Summary of HB 653, Impacting Condominiums, Cooperatives, and Homeowners’ Associations
HB 653 (SB 744), sponsored by Representative Moraitis, passed the Florida Legislature but as of today, it has not yet been sent to the Governor for consideration. When a bill is sent to the Governor, he has fifteen (15) days to act. He can either sign the bill into law, veto it, or allow it to become law without his signature. If approved by the Governor, HB 653 will be effective on July 1, 2017 (except the provision regarding websites will be effective on July 1, 2018). The following is a summary of the bill:
FIRE SPRINKLERS AND ENGINEERED LIFE SAFETY SYSTEMS (ELSS) (Condominiums and Cooperatives)
633.2225, Florida Statutes (NEW)
- Requires condominium associations that operate a building of three stories or more and that have not installed a sprinkler system in the common areas to mark the building with a sign or symbol approved by the State Fire Marshal to warn persons of the lack of a sprinkler system.
The State Fire Marshal shall:
- Ensure that the dimensions and placement of the sign or symbol do not diminish the aesthetic value of the building;
- Adopt rules necessary to implement the provisions of this section including, but not limited to:
- The dimensions and color of such sign or symbol;
- The time within which the buildings without sprinklers must be marked;
- The location on each building where such sign or symbol must be posted.
- The State Fire Marshal and local fire officials shall enforce this section.
- An association that fails to comply with the requirements of this section is subject to penalties as provided in s. 633.228.
718.112(2)(l), §719.1055, Florida Statutes
- The bylaws shall include a provision that a certificate of compliance from a licensed electrical contractor, electrician, or professional engineer, may be accepted by the board as evidence of compliance with the applicable fire and life safety code.
- Notwithstanding chapter 633 or any other code, statute, or ordinance, administrative rule, or regulation, or any interpretation of the foregoing, an association is not obligated to retrofit the common elements, association property, or units of a residential condominium/cooperative with a fire sprinkler system or other engineered life safety system in a building that is 75 feet or less in height.
- There is no obligation to retrofit with a fire sprinkler or other engineered life safety system for a building greater than 75 feet in height, calculated from the lowest level of fire department vehicle access to the floor of the highest occupiable story if the unit owners have voted to forego such retrofitting by the affirmative vote of two-thirds of all voting interests in the affected condominium/cooperative.
- There is no requirement that owners in condominium/cooperatives of 75 feet or less conduct an opt out vote and such condominium/cooperatives are exempt from fire sprinkler or other engineered lifesafety retrofitting. The preceding sentence is intended to clarify existing law.
- The local authority having jurisdiction may not require completion of retrofitting with a fire sprinkler system or other engineered lifesafety system before January 1, 2022.
- By December 31, 2018, an association that operates a residential condominium/cooperative that is not in compliance with the requirements for a fire sprinkler system or other engineered life safety system and has not voted to forego retrofitting of such system must initiate an application for a building permit for the required installation with the local government having jurisdiction demonstrating that the association will become compliance by December 31, 2021.
- A vote to forego the required retrofitting may be obtained at a meeting, by written consent, or by electronic voting and is effective upon recording a certificate executed by an officer or agent of the association attesting to such vote in the public records of the county where the condominium/cooperative is located.
- When an opt out vote is to be conducted at a meeting, the notice must be mailed or delivered to each owner at least 14 days before the membership meeting in which the vote to forego retrofitting of the required fire sprinkler system or other engineered lifesafety system is to take place.
- Within 30 days after the association’s opt out vote, notice of the results must be mailed or delivered to all unit owners. Evidence of compliance with this notice requirement shall be made by affidavit executed by the person providing the notice and filed among the official records of the association.
- Failure to provide timely notice to unit owners does not invalidate an otherwise valid opt-out vote if notice of the results is provided to the owners.
- After notice is provided to each owner, a copy must be provided by the current owner to a new owner before closing and by a unit owner to a renter before signing a lease.
- If there has been a previous vote to forego retrofitting, a vote to require retrofitting may be obtained at a special meeting of the owners called by a petition of at least 10% of the voting interests, or by a majority of the board of directors. The approval of two-thirds of all voting interests in the affected condominium/cooperative is required to require retrofitting. Removes the language which prohibited an association from using electronic transmission for the notice of a meeting called to opt back into the required retrofitting.
- Clarifies that compliance with the administrative reporting requirement to the Division of Condominium, Timeshares, and Mobile Homes does not affect the validity of an opt out vote.
- The provisions of Section 718.112(2)(l) does not apply to timeshare condominium associations, which shall be governed by s. 721.24.
CRIMINAL PENALTIES (Condominiums)
718.111(1), Florida Statutes
- An officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value or kickback for which consideration has not been provided for his or her own benefit or that of his or her immediate family. If applicable, a violation of this provision may result in criminal penalties as provided in Section 718.111(1)(d).
- Forgery of a ballot envelope or voting certificate used in an election is punishable as provided in s. 831.01;
- The theft or embezzlement of funds of a condominium association is punishable as a crime as provided in s. 812.014;
- The destruction of or the refusal to allow inspection or copying of an official record in furtherance of any crime is punishable as tampering with physical evidence as provided in s. 918.13 or as obstruction of justice as provided in chapter 843;
- An officer or director charged by information or indictment with a crime referenced above must be removed from office and the vacancy shall be filled as provided in Section 718.112(2)(d)2. until the end of the officer’s or director’s period of suspension or the end of his or her term of office, whichever occurs first.
- If a criminal charge is pending against the officer or director, he or she may not be appointed or elected to a position as an officer or a director of any association and may not have access to the official records of ay association, except pursuant to court order.
- If the charges are resolved without a finding of guilt, the officer or director must be reinstated for the remainder of his or her term of office, if any.
CONFLICT OF INTEREST (Condominiums)
718.111(3), Florida Statutes
An association may not hire an attorney who represents the management company of the association.
- 718.111(9), Florida Statutes
Except for a timeshare condominium, a board member, manager, or management company may not purchase a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments or take title by deed in lieu of foreclosure.
OFFICIAL RECORDS (Condominiums and Cooperatives)
718.111(12), §719.104(2), Florida Statutes
- Electronic records relating to voting by unit owners are considered “official records” and must be maintained for one (1) year from the date of the election, vote, or meeting to which the document relates. (Condominiums and Cooperatives)
- Bids for materials, equipment, or services, are “official records”. (Condominiums)
- The records of the association must be available to unit owners within 10 working days after receipt of a written request by the board or its designee. (NOTE: The previous law required that the records must be made available to unit owners within 5 working days). (Condominium and Cooperatives)
- Clarifies that the right to make or obtain copies of records extends to the owner’s authorized representative. (Condominiums)
- A renter of a unit has a right to inspect and copy the association’s bylaws and rules. (Condominiums)
WEBSITES FOR OFFICIAL RECORDS (Condominiums)
718.111(12)(g), Florida Statutes
- By July 1, 2018, an association with 150 or more units which does not manage timeshare units shall post digital copies of the following official records on its website:
- The recorded declaration of condominium of each condominium operated by the association and each amendment to each declaration.
- The recorded bylaws of the association and each amendment to the bylaws.
- The articles of incorporation of the association, or other documents creating the association, and each amendment thereto. The copy posted pursuant to this sub-subparagraph must be a copy of the articles of incorporation filed with the Department of State.
- The rules of the association.
- Any management agreement, lease, or other contract to which the association is a party or under which the association or the unit owners have an obligation or responsibility. Summaries of bids for materials, equipment, or services must be maintained on the website for 1 year.
- The annual budget required by s. 718.112(2)(f) and any proposed budget to be considered at the annual meeting.
- The financial report required by subsection (13) and any proposed financial report to be considered at a meeting.
- The certification of each director required by s.718.112(2)(d)4.b.
- All contracts or transactions between the association and any director, officer, corporation, firm, or association that is not an affiliated condominium association or any other entity in which an association director is also a director or officer and financially interested.
- Any contract or document regarding a conflict of interest or possible conflict of interest as provided in ss. 468.436(2) and 718.3026(3).
- The notice of any unit owner meeting and the agenda for the meeting, as required by s. 718.112(2)(d)3., no later than 14 days before the meeting. The notice must be posted in plain view on the front page of the website, or on a separate subpage of the website labeled “Notices” which is conspicuously visible and linked from the front page. The association must also post on its website any document to be considered and voted on by the owners during the meeting or any document listed on the agenda at least 7 days before the meeting at which the document or the information within the document will be considered.
- Notice of any board meeting, the agenda, and any other document required for the meeting as required by s.718.112(2)(c), which must be posted no later than the date required for notice pursuant to s. 718.112(2)(c).
- The association shall ensure that the information and records described above, which are not permitted to be accessible to unit owners, are not posted on the association’s website.
- If protected information or information restricted from being accessible to unit owners is included in documents that are required to be posted on the association’s website, the association shall ensure the information is redacted before posting the documents online.
- The website must be:
- An independent website or web portal wholly owned and operated by the association;
- A website or web portal operated by a third-party provider with whom the association owns, leases, rents or otherwise obtains the right to operate a web page, subpage, web portal, or collection of subpages or web portals dedicated to the association’s activities and on which required notices, records, and documents may be posted by the association;
- The association’s website must be accessible through the Internet and must contain a subpage, web portal, or other protected electronic location that is inaccessible to the general public and accessible only to unit owners and employees of the association.
- Upon the unit owner’s written request, the association must provide the unit owner with a username and password and access to the protected sections of the association’s website that contain any notices, records, or documents that must be electronically provided.
FINANCIAL REPORTING (Condominiums, Cooperatives, and Homeowners’ Associations)
718.111(13), §719.104(4), §720.303(7), Florida Statutes
- Requires that a copy of the “most recent” financial report or notice that a copy of the “most recent” financial report be mailed or hand delivered to a unit owner, without charge, “within 5 business days” after receipt of a written request from a unit owner. (Condominiums only)
- Removes the provision that allows an association that operates fewer than 50 units, regardless of the association’s annual revenues, to prepare a report of cash receipts and expenditures in lieu of the financial statement required by Section 718.111(13)(a).
- Therefore, all associations, regardless of size, must have prepared the appropriate financial report, based on the association’s revenues, unless waived in advance by the members.
- Removes the provision which stated that associations may not waive the financial reporting requirements of Section 718.111(13), Florida Statutes, for more than 3 consecutive years. (Condominiums and Cooperatives—this was never the law for HOAs)
- A unit owner may provide written notice to the division of the association’s failure to mail or hand deliver a copy of the most recent financial report within 5 business days after submission of a written request to the association for a copy of such report. If the division determines that the association failed to mail or hand deliver a copy of the most recent financial report to the unit owner, the division shall provide written notice to the association that the association must mail or hand deliver a copy of the most recent financial report to the unit owner and the division within 5 business days after it receives such notice from the division. An association that fails to comply with the division’s request may not waive the financial reporting requirement provided in the statute. A financial report received by the division shall be maintained, and the division shall provide a copy of such report to an association member upon his or her request. (Condominiums)
DEBIT CARDS (Condominiums)
718.111(15), Florida Statutes (NEW)
- 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.
- The use of a debit card issued in the name of the association, or billed directly to the association, for any expense that is not a lawful obligation of the association may be prosecuted as credit card fraud pursuant to s. 817.61.
NOTICE OF BOARD MEETINGS (Condominiums, Cooperatives, and Homeowners’ Associations)
718.112(2)(c)1., §719.106(1), §720.303(2), Florida Statutes
- 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 agenda on a website serving the association for at least the minimum period of time for which a notice of a meeting is also required to be physically posted on the property.
- Any such rule shall include a requirement that the association send an electronic notice in the same manner as required for a notice for a meeting of the members, which must include a hypertext link to the website where the notice is posted, to unit owners whose email addressed are included in the association’s official records.
MATERIAL ALTERATIONS TO THE COMMON ELEMENTS (Condominiums)
718.113(2), Florida Statutes
Requires the owner vote to approve material alterations and substantial additions to be taken before the material alterations or substantial additions are commenced.
TERMINATION OF CONDOMINIUMS (Condominiums)
718.117, Florida Statutes
- Revises the legislative findings and public policy statements related to Section 718.117, Florida Statutes.
- Expressly states the amendments are intended to clarify existing law, are remedial in nature, and are intended to address the rights and liabilities of the affected parties, and apply to all condominiums created under the Condominium Act.
- Regarding optional terminations, 80 percent of a condominium’s voting interests may approve a plan of optional termination, regardless of what a condominium’s governing documents may provide. However, if 5 percent or more of the voting interests reject the plan of termination, the plan may not proceed. (The previous law required 10 percent or more of the voting interests to reject the plan). In addition, the plan of termination must be approved by the Division of Condominiums, Timeshares and Mobile Homes.
- If 5 percent or more of the voting interests of a condominium reject a plan of termination, a subsequent plan may not be considered for 24 months. (The previous law required 18 months between termination votes).
- The optional termination of a condominium pursuant to Section 718.117(3) is not permitted until 10 years after the recording of the declaration of condominium, unless there is no objection to the plan. (The previous law prohibited optional termination for 5 years after the recording of the declaration).
- In the event of an optional termination, all persons whose condominium unit is their homestead and who are current in the payment of both assessments and other monetary obligations to the association must be paid at least the original purchase price paid for their units. (The previous law provided that in order to receive the purchase price, the owner must have been an original purchaser from the developer, must have rejected the plan of termination, and must have been current in the payment of any mortgage encumbering the unit).
- The plan of termination must disclose the following:
- The identity of any person or entity that owns or controls at least 25 percent of the condominium units. (The previous law required disclosure of the person or entity owning or controlling 50 percent of the units).
- If 25 percent units are owned by an artificial entity, the identity of the natural person or persons who, directly or indirectly, manage or control the entity or entities and the natural person who, directly or indirectly own or control 10 percent or more of the artificial entity or entities that constitute the bulk owner (instead of 20 percent as under the previous law).
- The factual circumstances that show that the plan complies with the requirements of this section and that the plan supports the expressed public policies of this section.
BULK BUYERS (Condominiums)
718.707, Florida Statutes
Removes the “sunset” date of July 1, 2018 from the Distressed Condominium Act, the result being that the Distressed Condominium Act, which was originally intended to be temporary in nature, will now be permanent.
BOARD MEMBERS (Cooperatives)
719.106(1), Florida Statutes
- In residential cooperative association of 10 or more units, co-owners of a unit may not serve as members of the board at the same time unless they own more than one unit or unless there are not enough eligible candidates to fill the vacancies.
- Board members may communicate by email but may not vote by email.
- A director or officer more than 90 days delinquent in the payment of any monetary obligation to the association shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law.
BULK AGREEMENTS FOR COMMUNICATION SERVICES (Cooperatives)
- If so provided in the bylaws, authorizes a cooperative association to enter into bulk contracts for communications services as defined in chapter 202, information services, or Internet services and such costs shall be a common expense.
BOARD OF DIRECTORS AND ELECTRONIC NOTICE OF MEETINGS (Homeowners’ Associations)
720.303(2), Florida Statutes
- Board members may communicate by email but may not vote by email.
- The association may provide by electronic transmission for meetings of the board of directors, committee meetings requiring notice, and annual and special meetings of the members to any member who has provided a facsimile number or e-mail address to the association to be used for such purposes; however, a member must consent in writing to receiving notice by electronic transmission.
ELECTIONS (Homeowners’ Associations)
720.306(9)(a), Florida Statutes
- Clarifies that if an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required, write-in nominations are not permitted and such candidates shall commence service on the board of directors, regardless of whether a quorum is attained at the annual meeting.
PARTIAL PAYMENTS (Homeowners’ Associations)
720.3085, Florida Statutes
- An HOA may accept payments, including partial payments, and it will not act as an “accord and satisfaction”, notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The foregoing is intended to clarify existing law.