New Legislation Affecting Homeowner Associations (House Bill 7119)

On June 14, 2013, the Governor signed into law the proposed legislation identified as House Bill 7119, which primarily makes changes to Chapter 720 of Florida Statutes, for homeowners associations.  The one item of change in the Bill outside of Chapter 720 F.S. is the creation of a new subsection (7) to Section 468.436(2) F.S., relating to licensed community association managers.  The new provision indicates that disciplinary action may be taken against a manager for violations of any provision of Chapter 718, 719 or 720 F.S., while performing community association management services.

Section 720.303(5) F.S. has been revised regarding inspection and copying of records.  The Official Records are now required to be maintained for at least seven (7) years and must be made available to a requesting owner for inspection or photocopying within 45 miles of the community or within the county in which the association is located, within 10 business days after receipt of the written request.  Records may be made available electronically via the internet or on a computer screen and printed upon request.  An inspecting owner must be allowed to use a portable device, including a smartphone, tablet, portable scanner or any other technology capable of scanning or taking photographs to copy the records if the owner so desires, without cost to the owner.

Section 720.303(5)(c) F.S. was revised regarding charges which may be imposed by the association to cover the costs of providing copies to an owner.  The new provision adds to the costs of the copying such costs that are required for personnel to retrieve and copy the records if such time is more than one-half hour, and not more than $20 per hour.  Such charges may not be imposed to provide 25 or less copies.  The copy cost has also been reduced from $.50 per page to $.25 per page.  The association may now only recover the costs of having copies made by an outside duplicating service, if a copy service is used, and may not charge the owner for costs to use association management company personnel in making copies.  An appropriate invoice from the copy service is required to be in hand in order to pass such copy costs along to the owner.

Section 720.303(6) F.S., relative to budgets, has been revised to indicate that if reserves are established by the developer, the budget must designate the components for which the reserve accounts may be used.

A new Section 720.303(13) F.S. has been added, which sets forth a new reporting requirement of homeowners association to the Division of Condominiums, Time Shares and Mobile Homes (the “Division”), within the Department of Business and Professional Regulation (the “DBPR”).  No later than November 22, 2013, a report on a form created by the Division must be filed that indicates the association legal name; association federal employer identification number; mailing and physical addresses of the association; total number of parcels operated and/or managed by the association; and, the total amount of revenues and expenses from the association annual budget.  If the developer remains in control of the association as of the deadline date, certain developer information is also required.  A registration system is also required to be established on the internet by October 1, 2013 by the DBPR.  The Division is also authorized to establish administrative rules regarding this process.  The DBPR is required to prepare an annual report of the data reported to present to the Governor, the President of the Senate and the Speaker of the House by December 1 of each year.  This particular subsection expires on July 1, 2016, unless reenacted by the Legislature.

A new Section 720.3033 F.S. has been added, entitled “Officers and directors” and creates additional limitations and obligations on homeowner association board members and officers.  Among the requirements of this new section is that each board member should certify, in writing, to the secretary of the association, that he or she (a) has read the governing documents for the community; (b) will work to uphold such documents and policies to the best of his or her ability; and, (c) will faithfully discharge his or her fiduciary responsibility to the association members.  Alternatively, within 90 days of being elected or appointed to the board, the director may complete an education course approved by the Division.  In either case, the certification will not need to be repeated each year of continued, uninterrupted service on the board.  If a director fails to meet this requirement, that director is suspended from board and the remaining directors may fill the vacancy during the period of suspension.  The association must retain the certificate for a five (5) year period following the election or appointment of the director.

Subsection (2) provides for procedures that must be followed in order for a homeowner association to enter into a contract or other transaction with any of its directors, or a corporation, firm or association that is not an affiliated homeowners association, or other entity in which an association director is also a director, officer or has a financial interest.  Among such procedures is an opportunity for the membership to vote to cancel such transaction or contract.

Subsection (3) prohibits officers, directors or managers of a homeowner association from soliciting, offering to accept, or accepting any good or service of value for which consideration has not been paid.  If the board learns of such occurrence, it is required to remove such offender from office and fill the vacancy so created.  This limitation expressly does not extend to food to be consumed at a business meeting with a value of less than $25 per individual, or a service or good received in connection with trade fairs or education programs.

Subsection (4) provides that a director or officer charged by information or indictment with a felony theft or embezzlement offense involving funds or property of the association is removed from office and replaced by the board until the end of the suspension period or expiration of the term of office, whichever is first.  If the charges are resolved without a finding of guilt or guilty plea or nolo contendere, the director or officer shall be reinstated for the remainder of the term of office.  Any member who has such criminal charges pending may not be appointed or elected to a position as a director or officer.

Subsection (5) requires associations to maintain insurance or a fidelity bond for all persons who control or disburse association funds.  The insurance or bond must cover the maximum funds that will be in the possession or control of the association at any one time.  Included in this requirement are persons authorized to sign checks, the president, secretary and treasurer of the association.  The cost is a common expense of the association.  The membership may vote each year to waive this requirement by a majority of those present at a properly called meeting.

Section 720.306 (1)(b) F.S. now obligates homeowner associations that record amendments to the governing documents to provide a copy of the amendment to the members within 30 days of the recording.

Section 720.306(9)(a) F.S. has been revised regarding association elections to clarify that if the election process indicated in the governing documents allows candidates to be nominated in advance of the meeting, nominations from the floor at the meeting are not required.  An election is not required unless more candidates are nominated than vacancies exist.

Section 720.307 F.S., regarding transition of control from the developer, has been revised to add new triggering events for members other than the developer to elect a majority of the board.  These triggering events include if: (a) the developer abandons or deserts its responsibility to maintain or complete amenities or infrastructures (a presumption of abandonment exists if the developer has failed to pay assessments for more than two years); (b) the developer files for bankruptcy; if the developer loses title through a foreclosure proceeding, unless the successor owner has accepted an assignment of developer rights and responsibilities; and, (c) a receiver is appointed for the developer.  Subsection (2) provides that members other than the developer are entitled to elect at least  one member of the board if 50% of the parcels in all phases have been conveyed to non-developer owners.

A new Section 720.3075(5) F.S., has been added regarding amendments made to the governing documents by developers without a vote of the other owners, requiring a test of “reasonableness” for such amendments, and prohibiting an amendment that is arbitrary, capricious, or in bad faith; destroys the general plan of development; prejudices the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shifts economic burdens from the developer to the existing nondeveloper members.

Section 720.3085(2)(b) F.S., has been revised to attempt to address the issue of “joint and several liability” of assessment obligations relative to association-owned parcels.  The revision indicates that the term “previous owner” expressly does not include an association that acquires title to a delinquent property through foreclosure or by deed in lieu of foreclosure of unpaid assessments.  It also limits the liability of the new owner of the property to only unpaid assessments that accrued before the association acquired title to the delinquent property.  All sums that came due while the association held the title will not be the obligation of the new owner, nor will any interest, late fees, attorney’s fees and costs that accrued against the property prior to the association taking title.