- 2017 Legislative Session Results in Significant Changes to Community Association Practice
The 2017 legislative session has proven particularly impactful in the realm of community association law. The following provides a concise overview of the most notable laws enacted during the session, all of which are effective as of July 1, 2017, unless stated otherwise:
- HB 1237 – Condominiums
HB 1237, applying exclusively condominiums, criminalizes certain board member activity and prohibits an association and its management company from retaining shared counsel, among many other changes. Specifically, Section 718.111(a) and (d), Florida Statutes now imposes criminal penalties for the following actions: forgery of a ballot envelope, forgery of voting certificate, theft or embezzlement of funds, destruction of an official record, refusing to allow inspection or copying of an official record within certain timeframes, and soliciting, offering, or accepting a kickback. These actions constitute, at a minimum, second degree misdemeanors and up to first degree felonies.
Section 718.111(3)(b) now prohibits an association from hiring an attorney who also represents its management company. This ban on shared counsel will certainly lead to an increase of insurance premiums as carriers will be obligated to retain separate counsel for each insured entity.
In the same vein, acceptable conflicts of interest of association directors and officers are further limited, first requiring the disclosure of “any activity that may reasonably be construed to be a conflict of interest.” A rebuttable presumption of a conflict of interest is established if either any director, officer, or relative of any director or officer enters into a contract for goods or services with the association; or any director, officer, or relative of any director or officer holds an ownership interest in a corporation, LLC, partnership, LLP, or other business entity that conducts business with the association or proposes to enter into a contract or other transaction with the association. Any conflict must be denoted in the contract.
HB 1237 further mandates that condominium associations create and maintain an internet site. The site must be operational by July 1, 2018. This website requirement applies only to associations of 150 or more units.
Section 718.111(12)(a) now delineates additional requirements for record keeping which includes 1) bids be maintained as accounting records for seven years; 2) authorized representatives of members are now permitted to inspect the association’s records; 3) renters have a right to inspect and copy the association’s bylaws and rules; and 4) electronic records of voting must be maintained for one year.
- SB 1520 – Termination of a Condominium Association
SB 1520 delineates specific legislative goals for condominium terminations which includes the maintenance of storm water management systems and managing expenses for same, avoidance of covenants that impair productive use of the land, protection of residents from safety hazards stemming from the condominium property, ensuring fair treatment and just compensation for individuals affected, as well as the preservation of homestead property and rights. Optional terminations in particular are further restricted in this bill as the Division of Condominiums must now make a determination as to whether a condominium’s termination plan satisfies certain statutory requirements as denoted in Section 718.117, Florida Statutes. The Division’s decision must be rendered within 45 days after the receipt of the initial termination plan. Notably, an optional termination plan must be approved by at least 80% of the total voting interests and not objected to by more than 5% of the total voting interest. If more than 5% of the total voting interests object, a subsequent termination plan may not be considered for 24 months after the initial rejection. The plan of termination must also identify each person or entity that owns 25% or more of the units, and if the units are owned by an artificial entity, the person or entity that controls 10% or more of the artificial entity must be disclosed. SB 1520 expressly states that Section 718.117 applies to all Florida condominiums in existence on or after July 1, 2007 and that all amendments to the section clarify existing law.
- SB 398 – Estoppel Certificates
This bill extensively amends Sections 718.116, 719.108, and 720.30851, which govern the preparation and issuance of estoppel letters. Most notably, an association may be bound by an estoppel certificate issued by any board member, authorized agent, or authorized representative of the association including any authorized agent, authorized representative, or employee of a management company authorized to complete this form on behalf of the board or association. In response, associations should implement policies limiting who communicates information on its behalf. An estoppel certificate must now be delivered to the requestor within ten days of the request. An estoppel certificate has an effective period of 30 days if sent by email and 35 days if sent by regular mail.
- HB 1237 – Condominiums