Senate Bill Seeks to Criminalize Certain Violations of the Condominium Act

Florida’s 2017 legislative session is well under way and we are already seeing a slew of bills directed at community associations.  One bill in particular should alarm anyone working with or serving on condominium association boards of directors. Senate Bill 1682, filed by Senator Rene Garcia, proposes numerous changes to how condominium associations are governed and seeks to impose criminal penalties for certain violations of the Condominium Act.

The bill is an apparent response to a Final Report of the Miami-Dade County Grand Jury titled “Addressing Condo Owners’ Pleas for Help:  Recommendations for Legislative Action.”  The Miami Grand Jury reviewed the many complaints received about condominium boards of directors throughout the state and made recommendations to change the Florida’s laws regulating boards of directors for condominium associations.

In one case, a “condo crime family” was accused of rigging condominium association elections and of stealing funds from the association for many years, possibly even two decades. However, they were never voted out because of the election rigging. Once the Grand Jury looked into how the Department of Business and Professional Regulations (“DBPR”) handled these complaints, it was exasperated, amazed and shocked at what it found, according to an article in the Tampa Bay Times. At the time of the Grand Jury investigation, the DBPR had only 33 investigators for the entire state of Florida. And, Florida has over 1.5 million condominium units. The Grand Jury further found that the investigators were not properly trained, and were more interested in closing a case rather than solving the problems.

The Grand Jury’s Recommendations

The Grand Jury recommended several actions be taken via legislative process, including but not limited to:

• Creating a new bureau of compliance, separate from the DBPR.
• Giving the new bureau the authority to conduct criminal investigations.
• Training investigators in “basic investigative techniques.”
• Making board members and directors personally liable for refusing to turn over any records, including financial records, to condo owners. If a member or directors willfully and knowingly refuses to turn over records that unit owners are entitled to, that member or director would be held criminally liable.
• Keeping the directors and board members from voting on contracts wherein a board member or director has a conflict of interest, including a relative working for the company.
• Holding any board member or director criminally liable for destroying any records, including financial documents having to do with the condo association.
• Making fraudulent election activity a third-degree felony.
• Causing a member or director who is found to be criminally liable to temporarily or permanently losing his or her license and barring said person from ever serving on another condominium board.
• Expanding the powers of election monitors.
• Cause election monitors to become certified.
• A set of new rules for the separate investigative board that would be created to oversee condominium association and/or property association board rules.

Criminal Penalties in Senate Bill 1682

Senate Bill 1682 incorporates some of the recommendations of the Grand Jury Report, including criminal penalties for failing to provide access to official records and fraudulent election activities.

Specifically, the bill provides that any director or member of the board or association who knowingly, willfully, and repeatedly violates (i.e., two violations within a 12-month period) a unit owner’s right of access to official records commits a misdemeanor of the second degree.  Additionally, any person who intentionally destroys official records commits a misdemeanor of the first degree.

As to election fraud, Senate Bill 1682 provides that a person who willfully, knowingly, and fraudulently changes or attempts to change a vote or ballot cast, to be cast, or attempted to be cast by a unit owner so as to prevent such unit owner from voting as he or she intended commits a third degree felony.

The Consequences

While election fraud, embezzlement of association funds, or breaches of fiduciary duty do occur in community associations, and when it does those cases catch the headlines, in our experience those cases occur in a very small fraction of communities.  Communities already struggle to get volunteers to serve on their boards of directors.  Imposing criminal penalties is going to make it even more difficult.

Additionally, the more egregious violations, such as election fraud or embezzlement, are already crimes in Florida.  Even official record access disputes are subject to civil penalties.  Every community has that one owner who abuses the right to access records in order harass an association.  The threat of criminal penalties inserted into those disputes makes serving on the board of directors untenable.

To address the Grand Jury’s Report, the legislature should first focus on ensuring the money condominium unit owners pay to the Condominium and Cooperative Trust Fund, which funds the DBPR’s regulation of condominiums, are not appropriated for other programs.  That would be a good start instead of imposing misguided criminal penalties on volunteers