no matter in what county a condominium or cooperative is located, they will be periodically inspected with information shared with unit owners, local building officials, and prospective buyers. CAI will continue working with policymakers to make certain that associations have the time to meet these changes and that these new processes are practically workable for associations while making certain they are fiscally sound and physically safe.
Sincerely,
CAI Florida Legislative Alliance
Disclaimer: In January 2022 the The Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation issued an opinion which drastically alters the information provided herein. Please consult with an attorney of your choosing to obtain the latest guidance in this ever evolving area..
The 2021 Florida Legislature was busy indeed. This year’s new legislation brings tremendous clarifications of existing laws and new laws to Florida’s community associations. All of the bills discussed herein were approved by the Governor, and are now in effect (unless otherwise noted). To view the bills that were passed into law, please visit kbrlegal.com and click on the “2021 Legislative Update” on our homepage. A printable version of this article is available HERE.
Following are laws applicable to:
1) Senate Bill 602, effective May 7, 2021, provides additional clarification for already existing laws in Chapter 617, Fla. Stat., known as the Florida Not For Profit Corporation Act.
a) §617.0725, Fla. Stat., clarifies that amendments to the articles of incorporation and bylaws of condominium, cooperative, and homeowners associations which effect or impose a quorum or voting requirement greater than the general quorum or amendment vote requirement are not required to be approved by the greater quorum or voting requirement then in effect or proposed to be adopted when voting to lower the threshold.
b) §617.0825, Fla. Stat., adds organizing committees established under §720.405, Fla. Stat. (covenant revitalization), to the existing list of condominium, cooperative, and homeowners associations exceptions to the board committee and advisory committee requirements of §617.0825.
c) §617.1703, Fla. Stat., further clarifies existing law that in the event of conflict between the Florida Not For Profit Corporation Act and Chapter 718 (condominiums), Chapter 719 (cooperatives), Chapter 720 (homeowners associations), and Chapter 723 (mobile home parks), the provisions of those specific chapters apply over that of the Florida Not For Profit Corporation Act.
2) House Bill 463 provides an exemption for certain community associations from the requirements of Chapter 514, Fla. Stat., regulating public swimming pools.
(a) §514.0115, Fla. Stat., provides that “pools serving homeowners associations and other property associations which have no more than 32 units or parcels and are not operating as public lodging establishments are exempt from supervision” under Chapter 514 except for supervision necessary to ensure water quality and compliance with §514.0315 (required safety features), and are subject to §514.05 (denial, suspension, or revocation of permit and administrative fines) and §514.06 (injunctions).
1) House Bill 649 provides associations regulated by Chapters 718 and 719, Fla. Stat., certain rights and obligations as related to ad valorem tax assessment challenges.
(a) §194.011, Fla. Stat., pertains to ad valorem tax assessment challenges and is amended as follows:
i. Confirms the right of associations regulated by Chapters 718 and 719, Fla. Stat., to challenge ad valorem tax assessments.
ii. Requires that an association send a notice of its intent to petition the value adjustment board to all owners which notice must include a statement that by not opting out of the petition, the owner agrees that the association represents that owner in any related proceedings without the need for the owner to be named or joined as a party.
iii. Perfects the right of the association that has filed a single joint petition to seek judicial review or appeal a decision and continue to represent the owners in any related proceedings.
(b) §194.181, Fla. Stat., pertains to any tax assessment challenge and is amended as follows:
i. In any case brought by the property appraiser relating to a value adjustment board decision on a single joint petition filed by an association, the association is the only required party defendant (meaning, the individual owners are not required to be named as parties).
ii. Once the association receives a complaint filed by the property appraiser, it must provide notice to all owners that they may (i) elect to retain their own counsel, (ii) choose not to defend the appeal, or (iii) be represented by the association.
1) As to condominium associations, Senate Bill 56 provides the following changes:
(a) §718.111, Fla. Stat., is amended to add “all acknowledgments made pursuant to §718.121(4)(c)” (*see below) to the list of what consti- tutes official records. In short, this refers to an owner’s acknowledgement that the association will change its delivery method for providing invoices for assessments or statements of account. While the owner acknowledgement constitutes a part of the official records, it is not open to unit owner inspection and copying.
(b) §718.116, Fla. Stat., is revised to extend the timing, from 30 days to 45 days, of the statutorily required delinquent assessment notice (a/k/a, the intent to foreclose letter) that must be sent to delinquent owners informing them that a claim of lien has been filed against their property and that that the association will foreclose its lien if it remains unpaid. Thus, this notice must be given at least 45 days before the foreclosure action is filed. Failure to do so will preclude the association from recovery of its attorney fees and costs.
(c) §718.121, Fla. Stat., pertains to the association liens for delinquent assessments and is amended as follows:
i. “If an association sends out an invoice for assessments or a unit’s statement of account described in §718.111 (12)(a)11.b., Fla. Stat., they must be delivered to the unit owner by first-class United States mail or by electronic transmission to the unit owner’s email address maintained in the association’s official records. (§718.111(12)(a)11.b., Fla. Stat., refers to a current account and a monthly, bimonthly, or quarterly statement of the account for each unit designating the name of the unit owner, the due date and the amount of each assessment, the amount paid on the account, and the balance due.)
ii. “Before changing the method of delivery for an invoice for assessments or the statement of account, the association must deliver a writ- ten notice of such change to each unit owner at least 30 days before the association sends the invoice for assessments or the statement of account by the new delivery method. The notice must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, it must be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing. a)*A unit owner must affirmatively ac- knowledge, electronically or in writing, his or her understanding that the association will change its method of delivery of the invoice for assessments or the unit’s statement of account before the association may change the method of delivering an invoice for assessments or the statement of account.”
iii. New Notice of Late Assessment: “An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed to the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees. Additional collection action cannot be taken for 30 days from the date of the notice. The notice of late assessment must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, must also be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing.”
A rebuttable presumption that the association mailed a notice in accordance with this new law is established if a board member, officer, or agent of the association, or licensed community association manager provides a sworn affidavit attesting to such mailing. In addition, the notice must substantially follow the required statutory format which is provided in the legislation.
iv. The timing of the statutorily required notice of intent to record a claim of lien (a/k/a, the intent to lien letter) that must be sent to delinquent owners informing the owner that a claim of lien will be filed against their property if the delinquency remains unpaid has been changed from 30 days to 45 days.
2) As to condominium associations, Senate Bill 630 provides the following changes:
(a) §627.714, Fla. Stat., addresses residential condominium unit owner coverage and required loss assessment coverage. “If a condominium association’s insurance policy does not provide rights for subrogation against the unit owners in the association, an insurance policy issued to an individual unit owner in the association may not provide rights of subrogation against the condominium association.” “Subrogation” is a right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss. Whether this will cause an increase in insurance premiums is highly debatable, depending upon whom you ask. While only time will tell, it is this author’s personal belief that it will cause an increase in pre- miums because the insurance company responsible for the casualty may not have a manner by which they can recoup their losses from the party that caused the casualty. Additionally, it is important to note that this new “anti-subrogation” law only applies to residential condominiums.
(b) §718.103, Fla. Stat., provides definitions of the terms used in Chapter 718, Fla. Stat., and is amended as follows:
i. The term “multicondominium” is amended from “a real estate development containing two or more condominiums, all of which are operated by the same association,” to “real property containing two or more condominiums, all of which are operated by the same association.”
ii. The term “operation” or “operation of the condominium” is amended to include administration and management of the condominium property “and the association.”
(c) §718.111, Fla. Stat., pertains to official records and is amended as follows:
i. Bids for work to be performed or for materials, equipment, or services must be maintained by the association “for at least 1 year after receipt of the bid.”
ii. In addition to the association’s bylaws and rules, a renter of a unit is now also entitled to inspect and copy the declaration of condominium.
iii. A condominium association “may not require a member to demonstrate any purpose or state any reason for the inspection” of the official records.
iv. An association managing a condominium with 150 or more units and which does not contain timeshare units is already required to post digital copies of certain official records on its website. As an alternative to posting on the website, the association can make the documents available through an application that can be downloaded on a mobile device (otherwise commonly referred to as an “app”).
v. The legislation clarifies the requirement that amendments to the articles of incorporation or other documents creating the association must be posted to the website or app.
(d) §718.112, Fla. Stat., is amended as follows:
i. A condominium association, through board action, may extinguish a discriminatory restriction as provided in §712.065, Fla. Stat.
ii. Board of director term limits are clarified to provide that “[o]nly board service that occurs on or after July 1, 2018, may be used when calculating a board member’s term limit.”
iii. Notice provisions for annual meetings and other unit owner meetings are now separately provided and allow for posting of such notices on association property in addition to posting such notices on the condominium property.
iv. The second notice of election must be provided not less than 14 days nor more than 34 days before the date of the election.
v. Regarding transfer fees, “the association may not charge a fee in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Such fee may not exceed $150 per applicant” (an increase of $50). “For the purpose of calculating the fee, spouses or a parent or parents and any dependent children are considered one applicant. However, if the lease or sublease is a renewal of the lease or sublease with the same lessee or sublessee, a charge may not be made.” Such fees may be adjusted every five years in an amount equal to the total of the annual increases occurring in certain consumer indexes, with the Department of Business and Professional Regulation (the “Department”) periodically calculating the fee rounded to the nearest dollar and published on its website.
vi. Director recall challenges by the unit owner representative or by a recalled director may be made by filing a court action in addition to filing a petition for arbitration with the Division of Florida Condominiums, Timeshares, and Mobile Homes (the “Division”).
vii. A new provision for “alternative dispute resolution” is mandated to be provided in §718.1255, Fla. Stat., for any residential condominium (discussed below).
viii. A provision which prohibited a non-timeshare condominium association (a/k/a, a residential or commercial condominium association) from employing or contracting with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer is removed.
(e) §718.113, Fla. Stat., is amended as follows to add “natural gas fuel” vehicles to the provisions regarding electric vehicles:
i. The rights granted to those needing to charge electric vehicles are now extended to those having natural gas fuel vehicles, including the right to install a natural gas fueling station within the boundaries of the unit owner’s limited common element parking space or exclusively designated parking space and the obligation to pay the cost for the supply and storage of the natural gas fuel.
ii. “The unit owner installing, maintaining, or removing the electric vehicle charging station or natural gas fuel station is responsible for complying with all federal, state, or local laws and regulations applicable to such installation, maintenance, or removal.”
iii. The board of directors “may make available, install, or operate an electric vehicle charging station or a natural gas fuel station upon the common elements or association property and establish the charges or the manner of payments for the unit owners, residents, or guests to use the electric vehicle charging station or natural gas fuel station.” Importantly, this installation, repair, or maintenance of an electric vehicle charging station or natural gas fuel station “does not constitute a material alteration or substantial addition to the common elements or association property.”
(f) §718.117, Fla. Stat., previously provided that a unit owner or lienor may contest a plan of termination by initiating a petition for mandatory non-binding arbitration. Now, such contest must be brought in accordance with §718.1255, Fla. Stat. (further discussed below).
(g) §718.121, Fla. Stat., pertains to liens and is amended as follows:
i. Labor performed on or materials furnished for the installation of a natural gas fuel station, in addition to an electric vehicle charging station, cannot be the basis for the filing of a lien under Part I of Chapter 713, Fla. Stat., against the association, but such a lien may be filed against the unit owner.
ii. The notice of intent to record a claim of lien (a/k/a, the intent to lien letter) which must be provided to the unit owner prior to recording the lien is now deemed “to have been delivered upon mailing.”
(h) §718.1255, Fla. Stat., pertains to alternative dispute resolution and provides for significant changes such that non-binding arbitration for certain matters is no longer mandatory but rather is optional, and instead, the aggrieved party can use the mediation process set out in Chapter 720, Fla. Stat., rather than the aforementioned arbitration process as follows:
i. “Before the institution of court litigation, a party to a “dispute” (defined below), other than an election or recall dispute, must either petition the Division for nonbinding arbitration or initiate pre-suit mediation” in accordance with §720.311, Fla. Stat. Briefly explained, the pre-suit mediation process set out in §720.311, Fla. Stat., requires the aggrieved party to send to the responding party a statutorily required demand to participate in pre-suit mediation providing five mediator options. The responding party must select one of the five mediators within 20 days, and if not, then the aggrieved party may proceed to file their lawsuit and seek attorney’s fees and costs incurred in attempting to obtain mediation. If the responding party does appropriately respond, then mediation must take place within 90 days.
ii. For purposes of using either nonbinding arbitration or pre-suit mediation, a “dispute” refers to any disagreement between two or more parties that involve the following:
a) the authority of the board of directors to require any owner to take action or to not take action involving that owner’s unit or the appurtenances thereto;
b) the authority of the board of directors to alter or add to a common area or element;
c) the failure of a governing body when required by Chapter 718, Fla. Stat., or an association document to
(1) properly conduct elections
(2) give adequate notice of meetings or other actions
(3) properly conduct meetings, or (4) allow inspection of books and records; or
(4) a plan of termination pursuant to §718.117, Fla. Stat.
iii. The arbitration can be binding upon the parties, meaning not appealable in the local circuit court, if all parties in the arbitration agree to be bound in writing. If not, then within 30 days of conclusion of the arbitration, the arbitrator’s final order can be appealed in the local circuit court. Such appeal is heard de novo, meaning anew.
(i) §718.1265, Fla. Stat., pertains to emergency powers which are now updated to include situations such as COVID-19 and provide for new procedures which are essentially a codification of the procedures used during the COVID-19 pandemic.
i. Emergency powers are clarified and expanded such that they can be employed in response to damage or injury caused by or anticipated in connection with an emergency as defined in §252.34(4), Fla. Stat., for which a state of emergency is declared.
a) As defined in §252.34(4), Fla. Stat., an “emergency” means “any occurrence, or threat thereof, whether natural, technological, or manmade, in war or in peace, which results or may result in substantial injury or harm to the population or substantial damage to or loss of property.”
ii. In addition to being able to conduct board and membership meetings with notice given as practicable, committee meetings and elections may also be noticed in such manner, and all such meetings may be conducted, in whole or in part, by telephone, real-time video conferencing, or similar real-time electronic or video communication.
iii. In addition to implementation of disaster plans, emergency plans can now be implemented before, during, or following the event for which the state of emergency is declared which include, but are not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.
iv. In addition to making decisions regarding whether the property is available or unavailable for entry and occupancy by unit owners, family members, tenants, guests, agents, or invitees in order to protect the health, safety, or welfare of such persons upon advice of emergency management officials or licensed professionals retained by the board, such advice may also be provided by public health officials and other licensed professionals available to the board. This also includes decisions as to whether any portion of the property can be safely inhabited, accessed, or occupied, subject to certain exclusions, discussed below.
v. The mitigation authority is expanded to include mitigation of injury or contagions, in addition to mitigation of damage, and such authority includes taking action to contract for the removal of debris and to prevent or mitigate the spread of fungus or contagion.
vi. Contracting on behalf of any unit owner or owners for items or services for which the owners are otherwise individually responsible but which are necessary to prevent further damage to the condominium property or association property is expanded to include prevention of injury and contagion. In addition to drying out of units, replacing damaged air conditioners and air handlers to provide climate control, etc., specifically referenced is sanitizing of the condominium property or association property, as applicable.
vii. Notwithstanding the power of the board to prohibit access to the property, “an association may not prohibit unit owners, tenants, guests, agents, or invitees of a unit owner from accessing the unit, the common elements, and the limited common elements appurte- nant to the unit for the purpose of ingress to and egress from the unit and when necessary in connection with the sale, lease, or other transfer of a unit” or “with the habitability of the unit or for the health and safety of such person, unless a governmental order or determination, or a public health directive from the Centers for Disease Control and Prevention, has been issued prohibiting such access to the unit. Any such access is subject to reasonable restrictions adopted by the association.”
(j) §718.202, Fla. Stat., pertains to sales or reservations deposits prior to closing and is amended as follows:
i. Currently, so long as proper disclosures are provided, a developer may withdraw escrow funds in excess of 10 percent of the purchase price. The use of such funds is limited, as revised, to payment of “actual costs incurred,” including, but not limited to, expenditures for “demolition, site clearing, permit fees, impact fees, and utility reservation fees, as well as architectural, engineering, and surveying fees that directly relate to the construction and development of the condominium property.”
ii. In addition to existing prohibitions as to what these funds cannot be used for, such as salaries, commissions, and expenses of salespersons and advertising, the use of these funds for marketing or promotional purposes, loan fees and costs, principal and interest on loans, attorneys’ fees, accounting fees, or insurance costs is also prohibited.
(k) §718.303, Fla. Stat., clarifies that fines and use right suspensions are also applicable to tenants in addition to the already included unit owner, licensee, or invitee of the unit owner and that a fine is due five days after notice of the approved fine is provided to the violator.
(l) §718.405, Fla. Stat., is amended to provide that a multicondominium association is not prevented or restricted from “adopting a consolidated or combined declaration of condominium if such declaration complies with §718.104, Fla. Stat. (pertaining to creation of a condominium and contents of a declaration), and does not serve to merge the condominiums or change the legal descriptions of the condominium parcels as set forth in §718.109, Fla. Stat., unless accomplished in accordance with law.” The new provision is intended to clarify existing law and applies to associations existing on July 1, 2021.
(m) §718.501, Fla. Stat., pertains to the authority, responsibility, and duties of the Division and is amended as follows:
i. The Division has expanded jurisdiction to investigate complaints regarding “maintenance” of official records in addition to the existing authority to investigate complaints regarding “access” to official records.
ii. The Division is required to provide, upon request, a list of mediators to any association, unit owner, or other participant in alternative dispute resolution proceedings under §718.1255, Fla. Stat., requesting a copy of the list.
3) As to condominium associations, Senate Bill 1966 provides for the following changes to the board member eligibility requirements and budget process:
(a) §718.112, Fla. Stat., pertains to board member eligibility requirements and the budget adoption process and is amended as follows:
i. As to condominium board member eligibility, presently, if a candidate is delinquent in “any monetary obligation,” then the candidate is not eligible to run for the board. This is revised to further limit the delinquency which would render a candidate ineligible to run for the board to a delinquency merely in the payment of any “assessment obligation” in order to be disqualified.
a) For purposes of determining assessment delinquency, “a person is delinquent if the payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation. If a due date is not specifically identified in the declaration of condominium, bylaws, or articles of incorporation, the due date is the first day of the assessment period.”
ii. The board is required to adopt the annual budget “at least 14 days prior to the start of the association’s fiscal year. In the event the board fails to adopt the annual budget in a timely fashion a second time, it shall be deemed a minor violation, and the prior year’s budget shall continue in effect until the new budget is adopted.”
(b) §718.501, Fla. Stat., is amended to provide the Division with the authority to adopt rules regarding the submission of a complaint against an association.
(c) §718.5014, Fla. Stat., is amended to allow the Condominium Ombudsman the ability to relocate his or her principal office, presently required to be located in Leon County, to a place convenient to the offices of the Division.
1) As to cooperative associations, Senate Bill 56 provides the following changes:
(a) §719.104, Fla. Stat., is amended to add “all acknowledgments made pursuant to s. 719.108(3)(b)3” (*see below) to the list of what constitutes official records. In short, this refers to an owner’s acknowledgement that the association will change its delivery method for providing invoices for assessments or statements of account. While the owner acknowledgement constitutes a part of the official records, it is not open to unit owner inspection and copying.
(b) §719.108, Fla. Stat., pertains to association liens for delinquent assessments and is amended as follows:
i. “If an association sends out an invoice for assessments or a unit’s statement of account described in §719.104(2)(a)9.b., Fla. Stat., they must be delivered to the unit owner by first-class United States mail or by electronic transmission to the unit owner’s email address maintained in the association’s official records.” (§719.104(2)(a)9.b., Fla. Stat., refers to a current account and a monthly, bimonthly, or quarterly statement of the account for each unit designating the name of the unit owner, the due date and the amount of each assessment, the amount paid on the account, and the balance due.)
ii. “Before changing the method of delivery for an invoice for assessments or the statement of account, the association must deliver a written notice of such change to each unit owner at least 30 days before the association sends the invoice for assessments or the statement of account by the new delivery method. The notice must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, it must be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing.” “*A unit owner must affirmatively acknowledge, electronically or in writing, his or her understanding that the association will change its method of delivery of the invoice for assessments or the unit’s statement of account before the association may change the method of delivering an invoice for assessments or the statement of account.”
iii. New Notice of Late Assessment: “An association may not require payment of attorney fees related to a past due assessment without first delivering a writ- ten notice of late assessment to the unit owner which specifies the amount owed to the association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees.” Additional collection action cannot be taken for 30 days from the date of the notice. “The notice of late assessment must be sent by first-class United States mail to the unit owner at his or her last address as reflected in the association’s records and, if such address is not the unit address, must also be sent by first-class United States mail to the unit address. Notice is deemed to have been delivered upon mailing.” A rebuttable presumption that the association mailed a notice in accordance with this new law is established if a board member, officer, or agent of the association, or licensed community association manager provides a sworn affidavit attesting to such mailing. In addition, the notice must substantially follow the required statutory format which is provided in the legislation.
iv. Notice of Intent to Lien: The timing of the statutorily required notice of intent to record a claim of lien that must be sent to delinquent owners informing the owner that a claim of lien will be filed against their property if the delinquency remains unpaid has been changed from 30 days to 45 days.
v. Notice of Intent to Foreclose: The timing of the statutorily required delinquent assessment notice that must be sent to delinquent owners informing the owner that a claim of lien has been filed against their property and that the association will foreclose its lien if it remains unpaid has been changed from 30 days to 45 days. Thus, this notice must be given at least 45 days before the foreclosure action is filed. Failure to do so will preclude the association from recovery of its attorney fees and costs.
2) As to cooperative associations, Senate Bill 630 provides the following changes:
(a) §719.103, Fla. Stat., which sets forth the definition of the term “unit,” is amended to provide that “[a]n interest in a unit is an interest in real property.” (This small tweak may be very helpful to cooperative shareholders in their attempts to enter into loans for their cooperative units subject to the proprietary lease.)
(b) §719.104, Fla. Stat., with regard to official records, is amended to provide that the cooperative association “may not require a member to demonstrate any purpose or state any reason for the inspection” of the official records
(c) §719.106, Fla. Stat., pertains to cooperative by-laws and is amended as follows:
i. “A board member or committee member participating in a meeting via telephone, real-time video conferencing, or similar real-time electronic or video communication counts toward a quorum, and such a member may vote as if physically present.”
ii. If the board determines not to certify a recall or fails to certify a recall, then the board must, within five business days, file a petition for arbitration with the Division or file a court action. The unit owners participating in the recall must be named as a party under the petition for arbitration or in a court action. If the arbitrator or court certifies the recall as to any director, the recall is effective upon mailing the final order of arbitration to the association or the final order of the court. If the association fails to comply with the order of the court or the arbitrator, the Division may take action pursuant to §719.501, Fla. Stat.
iii. Director recall challenges by the unit owner representative or by a recalled director may be made by filing a court action in addition to filing a petition with the Division.
iv. A new provision for “alternative dispute resolution” is mandated to be provided in §719.1255, Fla. Stat., for internal disputes arising from the operation of the cooperative.
v. A cooperative association, through board action, may extinguish a discriminatory restriction as provided in §712.065, Fla. Stat.
(d) §719.128, Fla. Stat., pertains to emergency powers which are now updated to include situations such as COVID-19 and provide for new procedures which are essentially a codification of the procedures used during the COVID-19 pandemic.
i. Emergency powers are clarified and expanded such that they can be employed in response to damage or injury caused by or anticipated in connection with an emergency as defined in §252.34(4), Fla. Stat., for which a state of emergency is declared.
a) As defined in §252.34(4), Fla. Stat., an “emergency” means any occurrence, or threat thereof, whether natural, technological, or manmade, in war or in peace, which results or may result in substantial injury or harm to the population or substantial damage to or loss of property.
ii. In addition to being able to conduct board and membership meetings with notice given as practicable, committee meetings and elections may also be noticed in such manner, and all such meetings may be conducted, in whole or in part, by telephone, real-time video conferencing, or similar real-time electronic or video communication. Notice of decisions may also be communicated as provided in this paragraph.
iii. In addition to implementation of disaster plans, emergency plans can now be implemented before, during, or following the event for which the state of emergency is declared which may include, but are not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.
iv. In addition to making decisions regarding whether the property is available or unavailable for entry and occupancy by unit owners, family members, tenants, guests, agents, or invitees in order to protect the health, safety, or welfare of such persons upon advice of emergency management officials or licensed professionals retained by the board, such advice may also be provided by public health officials and other licensed professionals available to the board. This also includes decisions as to whether any portion of the property can be safely inhabited, accessed, or occupied subject to certain exclusions, discussed below.
v. In addition to requiring evacuation in the event of a mandatory evacuation order, the emergency powers now include the power to prohibit or restrict access to the cooperative property in the event of a public health threat.
vi. The mitigation authority is expanded to include mitigation of injury or contagions, in addition to mitigation of damage, and such authority includes taking action to contract for the removal of debris, to prevent or mitigate the spread of fungus, or to sanitize the cooperative property.
vii. Contracting on behalf of any unit owner or owners for items or services for which the owners are otherwise individually responsible but which are necessary to prevent further damage to the cooperative property is expanded to include prevention of injury and contagion. In addition to drying out of units, replacing damaged air conditioners and air handlers to provide climate control, etc., specifically referenced is sanitizing of the cooperative property.
viii. Notwithstanding the power of the board to prohibit access to the property, “an association may not prohibit unit owners, tenants, guests, agents, or invitees of a unit owner from accessing the unit, the common elements, and the limited common elements appurtenant to the unit for the purpose of ingress to and egress from the unit and when is necessary in connection with the sale, lease, or other transfer of a unit or with the habitability of the unit or for the health and safety of such person, unless a governmental order or determination, or a public health directive from the Centers for Disease Control and Prevention, has been issued prohibiting such access to the unit. Any such access is subject to reasonable restrictions adopted by the association.”
3) As to cooperative associations, Senate Bill 1966 provides the following changes to the budget process:
(a) §719.106, Fla. Stat., is amended to provide that the board is required to adopt the annual budget “at least 14 days prior to the start of the association’s fiscal year. In the event the board fails to adopt the annual budget in a timely manner a second time, it shall be deemed a minor violation, and the prior year’s budget shall continue in effect until the new budget is adopted.”
1) As to homeowners associations, Senate Bill 56 provides the following changes:
(a) §720.303, Fla. Stat., is amended to add “all acknowledgments made pursuant to s. 720.3085(3) (c)3” (*see below) to the list of what constitutes official records. In short, this refers to an owner’s acknowledgement that the association will change its delivery method for providing invoices for assessments or statements of account. While the owner acknowledgement constitutes a part of the official records, it is not open to owner inspection and copying
(b) §720.3085, Fla. Stat., pertains to association liens for delinquent assessments and is amended as follows:
i. “If an association sends out an invoice for assessments or a parcel’s statement of account described in §720.303(4)(j)2., Fla. Stat., they must be delivered to the owner by first-class United States mail or by electronic transmission to the owner’s email address maintained in the association’s official records.” (§720.303 (4)(j)2., Fla. Stat., refers to a current account and a periodic statement of the account for each member, designating the name and current address of each member obligated to pay assessments, the due date and amount of each assessment or other charge against the member, the date and amount of each payment on the account, and the balance due.)
ii. Before changing the method of delivery for an invoice for assessments or the statement of account, the association must deliver a written notice of such change to each owner at least 30 days before the association sends the invoice for assessments or the statement of account by the new delivery method “The notice must be sent by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the parcel address, it must be sent by first-class United States mail to the parcel address. Notice is deemed to have been delivered upon mailing.” “*A parcel owner must affirmatively acknowledge, electronically or in writing, his or her understanding that the association will change its method of delivery of the invoice for assessments or the parcel’s statement of account before the association may change the method of delivering an invoice for assessments or the statement of account.”
iii. New Notice of Late Assessment: “An association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the owner which specifies the amount owed to the association and provides the owner an opportunity to pay the amount owed without the assessment of attorney fees.” Additional collection action cannot be taken for 30 days from the date of the notice. “The notice of late assessment must be sent by first-class United States mail to the owner at his or her last address as reflected in the association’s records and, if such address is not the parcel address, must also be sent by first-class United States mail to the parcel address. Notice is deemed to have been delivered upon mailing. A rebuttable presumption that the association mailed a notice in accordance with this new law is established if a board member, officer, or agent of the association, or licensed community association manager provides a sworn affidavit attesting to such mailing.” In addition, the notice must substantially follow the required statutory format which is provided in the legislation.
2) As to homeowners associations, Senate Bill 630 provides the following changes:
(a) §720.301(8), Fla. Stat., setting forth the definition of the term “governing documents,” is revised to remove adopted rules and regulations therefrom.
(b) §720.303, Fla. Stat., pertains to board meetings, official records, budgets, financial reports, association funds, and recalls and is amended as follows:
i. “In addition to any of the authorized means of providing notice of a board meeting, the association may, by rule, adopt a procedure for conspicuously posting the meeting notice and agenda on the association’s website or an application (an app) that can be downloaded on a mobile device for at least the minimum period of time for which a meeting notice is also required to be physically posted on the association property. Any rule adopted must, in addition to other matters, include a requirement that the association send electronic notice to members whose email addresses are included in the association’s official records in the same manner as is required for notice of a meeting of the members. Such notice must include a hyperlink to the website or such mobile application on which the meeting notice is posted.”
ii. “Ballots, sign-in sheets, voting proxies, and all other papers and electronic records relating to voting by owners” are added to the list of official records which must be maintained by the association, and they must be maintained for at least one year after the date of the election, vote, or meeting.
iii. Although comprising a part of the association’s official records, “[i]nformation an association obtains in a gated community in connection with guests’ visits to parcel owners or community residents” is added to the list of official records which are not subject to member inspection and copying.
iv. If the budget does not include reserve accounts created in accordance with §720.303(6)(d), Fla. Stat., or the declaration, articles, or bylaws do not obligate the developer to create reserves, and the association is responsible for the repair and maintenance of capital improvements that may result in a special assessment if reserves are not provided or not fully funded, each financial report for the pre- ceding fiscal year must contain a statutorily provided statement warning of such consequence in conspicuous type.
v. While a developer is in control of a homeowners association, the developer may, but is not required to, include reserves in the budget. If the developer includes reserves in the budget, the developer may determine the amount of reserves included.
vi. The developer is not obligated to pay for “contributions to reserve accounts for capital expenditures and deferred maintenance, as well as any other reserves the homeowners association or developer may be required to fund pursuant to any state, municipal, county, or other governmental statute or ordinance.”
vii. The developer is also not obligated to pay for operating expenses. In reading this new provision together with other developer funding obligations, this author interprets this provision to mean that the developer is not obligated to pay for operating expenses beyond its parcel assessment obligations if the developer is paying assessments on its parcels as opposed to deficit funding.
viii. The developer is not obligated to pay for “any other assessments related to the developer’s parcels for any period of time for which the developer has provided in the declaration that in lieu of paying any assessments imposed on any parcel owned by the developer, the developer need only pay the deficit, if any, in any fiscal year of the association, between the total amount of assessments receivable from other members plus any other association income and the lesser of the budget or actual expenses incurred by the association during such fiscal year.”
ix. If the board determines not to certify a recall or fails to certify a recall, then the board must, within five business days, file a petition for arbitration with the Department or file a court action. The owners participating in the recall must be named as a party under the petition for arbitration or in a court action. If the arbitrator or court certifies the recall as to any director, the recall is effective upon mailing the final order of arbitration to the association or the final order of the court.
x. Director recall challenges by the owner representative or by a recalled director may be made by filing a court action in addition to filing a petition under §718.1255, Fla. Stat.
(c) §720.305, Fla. Stat., clarifies that a fine is due five days after notice of the approved fine is provided to the owner and, if applicable, to any occupant, licensee, or invitee of the owner.
(d) §720.306, Fla. Stat., pertains to meetings of members, voting and election procedures, and amendments to the governing documents.
i. “A notice required under this section must be mailed or delivered to the address identified as the owner’s mailing address in the official records of the association as required under §720.303(4), Fla. Stat.”
ii. As to leasing, any governing document, or amendment thereto, that is enacted after July 1, 2021, and that prohibits or regulates rental agreements applies only to (i) an owner who acquires title to a parcel after the effective date of the governing document or amendment, or (ii) an owner who consents, individually or through a representative, to the governing document or amendment.
a) Notwithstanding, an association may amend its governing documents to prohibit or regulate rental agreements for a term of less than six months and may prohibit the rental of a parcel for more than three times in a calendar year, and such amendments shall apply to all owners.
b) For the purposes of these rental amendment restrictions, a change of ownership does not occur when a parcel owner conveys the parcel to an “affiliated entity,” when beneficial ownership of the parcel does not change, or when an heir becomes the owner.
c) An “affiliated entity” means “an entity that controls, is controlled by, or is under common control with, the owner or that becomes a parent or successor entity by reason of transfer, merger, consolidation, public offering, reorganization, dissolution or sale of stock, or transfer of membership partnership interests.”
d) “For a conveyance to be recognized as one made to an affiliated entity, the entity must furnish to the association a document certifying that the exclusion applies and provide any organizational documents for the owner and affiliated entity which support the representations in the certificate, as requested by the association.”
e) For the purposes of these rental amendment restrictions, “a change of ownership does occur when, with respect to an owner that is a business entity, every person that owned an interest in the real property at the time of the enactment of the amend- ment or rule conveys their interest in the real property to an unaffiliated entity.”
f) These rental amendment restrictions do not apply to associations with 15 or fewer owners.
iii. Election and recall disputes between a member and an association must be submitted to either binding arbitration with the Division or filed with a court of competent jurisdiction. (This amendment is also reflected in §720.311, Fla. Stat.)
(e) §720.3075, Fla. Stat., is amended to provide that a homeowners association, through board action, may extinguish a discriminatory restriction as provided in §712.065, Fla. Stat.
(f) §720.316, Fla. Stat., pertains to emergency powers which are now updated to include situations such as COVID-19 and provide for new procedures which are essentially a codification of the procedures used during the COVID-19 pandemic.
i. Emergency powers are clarified and expanded such that they can be employed in response to damage or injury caused by or anticipated in connection with an emergency as defined in §252.34(4), Fla. Stat., for which a state of emergency is declared.
a) As defined in §252.34(4), Fla. Stat., an “emergency” means “any occurrence, or threat thereof, whether natural, technological, or manmade, in war or in peace, which results or may result in substantial injury or harm to the population or substantial damage to or loss of property.”
ii. In addition to being able to conduct board and membership meetings with notice given as practicable, committee meetings and elections may also be noticed in such manner, and all such meetings may be conducted, in whole or in part, by telephone, real-time video conferencing, or similar real-time electronic or video communication. Notice of decisions may also be communicated as provided in this paragraph.
iii. In addition to implementation of disaster plans, emergency plans can now be implemented “before, during, or following the event for which the state of emergency is declared which may include, but are not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.”
iv. In addition to making decisions regarding whether the property is available or unavailable for entry and occupancy by owners, family members, tenants, guests, agents, or invitees in order to protect the health, safety, or welfare of such persons upon advice of emergency management officials or licensed professionals retained by the board, such advice may also be provided by public health officials and other licensed professionals available to the board. This also includes decisions as to whether any portion of the property can be safely inhabited, accessed, or occupied, subject to certain exclusions, discussed below.
v. The mitigation authority is expanded to include mitigation of injury or contagions, in addition to mitigation of damage, and such authority includes taking action to contract for the removal of debris, to prevent or mitigate the spread of fungus, or to sanitize the common areas or facilities.
vi. Notwithstanding the power of the board to prohibit access to the property, “an association may not prohibit owners, tenants, guests, agents, or invitees of an owner from accessing the common areas and facilities for the purpose of ingress to and egress from the parcel and when necessary in connection with the sale, lease, or other transfer of a parcel or with the habitability of the parcel or for the health and safety of such person, unless a governmental order or determination, or a public health directive from the Centers for Disease Control and Prevention, has been issued prohibiting such access to the parcel. Any such access is subject to reasonable restrictions adopted by the association.”
1) Senate Bill 2006 amends various Florida Statutes as relates to emergency management that govern emergency preparations, orders, and disaster recovery as follows:
(a) Prohibits a business entity or a governmental entity from requiring customers to verify COVID-19 vaccination, which includes community associations.
(b) Expands emergency powers for use during public health emergencies.
(c) Provides for legislative oversight and limitations on the duration of executive orders issued by the governor.
(d) Provides for limitations on the duration of emergency orders issued by a political subdivision, including the ability of the governor to invalidate local orders if the governor determines that the order unnecessarily restricts individual rights or liberties.
(e) Provides that an executive order imposing business restrictions or closure of, or restricted in-person attendance at, K-12 public schools must specifically state the reasons for the restrictions or closure.
2) House Bill 403 provides restrictions on local government’s ability to regulate home businesses.
(a) §559.995, Fla. Stat., pertaining to home-based businesses and local government restrictions, is added as follows:
i. Local governments may not enact or enforce any ordinance, regulation, or policy or take any action to license or otherwise regulate a home-based business.
ii. A home-based business must meet the following criteria in order to be considered a home-based business:
a) It must operate from residential property.
b) Employees of the business who work at the residential dwelling must also reside there, except that there may be up to two other employees or independent contractors who do not reside at the residential dwelling who may work at the business. In addition, there can be other remote employees that do not work at the residential dwelling.
c) Parking related to the business activity may not be greater in volume than would normally be expected by similar residents where no business is conducted and must comply with local zoning requirements, along with other compliance requirements.
d) As viewed from the street, the use of the residential property must be consistent with the uses of the residential areas that surround the property.
e) The activities of the home-based business must be secondary to the property’s use as a residential dwelling. The business activities must comply with all relevant local and state regulations. There can be no excessive fumes, noxious odors, vibration, noise, etc.
iii. Provides that the application of these new laws does not supersede any current or future declaration adopted pursuant to Chapter 718 (condominiums), Chapter 719 (cooperatives), and Chapter 720 (homeowners associations).
3) House Bill 421 & House Bill 1101 (effective 10/1/2021) provide revisions to the Bert J. Harris, Jr., Private Property Rights Protection Act, set out in Chapter 70, Fla. Stat. This Act provides relief to private landowners when a law, regulation, or ordinance inordinately burdens, restricts, or limits private property without amounting to a taking under the U.S. Constitution.
(a) §70.001, Fla. Stat., is amended as follows:
i. Provides that the prior owner maintains their Bert Harris claim so long as they filed their claim while they were the property owner.
ii. Clarifies that the term “real property” includes “surface, subsurface, and mineral estates” in addition to appurtenances and improvements to the land, including any other relevant interest in the real property in which the property owner has a relevant interest. However, the term includes only parcels that are the subject of and directly impacted by the action of a governmental entity.
iii. Allows the property owner the right to forgo a jury trial and to elect that the court determine the award of compensation.
iv. Provides for what amounts to a one-year statute of limitations to bring the claim from the time of the governmental notice which brought about the diminution of value.
4) SB 72 was signed into law on March 29, 2021, and, in pertinent part, grants liability protection to businesses and entities from lawsuits related to COVID-19 exposure.
(a) §768.38, Fla. Stat., was created and grants civil liability immunity to business entities and institutions, including, but not limited to, religious institutions and community associations. However, limited liability companies are excluded.
i. To be afforded the immunity, the association (or other business entity) must make a good faith effort to substantially comply with authoritative or controlling federal, state, and local public health standards or guidelines at the time the cause of action accrued. If more than one source or set of standards or guidance was authoritative or controlling at the time, the association’s good faith effort to substantially comply with any one of these sources or sets of standards or guidance will confer immunity from civil liability.
ii. If the court determines the defendant did not make a good faith effort to comply, the plaintiff may proceed with an action against the defendant. To establish liability, the defendant must have acted with gross negligence or intentional conduct, and the foregoing must be proven by clear and convincing evidence (rather than a mere preponderance of the evidence).
iii. There is a shortened one-year statute of limitations within which to bring the claim.
5) SB 60 pertains to code enforcement complaints.
(a) §§125.69, 162.06, 162.21, 166.0415, Fla. Stat., were amended to provide that a code inspector or code enforcement officer may not initiate an investigation of a potential violation of a duly enacted code or ordinance by way of an anonymous complaint unless the code inspector or code enforcement officer has reason to believe the violation presents an imminent threat to public health, safety, or welfare or imminent destruction of habitat or sensitive resources.
6) SB 76 pertains, in pertinent part, to contractors and provides for prohibition of solicitation.
(a) §489.147, Fla. Stat., pertaining to prohibited solicitations regarding roof damage is added as follows:
i. A contractor may not directly or indirectly engage in any of the following practices:
a) Soliciting a residential property owner by means of a “prohibited advertisement.” The term “prohibited advertisement” means “any written or electronic communication by a contractor that encourages, instructs, or induces a consumer to contact the contractor or public adjuster for the purpose of making an insurance claim for roof damage. The term includes, but is not limited to, door hangers, business cards, magnets, flyers, pamphlets, and emails.”
b) “Offering to a residential property owner a rebate, gift, gift card, cash, coupon, waiver of any insurance deductible, or any other thing of value in exchange for the following: 1) Allowing the contractor to conduct an inspection of the residential property owner’s roof; or 2) Making an insurance claim for damage to the residential property owner’s roof.
c) Offering, delivering, receiving, or accepting any compensation, inducement, or reward for the referral of any services for which property insurance proceeds are payable.
d) Interpreting insurance policy provisions or advising an insured regarding coverage or duties under the insurance property insurance policy.
e) Providing an insured with an agreement authorizing repairs without providing a good faith estimate of the itemized and detailed cost of services and materials for repairs undertaken pursuant to an insurance claim; however, a contractor is not in violation if the actual cost of repairs differs from the initial estimate.”
ii. A contractor or unlicensed person who violates this section is subject to disciplinary proceedings and may receive up to a $10,000 fine for each violation.
iii. A contractor may not execute a contract with an owner to repair or replace a roof without including a notice that the contractor may not engage in the practices set forth above. If the contractor does not include such notice, the owner may void the contract within 10 days after execution.
(Reprinted with permission from the July 2021 edition of the Florida Community Association Journal)
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Kaye Bender Rembaum