This shall serve as Wasserstein, P.A.’s newsletter regarding recent legislative changes of which you should be aware. Please note that the following is only a summary of the key changes and updates that have already gone into effect or will go into effect July 1, 2021 (along with some color commentary). Please feel free to share it with your fellow board members and property managers!
CONDOMINIUM ASSOCIATIONS
Emergency Powers
The emergency powers are now expressly applicable to an emergency declared due to a public health crisis such as COVID-19. The powers can now be used to prevent harm anticipated to be caused in connection with the emergency and not just after the harm or damage has occurred. During a declared state of emergency, in addition to Board meetings, members meetings, committee meetings and elections can be held in whole or in part virtually via telephone, real-time video conferencing or similar real-time communication. However, the emergency powers cannot prohibit unit owners, tenants, guests, agents or invitees of a unit owner from accessing the unit or the common elements or limited common elements for the purpose of ingress and egress from the unit when access is necessary in connections with (a) the sale, lease, or transfer of title of a unit or (b) the habitability of the unit or for the health and safety of such persons unless a governmental order or public health directive from the CDC has been issued prohibiting such access to the unit. However, such access is subject to reasonable restrictions adopted by the Association. The “disaster plan or emergency plan” can now be implemented during the emergency rather than just before or after the emergency. In determining to close or limit access to the condominium property the Board can now rely on the advice of “public health officials” and not just an emergency management official or other licensed professional.
COMMENTARY: These changes are useful to expand and clarify the emergency powers so that they clearly apply not only in connection with hurricane-type disasters, but also during a state of emergency declared for a pandemic or other type of public health crisis. However, there are still some issues that remain unclear such as the ability to not only conduct the various meetings electronically, but whether unit owners are allowed to count for quorum and cast a vote over such mediums (and not by paper or an electronic voting platform). Another open issue is whether the Board can close or limit access to certain groups of people, such as social guests, while allowing access to others, such as residents or certain family members.
Transfer Fees and Security Deposits
The maximum transfer fee charged in connection with a change of ownership or a lease has been raised from $100.00 per applicant to $150.00 per applicant. This fee will be adjusted every 5 years pursuant to the Consumer Price Index. The authority to charge a security deposit for a lessee, which formerly was required to be in the Declaration or Bylaws, may now also be authorized in the Articles of Incorporation.
COMMENTARY: A most welcome update as the old $100 cap caused some Association’s to lose money on processing applications. It was simply an outdated amount and quite honestly, $150 might still be a low cap. However, with the litigation that has been brought in the past 5 years against condos that were charging excessive transfer fees, this $150 cap with periodic updates is probably a fair and reasonable compromise.
While the increase to transfer fees was a valuable change, the extending of authority regarding charging of security deposits to include the articles of incorporation is fairly meaningless since the articles of incorporation almost never contain language dealing with leasing or any other type of use issues. If the legislature wanted to really extend an Association’s ability to charge a security deposit they should have allowed the authority to exist in the rules and regulations.
8-Year Director Term Limit
The law has been clarified to provide that the 8-year continuous years of service runs from service that commences on or after July 1, 2018.
COMMENTARY: This was a needed clarification. For the past few years there has been much debate as to whether the 8 year term limits enacted in 2017 (as modified in 2018) applied to “time served” before the law went into effect. Now we all have certainty that it does not, meaning that this statute will not be something to worry about until 2026, so we can put the snooze button on this one for now.
However, when we do get to 2026 there is still the possibility that at the end of the 8th year (or really at any other time during their tenure) a Board member could resign (and possibly even be immediately re-appointed) and then contend that they did not serve 8 consecutive and uninterrupted years, thereby making themselves fully eligible to continue to serve without any limitations or restrictions. Everyone loves a good loophole, right?
Another lingering issue is the wording of the exception language. It says that any Board member who has served more than 8 consecutive years can still be elected if there are not enough other willing candidates or if they secure the votes of at least 2/3 of all “votes” cast in the election. So, if an association has 3 seats up for election and receives 100 ballots then very likely there will be approximately 300 votes in total cast in the election (3 votes per ballot). 2/3 of 300 is 200. So the Board member would need to secure 200 votes in their favor from 100 ballots and as we all know, you cannot put more than 1 vote per candidate (which would otherwise be called cumulative voting, which is prohibited) so the best any candidate could achieve in this example is 100 votes in their favor, making it impossible for the term limited Board member to possibly achieve 2/3 of all “votes” cast in the election. As such, the legislature really should reword this exception to be a number of votes equal to at least 2/3 of all valid “ballots” cast and counted in the election.
Board Eligibility – Delinquency Only Based on Unpaid Assessments
The law used to provide that a candidate who was delinquent in the payment of “any monetary” obligation to the Association was not eligible to run for the Board. Now, the law has been changed to provide that a candidate who is delinquent in the payment of any “assessment” is not eligible to be a candidate. For purposes of this paragraph, a person is delinquent if a payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation and if a due date is not specifically identified in the declaration of condominium, bylaws, or articles of incorporation, the due date is the first day of the assessment period.
COMMENTARY: So one problem solved. If a unit owner owes a late fee or fine or a few dollars of interest they are still eligible. Great. But, what about the timing issue? That is seemingly clarified in a way that makes it potentially very unfair. For example, if a unit owner’s intent to run for the Board is due on say the 5th of the month and their assessment for that month came due on the 1st of the month and is not considered late until the 15th of the month, if they have not paid that month’s assessment as of the 5th would they be disallowed to be candidate for the Board? Sure seems like it!
Collections Letters – Pre-Intent to Lien Letter and New Timelines
Before changing the method of delivery for an invoice for assessments or the statement of account, the Association must now deliver a written notice of such change to the unit owner. The written notice must be delivered at least 30 days before the Association sends the invoice for assessments or the statement of account by the new delivery method and the unit owner must affirmatively acknowledge his or her understanding that the Association will change its method of delivery before the Association may change the method of delivery. The unit owner may make the affirmative acknowledgment electronically or in writing.
An Association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the unit owner which specifies the amount owed to the Association and provides the unit owner an opportunity to pay the amount owed without the assessment of attorney fees. A rebuttable presumption that an association mailed a notice in accordance with this subsection is established if a Board member, officer, or agent of the association, or a manager provides a sworn affidavit attesting to such mailing. The Statute contains a form that should be used.
COMMENTARY: While there was previously never a requirement to send a unit owner a delinquency letter free from attorney’s fees before sending an account for collections, most all Associations routinely sent courtesy letters, warning letters or demand letters, usually through their management company and often at no charge to the unit owner. So, management companies will likely just have to modify their existing letters and make sure that they are substantially in the form that is now required by the statute.
The notices of Intent to Lien and Intent to Foreclose the Lien have been increased from 30 days to 45 days. This makes the timeframes consistent with those provided for in homeowners associations for the same notices.
Annual Budget
The Board shall adopt the annual budget at least 14 days prior to the start of the Association’s fiscal year. In the event that the Board fails to timely adopt the annual budget a second time, it shall be deemed a minor violation pursuant to the Division of Condominiums and the prior year’s budget shall continue in effect until a new budget is adopted.
Notice of Members Meetings
The annual meeting has always required at least 14 days advance notice. The statute has been clarified to provide that if the bylaws do not specify a timeframe for written notice of other types of unit owner meetings, then this same 14 day notice requirement applies to those as well. It further clarifies that the notice may be posted on condominium property or association property rather than only condominium property. Association property is deeded property owned by the association as opposed to condominium property identified in the Declaration of Condominium as common elements.
COMMENTARY: When we think of a condominium association unit owner meeting we all default to 14 days advance notice, and while a condo association can now possibly give less notice than 14 days if the bylaws allow for it (for unit owner meetings besides the annual meeting), the reality is most everyone will continue to default to the same 14 days notice and that is probably the safest way to operate (unless of course a condo needs to move quickly to take a unit owner vote on something like a waiver of reserves or amendment of documents and the bylaws allow for the meeting to be noticed on say 10 days notice instead of 14).
Official Records
Bids must be kept for at least 1 year after the receipt of the bid. Before bids had to be kept for at least 7 years.
Renters now have the right to inspect and copy the declaration of condominium in addition to the bylaws and the rules. Previously, renters had the right to inspect and copy only the bylaws and rules.
COMMENTARY: This is a good correction. The original intention was clearly to allow renters the opportunity to view the documents that actually govern their residency and those provisions were most definitely not going to be found (in most instances) in the bylaws, which usually contain such exciting information as how the Association notices its meetings, what is needed for a quorum and how proxies are used. Renters don’t care about any of that. They really just want to know the use restrictions that are associated with their occupancy and since those are most commonly found in the declaration, adding that document to the list made a lot of sense.
Any person with the right to inspect and copy official records may not be required to demonstrate any purpose or state any reason for the inspection.
Condominiums with 150 or more units have been required to maintain a website and post certain notices and documents on it since January 1, 2019. The new law now provides that the Association can, in lieu of posting on the website, make such documents available instead “through an application that can be downloaded on a mobile device.” The downloadable application must be independent and operated by a third-party provider and must be accessible through the internet and meet all other requirements imposed on the website by the Statute.
COMMENTARY: The legislature, much like my 95 year old grandmother, has seemingly discovered the existence of mobile applications or “apps” as the kids call them. Better late than never!
Natural Gas and Electric Vehicle Charging Stations Installed by Unit Owners
Continuing with the theme of supporting technology, unit owners may now install a natural gas fuel station or electric vehicle charging station within the boundaries of their limited common element or “exclusively designated” parking spaces. Like electric vehicle charging stations, the unit owner must have the station separately metered and must comply with all federal, state and local laws and regulations for installation, maintenance and removal. Also, the contractor hired to install the stations on behalf of the unit owner cannot lien the common elements or Association property if the contractor is not paid for the work but can lien the unit owner’s unit.
COMMENTARY: In my opinion, the bigger change here is adding the “exclusively designated” parking space language because some unit owners have assigned parking that is not actually a limited common element but rather a deeded parking space that they own. Under the prior statutory language the Association could have actually denied such unit owners from installing an electric charging station since their parking space was not a “limited common element” but now that ambiguity is gone and that is a good thing.
Of course, the other “big” addition here is allowing for natural gas fuel stations to be installed in unit owner parking spaces as well. Wake me up when natural gas vehicles become a thing.
Natural Gas and Electric Vehicle Charging Stations Installed by the Association
The Board of an Association may make available, install, or operate an electric vehicle charging station or a natural gas fuel station on the common elements or Association property and establish the charges and the manner of payments for the unit owners, residents or guests who use them and the installation of either type of device shall not constitute a material alteration or substantial addition to the common elements or Association property.
COMMENTARY: We have had several clients ask about installing common area charging stations and the concerns were usually the cost of installation, how to bill for usage, the limited applications (at least for now until electric cars become more prevalent), the issue of certain individuals monopolizing the equipment and of course, the big issue of it being a material alteration and potentially requiring a membership vote. However, having the legislature remove the material alteration concern is fantastic progress and should help “pave the way” (pun intended) to encourage more electric vehicles.
Alternative Dispute Resolution
Arbitration through the DBPR, Division of Condominiums is no longer mandatory for the disputes to which it previously applied (except for election and recall disputes which must still be arbitrated or go to court). The Association or the unit owner now has the option to either go through arbitration (which the parties can agree to be binding and final) or instead go to pre-suit mediation (like homeowners associations have been able to do for quite some time) and if not resolved through pre-suit mediation to then go directly to court.
COMMENTARY: This is great news for anyone that has gone through the arbitration process because it is slow and unrewarding, the rulings have been inconsistent over the years and the arbitrators rarely have awarded full fees incurred, meaning that the Association has almost always had to come out of pocket to enforce its governing documents.
Discriminatory Restrictions
The Board may remove illegal discriminatory restrictions contained in the governing documents without an owner vote.
COMMENTARY: Although illegal provisions were unenforceable anyway, making it simple to eradicate such provisions from the record books was a laudable step forward.
Fines
Payment of a fine approved by the fining committee is now due 5 days after the notice of the approved fine is provided instead of 5 days after the fining committee meeting was held.
HOMEOWNERS ASSOCIATIONS
Emergency Powers
The emergency powers are now expressly applicable to an emergency declared due to a public health crisis such as COVID-19. The powers can now be used to prevent harm anticipated to be caused in connection with the emergency and not just after the harm or damage has occurred. During a declared state of emergency, in addition to Board meetings, members meetings, committee meetings and elections can be held in whole or in part virtually via telephone, real-time video conferencing or similar real-time communication. However, the emergency powers cannot prohibit unit owners, tenants, guests, agents or invitees of an owner from accessing the parcel or the common areas for the purpose of ingress and egress from the unit when access is necessary in connections with (a) the sale, lease, or transfer of title of a unit or (b) the habitability of the unit or for the health and safety of such persons unless a governmental order or public health directive from the CDC has been issued prohibiting such access to the unit. However, such access is subject to reasonable restrictions adopted by the Association. The “disaster plan or emergency plan” can now be implemented during the emergency rather than just before or after the emergency. In determining to close or limit access to the community property the Board can now rely on the advice of “public health officials” and not just an emergency management official or other licensed professional.
COMMENTARY: These changes are useful to expand and clarify the emergency powers so that they clearly apply not only in connection with hurricane-type disasters, but also during a state of emergency declared for a pandemic or other type of public health crisis. However, there are still some issues that remain unclear such as the ability to not only conduct the various meetings electronically, but whether unit owners are allowed to count for quorum and cast a vote over such mediums (and not by paper or an electronic voting platform). Another open issue is whether the Board can close or limit access to certain groups of people, such as social guests, while allowing access to others, such as residents or certain family members.
Amendments
Any governing document, or amendment to a governing document, that is enacted after July 1, 2021, and that prohibits or regulates rental agreements will only apply to:
1. An owner who acquires title to the parcel after the effective date of the governing document or amendment; or
2. An owner who consents to or votes in favor of to the governing document or amendment.
COMMENTARY: It is interesting that they used the phrase “prohibits or regulates rental agreements” because there are several rental-related amendments that I would contend do not “prohibit or regulate” the actual rental agreements themselves, but instead have an effect on the renters themselves or on other ancillary matters such as approval processes, background checks, transfer fees and security deposits.
With respect to those who did not consent to or vote in favor of a rental amendment retaining their protection from it when there is a change of ownership, this new law further provides that a change of ownership (in this context) is not deemed to occur when an owner conveys the parcel to an “affiliated entity”, when beneficial ownership of the parcel does not change, or when an heir becomes the owner. The term “affiliated entity” is defined in the statute and any such entity desiring to carry over the protections afforded to the predecessor must furnish to the Association documentation as may be requested.
COMMENTARY: The primary purpose of this provision is to allow owners to confidently re-deed their property to a trust or limited liability community for estate planning or asset protection purposes without fear of losing their protection from rental amendments that they did not vote to approve that were passed after July 1, 2021. It will also protect those who are involuntarily thrust into ownership upon the death of the owner from being subject to such rental amendments as well.
Although this new law appears to be fairly broad and protective of the owners with regard to rental amendments, it does provide a key exception--a homeowners association may amend its governing documents to prohibit or regulate rental agreements for a rental term of less than 6 months and may prohibit the rental of a parcel more than three (3) times in a calendar year and those types of amendments will still apply to all parcel owners regardless of whether or not they voted for it.
COMMENTARY: This exception is crucial because it will allow homeowners association that do not already have restrictions on short term rentals to still pass such restrictions after July 1, 2021 with the confidence that if they are approved by the required percentage of the membership that such restrictions will apply to all owners regardless of whether or not they voted in favor and the community can avoid being overrun by AirBNB, VRBO and other short-term type uses.
For the past few years, there was a requirement that notice of an adopted amendment being recorded had to be mailed to the owner’s address as listed on the property appraisers’ website. The notice may now be mailed to the mailing address the Association has listed in the Association’s official records.
COMMENTARY: This is another correction of a past mistake. The property appraiser is not always a reliable of information and requiring the Association to rely on it would mean every time they sent out a document they would have to verify every owner’s address against the property appraiser’s information to make sure what they had on file was up to date. Thankfully this administrative nightmare is over.
Board Adopted Rules
For the past few years, amendments to Board adopted rules and regulations had to be recorded with the County because the legislature previously revised the statutory definition of “governing documents” to add rules and regulations. The definition has now been reverted back to how it previously existed, which means that rules and regulations are no longer part of the statutory definition of “governing documents” and accordingly, amendments to rules and regulations no longer have to be recorded.
COMMENTARY: This is a good corrective measure as it was clearly never the intention of the legislature to require rules and regulations to be recorded and it was just an unintentional consequence of them trying to expand the scope of the definition of “governing documents”. This is good for homeowners associations as it will save them money on recording costs that they will no longer have to pay.
Board Meeting Notice
In addition to any of the authorized means of providing notice of a meeting of the Board, the Association may, by rule, adopt a procedure for conspicuously posting the meeting notice and the agenda on the Association’s website or an application that can be downloaded on a mobile device for at least the minimum period of time for which a notice of a meeting is also required to be physically posted on the Association property. Any rule adopted must, in addition to other matters, include a requirement that the Association send an electronic notice to members whose e-mail addresses are included in the Association’s official records in the same manner as is required for a notice of a meeting of the members. Such notice must include a hyperlink to the website or such mobile application on which the meeting notice is posted. This is in addition to the traditional notice that is still required.
Elections and Recalls
For many years, election and recall disputes in homeowners association could only be filed with the DBPR, Divisions of Condominiums. Now, an election or recall dispute can still be filed with the Division or it can instead be filed directly in a court. Pre-suit mediation is not required before filing in Court.
COMMENTARY: This is great news for anyone that has gone through the arbitration process because it is slow and unrewarding and the rulings have been inconsistent over the years. But hey, if you like those qualities in your adjudication process then you can still choose to avail your Association of arbitration through the DBPR!
Official Records
Ballots, sign in sheets, voting proxies, and all other papers relating to voting by parcel owners are official records and must be maintained for at least 1 year after the date of the election, vote, or meeting.
Information an Association obtains in a gated community in connection with guests visiting homeowners or community residents are protected official records and cannot be inspected and copied by owners making official records requests.
COMMENTARY: This is a sensible addition to the list of records that are not available for inspection since a list of who is coming and going to and from a property is something for which there is a reasonable expectation of privacy.
Statutory Reserves and Developer Deficit Funding
Statutory or “mandatory” reserves used to be established in 3 ways:
1. The developer initially established them prior to turnover in the budget;
2. The governing documents as drafted by the developer mandate reserves; or
3. The members voted to establish them after turnover.
The new law removes the first type such that statutory reserves are now only created if they are mandated in the governing documents or by a vote of the members.
Year end financial reporting has also been modified to provide that if a homeowners association does not maintain statutory reserves or the governing documents do not obligate the developer to create reserves that this must be noted on the year-end financial report with a bold all caps disclaimer. The change here is adding the “governing documents” term to the provision.
While a developer is in control of a homeowners association, the developer may (but is not required to) include reserves in the budget. If the developer does include reserves in the budget, the developer may determine the amount of reserves included. The developer is not obligated to pay for:
1. Contributions to reserve accounts for capital expenditures and deferred maintenance, as well as any other reserves that the homeowners association or the developer may be required to fund pursuant to any state, municipal, county, or other governmental statute or ordinance;
2. Operating expenses; or
3. Any other assessments related to the developer’s parcels for any period of time for which the developer has provided in the declaration that in lieu of paying any assessments imposed on any parcel owned by the developer, the developer need only pay the deficit, if any, in any fiscal year of the association, between the total amount of the assessments receivable from other members plus any other association income and the lesser of the budgeted or actual expenses incurred by the association during such fiscal year.
This law applies to all homeowners associations existing on or created after July 1, 2021.
COMMENTARY: This new law is likely a reaction to the Centex case from 2017 in which the Court determined that developers who established statutory reserves had a duty to pay those reserves (above and beyond their deficit funding of operating expenses) while they remained in control or to annually vote to waive or reduce such reserves.
Collections Letters – Pre-Intent to Lien Letter
Before changing the method of delivery for an invoice for assessments or the statement of account, the Association must now deliver a written notice of such change to the owner. The written notice must be delivered at least 30 days before the Association sends the invoice for assessments or the statement of account by the new delivery method and the owner must affirmatively acknowledge his or her understanding that the Association will change its method of delivery before the Association may change the method of delivery. The owner may make the affirmative acknowledgment electronically or in writing.
An Association may not require payment of attorney fees related to a past due assessment without first delivering a written notice of late assessment to the owner which specifies the amount owed to the Association and provides the owner an opportunity to pay the amount owed without the assessment of attorney fees. A rebuttable presumption that an association mailed a notice in accordance with this subsection is established if a Board member, officer, or agent of the association, or a manager provides a sworn affidavit attesting to such mailing. The Statute contains a form that should be used.
COMMENTARY: While there was previously never a requirement to send an owner a delinquency letter free from attorney’s fees before sending an account for collections, most all Associations routinely sent courtesy letters, warning letters or demand letters, usually through their management company and often at no charge to the owner. So, management companies will likely just have to modify their existing letters and make sure that they are substantially in the form that is now required by the statute.
Discriminatory Restrictions
The Board may remove illegal discriminatory restrictions contained in the governing documents without an owner vote.
COMMENTARY: Although illegal provisions were unenforceable anyway, making it simple to eradicate such provisions from the record books was a laudable step forward.
Fines
Payment of a fine approved by the fining committee is now due 5 days after the notice of the approved fine is provided instead of 5 days after the fining committee meeting was held.
ADDITIONAL COVID LEGISLATION
COVID-19 Vaccine Proof Documentation – F.S. 381.00316(1) – (6)
A business entity, as defined in Florida Statute 768.38 to include any business operating in this State, may not require patrons or customers to provide any documentation certifying COVID-19 vaccination or post-infection recovery for them to gain access to, entry upon, or service from the business operations in this State. This statute does not otherwise restrict businesses from instituting screening protocols in accordance with state or federal law to protect public health. The department may impose a fine not to exceed $5,000 per violation.
COMMENTARY: There is some debate as to whether this law applies to community associations because they may not be deemed a “business entity” and owners and guests may not be considered “patrons” or “customers”. However, it is my belief that a community association cannot require proof of vaccination to use the common areas or amenities.
COVID-19 Liability Protection – F.S. 768.38
This new provision of the law protects corporations, including community associations, from civil liability for damages, injury, or death which arises from or related to COVID-19 as long as the Association “made a good faith effort to substantially comply with authoritative or controlling government-issued health standards or guidance at the time the cause of action accrued.” The statute of limitations to bring a claim against the Association is within 1 year after the damage, injury or death occurred.
COMMENTARY: This should give community associations some degree of peace of mind that they will be shielded from liability for COVID-19 claims. However, just be prepared that lawsuits will still be filed contending that a good faith effort to comply with health standards was not met.
