Florida House Bill 1373 is Highly Unfavorable for Condominiums and HOAs

This 221-page bill calls for sweeping changes to the laws pertaining to condominiums, cooperatives and homeowners associations as well as expanding the powers associated with the Office of the Condominium Ombudsman. The proposed bill, as currently drafted, actually creates many new problems for communities already trying to operate on limited budgets. At a time when communities are still reeling from huge insurance premium increases and other unwelcome costs which they have had to pass on to their residents, one has to wonder why public policy makers would further increase the burden on those residents by requiring things such as: automatic audits, automatic community-wide mailings, increased postage and copying costs and a host of other unnecessary administrative costs. If you live in an HOA please note that the section dealing with the enormous changes to your communities can be found towards the end of this article.

There certainly is not space to go through this bill point by point but I have broken down key parts via category so you can get a feel for the overall tone and impact this bill will have on your communities. You should pull up the full bill text at either the House or Senate websites (use the Legislative Links category on the CALL website at www.callbp.com) and read the bill in its entirety. Language being added is underlined and language being removed from the current statutes is lined through. You can then use the Legislator Connect feature on the CALL site to email your own State Representative and State Senator about this bills potential impact for you and your community or you can email the entire Florida Legislature with just the click of a button. Remember, emails are more effective if you identify yourself and your community’s type and location.

I. COSTLY CHANGES: HB 1373 makes the following costly changes in a condominium association:

– Notices of proposed amendments to the declaration must be sent to each owner by certified mail (note: requiring anything to be sent via certified mail increases the costs associated with the mailing and decreases the likelihood that the item being sent via certified mail which actually be received. Many unit owners work and will not be home when certified delivery is attempted, others will be home but will refuse delivery and still others may reside out of the country for long periods of time where certified mail is not an option);

– Requires an automatic mail out of the financial report each year whether owners want it or not;

– Eliminates the ability for the owners to waive the financial reporting requirements for more than 2 years (note: language doesn’t clarify whether that is two years consecutively or two years ever which means conceivably communities would have to have yearly audits after they have waived the requirement for more than two years);

– Requires the board to respond via certified mail to unit owners written inquiries and removes the ability of the board to pass reasonable rules regarding the frequency and manner of responding to unit owner inquiries (note: conceivably a unit owner could write one inquiry a day for 365 days and the board would now have to respond to each one via certified mail);

– Eliminates the ability to print candidate information sheets on both sides of the paper (this means more paper and a higher cost)

– Eliminates the ability of an association to accelerate assessment payments against a delinquent owner until AFTER a lien has been filed; (Many condo documents have acceleration clauses allow the Association to make due all regular assessments at once should an owner be chronically delinquent.)

– Upon a finding by the Division that an association has committed a violation within the Divisions jurisdiction, the association shall be required to mail a notice to all unit owners setting forth the facts and findings relative to any and all violations as well as a description of the corrective action required (note: all correspondence, orders, etc. from the Division already become part of the official records of the Association and thus open to inspection by all unit owners); and

– Requires the association to participate in a mandatory educational program related to the violation. Failure to comply with this mandatory educational program shall result in a civil penalty to the association in the amount of $500.00 for each week the notice is not mailed and posted or the educational training is not completed (note: Does this mean the entire board must go for training? What if members are out of town, does the $500.00 weekly fine apply? The use of the word association is confusing; does this apply to the board or the entire membership? Also, this is a cost that all unit owners have to encumber, despite them not being involved)

II. TAKING AWAY OWNERS CHOICES: HB 1373 makes the following changes for condominium associations regardless of what is required by an association’s governing documents:

– Eliminates the ability for association members to opt out of the statutory election procedures (note: for smaller communities who don’t want or see the need to send out the two notices required by the statute, this will have a big impact in both costs and labor).

III. HARMFUL CHANGES: HB 1373 makes the following changes for condominium associations:

– Percentage ownership of common elements and common surplus and responsibility for common expenses shall be based on a unit’s total square footage and not on an equal fractional basis;

– Requires the board to repair and replace the condominium property and units damaged after a casualty substantially in accordance with the original plans and specifications of the condominium as soon as possible but not later than 60 days after the casualty (note: unrealistic given time required to process claims);

– Requires that all ballot envelopes must be placed in a locked or sealed ballot drop box immediately upon receipt and the box shall not be opened in advance of the election meeting (note: no mention of where this box shall be located, how it shall be sealed and whom will have the key or other device to gain entry to the box);

– The Board may not apply for or accept a loan or line of credit in an amount that exceeds 10% of the associations annual budget for the current year except in the case of an emergency or if such authority is provided for in the bylaws or a majority of the owners vote, in advance, to give that authority to the board (note: more financial and political restrictions on the association in already tough times);

– Requires the vote to waive or reduce reserves to take place at the annual membership meeting (note: this reserve vote should be tied to the associations fiscal year for budgeting purposes and not to the date of the annual meeting which often takes place months after the associations fiscal year has commenced);

– Prohibits the board from adopting any rule that would prohibit any reasonable accommodation for religious practices including the attachment of religiously mandated objects to the front-door area of a condominium unit (note: would a reasonable accommodation for religious practices include allowing a religious group to use the clubhouse exclusively on weekends for religious ceremonies? How about ritual sacrifices?);

-Requires the association to give a unit owner 24 hours advance written notice of its intent to access the unit except in cases of emergency (what if the owner is out of the country and unreachable while a leak from their unit is turning into a flood in the common areas?) and the unit inspection must be done by two persons, one of whom must be a board member (probably not realistic);

– Allows only the costs of a basic cable contract to be treated as a proper common expense. (note: internet access, premium channels, VOIP, etc. would all fall within the category of a bundled service contract and thus, owners would be at a serious disadvantage if they wanted to negotiate for these services on their own);

– All instances of abuse against unit owners will be immediately investigated by the Division. The term abuse is defined by HB 1373 as any willful act or threat by a member of the board of directors of a condominium association or any member of a committee or subcommittee appointed by the board of directors, or any employee, volunteer, or agent purporting to act on behalf of the board of directors or any officer, director, employee or agent of any management company acting on behalf of a condominium association who denies or is likely to deny a condominium unit owner or dweller any of the rights and protections afforded to them under applicable state and federal laws, administrative rules and the governing documents (note: apparently board members and/or managers are not similarly subject to abuse as protecting them is not part of this bill); and

– Requires the board to send notice via certified mail to a unit owner before enforcement action can be taken and the owner shall have 30 days to respond to the violation notice in writing. If no response is provided and the violation continues or is repeated, the association may proceed with the enforcement action (note: this permits the chronic rule breaker to avoid enforcement);

IV. CHANGES THAT WARRANT CONSIDERATION: HB 1373 makes the following changes under this category to condominium associations as follows:

-Requires that the official records of the association shall be made available to a unit owner at a location within 30 miles driving distance of the condominium property;

-Social security numbers, drivers license numbers, credit card numbers and other personal identifying information of unit owners, occupants or tenants are not open to unit owner inspection (note: this is probably a good thing to prevent identity theft but could be problematic in 55 and over communities where an owner wants to inspect the supporting age verification documentation to determine that the community census is correct. Also, personal identifying information is too ambiguous a term);

– 20% of unit owners can petition to have an item placed on the board meeting agenda (note: this is already the law in homeowners associations);

– Clarifies that the only prohibition against eligibility for board membership shall be a felony conviction for which voting rights have not been restored;

– Requires disclaimer language on the face of all ballots relating to waiver of reserves that waiver or reduction in reserves may result in a special assessment regarding those reserve items in the future;

– Allows post-transition associations to use reserve votes for nonscheduled purposes to mitigate further damage to units or common elements or to make the condominium accessible for repairs;

– Requires the board to have the condominium buildings inspected by a professional engineer or professional architect every five (5) years for the purpose of determining that the building is structurally and electrically safe;

– Prohibits automatic renewal clauses in written contracts that provide for the operation, maintenance or management of a condominium association or property serving the unit owners; and

– Allows a majority of owners in HOAs to require the institution of reserve accounts.

V. CHANGES TO THE OFFICE OF THE CONDOMINIUM OMBUDSMAN: HB 1373 would make the following changes to the Ombudsmans Office:

– Allow the Ombudsman to act independently of the Department of Business and Professional Regulation (DBPR) and without approval or control of the DBPR;

– 1/5 of all fees collected by the Division from condominium unit owners shall be allocated and transferred to the Ombudsmans Office (note: shouldn’t the allocation of resources be tied to real needs and not to a predetermined figure?);

– Allows employees of the Ombudsmans Office to now be actively engaged in other businesses or professions or to serve as representatives of a political party;

– The Division shall be required to defer to the Ombudsmans findings;

– The Ombudsman shall be empowered to compel meetings, subpoena witnesses and documents; and

– The Ombudsman shall be empowered to grant immunity to any unit owner or association acting in good faith on the advice or opinion of the Ombudsmans Office and that unit owner or association shall be immune from any penalties or actions (note: Is this putting the State in the business of giving legal advice? Does this mean a court cannot rule contrary to the Ombudsman?);

VI. CHANGES TO COOPERATIVE ACT:

– Adds the grandfathering of rental rights already found in the Condominium Act to the Cooperative Act. Now provides that any amendment to the cooperative documents which restricts cooperative owners rights relating to rental of units applies only to current owners who consent to the amendment and unit owners who take title to their units after the effective date of the amendment.

VII. CHANGES TO HOA ACT:

– Brings HOAs within the authority of the Division through a Division of Mandated Properties which shall collect $4.00 from each association member in an HOA for the first two years of its creation and thereafter shall collect a fee per member which shall not exceed the Cost of Living Index (note: surveys amongst owners in homeowners associations consistently express a desire not to be further regulated or taxed by the State!!!)

– Creates an HOA Ombudsman;

– Creates a Homeowners Association Advisory Council;

– Post-transition, any changes to the governing documents for an HOA can only be accomplished with the approval of 2/3 of the parcel owners notwithstanding any lower percentage permitted by the governing documents;

– Officers and directors of an HOA may be personally liable for damages to a member if the actions of the officers and directors demonstrate a pattern of behavior intended to harass a member of the association;

– An HOA may not limit the number of guests a member may have within a 24-hour period;

– Removes the ability of directors to vote via secret ballot to elect officers;

– Reduces the percentage of owners needed to petition to place an item on the board meeting agenda from the current 20% to 10%;

– Requires a detailed agenda for board meetings to be published and made available to all members no less than 7 days prior to the date of the board meeting;

– If the Association fails to obtain copies of any plans, specifications, permits and warranties related to improvements constructed on the common areas or other property as platted and recorded, then the Association forfeits its rights to assess any fees to maintain the common areas of the property (note: this places an undue burden on the association especially if the developer is uncooperative in providing these documents to the association at or after transition);

– Eliminates attorney-client privilege in an HOA setting since it opens up all interpretations of any governing documents as provided by any legal source or attorney (other than those given as part of a pending lawsuit) to inspection by lot owners;

– Increases the minimum damages associated with an associations failure to produce association books and records to owner inspection from the current $50.00 per day to $100.00 per day;

– Eliminates the boards ability to pass reasonable rules regarding the frequency of document inspection requests;

– Eliminates the ability of HOAs to fine owners for covenant violations!!!! (note: first the ability to lien for fines was removed and now the ability to fine altogether. Without an internal mechanism to discourage violations boards will be forced to choose between proceeding directly to legal enforcement or ignoring violations altogether;

– Any amendments restricting owners rights relating to the rental of homes applies only to parcel current owners who consent to the amendment and to parcel owners who take title to their parcels after the effective date of the amendment;

– Amendments to the covenants must be recorded with the entire set of covenants;

– The election procedures for HOAs will be changed to mirror those contained in the Condominium Act; and

– Mandatory board member training at the associations expense.

You can make a difference as to whether or not this bill passes. Contact your legislators today by using the Legislator Connect tool at www.callbp.com!

 

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4 Comments

Filed under BoB Articles, News

4 responses to “Florida House Bill 1373 is Highly Unfavorable for Condominiums and HOAs

  1. joyce mummert

    Our By-laws have been amended to have staggered 2year term of office and so registered with Manatee county as a legal part of our Documents. The Board thinks we have to vote again to accept the staggered term. This vote seems redundant to me. Asking an opinion

  2. BoB

    if you ammended the by-laws with a 2/3 membership vote as called for in Chapter 718 of the Florida Statutes, then there is no need for an additional vote. Staggered terms should be mandated to ensure more adequate Board transitions. I applaud the action of your community.

  3. Ken

    If your documents were amended before Oct 1st 2008 and if your documents automaticaly adopts new Florida Laws then you will have to revote and only a majority vote is needed. You can can read this on the Divisions web site – the Declaratory Statement # DS2008061. If you documents do not automaticaly adopt new Florida Laws then there is another Declaratory thad has not been decided yet- DS2008056492 (as of Nov 8th 2008)

  4. As unpopular as HOAs can be smeotimes, they are in place to protect home owners property and neighborhood. They help keep neighborhoods from looking hodgepodge. If everyone started doing everything that they wanted to, whenever they wanted to, the neighborhood would start looking run down very quickly. If there are things you don’t like about your HOA, I suggest you join the board and make the changes you want accordingly.

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