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2011 LEGISLATIVE UPDATE - PART I

 

HOUSE BILL 1195

 

  The most significant legislation affecting Florida community associations this year is House Bill 1195.  This Bill has been signed by the Governor as of June 21, 2011, and is now known as Chapter 2011-196, Florida Laws.   The effective date of the legislation is July 1, 2011, so all persons involved in decision making and administration of community associations need to be aware of the contents of this legislation.

 

  The Bill consists of 75 pages, including many grammatical changes and other places where the entire text of a particular section of the law is set forth even though there are minor changes to that particular section.  This update will summarize the effect, and in some cases the context and background, of the changes which have been adopted.  Most of the changes were intended to clarify legislation which had been adopted in prior legislative sessions, since the Legislature did not wish to consider new substantive changes to community association legislation this year.

 

All references below are to the applicable sections of the Florida Statutes

 

GENERAL:

 

Section 633.0215(14) has been amended to now state that condominium, cooperative or multi-family residential buildings that are less than four stories in height, and which have an exterior corridor providing a means of egress, are exempt from installing a manual fire alarm system which is otherwise required by the Florida Fire Prevention Code.  It is stated that this change was intended to clarify existing law, although three-story buildings, and cooperative and non-condominium multi-family residential buildings, were not addressed in the prior version of the statute.

                                                                       

AMENDMENTS TO CHAPTER 718 (Condominiums)

 

Official Records:

 

Section 718.111(12)(a) has been amended to address identifying information of owners.  The association is required to maintain a current roster of all unit owners, and their mailing addresses, and, if known, their telephone numbers.  Additionally, for unit owners who have consented to receive notices by electronic transmission, the e-mail addresses and facsimile numbers of such owners are also required to be maintained as part of the official records; however, these are not accessible to other unit owners, unless the unit owners who consented to receive notices by electronic transmission have consented in writing to the disclosure of this protected information.  In other words, if the association has e-mail addresses and facsimile numbers on file, and an owner has not agreed to accept official notices from the association by electronic transmission, or has not consented to the disclosure of this information, then the e-mail addresses and facsimile numbers are not supposed to be accessible to persons who wish to inspect the official records.  For those associations who wish to publish a directory, they may wish to seek written consent from owners who wish to allow their e-mail addresses to be published.

 

Another change to the official records section is contained in 718.111(12)(c), which relates to records which are not accessible to unit owners.  Protection for personnel records of association or management company employees has been expanded.  Previously only records of association employees were exempted.  However, the term “personnel records” does not include written employment agreements with an association employee or a management company, or budgetary or financial records that indicate the compensation paid to an association employee.

 

Board Meetings - Personnel Issues:

 

Section 718.112(2)(c) has been amended to authorize Board meetings held for the purpose of discussing personnel matters to be closed meetings, which are not required to be open to other unit owners.  This change was previously made for homeowners’ associations and now condominium associations may also discuss personnel matters in a closed Board meeting. 

 

PRACTICE TIP - Many associations are not aware of the requirement that meetings of committees of condominium associations must be open to the membership, and posted, unless those meetings are exempted from the open meeting requirement by the Bylaws of the association.  Associations should consider amending their Bylaws to exempt committee meetings, other than meetings where final action will be taken by the committee, or where recommendations will be made by the committee to the Board of Directors regarding the budget (since these type of meetings are required to be open to other owners regardless of any provision in the Bylaws).

 

Election of Board Members:

 

Section 718.112(2)(d) has been amended in several respects as this relates to the election of Board members.  As amended, this statute includes the following provisions:

 

  1. If the number of Board members whose terms expire at the annual meeting equals or exceeds the number of candidates who have timely submitted a written notice of their intention to become a candidate, the candidates become members of the Board effective upon the adjournment of the annual meeting.

 

  1. Unless the Bylaws provide otherwise, any remaining vacancies shall be filled by the majority of the directors making up the newly-constituted Board, even if there is less than a quorum.

 

  1. Eligibility to serve on the Board is to be determined at the time of the deadline for submitting a notice of intent to run for the Board, in order to have the person’s name listed as a proper candidate on the ballot.  Therefore, for example, if someone is delinquent in the payment of a monetary obligation to the association for more than 90 days, this would disqualify them from being eligible for the Board if the delinquency had not been cured as of the deadline for submitting a notice of intent to run for the Board.

 

  1. The statute previously provided that within 90 days after being elected or appointed to the Board, each newly-elected or appointed director was either to certify in writing that they had read the governing documents and would uphold the documents and fulfill their fiduciary duty; or in the alternative a course could be taken from a Division-approved education provider.  This option has now been clarified to provide that the course can be taken within a period of one year before the date of election or appointment, or 90 days after.  The written certification or educational certificate does not need to be re-submitted as long as the director serves on the Board without interruption, so it would not apply to a director who was re-elected and had previously complied with the requirements.

 

Hurricane Protection:

 

Section 718.113(5)(a) has been amended to permit a Board of Directors to vote to install impact glass or other code-compliant windows on all units, or hurricane protection other than shutters, so long as this meets or exceeds the applicable building code, upon the approval of a majority of the voting interests in the condominium. 

 

Acquisition of Interest in Land or Memberships in Clubs or Facilities:

 

Section 718.114 has been amended to indicate that an association which wishes to enter into an agreement to acquire possessory or use interests in lands or facilities in order to provide enjoyment, recreation or other benefits to the unit owners, and which does not do so within the first 12 months after the recording of the Declaration, may then proceed to enter such agreements upon the vote or written consent of a majority of the total voting interests, or as otherwise authorized by the Declaration. 

 

Assessment Liability to Other Associations:

 

Section 718.116(1)(b)2 has been added to address an issue which has come up in certain lien foreclosure actions.  The statute previously did not address the liability of an association which takes title to a condominium unit through foreclosure, as this relates to a master association or other association which also has assessment obligations owing to it in regard to the foreclosed property.  The new statute provides that the association, or its successor or assignee, acquiring title through foreclosure is not liable for any amounts which came due to another association prior to the acquisition of title.  It is further stated that this sub-paragraph is intended to clarify existing law. 

 

Collection of Monies From Tenants:

 

Section 718.116(11)(a) has been modified and clarified in regard to the manner in which the association can collect rental payments from a tenant of a delinquent owner.  The statute now clearly says that the tenant is to pay all subsequent rental payments after receiving a written demand, and is to continue to make such payments until all monetary obligations of the unit owner have been paid in full to the association.  There is also now a statutory form for the demand letter, and the notice must be sent in substantial compliance with the statutory wording. 

 

PRACTICE TIP - It is now more important than ever for all associations to have good records of units which are rented, including copies of leases if possible, and the association should also check its records to determine whether a delinquent owner is leasing his or her unit.  A short-term lease is not required to be in writing, and if there is a question as to whether a unit is being occupied by a guest or a tenant, a demand can be sent under the statute to the occupant.  If the association is foreclosing on its lien, there is a right to collect rent through the court, in situations where tenants may not be cooperative.                            

 

Termination of Condominium:

 

Section 718.117 has been amended, and now allows any unit owner to file a plan of termination under certain circumstances.  There also has been wording added to expand upon the statutory provisions relating to partial termination for a portion of the condominium.

 

Enforcement - Suspension of Use Rights:

 

An amendment has been made to Section 718.303(3)(a) to clarify that associations may suspend, for a reasonable period of time, the right of unit owners, tenants, guests or invitees, to use the common elements or association property based upon failure to comply with any provision of the Declaration, Bylaws or Rules and Regulations of the association.  A suspension based upon violation of the governing documents may not be imposed unless the Association first provides at least 14 days written notice and the opportunity for a hearing.

 

The wording relating to suspension of use rights based upon the owner being 90 days delinquent in paying monetary obligations to the association has also been clarified, and a suspension for this reason does not require notice and the opportunity for a hearing. 

 

Section 718.303(5) has been amended to clarify that when voting rights are suspended (based upon an owner being delinquent in payment of any monetary obligation for more than 90 days), any suspended voting rights are not to be counted toward the total number of voting interests necessary to constitute a quorum, conduct an election, or take any other action pursuant to the statutes or the governing documents.

 

Finally, wording has been added to Section 718.303(6) to clarify that all suspensions imposed in regard to the right to use the common elements or other facilities of the association, or the right to vote, must be approved at a properly-noticed Board meeting, and upon approval the association must notify the party whose rights have been suspended. 

 

PRACTICE TIP - It is suggested that notices relating to delinquencies should advise owners of the fact that their rights to use the common elements and recreational facilities, and their right to vote, may be suspended by the Board if they become delinquent by more than 90 days.  This may help encourage some owners to bring their accounts current.

 

Bulk Purchasers and Assignees:

 

Section 718.703 has been amended to clarify who is a bulk purchaser of the units, and to state that a mortgagee or its assignee may not be deemed to be a developer or a bulk assignee by reason of the acquisition of condominium units through the foreclosure process, unless the mortgagee or its assignee exercises certain developer rights.  There are a number of other detailed provisions relating to bulk assignees and bulk purchasers.  Please ask your association attorney for guidance as to your particular situation if your community may be affected by any of these provisions.

                                                                                                           

AMENDMENTS TO CHAPTER 719 (Cooperatives)

 

Chapter 719, relating to cooperatives, has been the subject of a number of amendments in recent years to bring the statute more in line with the Condominium Act.  The changes which were made in this particular 2011 legislation include:

 

Collection Costs and Lien Rights:

 

Section 719.108(4) has been amended to delete wording which authorized a lien on the cooperative parcel for reasonable costs for collection services, other than reasonable attorneys’ fees which are authorized by the cooperative documents.  The lien does secure unpaid assessments, interest, and any authorized late fees.  This amendment appears to be directed toward costs charged for collection services by management companies, and other parties other than legal counsel.  The same issue has not been addressed in the condominium and homeowners’ association statutes.

 

Collection of Rent From Tenants of Delinquent Owners:

 

Section 719.108(10) has been amended to clarify the ability of the cooperative association to collect rental payments from tenants of delinquent owners, including a statutory notice form for making demand on the tenant, and other provisions which mirror the changes to the Condominium Act which are discussed above.

 

Suspension of Use and Voting Rights:

 

Section 719.303 has been amended to include the same provisions for suspension of use rights and voting rights which apply to condominium associations, as discussed above.

 

AMENDMENTS TO CHAPTER 720 (Homeowners’ Associations)

 

Right of Owners to Speak at Board Meetings:

 

A very significant change has been made to Section 720.303(2)(b), which now provides that members not only have the right to attend all meetings of the Board, but also the right to speak at such meetings with reference to all “designated items.”  This appears to refer to all items which are set forth on an agenda, and homeowners’ associations may need to consider exactly how their agendas are being structured.  The intent is clearly to allow homeowners to speak on issues which the Board intended to address at the Board meeting.

 

PRACTICE TIP - Associations have the right to adopt written reasonable rules regulating the manner in which owners may speak at a Board meeting.  Such rules may include a sign-up sheet for members wishing to speak.  It is not necessary that members be allowed to speak while the Board is debating a particular motion, and some associations choose to regulate the timing of owner input, especially in those communities where certain owners may be disruptive to the conduct of the Board meeting.

 

Official Records:

 

Amendments have been made to Section 720.303(5) which deals with official records.  The changes include:

 

                           - Personnel records, including disciplinary, payroll, health and insurance records, continue to be exempt from inspection.  However, the written employment agreements with an association employee, or budgetary or financial records which indicate the compensation paid to an association employee, are still accessible.  It should be noted that the statute relating to homeowners’ associations only deals with association employees, as opposed to the Condominium Act which has been revised to address management company employees as well.  It is not clear as to whether this is an oversight or whether this was a distinction which was intended by the Legislature.

 

                           - Personal identifying information of parcel owners in homeowners’ associations continues to be exempt, including e-mail addresses and facsimile numbers, as well as telephone numbers and emergency contact information.  However, an owner may consent in writing to the disclosure of protected information. 

 

PRACTICE TIP - Associations may wish to seek owner consent to allow for publication of more inclusive information in a community directory or any similar publication.

 

Enforcement - Fines and Suspensions:

 

Section 720.305(2) has been amended to clarify that fines may be adopted by homeowners’ associations based upon the failure of the owner, occupant, licensee or inviteee, to comply with any provision of the governing documents, including the Rules and Regulations.  The statute continues to provide that a fine of less than $1,000.00 may not become a lien against the parcel. 

 

PRACTICE TIP - The statute does not authorize liens for fines unless the governing documents provide for a lien.  Associations which utilize fining authority should review their governing documents to ensure that they are authorized to file a lien to the maximum extent permitted by the Florida Statutes as amended from time to time, and that unpaid fines are collectible in the same manner as unpaid assessments.

 

The statute has also been amended to clarify that associations may suspend use rights, for a reasonable period of time, based upon failure of the owner, occupant, licensee or invitee to comply with the governing documents or Rules and Regulations.

 

Use rights may also be suspended if a member is more than 90 days delinquent in paying any monetary obligation to the association (this includes fines and other charges, and not solely maintenance fees).  The rights of the member’s tenants, guests and invitees to use common areas and facilities can also be suspended until the monetary obligation is paid in full.  The right to suspend use rights does not apply to that portion of the common areas which are necessary to provide access or utility services to the parcel.  The notice and hearing requirements for a fine, or for a suspension of use rights based upon violations of the governing documents, do not apply to a suspension imposed based upon the owner being delinquent in payment of monetary obligations. 

 

PRACTICE TIP - As suggested above for condominium associations, associations should consider informing owners in their delinquency notices of the potential of suspension of use rights if there are common facilities which the owners may wish to use on the property which is managed by the homeowners’ association.

           

Eligibility Requirements to Serve on Board of Directors:

 

Section 720.306(9) has been amended to add new language which states that the following persons are not eligible to serve on the Board of Directors:

 

  1. Persons who are delinquent in the payment of any fee or other monetary obligation to the association for more than 90 days; and

 

  1. Persons who have been convicted of a felony and have not had their civil rights restored for at least five years as of the date on which such person seeks election to the Board.

 

The statute states that the validity of any action by the Board is not affected if it is later determined that a member of the Board is ineligible for Board membership.  This provision has been added so that associations are not required to conduct criminal background searches on all candidates for the Board of Directors. 

 

PRACTICE TIP - The homeowners’ association statute does not specifically state whether someone must be eligible to serve on the Board at the time that ballots are sent out to the owners, if the homeowners’ association has proper authorization to conduct votes by mail (this must be authorized by the governing documents of the association).  This should be contrasted with the changes to the Condominium Act, which state that the eligibility of a person to serve on the Board must be established as of the deadline for submitting notices of intent to serve on the Board.  It is therefore unclear as to whether someone can still be listed on a ballot if they are delinquent for more than 90 days in the payment of monetary obligations, and may then be elected to the Board if they are no longer delinquent at the time of the election itself.

 

Lien Foreclosures - Liability For Assessments to Other Associations:

 

Similar to the Condominium Act, Section 720.305 has been amended to state that an association, or its successor or assignee, that acquires title through foreclosure of a lien for unpaid assessments, is not liable for any charges which came due before the acquisition of title in favor of another association.  This situation often arises in communities where there are more than one association which may have lien rights against a particular parcel.

 

Collection of Rent From Tenants of Delinquent Owners:

 

Section 720.3085(8) has been amended, similar to the Condominium Act and the Cooperative Act, to clarify that tenants of delinquent owners can be required to make rental payments to the association until the monetary obligations of the parcel owner have been paid in full.  There is also a statutory notice which must be substantially complied with. 

 

PRACTICE TIP - Associations should continually check their delinquency list to see if any of the delinquent properties may be rented, and consider making demands on tenants in situations where properties may be rented.  If the association is foreclosing on its lien, there is a right to collect rent through the court, in situations where tenants may not be cooperative.

 

Bulk Cable, Communications and Data Agreements:

 

Section 720.309(2) has been added to the statutes and now provides that the Board may enter agreements for bulk cable service, communications services, information services or internet services.  If the governing documents provide for the cost of these to be treated as a common expense, then the payments are to be allocated to the owners in the same manner as other operating expenses.  If the governing documents do not provide for such services, the Board may still enter contracts for the services, but the cost for the service must be allocated equally to all owners on a per-parcel basis rather than any percentage basis which may be provided for in the governing documents. 

 

Any contract which has been entered by an association prior to July 1, 2011, for which the cost of the service is not equally divided among all parcel owners, may be changed by a majority of the voting interests present at a regular or special meeting of the association, in order to allocate the cost equally among all parcels. 

 

Further, any contract entered by the Board for any of these services may be canceled by a majority of the voting interests present at the next regular or special meeting of the association.  A member may make a motion to cancel such contract, but if no motion is made or if such motion fails to obtain the required vote, the contract is deemed to have been ratified for the term of the contract. 

 

There are other provisions included in the statute relating to certain persons who may have disabilities or may otherwise be entitled to discontinue services without incurring charges.

 

Finally, the statute states that a resident of any parcel, whether a tenant or parcel owner, may not be denied access to cable or video service providers if the resident pays a provider directly for such services.

 

CONCLUSION

 

Although many changes to the statutes have been made which affect community associations, most of the above changes are clarifications or supplementary material to previously existing statutes.  Nevertheless, each association should carefully review the changes in the existing statutes to see how these may affect their operations.  The law is effective as of July 1, 2011, so immediate attention to certain issues may be required.

 

In the event that you have any further questions regarding the manner in which any of the statutory changes may affect your association, please contact your association attorney.

 

 

 

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