Community Association 2017 Legislative Guide: Part III

In Part III of our legislative series, we review the remaining community association bills signed into law.  We also analyze House Bill 653, which was vetoed by Governor Rick Scott.  The bill, among other things, would have pushed back deadlines for retrofitting high rise residential condominiums with either fire sprinklers or an engineered life safety system (“ELSS”) from 2019 to 2022.  The bill would also have allowed high rise condominiums to opt out of having to install an engineered life safety system with a two-thirds vote of the unit owners.

SB 1520 – F.S. 718.117

Relating to Condominium Terminations

• Provides the legislative amendments clarify existing law and apply to all condominiums created under the Condominium Act
• Provides that 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
• 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 it may not proceed and a subsequent plan may not be considered for 24 months
• Terminations under Section 718.117(3) are not permitted until 10 years after the recording of the declaration of condominium, unless there is no objection to the plan
• In the event of a 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 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
  • 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
  • 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.

 HB 6027 – F.S. 718.111, 719.104, and 720.303

Relating to Financial Reporting

• Removes the provisions in the Condominium, Cooperative, and Homeowners’ Association Acts that allow 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 required financial statement
• Removes the provisions from the Condominium and Cooperative Act which state that associations may not waive the financial reporting requirements for more than 3 consecutive years

HB 653 – Vetoed by Governor Scott

This bill was especially important for high rise condominiums that voted to opt out of retrofitting their buildings with fire sprinklers.  As the law currently exists, high rise condominiums that opted out of fire sprinkler retrofitting may still be required to install an ELSS, which could be just as expensive, if not more so, than installing fire sprinklers.  Below is a summary of the main points of this failed bill:

• The bill mirrored some of the provisions of HB 1237 regarding criminal penalties, conflicts of interest, official records, websites, debit cards, condominium terminations, and financial reporting
• The bill required meeting notices to be posted on association website
• The bill would have eliminated the sunset provisions of the Distressed Condominium Relief Act making it permanent
• The bill provided that board members of both homeowners’ and cooperative associations could lawfully communicate via email, but not vote via email
• The bill clarified that condominiums with those buildings less than 75 feet were exempt from retrofitting requirement
• The bill clarified that HOAs could accept partial payments restrictive endorsements without risking accord and satisfaction
• The bill required votes for material alteration of common elements to occur prior to commencement of the alteration or modification

While many of HB 563’s provisions are important, none more so than the ELSS opt out provisions.  Undoubtedly, the Grenfell Towner in London that killed dozens of people played a strong roll in Governor Scott vetoing this bill.

Nevertheless, the requirements of the current statutory scheme could lead to significant special assessments for high rise condominiums. However, we expect a similar ELSS opt out bill to be introduced in next year’s legislative session.  In the meantime, we recommend all communities with buildings near or in excess of 75 feet in height consult with their local fire marshal, a fire safety engineer, and legal counsel to determine their obligations.