2018 Community Association Legislative Update

In this year’s legislative session, the Florida legislature passed two main community association related bills that will become law in 2018. The first, House Bill 841, provides extensive changes to the statutes governing Homeowner Associations, Condominium Associations, and Cooperative Associations. The second bill of major importance is House Bill 617, which establishes significant changes preserving and revitalizing governing documents under the Marketable Record Title Act. The change included in HB 617 will be effective October 1, 2018.

Below is a summary guide to assist you in understanding these important changes.

HB 841 : Community Associations – Laws effective July 1, 2018

NOTICES TO OWNERS AND ELECTIONS IN HOAs

• All notices under Section 720.306, Florida Statutes, must be mailed or delivered to the address identified as the parcel owner’s mailing address on the property appraiser’s website for the county in which the parcel is located.

This is a significant change, as these notices include those provided for all annual and special meetings of the membership, amendments, and elections. However, associations should discuss with their legal counsel whether all notices to members should be sent to mailing addresses as indicated on the property appraiser’s website. (HOAs Only)

• If no election is required because an equal number or fewer candidates than vacancies exist, and if nominations from the floor are not otherwise required, write-in nominations are not permitted and the candidates shall commence service on the board, regardless of whether a quorum is attained at the annual meeting. (HOAs Only)

ELECTRONIC NOTICE REQUIREMENTS FOR HOAs

• The association may provide notice by electronic transmission to any member who has provided a facsimile number or e-mail address to the association to be used for such purposes, and has consented in writing to receiving notice by electronic transmission. The new law appears to prohibit by exclusion other forms of electronic notice, such as social media platforms and mobile device applications. (HOAs Only)

AMENDMENT PROVISIONS FOR HOAs

• Changes HOA amendment procedures to mirror those for Condominiums. Arguably applies to amendments to rules and regulations as they are included in the definition of “governing documents” in Chapter 720:
  • amendments must contain the full text of the provision to be amended with new language underlined and deleted language stricken;
  • The above may be avoided for extensive revisions by notating on the amendment: “Substantial rewording. See governing documents for current text;”

APPLICATION OF PAYMENTS FOR HOAs

• The statutory application of payments applies regardless of any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment (HOAs Only; Already provided for Condominiums and Cooperatives)

FINING AND SUSPENSION ENFORCEMENT PROCEDURES

• Revises fining and enforcement procedures for Condominiums, Cooperatives, and HOAs:
  • enforcement committee must be composed of at least three members appointed by the board who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director or employee;
  • requires the committee to approve the fine or suspension by majority vote;
  • payment is due 5 days after the date of the committee meeting; and
  • association must provide written notice of the fine or suspension by mail or hand delivery to the owner.

ELECTRONIC VEHICLE CHARGING STATIONS IN CONDOMINIUMS

• Allows condominium unit owners to install a statutorily defined electric vehicle charging station within the boundaries of the unit owner’s limited common element parking area. The installation may not cause irreparable damage to the condominium property. The electricity for the station must be separately metered and payable by the owner who is also responsible for the costs of installation, operation, maintenance, repair, removal, and insurance of the charging station. (Condominiums Only)
• The condominium association may require the unit owner to:
  • comply with bona fide safety requirements;
  • comply with reasonable architectural standards;
  • use a licensed and registered electrical contractor or engineer;
  • provide a certificate of insurance naming the association as an additional insured on the owner’s insurance policy; and
  • reimburse the association for the actual cost of any increased insurance premium amount attributable to the electric vehicle charging station.
• Labor performed on or materials furnished for the installation of an electronic vehicle charging station under the new law may not be the basis for filing a construction lien against the association, but such a lien may filed against the unit owner. (Condominiums Only)

OFFICIAL RECORDS AND INSPECTION REQUESTS

• All meeting minutes must be permanently maintained in the official records (Condominiums and Cooperatives)
• Electronic records relating to voting by unit owners must be maintained for 1 year from date of election, vote or meeting (Condominiums and Cooperatives)
• Extends amount of time to respond to official records requests from 5 to 10 business days (Condominiums and Cooperatives)

ASSOCIATION WEBSITES

• Clarifies that associations managing a condominium with 150 or more units must comply with website requirements (Condominiums, and potentially Master HOAs)
• Extends deadline to January 1, 2019 for condominium associations to post certain official records on its website (Condominiums, and potentially Master HOAs)
• Refines the list of documents required to be posted on association websites, and limits the association’s liability for inadvertent disclosures of protected information (Condominiums, and potentially Master HOAs):
  • rather than actual contracts, the association is only required to post a list that identifies all executory contracts;
  • association is only required to post a list of bids received by the association within the past year;
  • summaries of bides for materials, equipment of services which exceed $500 must be maintained on the website for 1 year;
  • monthly income or expense statements to be considered at a meeting;
  • conflict of interest documents;
• The failure to post information required on the association website is not in and of itself sufficient to invalidate any action or decision (Condominiums, and potentially Master HOAs)

FINANCIAL REPORTING REQUIREMENTS FOR CONDOMINIUMS

• Clarifies that if an association fails to comply with the Division’s request to provide a unit owner with a financial report, the association may not waive the financial reporting requirement only for the fiscal year in which the owner’s request was made and the following fiscal year. (Condominiums Only)

NOTICE REQUIREMENTS FOR CERTAIN ASSOCIATION MEETINGS

• Removes the requirement that the notice of any meeting at which regular or special assessments are to be considered must include the “nature” of the purposes for such assessments. The new law provides that the notice must specifically state that assessments will be considered and provide the “estimated cost and description of the purposes for such assessments.” (Condominiums and Cooperatives)
• Allows for electronic notice of meetings via websites, in addition to physical postings, and requirements for electronic notice of meetings (Condominiums and Cooperatives)
• Owners providing consent to receive electronic notice are solely responsible for removing filters that prevent delivery of association emails (Condominiums and Cooperatives)

CONDOMINIUM BOARD MEMBER TERMS, RECALLS, AND CONFLICTS OF INTEREST

• No board member may serve more than eight consecutive years, unless approved by an affirmative vote of two-thirds of the voting interests voting in the election or unless there are not enough eligible candidates to fill the vacancies. (Condominiums Only)
• Provides that Board members may serve terms longer than 1 year if permitted by the bylaws or the articles of incorporation. Removes language limiting terms to 2 years. (Condominiums Only)
• Requires written agreements or ballots used to recall directors to be facially valid. (Condominiums Only)
• Clarifies that a petition to challenge a recall must come from a recalled board member if the board determines that the petition is facially valid, and from the unit owner representative if the board determines that the recall is not facially valid. (Condominiums Only)
• If the arbitrator determines a recall was invalid, the petitioning board member shall immediately be reinstated, and the recall is null and void. Provides for the recovery of attorneys fees under certain circumstances. (Condominiums Only)
• Clarifies the disclosure and approval requirements for conflicts of interest in Condominiums:
  • must be entered into the written minutes of the Board meeting;
  • approval of contracts or other transactions requires an affirmative vote of two-thirds of all other directors present;
  • at the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present; and
  • if the contract is canceled, the association is only liable for the reasonable value of the goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

TIMING OF MATERIAL ALTERATION APPROVALS

• Specifies that material alterations and substantial additions to Common Elements and Association Property must be approved before they are made, if not otherwise provided for in the declaration. New statute calls into question whether unapproved changes can be ratified by members after changes are made. (Condominiums Only)

BULK BUYER PROVISIONS

• Makes the laws applicable to bulk buyers permanent (Condominiums Only)

AUTOMATIC REMOVAL OF DELINQUENT COOPERATIVE ASSOCIATION DIRECTORS

• Provides for the automatic removal of directors and officers that are more than 90 days delinquent to the associations (Cooperatives Only)

BULK COMMUNICATION SERVICES FOR COOPERATIVE ASSOCIATIONS

• Allows cooperative associations to enter into bulk contracts for communications services as defined in chapter 202, information services or Internet services, and such costs shall be deemed a common expense.

DIRECTOR COMMUNICATION BY EMAIL/PROHIBITION ON VOTING

• Authorizes email as a means of communication between directors, but prohibits votes from being taken via email. (HOAs and Cooperatives Only. This provision already exists for Condominiums.)

HB 617 : Covenants and Restrictions – Laws effective October 1, 2018

• Revises the Marketable Record Title Act (MRTA) to create an important new method of preserving governing documents. The new method is far more streamlined than the previously existing method under Section 712.06, and could potentially apply retroactively to covenants and restrictions that have already expired. Associations should discuss these provisions with their legal counsel.
• Expands the ability of other property owners’ association that do not otherwise qualify as a homeowners association under Chapter 720, Florida Statutes, to preserve covenants and restrictions, and revitalize covenants and restrictions that have already expired.

YEARLY BOARD MEETING AGENDA REQUIREMENTS

• At the first Board meeting following each annual membership meeting (excluding the organization meeting) Boards are required to consider the desirability of filing notices to preserve the covenants or restrictions affecting the community or association from extinguishment under MRTA, and to authorize and direct the appropriate officer to file notice in accordance with the new preservation procedures under Section 720.3032

While there are a number of bills that were not approved in this year’s Legislative Session, the changes that will become law in the coming months will have far ranging and varied impacts on the operation and governance of Florida’s community associations. As is our ritual, we will continue to keep you informed on the changing legal landscape.