2014 LEGISLATION AFFECTING COMMUNITY ASSOCIATION OPERATIONS
I COMMUNITY ASSOCIATION MANAGER LICENSING BILL- in HB 7037
Effective date: July 1, 2014
Primary Sponsor: Representative Spano
Background: In 1996, the Florida Supreme Court issued an advisory opinion in which it identified certain tasks and activities being performed by managers as the unauthorized practice of law. Recently, a Committee of the Florida Bar requested that the Florida Supreme Court revisit that issue in light of major changes in the law since that time. In response to that Bar request, managers approached the Legislature and asked that it legislatively identify those tasks and activities which it believed could legally be performed by managers. The request resulted in changes to Chapter 468 found in HB 7037.
[NOTE: Following the adoption of the legislative clarification, the Florida Supreme Court asserted its jurisdiction, and is currently considering whether it agrees that the terms and conditions of the new law are appropriate. At this time, the Supreme Court has not yet issued its new opinion.]
Impact of Bill
Regarding tasks which require a community association manager’s license, HB 7037 provides the following:
1. Defines New Management Tasks And Activities which require a CAM license:
Section 468.431 was amended to add the following new tasks and activities to the already existing definition of “community association management:”
a. determining the number of days required for statutory notices;
b. determining amounts due the association;
c. collecting amounts due the association prior to the filing of a civil action;
d. calculating the votes required for a quorum;
e. calculating the votes required to approve a proposition or amendment;
f. completing forms related to the management of a community association that have been created by statute or by a state agency;
g. drafting meeting notices and agendas,
h. calculating and preparing certificates of assessments and estoppel certificates;
i. responding to requests for a certificate of assessment;
j. negotiating monetary or performance terms of a contract subject to approval by an association;
k. drafting pre-arbitration demands;
I. coordinating or performing maintenance for real or personal property and other routine services involved in the operation of a community association; and
m. complying with the association’s governing documents and the requirements of law as necessary to perform any of the foregoing.
2. Statutory Forms
For Condominiums, Cooperatives and Homeowner Associations, there are now forms in the statutes for releases of lien, 30-day pre-lien letters, and 30-day notice of intent to lien letters. Taken with the change to Section 468.431 which provides that use of statutory form letters is within the tasks that requires a CAM License, it now appears that community association managers can prepare these particular letters.
NOTES:
a, The lien and the release of lien are recorded in the County Public Records, and create a cloud on title to real property. What happens if there is a mistake in the amount due, or the legal description etc. on the lien? What happens if the manager mistakenly releases a lien? Monetary liability to manager and/or management company for damages to unit owner?
b. Should a manager take on the liability for preparing any form which affects title to property? Will the manager be protected from a claim if the information on the form is wrong?
Summary: If there is no form in the Statutes, and the action creates a potential cloud on title, don’t create it.
3. Legal Relationship between Managers and Associations
New Section 468.4334 –
a. Licensed managers and management companies are deemed to be agents acting on behalf of community associations.
b. Managers and management companies are required to discharge their duties loyally, skillfully, and diligently; to deal honestly and fairly; and act in
good faith; and with care and full disclosure. They must also account for all funds which are in their control.
c. The new law contains a big change to indemnification language contained in management services contracts with Associations. The contract can
provide for indemnification for ordinary negligence caused by the acts or omissions of the manager or management company, as a result of an instruction or direction of the association board of directors; and under other circumstances, with the following exception: No clause is permitted which will indemnify managers against acts or omissions which violate a criminal law;
actions from which a manager derives improper personal benefits, either directly or indirectly; gross negligence; recklessness; bad faith; maliciousness or; actions which are exercised in a manner which would exhibit wanton and willful disregard of human rights, safety, or property.
II HB 807
Effective date: July 1, 2014
Primary Sponsor: Representative Moraitis
Background: HB 807 is the platform for the bulk of the changes to the various community associations laws.
1. Timeshares vs. Vacation Rentals (Chapter 509, FS) – Sections 1-6 of the Bill. The language differentiates between Timeshares and Vacation Rentals related to DBPR licensure requirements.
2. HOA ONLY: Marketable Record Title Act – Chapter 712 – Section 7 of the Bill. To clarify apparently conflicting provisions, so that the second notice provision in Section 712.06 does not apply to preservation of HOA Governing Documents in 712.05
3. CONDOMINIUMS ONLY: Abandoned Units – 718.111(5) – Section 8 of the Bill.
The Association can enter an abandoned unit to inspect and make repairs to
the unit and/or common elements, address mold or deterioration, turn on the power to the unit. There are specific steps which must be followed to determine that the unit is abandoned – if the unit is in foreclosure, and it has been empty for at least 4 continuous weeks, without prior written notice to the association; or no one has resided in the unit for 2 consecutive months without prior written notice to the association, and the association cannot contact the owner or determine his whereabouts, with reasonable inquiry.
Except in an emergency, before accessing an “abandoned” unit, must give notice by mail or hand-delivery (or electronically if owner consented in writing) and wait two days. Also, the Association can charge all costs incurred back to the unit; and then, can lien and foreclose if the charges are not paid. Once a unit is abandoned, the Association can petition the Court to appoint a Receiver, and then the unit can be rented out and the Association will receive the proceeds. The Association is responsible to pay the Receiver a fee for the service.
4. CONDOMINIUMS ONLY: Insurance – Repair Obligation clarification
718.111(11)(j) – If damage is not covered by the association’s insurance carrier because it is not an insurable event, the obligation to repair or replace the damaged items is determined by reviewing the Governing Documents.
5. Changes to Owner Directories data – Sections 8, 14 and 17 of the Bill
718.111(12)(c)5, 719.104(2)(c)5 and 720.303(5)5 were all amended to clarify that owners in a condominium, cooperative and homeowners’ association can also voluntarily consent to the publication of other protected contact information when being used in an owner directory, such as additional telephone numbers, and other information listed in the statutes. Must be in writing.
6. CONDOMINIUMS AND COOPERATIVES ONLY: Forced Relinquishment of Official Records And Property: [Sections 718.111(12)(f) and 719.104(2)(e)] [Sections 8 and 14 of the Bill]
New Sections 718.111(12(f) and 719.104(2)(e) were added to provide that outgoing board or committee members must relinquish all official records and property of the association in his or her possession or under his or her control to the incoming board within five days after the election. It authorizes the Division to impose a civil penalty against an outgoing board or committee member who willfully and knowingly fails to relinquish such records and property.
7. Electronic Participation At Board Meetings: [CONDOMINIUMS ONLY] [Section 718.112(2)(b)5] [Section 9 of Bill]
Moving into the 21st Century, the Bill provides that, in addition to use of speaker phones, condominium board and committee members may participate in a meeting by real time video conferencing, or similar real time electronic or video communication.
8. Board Members’ Right To Communicate by E-mail: [CONDOMINIUMS ONLY] [Section 718.112(2)(c)] [Section 9 of Bill]
New 718.(2)(c) now permits Members of the board of administration to use e-mail as a means of communication, so long as they do not cast votes via e-mail.
9. Removal of Condominium Associations From The Chain of Title For Assessment Purposes [CONDOMINIUMS ONLY] [Section 718.116(1)(a)] [Section 10 of Bill]
To be consistent with similar language contained in Chapter 720 for HOAs,
718.116(1)(a) was amended to provide that condominium associations which acquire title to units through foreclosure or by deed in lieu of foreclosure are not considered to be previous owners for assessment purposes.
10. Limitations on Attempts to Terminate Condominiums: [CONDOMINIUMS ONLY] [Section 718.117(9)] [Section 11 of Bill]
Section 718.117(9) was amended to provide that, a new attempt to terminate a condominium cannot be commenced within 180 days from the date that an earlier termination attempt failed.
11. Elimination Of The Community Association Living Study Council [Condominiums, HOAs and Co-ops] [Section 718.50151] [Section 12 of the Bill]
At the request of a Community Association Living Study Council member (Rep Woods), Section 718.50151, was repealed, thereby eliminating that council, apparently due to a marked lack of interest by homeowners.
12. Continuation of The Bulk Sales Buyer Act: [CONDOMINIUMS ONLY] [Section 718.707] [Section 13 of Bill]
The automatic expiration (“sunset”) of the Bulk Sales Buyer Act, Section 718.707 was extended from July 1, 2015 to July 1, 2016. It appears this was done to permit interested parties to see if that law could be made permanent by adopting amendments which would be beneficial to both unit owners and developers.
13. Year-End Financial Reporting for Cooperatives: [COOPS ONLY] [Section 719.104(4)] [Section 14 of the Bill]
Section 719.104(4) was amended to be consistent with the year-end financial reporting requirements for condominiums.
14. Board Member Eligibility for Cooperatives: [COOPS ONLY] [Section 719.106((1)(a)2] [Section 15 of the Bill]
Section 719.106(1)(a)2 was amended to be consistent with the board membership requirements for condominiums. Must be current in assessments. Charged by State Attorney or Grand Jury with embezzlement or theft, removed and vacancy filled by Board appointment. If found innocent, resume seat.
15. Emergency Powers for Cooperative Associations:
[Section 719.128] [Section 16 of Bill]
New Section 719.128 was created to grant Cooperative Associations the emergency powers already granted to Condominium Associations by Chapter 718.
[NOTE: See also Section 19 of the Bill (paragraph 19 below) which gave emergency powers to the HOA’s.]
16. Handicap Accessibility For HOA Members To Board Meetings [(HOAs ONLY) [Sections 720.303(2)(a)] [Section 17 of the Bill]
Section 720.303(2)(a) was amended to provide that all meetings of the board must be held at a location that is accessible to a physically handicapped person if so requested by a physically handicapped person who has a right to attend the meeting.
17. Handicap Accessibility For HOA Members To Members’ Meetings [(HOAs ONLY] [Section 720.306(1)(a)] [Section 18 of the Bill]
Section 720.306(1)(a) was amended to provide that all meetings of the members must be held at a location that is accessible to a physically handicapped person if so requested by a physically handicapped person who has a right to attend the meeting.
[NOTE: Bayhead Landings Complaint]
18. Notice Of Homeowners’ Association Amendments: [HOA’s Only] [Section 720.306(1)(b) [Section 18 of the Bill]
Section 720.306(1)(b) allows associations to provide notice of adopted amendments by email, if the owner has given permission for electronic notice. Also, if the association had previously provided a copy of an amendment to the members before it was adopted, the association can then simply notify the owners that the amendment passed and supply them with the recording data and advise them that a copy of the amendment is available at no charge in lieu of providing another copy of the document.
19. Emergency Powers for Homeowners’ Associations: [HOAs ONLY] [Section 720.316] [Section 19 of the Bill]
New Section 720.316 was created to grant to Homeowner’s Associations emergency powers which are consistent with the operation of an HOA.
III. RESIDENTIAL VS. COMMERCIAL CONDOMINIUMS – SB 440
Primary Sponsor: Senator Altman
Effective Date: July 1, 2014
Background: There has been confusion regarding which sections of Chapter 718 apply only to residential condominiums, and which sections also apply to time share, commercial and vacation condominiums. This Bill is intended to eliminate this confusion
Impact of Bill
SB 440 amends Chapter 718 to provide that the following requirements do not apply to vacation clubs, timeshares, or commercial condominium associations:
1. The requirement to respond to certified written inquiries;
2. The prohibition against voting by general proxy;
3. Limitations on board member terms;
4. The prohibition of co-owners of a unit serving on the board;
5. Legal and financial eligibility requirements for board members;
6. The requirement that the board elections take place via written ballot or voting machine;
7. The requirement that new board directors certify within 90 days that they
have read the governing documents and bylaws, swear to uphold their responsibilities, etc.;
8. Mandatory non-binding arbitration;
9. Fire sprinkler opt-out provisions
10. Opting out of the requirements of Section 553.509(2),Florida Statutes dealing with the Americans with Disabilities Act Standards for Accessible Design; and
11. Hurricane shutter specifications and hurricane protection provisions.
IV. LOCAL GOVERNMENTAL REGULATION OF VACATION RENTALS – SB356
Primary Sponsor: Senator Thrasher
Effective Date: July 1, 2014
Background: Three years ago, the Legislature created Section 509.032 which prohibits local governments from being involved in regulating short-term vacation rentals. Apparently Senator Thrasher heard from many residents in single-family home communities that they were having troubles with vacation homes, but had no recourse because of this law. This bill was intended to remedy this problem.
Impact of Bill:
The statute provides as follows:
(b) A local law, ordinance, or regulation may not restrict the use of vacation rentals, prohibit vacation rentals, or regulate the duration or frequency of rental of vacation rentals based solely on their classification, use, or occupancy. This paragraph does not apply to any local law, ordinance, or regulation adopted on or before June 1, 2011.
V. NOTIFICATION OF RESERVED SUBSURFACE RIGHTS- HB 489
Primary Sponsor: Representative Spano
Effective Date: October 1, 2014
Impact of Bill:
Over time, some developers have retained subsurface rights when selling homes, with no notice to the buyers. Accordingly, a new Section 689.29 was adopted which will require sellers of new dwellings to provide written notification to prospective buyers of the seller’s intent to retain subsurface rights prior to entering into any sales contract. The bill provides a form notice to be used by sellers.
VI. ALTERNATIVE FLOOD INSURANCE- SB 542
Primary Sponsor: Senator Brandes
Effective Date: June 15, 2014
Background: As a result of the adoption of the Federal Biggert-Waters Flood Insurance law, the reasonable availability of flood insurance for residential property through the National Flood Insurance Program (NFIP) became a critical question, as did the astronomical cost of such coverage. In Florida, FEMA levied 30% of the increases, but we had only 5% of the loss claims. Insurance is global and fires, floods, tornadoes, earthquakes, tsunamis, hurricanes anywhere in the world affect your insurance rates.
At this point, the Biggert-Waters Flood Insurance law was further amended to eliminate the emergency nature and mandatory compliance dates. This bill was adopted to assist Floridians to obtain alternative flood insurance coverage right now.
BUT, this bill does not apply to commercial or commercial residential policies. The flood insurance contemplated in the new Law is only available to single family homes, and to condominium units or condominium associations.
The bill added a new Section 627.715 to authorize insurers to offer personal lines residential flood insurance policies to off-set the anticipated loss of the availability of flood insurance through the National Flood Insurance Program (NFIP), for individual homeowners.
VII. CITIZENS PROPERTY INSURANCE CORPORATION- HB 1089
Primary Sponsor: Representative Raschein
Effective Date: July 1, 2014
Background: This is part of an attempt to slowly but steadily reduce the role of Citizens as a major player in the Florida insurance arena.
Impact of Bill:
A new Section 627.351(6) was added to provide that, effective July 1, 2014, commercial lines residential condominiums are ineligible for coverage for wind-only coverage if 50 percent or more of the units are rented more than eight times in a calendar year for a rental agreement period of less than 30 days.
VIII. CITIZENS PROPERTY INSURANCE CORPORATION- SB 1672
Effective Date: July 1, 2014
Background: This is another bill which is slowly but steadily reducing the role of Citizens as a major player in the Florida insurance arena.
Impact of Bill:
Among other things, the bill amends Chapters 626 and 627 to provide for the following:
• Directs Citizens to stop writing new commercial residential multi-peril policies in the coastal account effective July 1, 2014. Instead, Citizens may offer separate wind-only policies, and commercial residential policies excluding wind. Citizens may, however, continue to renew commercial residential multi-peril policies on a building that is insured by Citizens on June 30, 2014.
• Prohibits an insurance agent, managing general agent, adjuster, customer or service representative from accepting referral fees or compensation from an inspection or inspection company related to an inspection used to obtain insurance coverage or establish the insurance premium.
• Prohibits a public adjuster, apprentice or associate from accepting a power of attorney that vests to the right to select the person that will perform repairs on an adjusted property.
