Florida Community Association Related Legislative Update 2017

Florida’s 2017 Legislative Session is in full swing. As is our yearly ritual, we have kept a close eye on proposed legislation relating to community associations. As many may recall, all major bills introduced last year affecting community associations fell victim to an abrupt and unusual end to the 2016 Legislative Session.  Based upon the number of bills currently pending in Tallahassee, it appears legislators are looking to make up for lost time this year. While there are some beneficial provisions, bills also include criminal penalties for Board members, regulations protecting the use of AirBnB, and significant increases in minimum statutory damages that may be collected from association’s and management companies.

To be clear, this list is not all inclusive, and the bills will certainly change in number and substance before the end of the regular session on May 5, 2017.  However, below is a snapshot summary of the currently pending legislation which impacts Florida condominiums and homeowners associations:

Senate Bill 1682 – Regarding Condominiums

• Bill would prohibit associations from hiring an attorney that represents the management company of the association.
• Prohibits directors, managers, and management companies from purchasing units at the association’s foreclosure sale for delinquent assessments.
• Provides that any person who knowingly, willingly, and repeatedly denies access to the official records of the association commits a second-degree misdemeanor. Any person who does so with the intent of facilitating or avoiding detection of a crime commits a third-degree felony.
• Requires condominium associations of 500 units or more to maintain a website by October 1, 2017, which includes a secure portal accessible only to members and employees. Certain documents must be maintained on the website, including a complete set of the governing documents and any amendments; any management agreement, lease, or contract to which the association is a party; bids obtained by the association; budgets and financial reports; director certification forms; contracts with directors and officers of the association; and meeting notices.
• Establishes consecutive term limits for directors that can only be overruled by a super majority vote of all members.
• Establishes criminal penalties for any person committing fraudulent voting activities for condominium elections, and any person assisting such voter fraud.
• Establishes new disclosure and approval requirements for conflicts of interests which may exist for directors or officers of the association.
• Provides that voting rights may only be suspended for delinquent monetary obligations to the Association in excess of $1000.  Also requires a 30-day notice from the Association prior to the suspension taking effect.

Senate Bill 398  – Estoppel Certificates

• Requires new information that must be provided by Association to prospective purchasers
• Estoppel Certificate fee may not exceed $250 if no delinquent amounts are owed to association. Additional $100 fee may be charged if estoppel certificate is requested on an expedited basis and is delivered within 3 business days of the request.  Additional $150 may be charged if a delinquent amount is owed to association. Fees may be charged upon request, but associations may be required to issue reimbursements if the property is not sold.
• Fees may be raised every 5 years based upon the Consumer Price Index.
• If estoppel letter is not provided by Association within 10 days of request, no fee may be charged.
• No fee may be charged for amended estoppel certificates.

House Bill 653  – Community Associations – ELSS Opt-out Provisions

• This bill provides condominium associations with the ability to opt out of Engineered Life Safety Systems, which we addressed in more detail in our previous blog.

House Bill 295  – Community Associations

• Increases minimum statutory damages for willfully failing to provide official records from $50 per day (up to 10 days), to $500 per day (up to 30 days) – a potential total of $15,000!
• If a community manager or management firm is delegated with the responsibility of providing access to records, a member has a claim against the manager or management firm for the damages. HB 295 specifies that managers and management firms cannot be indemnified or otherwise reimbursed by the association for these damages.
• Obligates HOAs to resubmit reports to the Division if there is a material change to the information previously provided under 720.303(13).  It is not clear what would be considered “material,” but presumably it would apply to the number of parcels governed by the community, and the amount of total revenues and expenses from the association’s annual budget.
• Removes the ability for HOAs to file a lien against a parcel for fines exceeding $1,000.
• Changes the requirements which trigger an obligation for a developer to turnover control of an HOA to non-developer members.
• Provides that election and recall disputes are eligible for presuit mediation.  However, this appears to be in addition to the mandatory non-binding arbitration which is currently required by statute.
• Provides that the DBPR shall provide binding arbitration at the request of a parcel owner or HOA for disputes involving rules enforcement, maintenance, assessments, and official records.
• Provides that the DBPR shall provide training and educational programs for HOA members, directors, and officers.
• Provides that the DBPR has enforcement authority over HOAs for records access, financial management, and election infractions. In addition, the DBPR may also investigate any complaint made against an HOA to the DBPR.
• Requires sellers of property subject to HOAs to provide a copy of the governing documents (including all amendments) and current operating budget of association to buyer at least 7 days prior to closing. Buyers may cancel sale within 3 days of receipt of documents.
• Creates limited causes of action against developers, and prohibits developers from using association funds for non-association purposes prior to turnover.

Senate Bill 1186  – Rental Restrictions in HOAs

• Any amendment which restricts the ability of owners to rent their homes, alters the duration of permissible rental terms, or limits the number of times an owner may rent their home during a specific period is only enforceable against owners who consent to the amendment, or purchase their homes “after July 1, 2017.” We expect this bill to be amended further, as the last provision lacks clarity on how it would be applied beyond July 1, 2017.  The most reasonable reading of the current language would appear to invalidate amendments restricting rental restrictions which have already been adopted prior to the provision becoming law. As there would be constitutional issues with applying the provision retroactively, we suspect the language will be changed to apply to owners purchasing their homes after an amendment restricting rentals is recorded.

House Bill 135  – Elections in Large HOAs

• Provides election procedures for HOAs with more than 7500 parcels.

Senate Bill 294 – Financial Reports

• If an association fails to provide year-end financial reports to owners, the association is prohibited from waiving financial reporting requirements for three (3) consecutive years and must also file a copy with the State for those three (3) years.

House Bill 425  – Short Term Vacation Rentals

• Prohibits local governments from restricting the use of vacation rentals, or regulating vacation rentals based solely on their classification, use, or occupancy.  Essentially, this bill is designed to protect individual owners’ ability to rent their homes on websites like AirBnB.

Senate Bill 318 – Preservation of HOA Covenants and Restrictions

• The bill is related to the Marketable Record Title Act (MRTA) and seeks to exempt the covenants and restrictions of a homeowners’ association from extinguishment by MRTA.

If these bills make their way through the legislative process and become law, they will significantly change the relationship between community associations and their members, and how community associations operate.  We will continue to monitor their progress as the 2017 Florida Legislative Session comes to a close.