The first week of the 2014 Legislative Session has wrapped up and two key community association bills were heard and passed through their first committee stops. There is a lot of information to cover for this week.
Citizens Property Insurance
SB 7062 by the Senate and Banking Insurance Committee seeks to continue to shrink Citizens Property Insurance Corporation. Of importance to condominium associations is a provision that would prohibit Citizens from offering new multi-peril commercial residential policies (the type of insurance that condominium associations purchase) after July 1, 2014. Citizens must continue to offer wind-only commercial residential policies, and may offer policies that exclude wind. The bill also provides that Citizens may (but is not required to) renew multi-peril commercial residential policies after June 30, 2014. The effects of this bill will likely be higher rates for condominium associations. The bill is scheduled to be heard in the Senate Banking and Insurance Committee on Tuesday, March 11, 2014 at 4:00 p.m. Please contact the members of the Senate Banking and Insurance committee and tell them that you are opposed to the bill because it will increase rates for condominium associations. The members of the Banking and Insurance Committee are:
- Senator Lizbeth Benacquisto (R): firstname.lastname@example.org
- Senator Nancy C. Detert (R): Detert.Nancy@flsenate.gov
- Senator Miguel Diaz de la Portilla (R): email@example.com
- Senator Alan Hays (R): firstname.lastname@example.org
- Senator Tom Lee (R): email@example.com
- Senator Gwen Margolis (D):firstname.lastname@example.org
- Senator Bill Montford (D): email@example.com
- Senator Joe Negron (R): firstname.lastname@example.org
- Senator Garrett Richter (R): email@example.com
- Senator Jeremy Ring (D): firstname.lastname@example.org
Community Association Bills
Residential Properties: SB 798 (Sen. Ring) and HB 807 (Rep. Moraitis) are companion bills and are the main community association bills for this session. Both bills passed unanimously in their first committee stops this week, without much controversy. SB 798 and HB 807 include a number of CALL initiatives including: (1) Amending Section 718.111(11)(j) to clarify that if an item is damaged by something other than an insurable event, the repair or replacement of the item is as provided in the declaration or bylaws; (2) Amending Section 718.111(12) to clarify that the association can publish all owner telephone numbers in a directory and that owners can consent to the publication of other contact information; (3) Amending Section 720.306(1)(b) to allow the association to provide notice of adopted amendments by email, if the owner has given permission for electronic notice. Also, if the association had provided a copy of the amendment prior to an owner vote on the amendment, the association can notify the owners that the amendment passed and the OR book and page number or instrument number of the amendment and notice that a copy of the amendment is available at no charge to the owners, in lieu of providing an actual copy.
“Safe Harbor” Bills: A few weeks ago, I told you about HB 871 by Rep. Trujillo, which would increase the “safe harbor” amount that a first mortgagee pays to the association after it forecloses on a mortgage. HB 871 now has a companion bill, SB 1462 by Sen. Stargel. HB 871/SB 1462 amend the safe harbor amount to allow recovery for assessments “and other costs that accrued or came due pursuant to the association’s governing documents” during the 24 months before acquisition of title by the first mortgage holder or the acquisition of title by the association, whichever occurs first, or 2% of the original mortgage debt, whichever is less. (The current law provides that the safe harbor amount is 12 months past due “common expenses and regular periodic assessments” or 1% of the original mortgage debt, whichever is less.) HB 871/SB 1462 also create a new provision which states that the liability of a first mortgagee for attorney fees is limited to $4,000, unless a court of competent jurisdiction finds “exceptional circumstances that justify a greater award.”
A couple of other “safe harbor” bills have also been filed—SB 1458 (Sen. Arbruzzo) and HB 1405 (Rep. Rader) increase the safe harbor to 24 months past due assessments, or 3% of the original mortgage debt, whichever is less.
Termination Bills: SB 1546 (Sen. Latvala) and HB 1061 (Rep. Zimmerman) have filed similar bills dealing with optional termination of condominiums. The bills provide that if termination is for other than because of economic waste or impossibility, owners who do not want to relinquish their property shall receive compensation equal to 110 percent of the original purchase price of his or her unit or 110 percent of the fair market value of his or her unit, whichever is greater. The term “fair market value” is defined as the price of a unit that a seller is willing to accept and a buyer is willing to pay on the open market in an arms-length transaction based on similar units sold in other condominiums, not including units sold at wholesale or at distressed prices, but including those sold in bulk purchases. HB 1061 includes additional provisions regarding bulk owners.
Community Association Managers
HB 7037 (Rep. Spano) which addresses activities of community association managers was heard and passed (11-2) in Business and Professional Regulation Subcommittee. The bill adds a number of activities to the definition of “community association management” including, but not limited to, collecting amounts due the association prior to the filing of a civil action, completing forms related to the management of a community association that have been created by statute or by a state agency, drafting letters of intended action, calculating and preparing certificates of assessments, responding to requests for an estoppel letter, negotiating monetary or performance terms of a contract subject to approval by an association, drafting pre-arbitration demands, and preparing statutory construction lien documents for association projects. A number of the members of the committees raised concerns that perhaps the bill goes too far in allowing managers to perform certain activities that should be performed by an attorney. Rep. Spano indicated that he was working with a number of stakeholders, including the Florida Bar, to resolve these issues.
HB 879 (Rep. Hooper) passed the House Insurance and Banking Subcommittee unanimously. HB 879 is similar to SB 542 by Sen. Brandes in that it seeks to attract more private flood insurers to Florida by making the negotiation process more flexible, removing some Office of Insurance Regulation oversight and diverging from National Flood Insurance Program guidelines for deductibles and policy limits. Rep. Hooper’s bill differs from the Senate bill, however, in that it will not allow policies that only cover the outstanding balance of a mortgage, which Rep. Hooper believes would lead to unrepaired homes after a flood, blighting neighborhoods.
On the federal level, the House of Representatives voted 306-91 to pass a flood insurance bill that would limit the rate increases that are being experienced by owners in Florida and other coastal areas. The House bill must still be reconciled with the Senate version that passed in January, because the two versions of the bills are different. If the House bill is ultimately approved by the Senate and signed into law by President Obama, it would restore the taxpayer subsidies for older homes, even after they are sold. The 2012 federal Biggert-Waters Act ended those subsidies, which resulted in owners not being able to sell their homes because of the high flood insurance rates. The House bill also would restore a grandfathering provision for owners who built to code, but were later remapped into a higher-risk flood zone. It also would provide funds to owners whose rates went up significantly under the 2012 law.
HB 489 by Rep. Spano passed its second of three committees, the House Business & Professional Regulation Subcommittee. The bill requires sellers of residential property to provide written notification to prospective buyers of the seller’s intent to retain subsurface rights at least 3 days prior to entering into any sales contract. The bill was amended at the committee meeting so that it would not apply to re-sales, but only to the sale of “new dwellings.” The Senate companion bill, SB 1032 (Sen. Latvala), will be considered on Monday, March 10, at 4:00 p.m. in the Senate Criminal Justice Subcommittee.
Week 2 Preview
The agendas for next week’s committee meetings are not all out yet. But here is what to expect in the Senate committees on Monday and Tuesday:
Monday, March 10 at 4:00: SB 1032 (Sen. Latvala) regarding subsurface rights will be considered in Senate Criminal Justice Subcommittee.
Tuesday, March 11 at 1:30: SB 440 (Sen. Altman) regarding non-residential condominiums will be considered in Senate Judiciary.
Tuesday, March 11 at 4:00: The Senate Banking and Insurance Committee will consider the following bills:
- SB 7062 (Banking & Insurance Committee) regarding Citizens Property Insurance (discussed above)
- SB 542 (Sen. Brandes) regarding flood insurance (discussed above)
- SB 1058 (Sen. Brandes) regarding Biggert Waters Flood Insurance Reform Act. The bill urges Congress to delay implementation of the Biggert-Waters Flood Insurance Reform Act of 2012 until specified conditions are met and to eliminate any requirement to immediately increase a property owner’s insurance procured through the National Flood Insurance Program to a full-risk rate, and, if the Congress fails to act, urging the President to delay any resulting rate increases.
As always, feel free to email me (email@example.com) if you have any questions.
Very truly yours,
Yeline Goin, Executive Director