Although the 2015 Legislative Session was abbreviated when the House abruptly adjourned prior to the scheduled end of the Session, some new legislation affecting community associations was passed and subsequently signed into law by the Governor. Of note is what is referred to as “House Bill 791″, which makes changes to Chapters 617, 718, 719 and 720 of Florida Statutes. Also passed is “House Bill 779″ which provides certain protections for tenants of foreclosed properties. “House Bill 643″ was also passed and makes changes to the Condominium Act relating to termination of condominiums. “House Bill 87″ was passed, making changes to Chapter 558 F.S., involving construction defects. House Bill 779 was made effective immediately upon being signed by the Governor (which has already occurred as of this writing), House Bill 643 was effective June 15, 2015, House Bill 87 is effective October 1, 2015, and all other changes are effective as of July 1, 2015. (Below are highlights of changes that most affect the operations of community associations. References to “718″ are to the Condominium Act; “719″ is to the Cooperative Act; and, “720″ is to Homeowners’ Association Act.)
HOUSE BILL 791 – GENERAL COMMUNITY ASSOCIATION BILL
The most significant of the new legislation affecting community associations is in House Bill 791. In our opinion, the most significant change in this House Bill is a procedure for electronic voting has been adopted and established for condominiums, cooperatives and homeowners associations. New Sections 718.128, 719.129 and 720.317 F.S., have been added to the respective Statutes, entitled “Electronic voting”, which are essentially the same for all three.
Under these new provisions, an association may conduct its election and any other owner votes through an internet-based online voting system. The new Statute requires the prior consent of an owner, in writing, to vote online. Additionally, the association is required to provide (a) a method to authenticate the unit owner’s identity to the online voting system; (b) for elections of the board, a method to transmit an electronic ballot that ensures the secrecy and integrity of each ballot; and, (c) a method to confirm, at least 14 days before the voting deadline that the owner’s electronic device can successfully communicate with the online voting system. Additionally, the online voting system must be able to authenticate the owner’s identity, and the validity of each electronic vote to ensure that the vote is not altered in transit. A receipt for the vote received through the online voting system must be provided to the owner. For elections to the board, the system must be able to permanently separate any authentication or identifying information from the electronic election ballot so that it is impossible to tie an election ballot to a specific owner. The voting system must also be able to store and keep electronic votes accessible for recount, inspection and review purposes.
In order to use this voting procedure, the board of directors must adopt a resolution containing specific requirements, including notices to the unit owners of the option, requirement of their consent and opportunity to opt out. If the resolution is to be considered at a board meeting, written notice of that meeting must be mailed, delivered or electronically transmitted to the owners and posted at the property. If an owner consents to online voting, the consent is valid until the owner opts out.
Section 617.0721 F.S., which applies to all not-for-profit corporations, including community associations, is revised regarding voting by members of the association to allow a copy, facsimile transmission or other reliable reproduction of the original proxy to be used instead of the original proxy. To do so, the copy must be a complete reproduction of the entire proxy.
Section 718.111(11)(j) F.S., regarding insurance, has been amended to clarify that if there is no insurable casualty event that caused the damage, the maintenance provisions of the governing documents will provide for the determination of responsibility for the repairs.
Section 718.111(12)(a)(15) F.S., relative to the “catch-all” provision of what is identified as the Official Records of a condominium association, open to inspection to owners or their authorized representatives, has been modified to add the word “written” regarding such records.
Sections 718.112(2)(d), 719.106(1)(d)(1)(b)(3) and 720.303(2)(c)(1) F.S. have been modified to eliminate the need to have the authority in the bylaws of the association in order to use electronic mail (e-mail) for meeting notices. As a result, all meeting notices, including for board and committee meetings, may be provided by e-mail. However, the requirement that owners provide written consent to receive notices by electronic mail remain.
Section 718.112(2)(f) F.S. regarding the annual budget has been revised to clarify that minimally, the items listed in Section 718.504(21) F.S. must be included in a proposed budget. Subsection 2 has been split into two parts (a and b) to address reserves, with subsection (a) addressing the reserves in general, and subsection (b) addressing reserves before the turnover of control of the association by the developer to the non-developer owners. Subsection (b) further clarifies the ability of the developer to vote its units to waive reserves.
Sections 718.116(3) and 719.108(3) F.S. have been revised to clarify that the application of payments made on a delinquent account are to be applied in the manner specified within the Florida Statutes, notwithstanding any purported “accord and satisfaction” or settlement agreement claimed by the payer by delivery of the payment. This is in response to a recent case in which the court ruled in a manner contrary to the understood intent of the Statute since 1991 (see our Legal Morsel article on this case from August 14, 2014, which you can view online at:
http://www.kbrlegal.com/appellate-court-decision-alters-23-years-collection-practices-condominium-associations/). These provisions also state that they are intended to clarify existing law, which makes the application of the change retroactive.
Section 718.707 F.S., relating to the bulk assignee or bulk purchaser of units, has been amended to extend the period of time for qualification from July 1, 2016 to July 1, 2018.
FINING AND SUSPENSION OF USE AND VOTING RIGHTS
Sections 718.303, 719.303 and 720.305 F.S. have been revised to clarify the proceedings for fining, which involve the board first levying a fine, and then a fining committee holding a hearing to approve or disapprove it. It further clarified that the role of the fining committee is only to confirm or reject the fine proposed by the board. Section 719.303(3)(b) F.S. has been modified regarding the qualifications for those who sit on the fining committee to mirror Section 718.303(3)(b), F.S. and be only “other owners who are neither board members nor persons residing in the board member’s household. Sections 718.303(4) and 720.305(3) F.S. were revised to clarify that the “monetary obligations” that qualify for suspension of use rights include a fee, fine or other monetary obligation. Sections 718.303(5) and 720.305(4) F.S. have been revised to further clarify that when the voting rights of an owner are suspended, the total number of eligible units is reduced for the purpose of calculating the necessary percentage to pass a proposal. A new subsection 718.303(7) and 720.305(6) F.S., have been added to clarify that any authorized suspension provided in the Statute applies not only to the member, but also to the tenants, guests, or invitees, and even if the delinquency or failure that resulted in the suspension arose from less than all of the multiple units owned by a member. This means that if an owner owns 3 units and is delinquent more than 90 days on one of the units, the voting rights on all 3 units may be suspended.
MISCELLANEOUS HOA REVISIONS
Section 720.301 F.S. was amended to include the rules and regulations of the association under the definition of “governing documents”.
Section 720.3015 was created and added to the Statute to provide a title to Chapter 720 F.S. which is the “Homeowners’ Association Act.”
HOA BOARD MEMBER QUALIFICATIONS
Section 720.306(9) F.S. has been amended regarding qualification to serve on the board. The revisions include that a person who is delinquent in the payment of any fee, fine or other monetary obligation to the association on the day that he or she could last nominate himself or herself or be nominated by another to the board may not seek election. That person’s name should not be included on the ballot. It further provides that any serving board member who becomes more than 90 days delinquent in the payment of any fee, fine or other monetary obligation to the association shall be automatically deemed to have abandoned the seat on the board. If the board member owns more than one property, the delinquency on any parcel owned by that board member will disqualify him or her from serving on the board.
HOUSE BILL 779 – TENANT PROTECTION
House Bill 779 adopts changes to Chapter 83 of Florida Statutes, which is the landlord-tenant statute. A new Section 83.561 F.S. has been added, entitled “termination of rental agreement upon foreclosure.” This new Statute creates certain rights and entitlements in tenants following the foreclosure sale. There is no express distinction between a mortgage and association lien foreclosure in this new provision, which creates the presumption that it applies to an association foreclosure as well. The tenant is allowed to remain in possession of the premises for a 30 day period following the date that the purchaser at the foreclosure sale delivers the 30-day notice of termination. The Statute also provides a form of suggested language that the 30-day notice should include. A writ of possession may only be applied for after the expiration of the 30-day period. The new Statute does not apply to specified situations which include the tenant being the mortgagor in the subject foreclosure or is the child, spouse, or parent of the mortgagor in the subject foreclosure. (This particular language can be interpreted to conclude that the Statute only applies to mortgage foreclosures since it does not reference the “former owner”.) It shall also not apply if the tenant’s rental agreement is not the result of an “arm’s length transaction”, meaning that there is a special relationship with the former owner. Additionally, it will not apply if the rental agreement allows the tenant to pay rent that is substantially less than the fair market rent, unless the rent is subsidized by a federal, state or local authority.
HOUSE BILL 643 – TERMINATION OF CONDOMINIUM
Changes are made to Section 718.117 F.S. involving the technical issues involving termination of condominiums, and is effective June 16, 2105. The technical issues are byond the scope of this article and it is urged that any condominium association considering termination of all or part of the condominium consult with an attorney familiar with these issues.
HOUSE BILL 67 – CONSTRUCTION DEFECTS
Technical changes have been made to Chapter 558 F.S. involving construction defect claims, which are also very technical in nature. As noted above, the changes are effective October 1, 2015. It remains recommended for associations to consult with their attorney on the affects of this Chapter of Florida Statutes whenever entering into construction contracts or disputes over construction defects of any kind.