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SB 1196 Includes New Remedies for Collecting Money Owed to Associations.

Community leaders and managers have complained for years about investor owner delinquencies.  Why should the owner continue to collect rent from his or her tenant without paying maintenance fees and/or assessments?  Sure, both the Condominium and Homeowners Acts allowed the association to apply to the Court to request the appointment of a rent-receiver, but to take advantage of that provision it had to file the foreclosure lawsuit.  The law requires notices to the delinquent owner, preparation and recording of the claim of lien, filing and serving the foreclosure lawsuit - all before the association could ask the Judge for authorization to collect rent.  It could take several months to obtain the appropriate Court Order - all while the account remains delinquent. In some cases the tenant moves out before the association has the chance to collect any rent.  Of course there are costs and expenses involved with that whole process. 

Recently (as reported on this blog in Condo Receiver Helps Collect Assessments; Q&A: Condo Receivers; Collecting Rent from Tenants; Q&A: Collecting Rent from Tenants (revisited) ) the Courts have extended the law to allow 'blanket receiverships' for all units subject to foreclosure - and even more recently some Orders were entered authorizing the receiver to collect rent from tenants occupying units even before the association filed for foreclosure.

Well, in response to those cries for help the legislature included a 'self-help' procedure for associations.  The first paragraph of this portion of the new law says:

If the unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association, the association may make a written demand that the tenant pay the future monetary obligations related to the condominium unit to the association, and the tenant must make such payment. The demand is continuing in nature and, upon demand, the tenant must pay the monetary obligations to the association until the association releases the tenant or the tenant discontinues tenancy in the unit. The association must mail written notice to the unit owner of the association’s demand that the tenant make payments to the association. The association shall, upon request, provide the tenant with written receipts for payments made. A tenant who acts in good faith in response to a written demand from an association is immune from any claim from the unit owner.
 

 The Association must follow a specific procedure to collect rent from tenants.  There are some pitfalls to avoid.  Its a good idea to discuss these issues with counsel or allow counsel to send the demands on your behalf. 

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Associations have new enforcement mechanisms available - due process requires careful planning & paperwork for associations to take advantage of these new remedies effectively.

 Condominium Associations:

Up until now condominium associations had to have authority to levy fines in the recorded governing documents and did not have the ability to tell delinquent owners to stay out of the pool or gym.  That changes as a result of SB 1196.

After July 1, 2010 (the effective date of the new law), condominium associations will be able to levy fines as a result of violations of the governing documents or rules.  Of course the association must still provide 14 days written notice of the violation and the opportunity for a hearing before a committee of unit owners before imposing any fines,  The fine cannot be levied or imposed if the committee does not agree.

Delinquent condominium owners have more to worry about than fines - the new laws will allow the association to suspend voting rights and use of common, recreational facilities if they are more than ninety (90) days past due in paying a monetary obligation.  The term "monetary obligation" is not defined  - it could include non-assessment obligations such as late fees, fines, transfer approval or screening fees and the like.  The association cannot suspend the use of limited common elements (such as the balcony attached to the unit), nor may it suspend portions of the property necessary to access the unit - such as hallways, elevators, parking spots, etc.  The association cannot suspend utilities.

Homeowners Associations:

The new laws actually limit homeowners' associations powers when it comes to suspensions.  In the past, suspensions could be imposed in the HOA context for either use violations (violations of the governing documents or rules) or delinquencies.  After July 1, 2010, suspensions may only be imposed by HOAs when a member is more than ninety (90) days past due. While it doesn't make sense (especially since Section 720.3085 limits late fees for delinquent assessments), the changes arguably limit fining as well.  Fourteen (14) days written notice and an opportunity for a hearing before a committee is required in either case.  If the committee (by majority vote) does not agree with the fine or suspension, it may not be imposed. 

HOAs cannot suspend use of portions of the property necessary to access the parcel (roads, etc.) or utility services. 

The law prohibits the HOA from filing a lien if the fine is less than $1,000 - does that mean that it can lien for fines of $1,000 or more?  Well, that remedy certainly needs to be included in the governing documents - so check with counsel.  If you're governing documents limit the amount of the fine, now is a good time to consider amendments.

Fines and suspensions must be considered at a properly noticed meeting.  Written notice of the fine or suspension (voting or use) must be furnished to the owner (and occupant if applicable).

Will these new procedures and remedies work?  Its hard to say, but attempting to take advantage of these remedies without following the required procedures is certainly likely to lead to disputes and may expose the association to liability.  Proceed with caution.

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The law isn't even effective yet and everyone wants to know where, when and whether they need the "board certification" required by the changes to §718.112(2)(d), Florida Statutes in SB 1196. 

All good questions but please let me clarify - condo directors elected after the effective date of the law either need to provide the association with a certificate containing various representations or evidence they have completed an education course. 

The statute says:

b. Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. In lieu of this written certification, the newly elected or appointed director may submit a certificate of satisfactory completion of the educational curriculum administered by a division-approved condominium education provider. A director who fails to timely file the written certification or educational certificate is suspended from service on the board until he or she complies with this subsubparagraph. The board may temporarily fill the vacancy during the period of suspension. The secretary shall cause the association to retain a director’s written certification or educational certificate for inspection by the members for 5 years after a director’s election. Failure to have such written certification or educational certificate on file does not affect the validity of any action.

The 2008 amendments to Section 718.112(2)(d)3., of the condominium act required candidates for the board to submit a certification form (prepared by the Division) to the association along with their notices of intent.  This change now requires the elected directors (not candidates) to certify:

• they have read the governing documents & association's policies;
• they will work to uphold the documents & policies to the best of their ability; and
• they will faithfully discharge their fiduciary responsibilities.

Who is an approved education provider?  Well Becker & Poliakoff is of course!  We have provided education to board members, licensed property managers & industry representatives for more than thirty (30) years.  The Firm offers on-line education as well as live, interactive webinars for those who cannot take off work or devote a Saturday to course work.

There are other approved providers in the State of Florida - CAI (Community Associations Institute) is a provider and offers on-line courses in addition to live seminars (most of which are free).

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Thank you everyone for the thoughtful questions and comments regarding SB 1196.  I have literally received hundreds of questions and comments over the past week - either through this site or by email.  Since many of the questions relate to the same issues, I'd like to share some of the responses. 

QUESTION:  Rumor has it that the Governor has a bill before him that would raise the voting approval to 75% for apparently new Condo and/or HOA amenities. True or false?

RESPONSE: You may be referring to the new section 720.31, Florida Statutes. It says that HOAs can acquire leased property, memberships and other interests in lands or facilities (including country clubs, marinas, golf courses, etc.) more than a year after recording the Declaration if the governing documents contain that authority or if 75% of the members agree.

QUESTION:  Are cable TV services considered a utility? Our HOA pays approx. $50 per month per unit for basic services. Comcast has refused to cut the services for those people who have stopped paying their maintenance fees, even if we pay the monthly dues and pay for the service to shut off the service. Without cable TVs service, it might give those people who have refused to pay their maintenance fees, an incentive to do so.

RESPONSE: You hit the $64,000 question. Maybe Comcast will change its policy as a result of the new law. I understand Comcast (and perhaps some other providers) believed that suspending service to individuals constituted a violation of the telecommunications act and federal regulations. Check back in a few weeks - we will be sure to post something related to suspending cable/television programming and are planning a webinar devoted to telecommunication issues in light of SB 1196. 

(P.S.  If your community is paying $50 per month for basic bulk services it should attempt to renegotiate that deal.)

QUESTION: Please inform me if there is a new requirement for board members to take a class or an exam to run for the board otherwise the association will be null and void.
Is this something new? please let me know

RESPONSE: The new law (effective July 1) requires board members to provide the association with a certification or evidence of completion of an approved course within 90 days of being elected or appointed.

QUESTION: Does SB1196 say anything about the requirement of installing hard wired smoke detectors in condominium buildings that are less than 3 stories in height? Is it still a requirement in these buildings?

RESPONSE: SB 1196 contains a provision that allows buildings of less than 4 stories with outside access (catwalks) to avoid installing manual fire alarms.

QUESTION: The new law stipulates that upon foreclosure the lender must now pay up to 12 months of back hoa dues or 1% of loan balance vs 6 months. Is that effect immediately once the bill goes into effect regardless of when the loan was placed on the property?

RESPONSE: While it is hard to predict how the lenders will interpret the bill, many community association attorneys believe that the new law will apply to acquisitions of title by lenders that take place July 1, 2010 forward, if the original mortgage was recorded after April 1992 (the effective date of the "safe harbor").

Remember, this information doesn't constitute legal advice & these responses are general in nature. Please consult with counsel to determine how the new laws will impact your operations.

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Community association leaders and managers should become aware of changes to record inspection obligations now that SB 1196 has been signed into law.

Roster List (Condo):

The roster list is an important document.  Telephone numbers have traditionally been included in the roster list, despite objections over the years.  The roster list also includes email addresses of the members if they have consented (or requested) to receive notices and other association information by email.  SB 1196 says that the email addresses and telephone numbers of the members must be removed from the association's records if the owner revokes consent to receive notice by electronic transmission.  Please discuss modifications to the roster or creating a procedure for owner consent to include this information with association counsel, as many owners have come to rely upon the roster or directory to remain in contact with friends and neighbors.

Civil Penalties (Condo):

Last year the act was amended to authorize civil penalties against anyone (individuals - i.e. board members, manager, etc.) that knowingly or intentionally defaced or destroyed accounting records.  It also authorized civil penalties for knowingly or intentionally failing to create or maintain the accounting records.  SB 1196 now limits the civil penalties to the time period the records are required to be maintained.  Penalties are likewise not appropriate for failing to create or maintain these records unless there is a finding of intent to harm the association or one or more of its members.

Misuse of Information (Condo):

We know the association cannot publish debtor lists or use the delinquency records to embarrass or harass its members, but the board (or management) has little to no control over what happens to records once they are in the possession of a unit owner.  SB 1196 says the association is not responsible for misuse of records properly obtained in connection with an owner's rights to inspect and copy.

Personnel Records (Condo & HOA):

Personnel records for association employees such as payroll, disciplinary actions, health and insurance records are no longer accessible to members.  I know a few managers that are happy with this change.

Owner Information (Condo & HOA):

Private information such as email addresses, telephone numbers, emergency contact information, social security numbers, driver's license and credit card numbers of the owners are not accessible to members.

Condo and HOA owners are not entitled to obtain the association's passwords, electronic security records, software or operating systems that manipulate data.

Presumption (HOA):

In HOAs the presumption that the association willfully failed to make records available if the records were not available within 10 business days only arises if the request was sent via certified mail, return receipt requested.

Inspection Costs (HOA):

If the association does not have a copy machine at the record site, or the owner requests more than 25 pages of records, copies may be made by an outside vendor or management company personnel - in that case the association may charge for the actual costs of the copies and hourly charges for vendor or employee time to cover the administrative costs to the vendor or the association.

You may need to change your association's record retention and/or inspection policies in light of these changes.

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 Concern for Florida's Consumers Important in Decision to Veto SB 2044 (Property Insurance) and SB 1964 (Design Professional Liability).

Governor Crist vetoed SB 2044, despite support from the Florida Insurance Commissioner and other industry representatives.  The Governor expressed his concerns that increases in insurance premiums and changes to mitigation discounts would be especially hard on Florida's consumers during "these very difficult economic times".

Consumer protection was likewise a major factor with respect to the veto of SB 1964.  Governor Crist agreed with critics of the bill who argued design professionals are not entitled to avoid liability, effectively "removing a consumer's right to bring a tort action against them for economic damages caused by their negligence".  Shifting the burden of economic loss to consumers without sufficient alternative remedies was not acceptable to the Governor.

On the other hand, HB 965, relating to real property assessments, received the Governor's approval.  Owners of properties affected by Chinese drywall may be entitled to a downward adjustment of the assessed value of the property for tax purposes.   Contact your local Property Appraiser to request re-valuation - you may be entitled to a significant discount.

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SB 1196 contains significant changes for community associations.  

Governor Crist had until June 1, 2010 to act on SB 1196.  While I have included bullet point explanations of some of the changes, over the next few weeks please check for more in depth information about how these new provisions will impact your association's operations.

Community associations across the state are breathing a sigh of relief - many of them will not be required to retrofit the buildings with fire sprinklers or install fire alarms, both expensive propositions in light of the record number of foreclosures and budget shortfalls.  In most cases elevator upgrades can be put off for five (5) years - hopefully the residential market will gain stability in that time, making the costs associated with the elevator improvements easier to fund.

Attention:  If you are a non-paying, non-resident unit owner and lease your unit, the association may demand future payments of rent from the tenant to satisfy your financial obligations, without filing a lawsuit first. 

Legislators all over the state heard complaints about the repair, upkeep and staffing requirements associated with recreational facilities.  Paying unit owners were demonstrably upset (justifiably so) that non-paying owners could enjoy the use of the recreational facilities, in some cases precluding paying owners from use due to over-crowding.  Under this new law, associations can suspend the use of recreational facilities if assessments are more than ninety (90) days past due.  Of course, associations cannot suspend any utility services, parking spaces or means of access to the unit.  The effectiveness of suspending use rights remains to be seen, but the provision itself should make owners think twice before defaulting.

This bill also includes the "Distressed Condominium Relief Act".  While the act doesn't protect buyers that acquire title after July 1, 2012, it will impact condominium associations for a number of years with respect to warranty, construction, accounting claims and the like.

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On Wednesday, May 26th, Governor Crist signed two (2) bills of interest to community association leaders and managers into law. 

HB 713 relates to the Department of Business and Professional Regulation.  It authorizes distance learning courses to satisfy continuing education requirements for various professionals, including CAMs.  There are several programs already offered online as part of CAMP (Community Association Managers Program, not to be confused with the manager association of Community Association Management Professionals).

This bill also creates both home inspection and mold related services licensing programs.

HB 1035 relates to elevator safety.  It allows for variances from certain codes as a result of undue hardship, so long as there is a finding that the variance will not adversely affect public safety.  It also includes the phase-in period for compliance with the Phase II Firefighter's Service requirements if the certificate of occupancy was issued on or before July 1, 2008.  The building owner/operator is given a five (5) year grace period to upgrade the elevators solely for this purpose.  If the elevator is replaced or requires major modification before that time, the Phase II Firefighter's Service improvements must be completed at the same time.

HB 1035 describes penalties for unlicensed elevator work.  Citations may be issued to the building owner or operator, in addition to the person performing the work.  Penalties may amount to $1,000 per day of a continuing violation.  

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What impact will bulk buyers and/or bulk assignees have on your condominium?

SB 1196 creates new Sections 718.701 through 718.708 entitled the "Distressed Condominium Relief Act".   The intent of these provisions is to encourage investors to buy unsold developer inventory, with the goal of stabilizing the condominium market.  It also protects lenders from assuming the responsibilities of the developer when they take title to the units in connection with developer defaults.  If this provision becomes law (the bill has been presented to the Governor) it will only apply to purchases (or other acquisition of title) that take place before the law 'sunsets' on July 1, 2012.  A bulk purchase before the effective date of the statute will not protect any buyer considered an "insider" pursuant to §726.102(7), Florida Statutes or anyone with the intent to "hinder, delay or defraud any purchaser, unit owner, or the association".

What is a bulk assignee?  Basically any person or entity that acquires more than seven (7) units in a condominium where there is an assignment of rights from the original developer.

What is a bulk buyer?  Any person or entity that acquires more than seven (7) units but does not receive an assignment of rights other than:

• the right to conduct sales, leasing and marketing activities on property;
• the right to be exempt from the working capital contribution; and
• the right to be exempt from the association's rights of first refusal (transfer approval procedure).

The bulk buyer, however, must comply with the association's transfer approval procedures with respect to the units acquired in the bulk purchase.  

Bulk assignee's are not saddled with warranties covering work performed under the direction of the original developer and do not need to fund the unfunded portion of the previous developer assessment guarantee.  They are, however, required to supply the post transition association with an audit for the period of their control and warrant their own work.   

Floridians are sadly getting used to dark, empty buildings.  Hopefully these provisions will accomplish the desires objectives.

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A number of bills CALL tracked this session were sent to Governor Crist recently.  He has until June 1, 2010 to act (veto or sign) on the following bills:

• SB 1196, Relating to Community Associations
• HB 663, Relating to Building Safety
• HB 713, Relating to Department of Business and Professional Regulation
• HB 1035, Relating to Elevator Safety
• HB 1411, Relating to Timeshare Foreclosures

We've included bullet point summaries of SB 1196 on this blog, but refer you to the actual text of the bill for more complete information.  Community Update will outline the impact of important bills on community associations - Becker & Poliakoff''s association clients will receive the electronic version shortly.

The Governor's office is in the process of reviewing SB 1964.  We've included concerns about this bill before in Condos/HOAs Have a Lot to Lose if Design Professional Protection Bills Become Law.  In 1999, the Florida Supreme Court codified a long standing principle that design professionals should be held accountable for economic loss damages that they cause just like other professionals in Florida. Board certified construction law attorney Steve Lesser said the following:

[Design professionals] have an obligation to design to meet code and protect the health, life & safety concerns of consumers.  An error in design judgment can be devastating to a unit owner and homeowners that cause damages and in fact- economic damages.  An elevator that fails to operate at the appropriate speeds and breaks down results in loss of use which is an economic loss.  Imagine how this could impact elderly unit owners.  A parking garage that is not properly shored up based on engineering calculations can result in economic loss.  These consumers are largely lay persons that often sign agreements (presented by the professional) that contain limitation of liability clauses. 
 

Please contact the Governor's office to express your support or opposition to 2010 legislation.  Make your voices heard in Tallahassee. 

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Large Insurance Bill Addresses Fees & Advertising by Public Adjusters, Deadlines for Filing Windstorm/Hurricane Related Claims, Policy Terms and Payouts by Carriers. 

 CS for CS for SB 2044 is a rather large bill addressing many aspects of insurance.  It limits payments to public adjusters for supplemental or reopened claims to 20% of additional insurance proceeds obtained and prohibits public adjusters from charging more than 10% of proceeds paid by a carrier if the claim involves losses from events that are subject to a declaration of a state of emergency by the Governor.  While the bill goes on to regulate advertising or solicitation by public adjusters and the form of contract between the public adjuster and the insured, more attention is being paid to three new provisions that, if they become law, impact property owner obligations, the carrier's ability to change the terms of the contract upon renewal and payment of claims.

These portions of the bill pertain to residential (personal lines) coverage.  Policies issued to multi-family property owners/managers (the Association) are generally (if not always) classified as commercial policies.

One part of the bill purportedly bars homeowners from filing claims.  It says that the insured must provide notice of any claim (including supplemental or reopened claims) based on a windstorm or hurricane loss to the carrier within three (3) years of the date of the storm.  While it doesn't change the applicable statute of limitations for civil actions, in some cases homeowners do not have a full understanding of all the damages caused by the windstorm/hurricane until after demolition and reconstruction begins.  Thus, the three (3) year time frame may result in loss of insurance proceeds, depending upon whether the homeowner has the ability to attend to reconstruction after the storm.

Another section of the bill allows the insurance carrier to change the terms of the policy upon renewal by use of a notice entitled "Notice of Change in Policy Terms".  Payment of the renewal premium constitutes acceptance of the new terms.

Most importantly, the bill removes the prompt payment requirements on the part of carriers.  It only requires the carrier to pay "actual cash value" minus the deductible, regardless of whether the homeowner paid for replacement cost coverage.  The carrier then only pays additional amounts once a contract for reconstruction is in place and the costs are incurred (as the work progresses).  Critics argue that this provision disproportionately impacts lower income families that do not have funds available to pay for reconstruction (along with all the non-insured items) and/or replacement of personal property without insurance proceeds.

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"Florida-Friendly" Landscaping Found to Conserve Water and Prevent Pollution.  HOAs and Large Property Owners Also Realize Significant Savings.

I reviewed the annual budget for a large HOA master association recently and was surprised that maintenance of the grounds accounted for more than 40% of the association's annual expenses.  The budget included line items for various grounds maintenance such as:

The Manager explained that irrigation repair was a constant source of expense.  There is a school in the community and the pick-up waiting area formed over the association's landscape.  Pumps required constant maintenance and repair and the association uses a vendor to detect leaks or weaknesses in the system   Pest control became an enormous expense, due to white-fly and other insects.  It also became more expensive to thwart algae and plant growth in the lakes/ponds (which supply water for irrigation) due to all the nutrients from the fertilizer used to keep the lawn/turf areas green and lush.  All-in-all these costs amount to over $500,000 annually.

Wow - that is a lot of money.

The University of Florida reports that Ocean Gallery, a 42 acre community comprised of 439 condominiums saved $65,000 its first year after employing Florida-Friendly landscaping practices.

 The Ocean Hammock Community won awards. both within Florida and nationally.  In 2009, Ocean Hammock won an Award of Excellence for its landscape maintenance by the Florida, Nursery Growers and Landscape Association and it also won the Professional Landcare Network Environmental Improvement Grand Award. For a full case study of improvements and savings, click HERE.

Florida-Friendly landscaping is defined in the Statutes.  Section 373.185, Florida Statutes says, in part:

"Florida-friendly landscaping" means quality landscapes that conserve water, protect the environment, are adaptable to local conditions, and are drought tolerant. The principles of such landscaping include planting the right plant in the right place, efficient watering, appropriate fertilization, mulching, attraction of wildlife, responsible management of yard pests, recycling yard waste, reduction of stormwater runoff, and waterfront protection. Additional components include practices such as landscape planning and design, soil analysis, the appropriate use of solid waste compost, minimizing the use of irrigation, and proper maintenance.
 

Check back to this site for more resources and examples of significant savings gleaned from innovative thinking and planning.

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Take a well deserved bow. You did it! Today the Florida House of Representatives overwhelming passed CS/CS/CS/SB 1196 (passed on 4/16/2010 by the Florida Senate) sending it to Governor Crist for his signature. Please take a moment to contact the Governor (http://www.flgov.com/contact_governor) and urge him to sign the bill right away. This is very important given his veto of similar last year.

This bill is of SIGNIFICANT POSITIVE IMPACT to community associations. It addresses everything from mortgagee liability (foreclosure crisis) to elevators, to sprinklers, to renters, etc. CALL has sent out earlier alerts containing details and be on the lookout for another summary to be released via the CALL website soon. Please contact your Legislators (both Representative and Senator) and thank them for their support.  From your CALL team on the ground at the Capitol…..THANK YOU!

All your emails, calls, visits and involvement were invaluable. We are only as good as the rest of our team…YOU! Thanks for once again proving you are THE voice for good community association public policy. Attention has been paid.

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The Regular Session ends April 30th.  We've previously highlighted changes in SB 1196 and HB 561 that would impact Condos & Co-Ops, here is some information for HOA leaders and managers: 

Records Access:   §720.303(5)

• Owner entitled to presumption that Association willfully denied record access after 10 business days if owner submits request via certified mail, return receipt requested.  Doesn't address what happens if no one picks up the certified letter.
• Association may charge "reasonable costs" in addition to photocopy fees to reimburse it or a vendor for the lost employee time associated with duplicating the records.
• Personnel records for the association's employees will not be subject to inspection (including disciplinary, payroll, health, insurance).
• Personal identifying data of members (ss #, credit card #, emergency contact info, etc.) will not be subject to inspection, although the address used for association mailings is still part of the roster list and subject to inspection.
• Passwords used to safeguard data and software and/or operating systems will not be subject to inspection.

Budgets & Reserves:  §720.303(6)

• Disclosure in financial report must notify owners of vote necessary to mandate reserves.
• If budget does include 'voluntary reserves', financial report must disclose that the funds may be used for non-reserve purposes and not calculated by statutory method.
• 'Statutory' reserves are reserve accounts established by the developer or created by membership vote.

Director Compensation:  §720.303(12)

Salary or compensation is generally prohibited for performing services as director, officer or committee member unless:

• the financial benefit of a lawful board action will benefit all or a significant number of members;
• the payment is reimbursement for out-of-pocket expenses (each association should adopt procedures or protocols for expense reimbursement, limits and types of expenditures that will be reimbursed);
• the payment is for recovery of insurance proceeds;
• the salary or compensation is authorized by the governing documents;
• the fee, salary or compensation is authorized by membership vote in advance; and/or
• a developer appointee may benefit financially from service to the association.

Fines/Suspensions of Use Rights:  §720.305

• Fines & Suspensions authorized if the member is delinquent for more than 90 days;
• Fines less than $1,000 cannot become a lien (doesn't specifically say that liens are permitted for fines exceeding $1,000);
• Suspensions cannot apply to utility services or property used to access the parcel;
• Written notice to the person fined or suspended is required.

Voting for Directors by Secret Ballot:  §720.306(8)

Adopts 'condo-like' double envelope procedure.

Collecting Rent from Tenants:  §720.3085(8)

Association may demand rent directly from tenant if owner is delinquent.

Acquisition of Recreational Leaseholds or Other Property/Property Use Rights:  §720.31(6)

Similar to §718.114 (condo act).  Allows association to enter agreements to acquire leaseholds, memberships or other possessory or use rights in lands and facilities.  Must be fully described in the declaration or if the action is not taken within 12 months of recording, the declaration must authorize said action as a material alteration/substantial improvement or at least 75% of the members must vote in favor of the action.

Special Assessments by Developer (before turnover):  §720.315

Pre-transition, developer controlled association may not levy special assessments without the approval of a majority vote of non-developer interests.  Vote must take place at duly-called meeting at which a quorum has been attained.

These are just brief bullet points, please refer to the actual legislation for more detail.  Committee amendments are still being filed and considered.

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Although there are many positive developments for Associations in this legislative session, noted below, there is at least one piece of legislation that will adversely impact associations, and all consumers.

Architects, engineers, surveyors and other design professionals may be anxiously awaiting  Senate Bill 1964 and House Bill 701  to pass.

If these provisions become law it will limit liability for design professionals, as of July 1, by:

• cutting off liability, in tort, of design professionals that fail to properly carry out their professional duties.

• overruling Florida Supreme court cases and Appellate decisions from all over the state which protected consumers and the general public with necessary redress in tort for economic damages cause by design professionals.

• permitting design professionals to escape liability for their own negligent conduct, if insurance exists, and

• elevating design professionals above other professionals, such as lawyers, doctors, and accountants, who cannot limit their liability by contract.

Associations are constantly fixing their roofs, roads, performing balcony concrete restoration, seawalls, fire alarm electrical engineering renovation, elevator modernization and structural repairs. All of these renovations are designed by engineers, architects etc, and are required to meet building codes including life safety codes. Associations hire design professionals to issue drawings and specifications to accomplish these goals.   Design professionals are also retained to monitor construction activities and approve applications for payment on these projects. Shouldn't they bear responsibility for damages that result from mistakes, omissions, lack of attention to detail or otherwise?

An error in design judgment can be devastating to unit owners and homeowners. Improperly designed elevator repairs, concrete repairs, shoring of buildings, electrical renovations, fire protection system renovations or repairs all could result in economic loss to Associations and ultimately unit owners and homeowners.

Should design professionals be allowed to practice without accountability for their negligent acts at the expense of Florida’s consumers? It is simply unfair.

Florida’s consumers should call their representatives immediately to prevent these bills from becoming law.

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There are only a few short weeks left for Florida's elected officials to pass meaningful legislation and at this point in the session it seems that the HB 561/SB 1196 Bill Package is the most likely to pass. These bills are in a constant state of flux and the information below only highlights major points in the bills (as of April 15, 2010). We encourage you to review the full text of the bills by accessing the Senate’s website here for HB 561 and here for SB 1196 and likewise encourage CALL members to contact the appropriate legislators by using the Legislator Connect feature on its website (www.callbp.com).  Here are a few highlights from the bills:

Fire Alarm Systems: - Amending s. 633.0215, F.S. 

Buildings less than four stories with exterior means of egress and exterior corridors will not have to install a manual fire alarm system (per Section 9.6, Life Safety Code in the Florida Fire Prevention Code).

Fire Sprinkler Retrofit - Amending s. 718.112 and s. 719.1055(5), F.S

Full “opt-out” will be permitted with affirmative vote of two-thirds (2/3rds) of the entire membership. Will only permit reconsideration of opt-out vote once every three years at a special meeting called by a petition of 10% of the voting interests.

Extends deadlines for associations that don’t opt out to the end of 2019.

Elevators – Amending s. 553.509(2)  and 399.02, F.S., (Phase II Firefighters’ Service)

Allows for a five (5) year delay to retrofit with a special access key for elevators in condominiums and cooperatives unless the elevator is replaced or requires major modification.  Allows associations to "opt-out" of elevator operation by alternative power source with affirmative vote of majority of owners of condominium.

Designation of Limited Common Elements by Amendment - Creates s. 718.110(14), F.S. - only in SB 1196

Allows association to designate limited common elements by amendment, so long as the building component is designed for use by specific owners.

Official Records – s. 718.111(12), F.S.

• Individual director liability for failure to maintain or destruction of official records is limited to cases where there is intent to harm the association or one or more of its members.
• Association not liable for unit owner misuse of information obtained from official records.
• Exempts personnel records (disciplinary, payroll, health and insurance records) from unit owner access.
• E-mail addresses, telephone numbers, emergency contact information, and any unit owner contact information other than the addresses to send notices are exempt from unit owner access.
• Association’s electronic or computer security data, including passwords, software and operating systems are exempt from unit owner access.

Common Expenses - Amending s. 718.115(1)(d)1., F.S.

Communication services (as defined in Chapter 202), information services, and internet services obtained pursuant to a bulk contract shall be deemed a common expense. (In HB 561 contracts entered into for these services by the developer or prior to transition may be canceled within 120 days of the transition meeting.)

HB 561 also creates new §718.112(3), F.S. that allows the bylaws of umbrella organizations governing a minimum of 1000 units to employ a marketing firm for the community as a common expense.

Board Eligibility – Amending s. 718.112(2)(d), F.S.

Co-owners in condominiums with more than 10 units cannot serve together unless they own more than one unit or there are not enough volunteers to fill all slots. Does not apply to timeshare condominiums.

Requires directors to supply association with new certification form or take a state-approved education class. Directors are suspended until they comply.

Collections and Foreclosures – Amending s. 718.116 and s. 719.109(3), F.S

Changes mortgagee liability cap from 6 months to 12 months after acquisition of title by foreclosure (or deed in lieu) but retains 1% cap.

Association may demand a tenant pay rent to the association to satisfy delinquency for that condominium unit with written notice to the unit owner. Landlord/owner must provide tenant with credit for any amounts paid to association. Association can evict tenant that fails to comply.

Enforcement Mechanism – Amending s. 718.303, F.S.

• Allows suspension of use rights if owner is more than 90 days past due. Cannot suspend use of limited common elements, utility service, parking spaces, elevators or impede access to/from unit.
• Requires board to vote on suspension/fine at duly noticed board meeting and advance notification to the unit owner.
• Allows association to suspend voting rights after 90 days of non-payment.

Filling Vacancies on Board – Creating s. 719.106 (1) 6, F.S.

Vacancies are filled for remainder of the term by vote of majority of remaining directors, even if less than a quorum or only one director. In the alternative, the Board may hold an election to fill the vacancy.

There are many more provisions - click below for additional content and come back to this site for information on changes to the Homeowners' Association Act (Chapter 720, Florida Statutes) and updates directly from Tallahassee.

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This week marks the final three weeks of the 2010 Legislative Session. The Regular Session is scheduled to end “Sine Die” on Friday, April 30. This, folks, is when things get…how shall…I say it….uh, interesting.

Every Session about 3000 bills are filed and about 10 percent, or 300 bills are actually passed by the Legislature. Therefore, as Committee meetings shut down and bills are no longer being heard, Sponsors start looking for moving bills (or vehicles) which are heading to each Chambers’ Floor to amend their bill language onto. This is a two-edged sword. Nothing is ever really dead until that final gavel raps the Session’s end. So if you are a proponent of certain language you are trying to pass you can attempt to load it onto a germane bill but so can those trying to pass language you are opposed to. The CALL team is pouring over the many, many Floor amendments which are being filed to make certain the Legislature passes those things which are helpful to community association residents and the volunteers who serve their communities and doesn’t pass language deemed harmful.

The most important Community Association package CALL is diligently working with the Legislature and Governor on is SB 1196 and its companion bill, HB 561. Both bills have successfully passed several Committees and are still on track to head to each Chambers’ Floor in a timely manner. As is the manner of the “give and take” legislative process, the bills have changed since their initial introduction. The latest version can be found at  http://www.flsenate.gov/data/session/2010/Senate/bills/billtext/pdf/s1196c3.pdf and we urge you to visit the link and review the 102 pages in the coming days and provide your feedback. Language addressing mortgagee liability was added in the last Committee. As of this version, it increases the liability cap from 6 months to 12 months. Given the VIGOROUS opposition of the lending industry, this is a significant move in the right direction but CALL isn’t through pushing for even more fair and appropriate reforms. For example, removing the “or 1 percent of the mortgage debt, whichever is less” language found in current law, requiring lenders to pay for  necessary repair assessments, etc. The language pertaining to the fire sprinkler retrofit opt out appears to be acceptable to the Governor’s office. There is helpful language pertaining to elevators, fire alarms, etc. which are all helpful to association residents who have been called upon in recent years to bear higher retrofitting costs.

Please stay engaged as we make the final push. This is the most imperative, “volatile”, sensitive time. Don’t assume anything and don’t walk away from the process now. We aren’t.

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On March 2, 2010, Congress passed and the President signed H.R. 4691, which extended the National Flood Insurance Program (NFIP) through March 28, 2010.  Homeowners (including community associations) who have current flood insurance policies still have coverage; but NFIP cannot issue new policies, increase coverage on existing policies or issue renewal policies.  Since the extension expired, please refer to the NFIP guide titled “Recommendations/Guidance for Possible NFIP Authority Lapse and Hiatus”.  FEMA has advised that "any hiatus period should be brief and most of the nearly 5.6 million flood insurance policyholders nationwide will not be affected".

Congress is scheduled to reconsider H.R. 4851 entitled the "Continuing Extension Act of 2010", which extends several governmental programs, on April 12, 2010. Once Congress authorizes the NFIP program again, it’s expected to make it retroactive.  However, the hiatus may slow down or delay closings that were scheduled to take place in early April.

Since flooding can often lead to mold if not addressed immediately, the U.S. Environmental Protection Agency publishes helpful information including mold clean-up guidelines. 

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Representative Bogdanoff Explains Amendments in CS/CS/HB 561 at Becker & Poliakoff's Leadership Seminar.  Representative Sachs announces she will "continue to fight for fairness in foreclosures". 

Over 450 volunteer board members, professional community association managers and industry representatives listened intently to Representative Bogdanoff on Saturday at the Kravis Center during the Becker & Poliakoff Leadership Seminar.  They were pleased to hear that CS/CS/HB 561 includes provisions that would:

• delay enforcement of code mandated elevator improvements (specifically ASME 17.1 and 17.3) in condominiums or cooperatives where the Certificate of Occupancy was issued on or prior to July 1, 2008, for five (5) years or until the elevator is replaced or requires major modification (whichever happens first);
• eliminate any requirement for condominiums or cooperatives that are less than four (4) stories and has exterior corridors to install a manual fire alarm as required by §9.6 of the Life Safety Code (as adopted by the Florida Fire Prevention Code);
• clarify that in a condominium association with more than 10 units, co-owners of a unit cannot serve on the board together unless they own more than one unit and are not co-occupants of a unit;
• require board members to certify (in writing) that they have read the laws and governing documents, will work to uphold the documents and policies and faithfully discharge their fiduciary responsibilities (or submit a certificate of satisfactory completion of approved educational curriculum), failing which they are automatically disqualified from service;
• allow high-rise condominium and cooperative associations to vote to completely avoid any obligation to retrofit the buildings with a fire sprinkler system or engineered life safety system and extend the deadline for others to 2019; and
• authorize bulk contracts for communication services, information services or internet services.

Stay tuned for more legislative updates direct from Tallahassee as these (and other) changes are likely to substantially impact community association operations.

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This week marks the second week of the legislative session and things are getting downright hot inside the capitol as it relates to community association bills. While only mid-week, I have been involved with numerous meetings regarding SB 1196 and HB 561, the ca package getting the most attention by the Legislature. I have met with the sponsors…Sen. Fasano, Sen. Ring, Rep. Bogdanoff, Rep. Hudson…with interest groups ranging from bankers, managers, CPA’s, insurance agents, with committee staff, etc. Progress is being made on several fronts and as language is negotiated which provide workable solutions to real challenges, we will get that out via the CALL website (www.CALLbp.com) for your review and input.

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OPPAGA Report Finds that Insureds Received Larger Insurance Settlements when Public Adjuster Involved in Claim.  Florida Legislature Considers Additional Regulations Governing Solicitation by Public Adjusters. 

 The number of public adjusters in Florida increased by more than 300% over the last six (6) years - no doubt as a direct result of the catastrophic damages caused by hurricanes in 2004 and 2005.  As the deadline to file Hurricane Wilma claims becomes closer and closer, more homeowners, association leaders and building managers are being solicited to re-open old claims.  In the aftermath of Hurricane Wilma many distraught association leaders readily 'signed on the dotted line' after being told 'not to worry' about the association's insurance claim or repairs to the property. 

Did the use of a public adjuster make a difference?  The report issued by the Office of Program Policy Analysis & Government Accountability (OPPAGA) finds that claims took longer but payouts were higher when a public adjuster represented the insured.  In fact, Citizens Property Insurance Corporation paid insureds represented by public adjusters at least five time (5x) more than it paid insureds handling claims by themselves.

While Section 626.8795, Florida Statutes specifically prohibits the public adjuster from having anything to do with the repair or reconstruction of the damaged property, contractors and public adjusters often seemed interchangeable to association leaders.  The Department of Financial Services recently stepped-up enforcement efforts against contractors - including United Roofing Systems.    Moreover, solicitations became so intrusive that the Florida laws were amended in both 2008 and 2009 to impose restrictions:

• limiting hours of solicitation (in person or by telephone) from Monday through Saturday between 8:00 a.m. and 8:00 p.m.;
• prohibiting contact with policyholders until at least 48 hours after an event; and
• limiting fees to 10% of the claims related to declared emergencies and 20% for all other new claims.

 SB 2264, filed by Senator Bennett seeks to control solicitation by public adjusters even more and according to the Sun-Sentinel, industry groups are all for it, claiming that public adjusters lead to higher premiums.  Among other things the bill seeks to:

• prohibit solicitation in person or by phone (unless the insured is someone they know or a family member);
• require written communications to include the word 'ADVERTISEMENT' in red ink and be sent via regular mail (not certified or registered);
• prohibit mailers until 30 days after the insurable event takes place; and importantly
• cap fees at the 10%/20% limits for re-opened claims.

Contracts between insureds and public adjusters often result in disputes leading to expensive and protracted litigation.  It is therefore extremely important to consult with counsel before entering into any contract with a public adjuster or contractor after a casualty occurs.  For more information on disaster planning and recovery, please go to www.hurricane-recovery.com.

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Naples City Council Urged by CALL to Adopt Resolution in Support of HB 561 and SB 1222 to Extend Deadline for Compliance with Costly Fire Sprinkler Retrofit Requirements.  Collier County Commissioners Expected to Consider Resolution at Upcoming Meeting.

Representatives from the State Fire Marshal's Office presented information to City Council members and interested citizens regarding the improvements required for high-rise buildings (including condominiums and cooperatives) to comply with the Florida Fire Prevention Code.  A recent report of the Florida Department of Business and Professional Regulation pegged estimated compliance costs at up to $8,600 per unit. This, at a the time of an historic decline in property values and unprecedented association assessment delinquencies, all while the efficacy of the requirement has yet to be shown.

While Florida Statutes, Section 718.112(2)(l) provides that an Association may vote to opt out of the requirements to retrofit the units of a high-rise residential condominium, currently there is no way to avoid a partial retrofit of interior common areas in a high rise building (a building greater than 75 feet in height).   WZVN (Channel 7) reported about the "angry condo association presidents" and county leaders that hoped to extend the deadline or even change the law completely. 
 

On another note - we are proud to be nominated as a Best Blog in the Sun-Sentinel's Best of Blog Awards.  The voting process is already underway - click HERE to vote for Florida Condo & HOA Law Blog in the Business and Technology Category! 

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Amendments to the Florida Rules of Civil Procedure Largely Derived From Recommendations of the Task Force on Residential Mortgage Foreclosure Cases.

Some of the changes are as follows:

Verification of Mortgage Foreclosure Complaints:  This requires the Plaintiff (lender) to attest to the truthfulness of the allegations in the complaint.  It is intended to minimize erroneous filings, conserve judicial resources by reducing the number of cases with "lost note" issues and provide the court with greater authority to sanction lenders that make false allegations.

Changes the Affidavit of Diligent Search:  When the defendants cannot be served personally, the law allows the foreclosure case to proceed after publication of a notice.  This new form requires the person that conducted the search to sign the Affidavit (instead of the lender) and to provide more information about the search.

New Form - Motion to Cancel and Reschedule Foreclosure Sale:  Associations wait and wait for a lender to foreclose and then wait for the sale to bill the new owner (whether lender or third party) for the appropriate amount.  More importantly, Associations need the property to be sold to start collecting assessments from the new owner going forward.  The number of sales canceled at the last minute seems to be on the rise.  This new form requires the lender to explain why they want to cancel the sale.  It also directs the Court to set a new sale date, rather than keeping properties in an "extended limbo between final judgment and sale". [Quote from Task Force]

There are some slight changes to the Final Judgment of Foreclosure that weren't published before so interested persons have sixty (60) days to comment before they become final.  All of the other changes are final and in effect.

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First, a quick note of introduction. As stated above, my name is Travis Moore and for the last number of years I have had the privilege of advocating for the interests of CALL members before Florida's policy makers. This includes the Governor's Office and Executive Branch Agencies such as the Department of Business and Regulation which is charged with condominium oversight and the state Legislature. While decisions are being made in Tallahassee and around the state, it is vitally important the voice of each CALL member is heard by those holding sway over the deliberations. I am pleased to be a part of your team by pointing your megaphone in the most effective direction and being your eyes and ears as the debate affecting our community takes place.

Probably THE hot button issue facing community associations in Florida is mortgage foreclosures and the statutory limit of lender liability for assessments. The association is left maintaining the asset  - the burden on the backs of the units not in foreclosure, but many sliding that way. This added burden is just buttering the slope.

Up until recently, the lending lobby has offered no workable solutions. Now, they are circulating draft legislation creating a non-judicial foreclosure process. To date, no bill has been filed but we suspect it will and CALL will quickly analyze it and get it circulated for your input. Already, we are reviewing the draft so be looking for a CALL Alert soon.

As in any proposal to address this true crisis for associations, there are certain criteria which we will insist on. Obviously it must address the associations' ability to have owners and lenders meet their financial obligations to the association. What is rightfully owed to the association for maintaining the real estate must be paid.  It must be paid as quickly as possible. One of the main issues currently being faced by associations is the length of time it is taking for the property to be foreclosed, while the hard cap of 6 months (COA) and 12 months (HOA) is keeping the lenders' liability unreasonably low. 

It is imperative that any foreclosure process, including a non-judicial one, not put the entire process and timetable under the control of the lender.  The lenders have the most to gain by delay...a cap and avoidance of paying full assessments upon taking title...while leaving associations even further at their "mercy."

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A couple of CA bills of interest were heard by the House Civil Justice & Courts Policy Committee on Tuesday (February 4, 2010) morning. HB 329 by Rep. Robaina was debated and it was decided by the Committee to hold off on taking a vote due to some concerns with the provisions pertaining to the ability of associations to go after payment of assessments from renters when unit owner landlords aren’t paying.

HB 561, a omnibus CA bill which CALL is working on very closely with sponsors Bogdanoff and Hudson, was passed by the committee after adopting several amendments pertaining to the contentious sprinkler retrofit issue. It would move the date of compliance to 2019 from 2014 and say that if an association has voted to forego retrofitting that 10 percent of owners could petition to have a special meeting “re-vote” once every 3 years. CALL will continue to monitor this issue to make certain a workable solution is found which doesn’t jeopardize the bill.

There was also a discussion on the Florida Supreme Court’s administrative order re the mandatory mediation process for residential mortgage foreclosure cases. David Muller of CALL was asked by the Committee to testify and was able to provide helpful information on the foreclosure crisis many associations are facing and how this mediation process must not cause further delay and cost. This issue remains a top priority of CALL. We need you to let your Legislators know how your association is being impacted and ask for action.

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2010 looks like it will be another active year in the foreclosure reform area. According to Yeline Goin, Co-Executive Director of Becker & Poliakoff’s Community Association Leadership Lobby (CALL) “there are already several Bills in play which we expect to generate a lot of discussion in Tallahassee this year.”   Some of them include the following:
 

House Bill 115: This proposal states that during the pendency of a foreclosure action, if the unit is occupied by a tenant, the association may demand that the tenants pay rent directly to the association, with a right of eviction for non-compliance. This Bill would also permit the condominium association to suspend certain common element use rights for nonpayment, although utility services could not be suspended. Voting rights could also be suspended for delinquencies. Similar amendments are proposed in this Bill for Chapter 720, the Florida Homeowners Association Act.

Senate Bill 164: This proposal requires any mortgagee which has not completed its foreclosure within six months from filing its foreclosure lawsuit to pay the “statutory cap” (six months of past due assessments or one percent of the original mortgage debt, whichever is less) during the pendency of the lawsuit. This proposal would apply to condominiums only.

House Bill 329: This proposal would also allow the collection of rents directly from tenants, and permit suspension of certain common element use rights and voting rights. Significantly, this Bill also deletes the statutory cap and would require a foreclosing lender to pay all unpaid assessments if the foreclosure action is not completed within a year.

House Bill 337/Senate Bill 968: This Bill states that if an owner is delinquent in the payment of assessments, they can be restricted from running for office, holding office, serving on committees, leasing units, or using the common areas.

House Bill 419/Senate Bill 864: This Bill is similar to a couple of others already discussed regarding the right to demand payment of rents directly from tenants. This proposal also states that an association’s claim of lien can include the cost of collection efforts by management companies or licensed managers.

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