The 2013 HOA Bill
Our last CAN Alert outlined in great detail the changes impacting condominiums, cooperatives and HOAs which will take effect on July 1st as a result of the passage of
HB 73 by Representative George Moraitis (R – Fort Lauderdale).
Today’s CAN Alert will discuss the significant changes that will take effect on July 1, 2013 impacting only HOAs as a result of the passage of HB 7119, by Representative Mike LaRosa (R – Saint Cloud). HB 7119 passed the House and Senate last week with only 4 members in the House voting against the bill and one member who wanted to vote Yes but incorrectly pressed No.
HB 7119 marks significant changes for Florida’s homeowners’ associations. We are thrilled that this bill contains several of our CAN proposals including the important clarification on joint and several liability needed in the aftermath of the Aventura Management LLC v. Spiaggia Ocean Condominium Association, Inc. decision released on January 23, 2013.
Here is a full look at what the HOA bill does:
- Subjects community association managers to disciplinary action for violating provisions of Chapters 718, 719 or 720 during the course of performing their services.
- Requires that HOA official records be maintained within the state for at least 7 years and be made available within 10 business days after receipt of a written request to any parcel owner for inspection or copying within 45 miles of the community or within the county where the community is located. HOAs can also comply with this requirement by making the records available to an owner electronically via the Internet or by allowing the records to be viewed in an electronic format on a computer screen and then printed out.
- Allows HOA members to use a smartphone, tablet, or other portable devices to take photos or images of association documents at no charge to the member. This is the CAN language which is also found in HB 73.
- Allows an HOA to charge for the personnel costs incurred to retrieve and copy records if the time spent doing so exceeds 1/2 hour and if the personnel costs do not exceed $20 per hour. Personnel costs may not be charged for records requests that result in the copying of 25 or fewer pages.
- Requires an HOA budget to designate the components for which a reserve account may be used if such reserve account was established by the developer.
- Creates new annual reporting requirements for the association manager or the board if the community is self-managed. Each year a report containing the following information must be sent to the Division by November 22, 2013: Legal name of the association; federal employer ID number of the association; association’s mailing and physical addresses; total number of parcels; and total amount of revenues and expenses from the association’s budget. For HOAs that are still under developer control, the report must also contain the following information: developer’s legal name; developer’s mailing address; the total number of parcels owned by the developer on the date of reporting.
- Requires the DBPR to establish and implement an online registration system for the foregoing reporting requirements no later than October 1, 2013.
- Requires the DBPR to present the data collected on Florida’s HOAs to the Governor, the Senate President and the Speaker of the House by December 1, 2013 each year.
- Provides an expiration date for these reporting requirements of July 1, 2016 unless further re-enacted by the Legislature.
- Requires certification of HOA directors in the same manner as currently required of condominium directors. This has been on CAN’s Legislative Agenda for 2 years in a row and we are grateful to see our language enacted in this bill.
- Requires contracts in which a director has a financial interest to be disclosed and approved by the affirmative vote of 2/3 of the directors present.
- Allows HOA members to cancel any contract in which a director is financially interested at the next regular or special membership meeting following execution of that contract. Clarifies that if the membership cancels such a contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages or other penalty for cancellation.
- Requires the board to immediately remove any director or officer who is found to have accepted any good or service of value without paying for same for himself or herself or his or her family. The exception to this rule is that a director or officer may accept food to be consumed at a business meeting with a value of less than $25 per individual or a service or good received in connection with trade fairs or education programs.
- Requires the immediate removal from office of any director or officer who is charged with a felony theft or embezzlement offense involving the association’s funds or property.
- Requires an insurance policy or fidelity bond for all persons who control or disburse funds of the HOA. Such policy or bond must cover the maximum funds that will be in the custody of the association or management agent at any one time. Persons who control or disburse funds includes persons authorized to sign checks on behalf of the association and the president, secretary and treasurer of the association. A majority of the association’s voting interests can vote to waive the requirement of this insurance policy or fidelity bond annually at a duly called association meeting.
- Requires the HOA to provide copies of amendments to the members within 30 days after recording such amendments in the Public Records.
- Clarifies that an HOA does not have to allow nominations from the floor the night of an election if there is a process in place for candidates to be nominated prior to the election meeting. Further clarifies that an election is not required unless more candidates are nominated than vacancies exist.
- Adds abandonment or desertion by a developer as a triggering event for turnover of association control. Creates a rebuttable presumption of abandonment and desertion if the developer has unpaid assessments of guaranteed amounts for more than 2 years.
- Adds a developer’s filing a petition for bankruptcy protection under Chapter 7 of the Bankruptcy Code as a triggering event for turnover of association control.
- Adds a developer losing title to the property via foreclosure or a deed in lieu of foreclosure as a triggering event for turnover of association control unless the successor owner has accepted an assignment of developer rights and responsibilities.
- Adds the appointment of a Receiver for more than 30 days as a triggering event for turnover of association control unless the court determines that such turnover would be detrimental to the association or its members.
- Allows members other than the developer to elect at least one member of the board if 50% of the parcels in all phases of the community have been conveyed to members.
- Prohibits a developer from unilaterally amending the governing documents in a manner which is arbitrary, capricious or in bad faith. Further prohibits the developer from making such amendments as would destroy the general plan of development, prejudice the rights of non-developer members to use and enjoy the common property or materially shift economic burdens from the developer to the existing non-developer members. Developer amendments will now be subject to a reasonableness test which is a welcome change!
- Clarifies that an HOA which forecloses on a delinquent property is still entitled to collect unpaid assessments which accrued prior to the time the association took title from third party purchasers at the bank’s subsequent foreclosure sale. This is language which CAN pushed hard to enact given the detrimental 3rd DCA Spiaggia decision which held that an association should be treated as a previous owner for joint and several liability purposes and thus, unable to collect any amounts from third party purchasers.
A huge thank you to Representative Mike La Rosa and Senator Alana Hays for assisting Florida’s HOAs with the inclusion of this language! This is now your wrap-up of the HOA changes for 2013.
We have every expectation that the Governor will sign this bill (as well as HB 73) and that all these significant changes will take effect on July 1st.
Please stay tuned for CAN’s upcoming 2013 Legislative Guidebook, our Annual Legislative Town Hall and our Legal Update courses starting in October as required by the DBPR.