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 after July 1, 2024 (along with some color commentary). Please further note that the information and commentary below are not to be construed as legal advice. Please feel free to share it with your fellow Board members and property managers!
CONDOMINIUM ASSOCIATIONS
MILESTONE INSPECTIONS
Condominiums have become very familiar with milestone inspection requirements over the past two (2) years as a key part of the legislative reaction to the Surfside collapse. In the most recent legislative session the only change in this regard is to extend the exception previously given to single family, two family and three family dwellings to four family dwellings with three or less habitable above-ground stories such that they do not have to obtain a milestone inspection.
STRUCTURAL INTEGRITY RESERVE STUDIES (SIRS) AND RESERVES
Along with the milestone inspection, the second major component that came out of the Surfside legislation is that most every residential condominium association is required to have a Structural Integrity Reserve Study (SIRS) completed by the end of 2024 (this applies to all associations existing before July 1, 2022) and also that the structural reserve funding requirements identified in the SIRS will very soon become an unwaivable part of every association budget (for budgets adopted after December 31, 2024).
The new legislation this year added essentially two (2) additional nuances with regard to SIRS and reserves. The first is that within forty-five (45) days of receiving a SIRS report, the association must either provide a copy of it to each owner or notify the owners of its availability. The second is that in the event a natural disaster renders an entire building unsafe and uninhabitable, as determined by local building officials, the board and a majority of the owners may vote to suspend reserve funding until the building is made habitable and may expend reserves for that very purpose.
COMMENTARY: The main takeaway here is that all the Surfside legislation from prior years is here to stay. Many associations have planned (or failed to plan) on the assumption that the legislature would kick the can down the road just the same as they had with fire sprinkler requirements. Unfortunately, that hope was misplaced. Whereas in prior years the sentiment of many condominiums had been to allow cost concerns to supersede safety concerns (since large scale condominium catastrophes were really only theoretical up to that point in time), once the Champlain Towers building came down, the logic and the politics flipped. However, while the legislature is now focused on mitigating the potential risk of physical danger, the resulting increased cost burden will certainly have implications for many Floridians on a fixed or reduced income. In fact, many condominiums have already begun to experience an increase in financial fallout resulting from the forced inspections and corrective work, and that is all before the mandatory structural reserves start to kick in. Stay safe, stay solvent and stay focused!
WEBSITES
For the past several years condominium associations with 150 or more units were required to operate a website or mobile device app to post certain records and notices and to have an owner portal. That minimum threshold of 150 units has now been reduced to 25 units, so only the smallest of condominium associations will now be excused from having a website or app.
YEAR-END FINANCIAL REPORTS
Associations have long had the right to obtain a vote of the owners to reduce the level of year-end financial reporting (i.e. only having a review performed when an audit would otherwise be required). However, that reduced reporting can no longer be allowed in consecutive years, meaning even if voted on by the owners, at most, the reduced financial reporting can only be permitted every other year.
Additionally, for many years a condominium association was allowed to mail or hand deliver to each owner, at their last provided address, either 1) a copy of the year-end financial report or 2) a notice that it will be provided upon written request. The methods of delivery have been updated and expanded and now the “or” is changed to an “and” such that condominium associations have to both send a copy of the report and a notice that it is available upon written request.
COMMENTARY: The first item is really not much of an issue as most associations do not vote to reduce the reporting level. The second change mentioned above is simply nonsensical. Condominium associations now have to send their owners a copy of the year-end financial report and also a statement that a copy is available upon written request?!?! Witness legislating at its finest!
MANDATORY DIRECTOR EDUCATION
While the prior section on year-end financial reporting dealt with a ridiculous and unnecessary change of an “or” to an “and”, when it comes to mandatory director education, it is actually a welcome change…well at least to some degree.
The law as it has long existed up until now gave directors a choice between either attending a board certification course or signing a certificate attesting that the director had read the condominium documents and would work to uphold them and uphold their fiduciary duty. The new legislation now requires that directors both attend a division-approved course (which must be at least 4 hours long and provide instructions on certain enumerated topics) and sign a certificate either within ninety (90) days of being elected/appointed to the board, or up to one (1) year prior. Existing directors elected/appointed before July 1, 2024 must comply with these requirements by June 30, 2025. This certification is valid for seven (7) years so long as the director serves without interruption.
Additionally, each year after being certified, directors must taking continuing education courses and obtain a certificate of having obtained at least one (1) hour of education on changes to Florida Statute 718 and the administrative rules during the past year.
COMMENTARY: I am all for having educated directors and I agree with removing the ability of directors to simply sign a piece of paper saying they will uphold the documents versus actually attending a class. I am also in favor of having a “re-certification” requirement every so often. However, we have to remember that board service is a volunteer position, one that is already relatively thankless, and adding not only more barriers to entry, but hurdles to maintain such a position, make it all the more unattractive. In that regard, it is my opinion that a four (4) hour minimum for a board certification course is not only unnecessary overkill, but cumbersome for both the directors and the instructors. I am also not in agreement with forcing directors to attend mandatory continuing education every year. I know that may sound crazy, but updates like this very document you are reading should, in my view, be sufficient. Forcing board members to attend a yearly continuing education class, while noble in spirit and seemingly not that big of a deal for those of us used to attending them, is yet another element that I believe may dissuade good candidates, who have other constraints on their time such as employment and/or family, from volunteering.
CRIMINAL PENALTIES
Continuing with the theme of making Board service more unattractive is another round of criminal sanctions as follows:
Third degree felony to willfully and knowingly refuse to release or produce association records, with the intent to avoid or escape detection, arrest, trial, or punishment for the commission of a crime, or to assist another person with such avoidance or escape.
Third degree felony for an officer, director, or manager of a condominium association to knowingly solicit, offer to accept, or accept a kickback.
First degree misdemeanor for engaging in specified fraudulent voting activity, and knowingly aiding, abetting, or advising a person in the commission of a fraudulent voting activity related to association elections. This includes fraud in general, making a willfully false affidavit, fraudulently seeking to change a ballot, ballot envelope, vote or voting certificate, using force or violence or any tactic of coercion, intimidation or bribery, menace, threat, or any other corruption to try to influence an owner’s vote, seeking to corruptly influence a vote by giving or promising “anything of value” to someone, other than a wearable campaign advertisement of nominal value or food at an election rally or aiding an election fraud offender to avoid consequence (except a licensed attorney giving legal advice).
First degree misdemeanor for knowingly and intentionally defacing or destroying required accounting records, or failing to create or maintain required accounting records, with the intent of causing harm to the association or one or more of its members.
Second degree misdemeanor for any director or member of the board or association to knowingly, willfully, and repeatedly violate (two or more violations within a twelve (12) month period) any specified requirements relating to inspection and copying of official records of an association.
Additionally, while the law already provides that an association, its officers, directors, employees, and agents may not use a debit card issued in the name of the association or billed directly to the association for the payment of association expenses, any such person who uses a debit card in the name of the association for an expense that is not a lawful obligation of the association commits theft and is punishable under the criminal statutes based upon the amount of money expended.
Finally, the new legislation provides that officers and directors charged with a criminal violation under Florida Statute 718 are deemed removed from office and prohibited from serving as a director or officer or having access to official records of any condominium association while the charge is pending (except by court order).
COMMENTARY: While the general outlook on expanding criminal sanctions seems daunting at first, the reality is that only the worst and most egregious offenders are prosecuted. If it were any more common place for Board members to face criminal liability, then the entire system of condominium governance would go out the window. Our office has worked with associations that have presented state attorneys with actions that seemed to fit the description of crimes that exist under Florida Statute 718, but it seemed like they simply had more serious cases to consider and no action was taken. In fact, it is my opinion that putting added demands on the time of volunteer Board members and making their jobs harder to perform by taking away enforcement tools (a large theme of this year’s updates for both condominiums and homeowners association) will ultimately be more negatively impactful as deterrents to service than any of these criminal provisions.
OFFICIAL RECORDS
In the spirit of making the jobs of not only directors, but also management agents more challenging, we next come to the series of new laws for condominium associations concerning official records.
Added to the pre-existing list of official records that must be maintained are now:
· All invoices, transaction receipts, or deposit slips that substantiate any receipt or expenditure of funds by the Association;
· All building permits; and
· All satisfactorily completed Board member educational certificates.
In addition, the statute now requires that the official records must be maintained in a manner that facilitates inspection of the records by an owner. In the event that the records are lost, destroyed, or otherwise unavailable, the obligation to maintain official records includes a good faith obligation to recover those records as may be reasonably possible.
While the foregoing updates to the statute are not all that excessive or overbearing, there is a new “checklist” requirement that is an administrative nightmare. It reads as follows:
“In response to a written request to inspect records, the Association must simultaneously provide a checklist to the requestor of all records made available for inspection and copying. The checklist must also identify any of the Association’s official records that were not made available to the requestor. An Association must maintain a checklist provided under this sub-subparagraph for 7 years. An Association delivering a checklist pursuant to this sub-subparagraph creates a rebuttable presumption that the Association has complied with this paragraph.”
COMMENTARY: Providing a checklist of all the records made available to the requestor is an absurd starting point. Is it permissible for the checklist to contain categories such as “contracts” or “invoices” or does it have to specify every single contract or invoice provided? If there are 500 pages produced does every page or document have to be specifically identified? Adding even further nonsensical work into the mix, the Association now also has to produce a checklist of the official records that were not made available. Does that mean the Association has to identify those records the requestor asked for but could not be provided for some reason (the logical interpretation) or does it mean the Association has to list all the records in its possession that were not made available, whether requested or not? Compiling records for inspections is already a cumbersome task. Now, because it will be that much more of an administrative time suck and an expanding legal liability, this will likely result in decreased production and increased management costs for associations.
BOARD MEETINGS
Whereas there previously existed no statutory minimum for the number of board meetings that had to be held, under the new legislation for any condominium association with ten (10) or more units, the board will now have to meet at least quarterly and at that same frequency must include on the agenda an opportunity for association members to “ask questions with respect to reports on the status of construction or repair projects, status of revenues and expenditures during the current fiscal year, and other issues affecting the condominium.”
Additionally, the new legislation provides a requirement regarding posting of contracts with the meeting notice:
“If an agenda item relates to the approval of a contract for goods or services, a copy of the contract must be provided with the notice, made available for inspection and copying upon a written request from a unit owner, or made available on the association’s website or through an application that can be downloaded on a mobile device.”
Representatives of the Division or Condominium Ombudsman are entitled to attend any meeting of the board, committee or unit owners that is open to unit owners, to perform their duties.
COMMENTARY: I believe that holding open Board meetings not less than every quarter is a reasonable update. However, forcing there to be an open forum by allowing owners to ask questions on “other issues affecting the condominium” is another example of legislators not understanding how condominiums function in reality. Board meetings are supposed to be for the board to expeditiously and efficiently conduct the corporate business and to allow the owners to comments on that business. Now these meetings could devolve into a free-for-all and go on for hours more than necessary and further, while the new law only allows for questions to be asked, it does not mandate that answers be provided.
There are also issues with the new requirement of providing with the meeting notice a copy of each contract that is under consideration for approval at that meeting. What if the board is just discussing a potential contract? I believe that would not require a copy of it to be attached. But what if the board is voting to approve a contract, subject to an engineer or attorney’s review and subsequent changes? Does the draft, non-final version of the contract have to be provided with the notice? Won’t that cause confusion? Further, what if the contract is voluminous and the meeting notice is posted on a bulletin board or in a glass case where there is limited space and/or physical accessibility to the actual paper? How will the contract fit and does it have to be fully accessible (every single page) where the notice is posted such that it can be read in full at that location or can the notice direct the owner elsewhere? If the notice is posted at multiple locations does a copy of the full contract have to be posted at every location? I believe the way that this new statute is worded, the association could at least choose to make the contract available on its website or app in lieu of posting it in paper form, but the verbiage is not exactly clear.
HURRICANE PROTECTION
The statute has been updated to provide that a Declaration of Condominium must specify whether the owners or the association is responsible for the installation, maintenance, repair or replacement of hurricane protection, which is a newly defined term meaning “hurricane shutters, impact glass, code-compliant windows or doors, and other code compliant hurricane protection products used to pre- serve and protect the condominium property or association property.”
Associations are also required to adopt “hurricane protection” specifications rather than just hurricane shutter specifications, as at present and they may include color, style, and other factors deemed relevant by the Board, which may include adhering to the existing, unified external appearance of the building scheme. Existing references to “hurricane shutters, impact glass, code compliant windows or doors, or other types of code compliant hurricane protection” are replaced with the new “hurricane protection” terminology.
While the statute already allows the association to install hurricane protection in parts of the property it maintains or, by approval of a majority of all owners, elsewhere such as within unit boundaries, this has been amended to add that with that same majority vote of the owners or per the language of the Declaration, the association may require owners to make the installation. Such installation, by the owner or by the association at an owner’s expense (collectible in the same manner as a common expense) is not deemed a material alteration and shall not apply to the “same type” of hurricane protection the owner has previously installed, unless it has reached the end of its useful life or “is necessary to prevent damage to the common elements or a unit.”
An owner is exempt from (or shall be given a credit against) any assessment associated with the association installing hurricane protection for all other units if the owner has the same type of hurricane protection in place and it is compliant with current codes, provided that the installation for all other units is funded by the association’s budget.
An owner is not responsible for the cost of any removal or reinstallation of hurricane protection or of a window or door protected by hurricane protection, if the removal is necessary for the maintenance, repair or replacement of other condominium property for which the association is responsible. The association may decide whether that work is to be done by the association or by the owner but with the cost reimbursed to the owner by the association.
COMMENTARY: Whereas before the law previously allowed for associations to require an affected owner to pay for the removal and/or reinstallation of hurricane protections as incidental to or as necessitated by exterior work, this has now been shifted to the association as a common expense. That will raise the question as to what happens if there are shutters that, once removed, are past their useful life and too old to be reinstalled, or that are damaged during the removal process (due to age and wear, and not negligence)?
Also, the statute now provides that every Declaration of Condominium must contain a statement that specifies responsibility for hurricane protection, but does not explicitly limit that to only new condominiums. While that statute, 718.104, does concern the creation of condominiums and such an interpretation is really the only logical reading, there is an argument that as worded, this legislation requires every condominium association to have to amend their Declaration if it does not already contain this information, and that can often be a daunting, if not impossible, task since Declaration amendments almost always require a member vote.
PROTECTED OWNER CONDUCT
Existing law regarding Strategic Lawsuits Against Public Participation, or SLAPP suits, which limit lawsuits from being filed by associations against owners in retaliation for speech at a public hearing or other related activities has been expanded to further protect an owner who exercises the right to “instruct his or her representatives” or “petition for redress of grievances” with regard to the association. This specifically includes reporting code violations to the government “in good faith”, creating, joining or supporting “a unit owners’ organization”, reporting a violation of the Condominium Act, including the new crimes being created, or Division Rules to a government agency, complaining to the Association or its representatives about a violation of the Condominium Act or the Nonprofit Corporations Act, exercising a statutory right of an owner; or making “public statements critical of the operation or management of the Association.”
In this same regard, it is also unlawful for an association to “fine, discriminatorily increase an owner's assessments, discriminatorily decrease services to a unit owner, or bring or threaten to bring an action for possession or other civil action, including a defamation, libel, slander, or tortious interference action, based on conduct”. The association may not expend common funds in support of a “claim” against an owner for any of the newly protected conduct, including but not limited to an action for defamation, libel, slander or tortious interference. Retaliatory conduct against an owner for such an activity may be raised as a defense in any legal action brought against an owner “for possession”.
COMMENTARY: A retaliatory cause of action seeking “possession” seems like a fairly unlikely claim, but the bigger concern here is the language disallowing an association from using association funds to prosecute claims of defamation, libel, slander or tortious interference. However, it seems that this is only limited to retaliatory actions and may not otherwise preclude an injunctive relief lawsuit that is not being brought as a SLAPP lawsuit.
OWNER VOTING
It has been clarified that for condominium associations that vote to utilize electronic voting, owners may consent to participating in electronic voting by opting in electronically rather than only “in writing” which is the pre-existing language. Also, once electronic voting is adopted, the condominium association must honor an owner’s request to vote electronically at all subsequent elections, unless the owner opts out.
With regard to suspending of owner voting rights who are at least ninety (90) days delinquent on a monetary obligation to the association, now in addition to giving at least thirty (30) days notice before such a suspension as currently exists, an association suspending voting rights also has to provide the owner with at least ninety (90) days notice of suspension before an election for it to be effective for that election.
COMMENTARY: Many associations were already having their owners opt into electronic voting via an electronic consent, so this just codifies what associations were already doing and quite honestly, it makes sense. With regard to the updated requirements concerning voting suspensions for delinquent owners, the law already requires a minimum dollar amount and at least thirty (30) days advance notice before the association can suspend voting rights, so adding another ninety (90) days advance notice requirement for suspensions that impact on election voting seems like overkill. Owners do need to be protected, but in my opinion the law as it existed was sufficient and this is now swinging the pendulum a bit too far.
MY SAFE FLORIDA CONDOMINIUM PILOT PROGRAM
The State has allocated $30,000,000 in grant monies for condominium associations to “harden” their buildings which primarily means work on roofs and openings like windows and doors. There is a hard cap of $175,000 per association and the statute indicates further how the grant money is to be allocated ($1 provided by the association to every $2 provided by the State) and provides further monetary limits for roof and opening-related projects. To apply for an inspection and a grant for work that improves association property other than the units, the association need only secure a board vote. However, to apply for any grant monies that would go towards improving units, a board vote and a unanimous vote of all impacted owners is required.
COMMENTARY: While it seems great on paper, this seems more like political window dressing than an actually impactful project that could have a widespread and tangible impact. Why? First, association roof and window projects are usually measured in the high six (6) figures, if not millions, so $175,000 is nice, if you can get it, but it may be a fairly minimal contribution, relatively speaking. Second, $30,000,000 sounds like a lot, right? Well, if every association that applies is going for the max $175,000 then the money runs out after the first 171 condominiums secure a grant. For perspective, there are approximately 30,000 condominium associations in Florida so it could only be a fraction of 1% that ultimately see any grant monies. Third, since there is a required inspection as part of the process, that inspection could be used by insurers to deny future claims if the work identified ultimately is not undertaken and completed. Fourth, is the uncertainty and lack of information from the State. At time of writing this commentary, there is no available portal and no real direction on how a condominium association will actually apply for the available inspections/grants. There is also uncertainty as to whether or not the grants can be used towards recently completed or active hardening projects that are already underway. I guess we will all find out together and then the race is on!
HOMEOWNERS ASSOCIATIONS
MANDATORY DIRECTOR EDUCATION
The law as it has long existed up until now gave directors a choice between either attending a board certification course or signing a certificate attesting that the director had read the condominium documents and will work to uphold them and uphold their fiduciary duty. The new legislation now requires that directors attend a division-approved course (which must provide instructions on certain enumerated topics) within ninety (90) days of being elected/appointed to the board. Unlike condominium association directors that make the certification valid for seven (7) years, this certification is valid for only four (4) years, so long as the director serves without interruption, and then has to be repeated.
In an other example of treating homeowners association directors more stringently than condominium association directors, a director of a homeowners association that has less than 2,500 parcels now must also complete at least four (4) hours of continuing education annually. If the association has 2,500 or more parcels, then directors must complete at least eight (8) hours of continuing education annually.
Any director who has not timely fulfilled the education requirement is automatically suspended from the board and may be temporarily replaced until the education is fulfilled.
COMMENTARY: I am all for having educated directors and I agree with removing the ability of directors to simply sign a piece of paper saying they will uphold the documents versus actually attending a class. I am also in favor of having a “re-certification” requirement every so often, although I believe that the seven (7) year length of validity that was implemented for condos is more reasonable than the lesser four (4) years of validity that is being applied to certifications for homeowners association directors. We have to remember this is a volunteer position, one that is already relatively thankless, and adding not only more barriers to entry, but hurdles to maintain such a position, make it all the more unattractive. In that same regard, I also believe that a four (4) hour or eight (8) hour annual continuing education requirement is unnecessary overkill and will be viewed as cumbersome for many directors. I know that may sound crazy, but updates like this very document you are reading should, in my view, be sufficient to keep previously certified board members up to date. Forcing board members to also attend a yearly continuing education class, while noble in spirit and seemingly not that big of a deal for those of us used to attending them, is yet another element that I believe may dissuade good candidates, who have other constraints on their time such as employment and/or family, from volunteering.
An overarching here issue is the deviation in the new requirements for homeowners association directors versus those applied to condominium association directors. Homeowners associations are being punished because of the bad actors down at the Hammocks HOA. The educational requirements should at the very least be uniform. There is no reason a homeowners association director should have to sit through four (4) or eight (8) hours a year of education when a condominium director need only sit through one (1) hour, or that homeowners association directors have their certification last for only four (4) years when a condominium association director’s certification is valid for seven (7) years. This should have been harmonized by the legislators.
An additional issue to consider is that the condominium association legislation makes it clear that existing directors elected/appointed before July 1, 2024 must comply with the new educational requirements by June 30, 2025, but this clarity as to existing directors is nowhere found in the homeowners association legislation. I think the safest route would be for homeowners association directors to do the same, but there is an argument that they are grandfathered in.
MANDATORY MANAGEMENT EDUCATION, DUTIES AND DISCLOSURES
Board members are not the only ones being charged with heightened educational requirements. Any property manager who provides management services to a homeowners association must now, at least every other year, have at least five (5) hours of continuing education that specifically pertains to homeowners association, and at least three (3) hours must relate to recordkeeping.
COMMENTARY: Three (3) hours on recordkeeping! Who is going to come up with a program with 180 minutes on recordkeeping, let alone keeping the managers from falling asleep. Unreal. And when they decided to enact this requirement, why only managers who provide services to homeowners associations and not condominium associations?
Additional new legislation that is also only applicable to property managers serving homeowners association is that they must attend at least one Board meeting or membership meeting annually “in person”, make their contract available upon request, and provide certain disclosures. Those disclosures include providing the members of the homeowners association (and posting it on the association website) the name and contract information for each manager or management company representative assigned to the association, their hours of availability and a summary of their duties. Any change in the information is required to be updated within twenty-four (24) hours.
COMMENTARY: Lots of unanswered questions here. How exactly do these disclosures get communicated to the membership? Does the management company have to send a mailing to the entire community every time the manager or other relevant staff changes, their hours change or their duties change? Does e-mail and/or posting on the association website suffice? Do these requirements apply to higher up management company personnel such as a regional director or vice president who has a homeowners association under their umbrella of responsibility? Do any or all of these new requirements apply to pre-existing management contracts?
Regardless of what the answers may be to any of the foregoing, one thing that seems certain is that these added burdens and ongoing requirements will almost assuredly result in increased management costs.
WEBSITES AND OFFICIAL RECORDS
By January 1, 2025 any homeowners association with 100 or more parcels must have a website or mobile application to which certain records must be posted. The association’s website and any app must include a section that is accessible only by user name and password, by parcel owners and employees of the association. Association records which the statute provides to be confidential and inaccessible to owners must be redacted or otherwise kept off the website or app. However, the association or its agent is not liable for disclosure of such records “unless such disclosure was made with a knowing or intentional disregard of the protected or restricted nature of such information.”
Timely notice of membership meetings and Board meetings, including agendas, are required to be posted on the website or the app. The posted notices of membership meetings must also include any item to be voted on at the meeting. The notices of Board meetings must include any document required for the meeting by statute.
Each homeowners association must adopt written rules governing the method or policy by which official records are to be retained. Association records must be kept for seven (7) years, unless the governing documents require longer. While bids are included in this list, the statute elsewhere states that they must be kept for only one (1) year, so a bit of an internal conflict.
Copy of official records must be made available to law enforcement within five (5) business days of receipt of a subpoena.
By October 1, 2024, each homeowners association shall provide a physical or digital copy of the association rules and covenants to every member of the association, and to every new member, and must also send to each member any future amendments. The association may adopt rules establishing standards for manner of distribution and timeframe for providing copies. Requirement can be met by posting a complete copy of the association’s website but the association must notify members of intent to utilize website for this purpose.
COMMENTARY: While the website and official records requirements are productive in that they better align condominium associations and homeowners associations, the requirement to force associations to adopt rules regarding methods and policies of document retention (rather than allowing them the choice to do so) feels like an overreach and is not clear. Can the envisioned rule simply state that “all records are kept by the property management company in accordance with their contract, corporate policies and applicable law”? If an association decides to electronically scan and save a document or a class of documents that were previously retained in hard copy, does the Board have to identify every such instance by way of a rules amendment?
Furthermore, why do homeowners associations have to now all of the sudden provide a physical or digital copy of the rules and covenants to existing members? Those members, if they really want a copy, can always make an official records request. This requirement, in addition to being expensive, has the potential to create liability should an association omit a document, provide a document that was later amended, or provide an incorrect or incomplete document and the receiving party then detrimentally relies on what was erroneously provided.
FINANCIAL MATTERS
An association and its officers, directors, employees, and agents may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expense. Credit cards are still allowed.
COMMENTARY: So the legislature is ok with individuals spending money that the association may not actually have, but not ok with them spending money that’s in the bank account, even if it is for a lawful purpose of the association? Perhaps they just figure the association can dispute unlawful charges on a credit card whereas a debit card provides the opportunity for someone to abscond with actual funds and I suppose its harder to dispute such charges and get that money back. In any case, this just makes it harder for homeowners associations to actually operate as many have used debit cards as a means of payment for years and its unfortunate that a few bad apples have spoiled it for everyone.
Homeowners associations with at least 1,000 parcels are required to prepare an audit annually, regardless of revenue and homeowners associations cannot vote in consecutive years to waive or reduce financial reporting requirements.
Compound interest cannot accrue on assessments.
An owner may make a written request for a detailed accounting of any amounts owed to the association and the Board must provide such information within fifteen (15) business days after receipt. Otherwise, the ability to collect any fines that may exist on the owner’s account is waived. Accounting cannot be requested again for ninety (90) days.
COMMENTARY: The statute already provided that an owner’s statement of account was an accessible official record and that such records had to be made available within ten (10) business days of request and the statute also provides a procedure for requesting an estoppel certificate, so this new law creates a potential conflict. Which timeframes apply? Furthermore, if there are going to be waivers as penalties then why is the vacating of fines the only target here?
FINES AND SUSPENSIONS
Speaking of targeting fines, the legislature really decided to make the procedure to fine or suspend not only more cumbersome and less effective as an enforcement tool, but some of the new legislation now arguably makes it an entirely frivolous endeavor.
Under the new legislation, the hearing before the fining committee must be held within ninety (90) days after the hearing notice is provided. The committee hearing may be held by telephone or electronic means. Written notice of the committee decision must be provided within seven (7) days of the date of the hearing and the committee must set a date by which the fine must be paid, which date must be at least thirty (30) days after delivery of the written committee decision.
HOWEVER, if a violation is cured before the hearing, or after written notice of the committee’s determination is provided, a fine or suspension may not be imposed! Attorney’s fees incurred for violations may not be imposed until time period passes for correcting the violation or paying the fine.
In addition to the procedural changes, the new law also provides that despite any rules in an association’s governing documents, no fine may be levied or a suspension imposed for leaving garbage receptacles out within 24 hours before or after designated garbage collection day or time or leaving holiday decorations or lights longer than indicated in the governing documents, unless such decorations or lights are left up for longer than one (1) week after the association provides written notice of the violation.
COMMENTARY: Fining has always been an overly long and relatively unrewarding process for associations, and this new legislation provides for even more deadlines and procedure for homeowners association, thus making the process even more unattractive. Even worse, the new laws also seemingly provide that an owner can have an ongoing violation go on for quite some time, the Board and then the fining committee can jump through all the procedural hoops, send all the letters, and then the owner can cure the issue at the very last minute, totally get off the hook and all the hard work to enforce and deter the behavior just goes away?!?! The fining process is supposed to be punitive to actually work, but this takes that away. Moreover, it is unclear if this new legislation would be applied to fines that are for violations that are not continuous in nature, but rather happen and then end relatively quickly. These include violations such as parking illegally, a dog not being walked on a leash or cleaned up after, nuisance violations, loud parties, aggressive confrontations, etc. These violations, by their very nature, occur and then conclude, so they are “cured” almost immediately, and yet associations have justifiably always had the right to fine owners for the occurrence, rather than having to rely on the ongoing nature of it as well. I believe that applying this provision to these types of violations would effectively mean they could never be the basis for a fine and while I do not believe the law would be read that way, this situation is begging for clarity.
Ultimately, it seems that the most viable way to truly address violations going forward will be to go through the legal enforcement process (shameless, but honest, plug!).
OWNER VOTING
It has been clarified that for homeowners associations that vote to utilize electronic voting, owners may consent to participating in electronic voting by opting in electronically rather than only “in writing” which is the pre-existing language.
COMMENTARY: Many associations were already having their owners opt into electronic voting via an electronic consent, so this just codifies what associations were already doing and quite honestly, it makes sense.
PROHIBITED RESTRICTIONS
The legislation from last year set forth that a parcel owner or tenant could not be prohibited “from installing, displaying, or storing any items on a parcel which are not visible from the parcel's frontage or an adjacent parcel.” This is now modified to allow a homeowners association to also restrict items if they are visible from “an adjacent common area, or a community golf course.” However, the list of items which are protected by specific example has been expanded from artificial turf, boats, flags and recreational vehicles to also include vegetable gardens and clotheslines.
The new legislation also provides that a homeowners association may not preclude:
· An owner, tenant, guest, or invitee from parking a personal vehicle, including a pickup truck, in the owner’s driveway or elsewhere that the owner or tenant, guest or invitee has a right to park under state, county or city regulations.
· An owner, tenant, guest, or invitee from parking or otherwise operating a work vehicle, notwithstanding any commercial vehicle restrictions, unless it is a commercial vehicle that weighs over 26,000 pounds, has more than two (2) axles or uses special fuel.
· An owner who is a first responder, tenant, guest or invitee from parking their first responder vehicle in an area that an owner, tenant, guest or invitee has a right to park.
· An owner from utilizing a contractor or worker solely because the contractor or worker is not on a preferred vendor list. Also, the association may not prohibit because the contractor or worker does not have a professional or occupational license.
COMMENTARY: The legislative updates in this section have thus far been the most significant source of trepidation for homeowners associations. Enforcing backyard standards, vehicles and contractors have forever been rights afforded to homeowners associations and yet the legislative has endeavored to take away fundamental controls that define what it means to live in a deed-restricted community. While we all realize that the world changes and adapts and that things like pickup trucks are no longer perceived the same way as they were decades ago, eradicating all restrictions on them, as well as commercial vehicles, is a significant measure that fails to contemplate concerns other than aesthetics. And let’s be real. None of these vehicles are over 26,000 pounds, have more than two (2) axles or take special fuel, so the statutory exception might as well not exist. No one is parking a semi trailer in their driveway. However, even standard full size pickup trucks and commercial vehicles can still be large, seen as unsightly and create spacial problems. An association should have control over these vehicles. What if the community has small adjacent or shared driveways that cannot fit a large vehicle like a dually pickup truck or work van? What if the community does not like the aesthetic of a lifted pickup truck or what if a 55 plus community is especially sensitive to the nuisance of a truck with a loud modified exhaust? What if the community has narrow streets that are not conducive to the operation of larger vehicles? It remains to be seen how these concerns will be resolved.
However, for some communities there is a potential legal argument that these types of substantive changes to existing law concerning backyards, vehicles, contractors and workers do not apply to them. More specifically, in 1977 there was a Florida case entitled Kaufman v. Shere wherein the court held that only when an association’s governing documents contain specific language subjecting the documents to the applicable Florida statutes “as amended from time to time” (the “Kaufman Language”), will substantive statutory changes apply. Otherwise, any substantive legislative amendments that were enacted after the effective date of an association’s governing documents are held to not apply to an association if its governing documents do not contain the “as amended from time to time” language. This same statutory application analysis was more recently reiterated and reinforced in the 2011 case of Cohn. v. The Grand Condominium Association, Inc. While this case law may offer a safety valve for some homeowners associations to preserve the enforcement of their covenants, please note that this is merely an argument at this juncture and associations and owners should consult with legal counsel before making any decisions or policies regarding these new laws.
ARCHITECTURAL DENIALS
A notice of denial by a homeowners association to an owner “for the construction of a structure or other improvement on a parcel” must include specification of the covenant or rule relied upon by the Association and the specific aspect of the improvement which does not conform to that covenant or rule. Additionally, a homeowners association is not permitted to require review and approval of plans and specifications for central air conditioning, refrigeration, heating, or ventilating systems if not visible from parcel’s frontage and is substantially similar to a system that is approved or recommended by the association.
COMMENTARY: With respect to the change regarding denials of architectural applications, it is highly advisable that associations develop and codify a design review manual or architectural guidelines that provide specifications that can be pointed to and relied upon by the applicable governing body (board or committee) to justify denials of non-conforming proposals.
HURRICANE PROTECTION
Homeowners associations are required to adopt “hurricane protection” specifications and they may include color, style, and other factors deemed relevant by the Board. The specifications may also include adherence to the existing, unified external appearance of the building scheme, but must include language that any structure or improvement is required to adhere to applicable building codes. An association may not deny applications for installation, enhancement, or replacement of hurricane protection by a parcel owner when the application conforms with the specifications adopted by the Board or architectural committee.
CRIMINAL PENALTIES
Continuing with the theme of making Board service more unattractive is another round of criminal sanctions as follows:
Any officer, director or manager who solicits, offers to accept or accepts anything or service of value from any person providing or proposing to provide goods or services to the association, or a kickback, without paying consideration for it, commits a third degree felony and shall be deemed to be removed from office. However, exemptions for small promotional items or food given in connection with a trade fair or educational program remain.
Any officer, director or manager who knowingly, willfully and repeatedly violates any of the statutory requirements to provide access to inspect and obtain copies of association records to a unit owner or an owner’s authorized representative, with the intention to cause harm to a member or member, commits a second degree misdemeanor and shall be deemed to be removed from office. “Repeatedly” is defined as two (2) or more violations within a twelve (12) month period.
Any person who knowingly and intentionally defaces or destroys accounting records during the period for which such records are required to be maintained (without any need to show harmful intent), or who knowingly or intentionally fails to create or maintain accounting records that are required to be created or maintained, with the intent of causing harm to the association or one or more of its members commits a first degree misdemeanor.
“Any person who willfully and knowingly refuses to release or otherwise produce association records with the intent to avoid or escape detection, arrest, trial, or punishment for the commission of a crime, or to assist another person with such avoidance or escape” commits a felony of the third degree.
Prior to this new legislation, numerous acts involving association elections were each made a first degree misdemeanor. Added to those existing first degree misdemeanor election crimes are now knowingly aiding, abetting or advising someone in the commission of election fraud, agreeing or conspiring with such a person or knowing of an election fraud and trying to help the person who committed it avoid or escape consequence (except a licensed attorney giving legal advice).
Additionally, while the use of debit cards issued in the name of the association or billed directly to the association has long been prohibited, now the use of any such debit card for an expense that has not been properly pre-approved by the Board and reflected in the written minutes or the written budget, even if otherwise a valid association expense, is the considered to be the commission of theft.
Finally, the new legislation provides that officers and directors charged with a criminal violation under Florida Statute 720 are deemed removed from office and a vacancy is declared.
COMMENTARY: While the general outlook on expanding criminal sanctions seems daunting at first, the reality is that only the worst and most egregious offenders are prosecuted. If it were any more common place for Board members to face criminal liability then the entire system of condominium governance would go out the window. Our office has worked with associations that have presented state attorneys with actions that seemed to fit the description of crimes that exist under Florida Statute 720, but it seemed like they simply had more serious cases to consider and no action was taken. In fact, it is my opinion that putting added demands on the time of volunteer Board members and making their jobs harder to perform by taking away enforcement tools (a large theme of this year’s updates for both condominiums and homeowners association) will ultimately be more negatively impactful as deterrents to service than any of these criminal provisions.
ADDITIONAL LEGISLATION
APPLICABLE TO ALL ASSOCIATIONS
MANAGEMENT
Management companies or managers who have been terminated or whose contract has concluded have twenty (20) business days to turn over official records. Failure to comply may result in a license suspension and a civil penalty of $1,000 a day up to ten (10) business days.
The new legislation also requires written disclosure to the board by a management company, manager or any director, officer or person with a financial interest in the management company, or who is a relative of such persons, with regard to any conflict of interest, which also includes any contract or business with the association by the management company for goods or services other than management. In such an instance of providing goods and service other than management by a management company or manager, if the bid exceeds $2,500 then the Association must solicit multiple competitive bids from other providers. Disclosure of the conflict must be disclosed in the contract itself, must be attached to the meeting notice/agenda of the next board meeting, and must be included in the related meeting minutes. Board approval of a contract or transaction with such a conflict requires approval by 2/3 of the directors present. A failure to disclose allows an association to cancel the contract for management services without penalty and subjects the manager or management company to potential license discipline. If a possible conflict is not disclosed and then later discovered, then the association may file a written notice terminating the contract provided that at least 20% of the voting interests concur and vote in favor thereof. Any cancellation notification must be sent by certified mail, return receipt requested or in the manner set forth in the contract.
COMMENTARY: The often unknown or overlooked administrative code has long had requirements with regard to the timeframe for management to relinquish records, but this legislation now brings a specific requirement to the forefront and makes it more readily known, which is a good thing for associations to avoid business disruptions. The conflict of interest provisions that were added are another example of more widely publicizing and expanding on the existing conflict of interest statutes to extend them from applying only to board member transactions with an association to also now include managers and management companies. Most of the larger companies that provide alternative services aside from management or that have potential conflicts of interest have been good about disclosing them in their contracts, but this legislation ensures even further transparency.
Additionally, in the most inconsistent move possible, the DBPR has determined that from July 1, 2024 until January 1, 2026, that licensed property managers with at least ten (10) years of licensure and no disciplinary action on their license are exempt from completing continuing the education normally required for renewal of their license.
COMMENTARY: Um….what?!?! The entire spirit of all the new legislation is to force education on board members and managers, even to what I believe is an overbearing degree, so how in the world does this not entirely contradict that narrative and the intention behind it? I mean good for the experienced managers I guess. How about lawyers? Can we take 18 months off from continuing education too?
