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Three Florida Homeowners and Condo Associations Bills Passed by the 2013 Legislature

Martin A. Schwartz

Three condominium and homeowners bills were passed by the Florida legislature: House Bill 73Senate Bill 120, and House Bill 7119. One of the bills, Senate Bill 120, is currently before the Governor for review. Two of the three bills (HB 73 and HB 7119) inserted the Division of Florida Condominiums, Timeshares and Mobile Homes (“Division”) into the governance of Homeowners’ Associations (“HOAs”), perhaps as a precursor to the Division taking over the governance process of homeowners associations the way it serves in governing condominiums. However, there does not appear to be any funding included for the Division’s extended duties.

HB 73 and SB 120 deal with condominiums: one, among other provisions, fleshes out issues faced when trying to convert a condominium unit into a condominium; the other addresses issues created by recording the declaration of condominium for a “to be built project” before taking the first purchase agreement.

The following is a summary of the three bills:

HB 73- Omnibus Legislation

This bill containing 74 pages is a “stripped down” version of a bill which passed the House last year but failed to obtain Senate approval. It contains a potpourri of changes to the Condominium Act, the Cooperative Act and the Homeowners’ Associations Act (HOA Act). Some of the changes to the Condominium Act and HOA Act are summarized below.

Condominium Act:

(a) Prohibits directors from serving more than a one-year term unless a two-year term was permitted by the Association’s articles or by-laws.

(b) Forbids an owner from running for the Board of Directors if delinquent in payments to the Association (previously an owner could run but not serve).

(c) Prohibits an Association from suspending use rights in limited common elements, access, utility services, parking or elevator use for noncompliant owners.

(d) Permits unit owners to extend the period for adding additional phases in a phased condominium from seven years to ten years from the date the declaration was recorded.

(e) Contains a new Section fleshing out the creation of a condominium from a condominium unit (very important in mixed-use projects).

HOA Act:

(a) Permits challenge for failure to call a recall election to be made with the Division.

(b) Prohibits an Association from suspending vehicular or pedestrian access to a parcel or the parcel’s parking rights for a noncompliant owner.

(c) Eliminates mortgagee consent to any amendments to governing documents of an Association unless they affect lien rights, foreclosure or otherwise materially affect mortgagee’s right for mortgages recorded after July 1, 2013. For mortgages recorded prior to July 1, 2013 for which consent is required, provides for deemed consent if lender does not object within 60 days after being notified of proposed amendment.

HB 7119-HOA Bill

Preliminary engagement of Division of Florida Condominiums, Timeshares and Mobile Homes into the area of homeowners associations and further incorporation of some of the provisions from the Condominium Act into the HOA Act.

(a) Requires HOAs to report to the Division by 11/22/13 the following information:

name, federal ID number, mailing and location addresses, total number of parcels, and total revenue and expenses in annual budget.

(b) Requires Division to establish by 10/1/13 a portal on the internet for such reporting by Associations.

(c) Requires Division to report to the Legislature by 12/1/13 the results of such reporting.

(d) Imposes sunset date for reporting on 7/1/16.

(e) Requires disclosure by directors of an Association of contracts with affiliates of any director and requires approval of two thirds of directors for such contracts. In addition, gives members right to disaffirm such contracts by majority vote at a members’ meeting.

(f) Prohibits directors or officers from personally receiving goods or services from providers to the Association.

(g) Contains additional triggers requiring developer turnover of control of Association:

     i) Developer bankruptcy or appointment of receiver for developer

     ii) Abandonment of project by developer for which failure to pay assessments for two years is a rebuttable resumption

     iii) Loss of the project by developer through foreclosure or a deed in lieu of foreclosure unless acquirer of developer’s interest also acquires an assignment of developer’s rights.

(h) Requires election of one non-developer member to the Board of Directors of the Association after sale of 50% of the parcels.

(i) Prohibits developer unilateral amendments to the Declaration governing an Association which are arbitrary, capricious or in bad faith, destroy general plan of development, prejudice rights of members to use common property or materially shift economic burdens from developer to members.

(j) Eliminates Association’s liability for assessments on any parcel during the period Association holds title to such parcel.

SB 120-ILSA Fix

As a result of a few cases and the current position of the Consumer Financial Protection Bureau on compliance with the federal Interstate Land Sales Disclosure Act governing projects to be built with 100 or more units, the current practice in Florida, to record the Declaration of Condominium prior to the first sale of a condominium unit, unfavorably impacted the previous trigger for the running of specific periods under the Condominium Act. This trigger was the recording of the Declaration of Condominium which affected the period: after which errors in the Declaration were incontestable, phases could be added to a phase condominium, a developer could unilaterally waive reserves, by the outside date by which a developer needed to turn over control of the Association and certain other matters. This bill changes the trigger event to the recording of a final as-built survey for the condominium or the sale of the first unit to a non-developer party.

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