March 3, 2020

2020 Community Association Legislative Update – Part I

While some legislative sessions can be relatively uneventful for condominiums and homeowner associations, this year there are a number of bills that could have a significant impact on the operation and governance of these communities.

In particular, House Bill 623 – Community Associations includes a number of proposed changes that would significantly impact condominiums, cooperatives, and homeowner associations. Given the breadth of the topics included in HB 623, and its positive movement through the Legislature, this post will focus on detailing the changes proposed in this bill alone. However, as we do each year, we’ll be releasing additional legislative updates on our blog addressing other bills of interests, and ultimately summarizing what actually becomes law, so be sure to subscribe to our blog, or check our website for future updates.

Please note – House Bill 623 is not currently the law. The provisions summarized below will only become law upon approval of the Legislature and Governor.

Official Records

Mirrors condominium law to cooperative and HOA law by requiring that condominiums maintain bids for work, materials, and equipment for one year instead of seven years;
Mirrors condominium and cooperative law to HOA law by prohibiting a condominium or cooperative from requiring a unit owner to state a reason for official records inspection; and
Mirrors HOA law to condominium and cooperative law by including all ballots, sign-in sheets, voting proxies, and all other papers relating to voting in the HOA’s official records.

Condominium Unit Owner Access to Official Records

Prohibits associations from requiring owners to state a reason for requesting to inspect official records.
Requires condominium associations to maintain official records in a manner determined by DBPR.
Requires a condominium association to provide an owner who requests to inspect official records a checklist of all the records that are and are not being made available for inspection. The association must provide a sworn affidavit by the person responding to the unit owner’s request attesting to the accuracy of the checklist along with the checklist.
The association must keep a copy of the checklist and the affidavit for at least seven years.
The bill provides that delivery of the checklist and the sworn affidavit creates a rebuttable presumption that the association complied with the unit owner or renter’s request to inspect the official records.

Condominium Unit Owner Insurance and Subrogation

The bill provides that if a condominium association’s insurance policy does not provide rights of subrogation against the unit owners, then a unit owner’s insurance policy may not provide rights of subrogation against the association.

Condominium Websites

The bill allows a condominium association to post required documents on a mobile application downloadable to a mobile device, or to a website.

Condominium Term Limits

The bill provides that only board service occurring after July 1, 2018, counts towards a board member’s eight-year maximum term. This clarifies a previous amendment regarding term limits.

Condominium Transfer Costs

The bill increases the fee a condominium association may charge a potential buyer or renter in connection with the sale, lease, sublease, or other transfer of a unit from $100 to $150.
The bill also provides that the transfer fee is to be adjusted every five years equal to the annual increases for that 5-year period in the Consumer Price Index for All Urban Consumers. The DBPR must calculate the fees, rounded to the nearest dollar, and publish the amounts, as adjusted, on its website.

Condominium Service Providers Conflicts of Interest

The bill repeals the provision prohibiting a condominium association from employing or contracting with any service provider in which a board member or a relative of a board member has a financial relationship. However, the bill maintains the provision requiring a board member’s financial interest be disclosed in the contract with the association and in the minutes of the meeting at which the board votes on the contract. Any contract that fails to disclose such interest is unenforceable.
The contract also requires an affirmative vote of two-thirds of the board of directors present and prohibits a board member with a financial interest from participating in the vote.
This restores the law applicable to board member conflicts of interest to its pre-2017 state.

Condominium Electric Vehicle Charging and Natural Gas Fuel Stations

The bill provides that a condominium association is prohibited from preventing a unit owner from installing a natural gas fuel station or electric vehicle charging station within the boundaries of the unit owner’s limited common element or exclusively designated parking area.
The bill gives “natural gas fuel” the same meaning as Fla. Stat. 206.9951, and defines natural gas fuel vehicle to mean a motor vehicle powered by natural gas fuel.
A unit owner installing a natural gas fuel station is subject to the same requirements as an owner installing an electric vehicle charging station. The unit owner is also responsible for the supply and storage of the natural gas fuel.
The bill allows a unit owner to use an embedded meter to meter the electricity used by an electric vehicle charging or natural gas fuel station or to have the station separately metered.
The bill also provides that the unit owner is responsible for complying with all federal, state, or local laws or regulations applicable to the installation, maintenance, or removal of electric vehicle charging or natural gas fuel stations.
The bill requires a condominium association to grant an implied easement across the common elements to the unit owner for the installation of an electric vehicle charging station or natural gas fuel station and any necessary equipment for the furnishing of electrical power to the station.
A lien may not be filed against the association for any labor performed or materials furnished for the installation of the charging or fuel station; however, a lien may be filed against the unit owner installing the charging or fuel station.

Sale of Condominium Parcels by a Developer

The bill further clarifies how a developer may spend funds in a special escrow account. A developer may withdraw funds from the special escrow account for the actual costs incurred by the developer in the construction and development of the condominium property.
Actual costs include, but are not limited to:
- Expenditures for demolition;
- Site clearing;
- Permit fees;
- Impact fees;
- Utility reservation fees; and
- Architectural, engineering, and surveying fees that directly relate to construction and development.
The bill further limits the prohibition from using such funds for salaries, commissions, or expenses of salespersons or for advertising purposes to include, marketing, promotional purposes, loan fees, costs, interest, attorney fees, accounting fees, or insurance.

Alternative Dispute Resolution

The bill authorizes a party to a condominium or cooperative dispute to petition for presuit mediation in accordance with the HOA Act, in lieu of arbitration prior to filing in civil court.
However, the bill provides that election and recall disputes are not eligible for mediation in lieu of arbitration. Instead, condominium, cooperative, and HOA election and recall disputes must be arbitrated by the Division or filed directly with a court of competent jurisdiction.

Condominium and HOA Fines and Suspensions

The bill provides that if a fine is approved by the committee, it must be paid to the association five days after notice of the approved fine is sent to the unit or parcel owner and, if applicable, to any tenant, licensee, or invitee of the owner, instead of five days after the meeting approving the fine.

Notice of Elections for Condominium Associations

The bill provides that the second notice of election must be mailed, delivered, or electronically transmitted to unit owners not less than 14 days or more than 34 days prior to the election, which mirrors the existing notice requirements for annual meetings.

Notice of Meetings for Condominium Associations

The bill clarifies that the requirements to provide written notice to each owner and conspicuously post such notice applies to all unit owner meetings, not just the annual meeting.
The bill also provides that except for the annual meeting, the time-period that a condominium association must serve notice of meetings to the owners and conspicuously post such notice is determined by the association’s bylaws. If the bylaws are silent, the notice must be sent to the unit owners and conspicuously posted at least 14 days before the meeting.

Condominium Association Financial Issues

The bill defines “financial issues” to mean an issue related to:
- operating budgets;
- reserve schedules;
- accounting records;
- notices of meetings;
- minutes of meetings discussing budget or financial issues;
- assessments for common expenses, fees, or fines;
- the commingling of funds; and
- any other record necessary to determine the revenues and expenses of the association.
The bill also provides that the Division may adopt rules to further define “financial issues.”

Notice of Meetings for HOAs

The bill amends HOA law to mirror condominium and cooperative law by allowing HOAs to adopt rules for noticing all board and owner meetings on a website or mobile application if the time requirements for physically posting the notices are met.
Any rule adopted for website or mobile application notice must include a requirement that the association send an electronic notice providing a hyperlink to the website or mobile application where the notice is posted to all parcel owners whose email addresses are part of the official records in the same manner as notice for a member meeting.
Notice by website or mobile application must be in addition to the other notice requirements.
The bill also provides that when notice of a meeting is mailed or delivered to an owner’s address it must be sent to the address identified as the parcel owner’s mailing address in the HOA’s official records, instead of the address identified as the parcel’s owner’s mailing address on the property appraiser’s website.

Cooperative Associations Video Conferencing

The bill provides that cooperative association board members and committee members may attend meetings by telephone, real time video conferencing, or by using a similar real-time electronic or video communication.
If a board or committee member attends a meeting by telephone, video, or electronic or video communication, a speaker must be used so the member may be heard by the rest of the board or committee and by any unit owners in attendance.
These changes had already been implemented in both Condominiums and HOAs.

HOA Swimming Pools

The bill provides that pools for HOAs and other property associations that have 32 parcels or less and are not being operated as public lodging establishments are exempt from Department of Health’s public pools requirements, except for maintaining water quality standards.

HOA Developers and Reserve Accounts

The bill removes the presumption that deems an HOA to have provided for reserve accounts if the developer initially establishes the accounts. This arguably means removing the requirement for a developer who initially establishes reserve accounts to maintain or fund those reserves.
The bill clarifies that if the governing documents of an HOA do not obligate a developer to create reserve accounts, the annual budget report and each financial report must include a conspicuous statement about the lack of reserve funding.
The bill does not change the HOA’s ability to vote to provide for reserve accounts nor does it change the requirement that notice be provided in the annual budget and other financial reports that the budget does not provide for reserves.

Displays of Flags by Owners in HOAs

The bill provides that an HOA may also not prohibit parcel owners from respectfully displaying an official flag of any other state, district, commonwealth, or U.S. territory.
An HOA may also not prohibit parcel owners from displaying such flag on an authorized flagpole.

HOA Amendments and Rental Restrictions

The bill provides that an amendment to an HOA’s governing documents enacted after July 1, 2020, prohibiting a parcel owner from renting their parcel or altering or limiting an owner’s ability to rent only applies to a parcel owner who acquires title after the effective date of the amendment or to a parcel owner who consents to the amendment.
However, an association may amend its governing documents to prohibit or regulate rental durations that are for terms of less than six months, and prohibit a parcel owner from renting his or parcel more than three times in a calendar year. Any such amendments apply to all parcel owners unless the HOA has 15 or fewer parcels.
For purposes of this provision, a change of ownership does not occur when a parcel owner conveys the parcel to an affiliated entity or when the beneficial ownership of the parcel does not change.
In order for this conveyance to be recognized, the entity must furnish the association with a certificate certifying that this conveyance applies, along with any documents supporting the conveyance.
The bill defines “affiliated entity” as an entity which controls, is controlled by, or is under common control with the parcel owner or that becomes a parent or successor entity by reason of transfer, merger, consolidation, public offering, reorganization, dissolution or sale of stock, or transfer of membership partnership interests.

Discriminatory Provisions

The bill defines “discriminatory restriction” as any provision in a title transaction recorded in the state which restricts ownership, occupancy, or use of any real property in the state by any natural person on the basis of a characteristic that is determined to be protected against discrimination under the Fourteenth Amendment or article I, section 2 of the Florida Constitution.
The bill restates that any discriminatory provision in a community association’s declaration, bylaws, or rules is void and unenforceable.
The bill provides that a discriminatory restriction is extinguished from any recorded title transaction, and filing a notice to preserve such a restriction has no effect.
The bill also provides that a community association may remove a discriminatory restriction in a covenant affecting a parcel or unit in the association by a majority vote of the association’s board of directors upon request by the owner of the affected parcel or unit.

Again, the changes summarized above have not been approved by the Legislature yet, but are steadily progressing in the current 2020 Legislative Session. As is our ritual, we will continue to keep you informed on the changing legal landscape.