2017 Legislation Changes Financial Reporting Requirements
Today’s column is the final installment of our annual review of legislation affecting Florida community associations.
In prior columns, we reviewed Senate Bill 398 dealing with “estoppel certificates,” and House Bill 1237 which only applies to condominiums and contains changes to the statute including board member term limits, the use of debit cards, recalls, mandatory websites for certain associations, suspension of voting rights, year-end financial reporting, the imposition of criminal penalties pertaining to certain conduct involving condominium elections and finances, and changes to the “conflict of interest” provisions of the statutes. Both SB 398 and HB 1237 became effective July 1, 2017.
The final piece of legislation we will review is House Bill 6027, which applies to condominium, cooperative, and homeowners’ associations. This law also became effective July 1, 2017.
HB 6027 deletes the year-end financial reporting exemption for associations that operate fewer than 50 units or parcels. Under previous law, these associations were not required to prepare a year-end annual financial report based on revenues, but rather, could prepare a report of cash receipts and expenditures.
Now, all associations must prepare a financial report based on annual revenues, regardless of the number of units or parcels. As a reminder, the following thresholds are contained in the law:
- An association with total annual revenues of $150,000 or more, but less than $300,000, must prepare compiled financial statements.
- An association with total annual revenues of at least $300,000, but less than $500,000, must prepare reviewed financial statements.
- An association with total annual revenues of $500,000 or more shall prepare audited financial statements.
- An association with total annual revenues of less than $150,000 is only required to prepare a report of case receipts and expenditures.
Further, for condominium and cooperative associations, HB 6027 also deleted the limitation on the number of times an association can waive its financial reporting requirements. Previously, condominium and cooperative associations could not waive the statutorily required financial reports for more than three consecutive years. This provision has now been deleted, although there is a bit of a glitch in the statutes since HB 6027 removed the provision, while HB 1237, which also amended these sections, left them intact. It remains to be seen how the official version of the Florida Statutes, which is due to be released in the next couple of months, will address this conflict.
This concludes our review of legislation that was enacted this year. It is also worthwhile to note that one Bill affecting condominiums that the Legislature approved was vetoed by Governor Scott. House Bill 653 contained a number of provisions that affected community associations, many of them similar to the provisions of HB 1237 concerning condominium associations, which we have previously discussed.
HB 653 also addressed the obligation of certain high-rise buildings to retrofit fire sprinklers and/or an “engineered life safety system.” HB 653 allowed high-rise condominium buildings to opt out of the obligation to retrofit an engineered life safety system (usually required when the building has opted out of a full sprinkler retrofit) upon approval of two-thirds of all voting interests. In vetoing HB 653, Governor Scott noted the recent deadly apartment building fire in London, England, and stated his view that life safety concerns outweigh the cost burden placed on some condominium associations.