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IMPORTANT: NEW CHANGES IN FLORIDA COMMUNITY ASSOCIATION LAW EFFECTIVE JULY 1, 2015

NEW CHANGES IN LAWS AFFECTING FLORIDA COMMUNITY ASSOCIATIONS
COMMUNITY ASSOCIATION LEGISLATIVE UPDATE

Below is a summary of recently enacted legislative bills that impact community associations. The summaries provided below are intended to provide a general description regarding the adopted bills and the manner by which the applicable community association laws are impacted as a result of their adoption. For a complete reading of the adopted legislation, please refer to the text of the bill available on the websites for the Florida Senate (www.flsenate.gov) and Florida House of Representatives (www.myfloridahouse.gov). Additionally, please contact our offices should you or your community require a more detailed legal analysis opining upon the impacts that the below described legislative changes might have on a specific community association. Unless otherwise specified below, July 1, 2015, is the effective date of the legislation described in this update.

I. House Bill 87 (2015) – Construction Defect Claims
(Effective October 1, 2015)

  • This 2015 legislation amended Section 558.001 to require that a construction defect claimant covered by Chapter 558 provide notice to the insurer of the contractor, subcontractor, supplier or design professional. The legislation modified the definition of “completion of a building or improvement” in Section 558.002, 718.203 and 719.203 to include issuance of a temporary certificate of occupancy (where previously this was generally assumed to mean only a final certificate of occupancy).

  • Probably the most significant impact of the legislation is an amendment to Section 558.004(1), adding a subsection (1)(b) to require that the notice of claim provided pursuant to Chapter 558 must describe the nature of each alleged construction defect, if known, rather than the general nature of each alleged construction defect. The section also specifies that, based upon at least a visual inspection by the claimant or its agents, the notice must identify the location of each alleged defect without undue burden. The section specifies that the claimant has no obligation to perform destructive or other testing for purposes of this notice.

  • Section 558.004(4) was amended to state that the written response to the notice of claim must include one or more of the offers or statements specified in paragraphs (5)(a)-(e), with all of the information required for that offer or statement (which provide options including an offer of repairs, an offer of monetary payment, a combination of these, a denial of the claim, or a statement that a monetary payment will be determined by an insurer).

  • Section 558(13) was amended to specify that providing of a notice of claim to an insurer shall not constitute a claim for insurance purposes “unless the terms of the policy specify otherwise.”

  • Section 558.004(15) was also amended, providing a revised description of what documents can be requested by the claimant and respondents pursuant to Chapter 558, and to expand this list to include maintenance records and other documents related to the discovery, investigation, causation and extent of the alleged defect identified in the notice of claim and any resulting damages. This scope was also amended to specify that a party may assert any claim of privilege recognized under the laws of this state with respect to any of the disclosure obligations specified in Chapter 558.

II. House Bill 71 (2015) – Service Animals in Public Accommodations

  • Disabled individuals are entitled to equal access to public accommodations, public employment, and housing accommodations.” This bill broadens the definition of public accommodations to include timeshares. However, the extent to which this bill governs single-family residences depends upon whether the community in question is deemed to be a public accommodation, public employment or housing accommodation.

  • This bill broadens the definition of an individual with a disability to include physical and mental impairments that substantially limit one or more life activities. A “physical or mental impairment” is defined in part “as a physiological disorder or condition that affects at least one bodily function or a mental or psychological disorder as specified by the Diagnostic and Statistical Manual of Mental Disorders.” “Major life activities” are defined as activities such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.

  • A disabled individual may be accompanied by a trained service animal in all areas of public accommodations. This bill requires the public accommodation to modify its policies to permit the service animal. Additionally, this bill includes certain limited circumstances under which the service animal can be excluded or removed from the public accommodation.

  • This bill provides that a public accommodation may not ask about the nature or extent of an individual’s disability, but may ask if the animal is a required service animal and what work the animal has been trained to perform.

  • Finally, the bill provides that any person who denies or interferes with the right of a person with a disability or a service animal trainer to access a place of public accommodation commits a second degree misdemeanor and requires the person to perform 30 hours of community service for an organization that serves individuals with disabilities, or for another entity as ordered by the court. Similarly, the bill provides that knowingly and willfully misrepresenting oneself as being qualified to use a service animal or being a trainer of a service animal is a second degree misdemeanor and requires the person to perform 30 hours of community service for an organization that serves individuals with disabilities, or for another entity as ordered by the court.

III. House Bill 453 (2015) – “ Florida Vacation Plan and Timesharing Act”. This bill makes several technical changes to the Florida Vacation Plan and Timeshare Act (“Act”), which governs timeshares in the State of Florida. The following summarizes the significant amendments to the Act:

  • Modifies the definition of “Timeshare Estate,” providing that an ownership interest in a condominium or cooperative unit or a beneficial interest in a timeshare trust is required for such interests to qualify as timeshare estates. Section 721.05(34), Florida Statutes.

  • Expands the limitation on liability for developers who, in good faith, attempt to and substantially comply with all the provisions of the Act. Section 721.07(5) and 721.55(5), Florida Statutes.

  • Amends the definitions of nonspecific and specific multisite timeshare plans to remove the requirement that the plans contain timeshare licenses or personal property timeshare interests. Chapter 721, Florida Statutes.

  • Modernizes the timeshare statute to update new product structures, such as real estate trusts, and how they will interrelate with timeshare plans.

  • Repeals the requirement for judicial approval of transactions involving timeshare trust property . Section 721.08(2)(c) and 721.53(1)(e), Florida Statutes.

  • Provides that the unexpired lease terms in timeshare trusts must be disclosed. Section 721.08(2)(c) and 721.53(1)(e), Florida Statutes.

  • Adds detail to the current substitution provisions limiting the amount a plan can be changed in a given year, which provides owners an opportunity to object to a substitution. 721.552(2), Florida Statutes.

  • Adds detail to current multisite disclosure requirements regarding the term of component sites. The terms of each component of a plan must be disclosed rather than only the shortest term. Section 721.55(4)(a), Florida Statutes.

  • Provides that a vote or written consent, or both, of 60 percent of all voting interests in a timeshare plan may extend or terminate the term of a timeshare plan. This provision only applies to timeshare instruments that have been in existence for at least 25 years and are silent as to how the plan terminates or is extended. Section 721.125, Florida Statutes.

  • Excludes component site common expenses and ad valorem expenses from the 125 percent cap on increases in common expense assessments for multisite timeshare plans. Section 721.55(4)(h), Florida Statutes.

IV. House Bill 643 (2015) – Condominium Termination Act

  • The Florida Legislature is taking action to correct existing laws on termination of condominiums/associations. Prior to HB 643/SB 1172, bulk buyers were using the Condominium Termination Statute set forth in Section 718.117, Florida Statutes, to purchase a majority of units in projects throughout Florida and terminate the association to facilitate the use of such properties for rental property conversion or development purposes. The recently passed bills now provide protection to owners who are forced to sell their units as a result of a condominium termination by a bulk owner/investor. With respect to residential associations, HB 643/SB 1172 provides that unit owners are required to be paid at least 100% of the fair market value for their units. In addition, owners who purchased their units from the developer and maintain the unit as a homestead are entitled to at least the original purchase price paid for on their unit.

  • HB 643/SB 1172 further provides that owners who are current on assessments and mortgage payments are entitled to full satisfaction of their first mortgage as a result of the termination. Similarly, the passed bills require that any homestead unit owner is to be paid a 1% relocation fee from the unit by the bulk buyer/investor in addition to the fair market value to be received for their unit. Finally, if the plan for termination calls for leasing of the units after termination, owners are allowed to lease their units for a period of twelve (12) months following termination. The above protections only apply to residential associations, and not commercial associations, who are faced with termination as a result of a bulk buyer/investor termination. In addition, prior to approval of any plan of termination, the non-bulk owners may have a right to elect 1/3 of the board of directors to vote on any proposed termination.

  • Coupled with the protection afforded to condominium owners against the threat of termination from bulk owners/investors, the passed bills also provide new protections against condominium terminations in general, to both residential and commercial associations. Primarily, if a plan of termination does not pass an initial owner vote, the termination plan cannot be considered for 18 months thereafter. Secondly, condominiums formed by conversions cannot be terminated for 5 years. In addition, the passed bills also allow for termination plans to be withdrawn in certain cases and termination proceeds apportioned to an owner may be reduced as well based on certain factors. Furthermore, HB 643/SB 1172 allow for owners to object to apportionment of proceeds based upon several factors, including arguments as to fairness and reasonableness. Finally, in certain cases, HB 643/SB 1172 allow for a contested termination to be subject to mandatory non-binding arbitration upon the request of the contesting owner(s). This bill has been signed by the Governor and is effective upon becoming law.

V. House Bill 791 (2015) – Electronic Voting

A. CORPORATIONS NOT FOR PROFIT. Voting by Members / Proxy (Section 617.0721, Florida Statutes). Even if a provision in the By-Laws or Articles of Incorporation states otherwise, any copy, facsimile transmission, or other reliable reproduction of the original proxy may be substituted or used in lieu of the original proxy for any purpose for which the original proxy could be used if the copy, facsimile transmission, or other reliable production is a complete reproduction of the entire proxy.

B. CONDOMINIUM ASSOCIATIONS

  1. By-Laws (Section 718.112, Florida Statutes)
    • Notices of meetings of a board of directors, unit owner meetings, except unit owner meetings called to recall board members and committee meetings may be given by electronic transmission to unit owners who consent to receive notice by electronic transmission.

    • At a minimum the proposed annual budget of estimated revenues and expenses, of an association, must show the amounts budgeted by accounts and expense classifications including expenses for the association and condominium as stated in Section 718.504(21), Florida Statutes.

    • Before turnover of control of an association, the Developer may vote the voting interests allocated to its units to waive the reserves or reduce the funding of reserves through the period expiring at the end of the second fiscal year after the fiscal year in which the certificate of surveyor and mapper is recorded. This provision clarifies the Developer’s voting interests.

  2. Electronic Voting (Section 718.112, Florida Statutes)
    • Associations may conduct elections and other unit owner votes through an internet-based online voting system provided the Association provides each unit owner with a method to authenticate the unit owner’s identity to the online voting system, a method to transmit an electronic ballot to the online voting system that ensures the secrecy and integrity of each ballot and a method to confirm, at least fourteen (14) days before the voting deadline, that the unit owner’s electronic device can successfully communicate with the online voting system.

    • The internet-based online voting system must be able to authenticate the unit owner’s identity, be able to authenticate the validity of each electronic vote to ensure that the vote is not altered in transit, be able to transmit a receipt from the online voting system to each unit owner who casts an electronic vote, for elections of the board of directors, be able to permanently separate any authentication or identifying information from the electronic election ballot and be able to store and keep electronic votes accessible to election officials for recount, inspection, and review purposes.

    • Unit Owners must consent to the online voting system in writing. An Association must approve, in advance of using the online voting system, a board resolution, which establishes reasonable procedures and deadlines for unit owners to consent, in writing to online voting, which provides that unit owners receive notice of the opportunity to vote through an online voting system and which establishes reasonable procedures and deadlines for unit owners to opt out of online voting after giving consent.

    • A unit owner who votes electronically shall be counted as being in attendance at the meeting for purposes of determining a quorum. A substantive vote of the unit owners may not be taken on any issue other than the issues specifically identified in the electronic vote, when a quorum is established based on unit owner voting electronically.

  3. Obligations of Owners and Occupants (Section 718.303, Florida Statutes)
    • A fine may be levied by the board of directors and once levied the role of a committee is limited to determining whether to confirm or reject the fine or suspension levied by the board of directors.

    • When the voting or use rights of a unit owner are suspended such suspension applies to the member and when appropriate the member’s tenants, guests, or invitees even if the delinquency or failure that resulted in the suspension arose from less than all of the multiple units owned by a member.

    • When voting rights are suspended, the total number of voting interests of the association must be reduced by the number of suspended voting interests when calculating the total percentage or number required to take or approve any action, and that the suspended voting interests may not be used for any purpose.

C. COOPERATIVES

  1. By-Laws; Cooperative Ownership (Section 719.106, Florida Statutes). Notices of meetings of a board of directors, unit owner meetings, except unit owner meetings called to recall board members and committee meetings may be given by electronic transmission to unit owners who consent to receive notice by electronic transmission.

  2. Electronic Voting (Section 719.129, Florida Statutes)
    • Associations may conduct elections and other unit owner votes through an internet-based online voting system provided the Association provides each unit owner with a method to authenticate the unit owner’s identity to the online voting system, a method to transmit an electronic ballot to the online voting system that ensures the secrecy and integrity of each ballot and a method to confirm, at least fourteen (14) days before the voting deadline, that the unit owner’s electronic device can successfully communicate with the online voting system.

    • The internet-based online voting system must be able to authenticate the unit owner’s identity, be able to authenticate the validity of each electronic vote to ensure that the vote is not altered in transit, be able to transmit a receipt from the online voting system to each unit owner who casts an electronic vote, for elections of the board of directors, be able to permanently separate any authentication or identifying information from the electronic election ballot and be able to store and keep electronic votes accessible to election officials for recount, inspection, and review purposes.

    • Unit Owners must consent to the online voting system in writing. An Association must approve, in advance of using the online voting system, a board resolution, which establishes reasonable procedures and deadlines for unit owners to consent, in writing to online voting, which provides that unit owners receive notice of the opportunity to vote through an online voting system and which establishes reasonable procedures and deadlines for unit owners to opt out of online voting after giving consent.

    • A unit owner who votes electronically shall be counted as being in attendance at the meeting for purposes of determining a quorum. A substantive vote of the unit owners may not be taken on any issue other than the issues specifically identified in the electronic vote, when a quorum is established based on unit owner voting electronically.

  3. Obligations of Owners (Section 719.303, Florida Statutes). A fine or suspension levied by the board of directors may not be imposed unless the board first provides as least fourteen (14) days written notice and an opportunity for a hearing to the unit owner and if applicable its occupant, licensee or invitee. The hearing must be held before a committee of other unit owners who are neither board members nor persons residing in a board member’s household. The role of the committee is limited to determining whether to confirm or reject the fine or suspension levied by the board.

D. HOMEOWNERS’ ASSOCIATIONS

  1. Short Title (Section 720.3015, Florida Statutes). Chapter 720 of the Florida Statutes may be cited as the “Homeowners’ Association Act”.

  2. Definitions (Section 720.301, Florida Statutes). Added that Rules and regulations adopted under the authority of the recorded declaration, articles of incorporation, or bylaws and duly adopted amendments thereto are incorporated into the definition of Governing Documents.

  3. Board Meetings (Section 720.303, Florida Statutes). Notices of meetings of the board of directors, committee meetings requiring notice, and annual and special meetings of the members may be given by electronic transmission to unit owners who consent, in writing, to receive notice by electronic transmission.

  4. Electronic Voting (Section 720.317, Florida Statutes)
    • Associations may conduct elections and other membership votes through an internet-based online voting system, if a member consents, in writing, to online voting provided the Association provides each member with a method to authenticate the member’s identity to the online voting system, a method to authenticate the member’s identity to the online voting system, a method to confirm, at least fourteen (14) days before the voting deadline, that the member’s electronic device can successfully communicate with the online voting system and a method that is consistent with the election and voting procedures in the association’s bylaws.

    • The internet-based online voting system must be able to authenticate the member’s identity, be able to authenticate the validity of each electronic vote to ensure that the vote is not altered in transit, be able to transmit a receipt from the online voting system to each member who casts an electronic vote, be able to permanently separate any authentication or identifying information from the electronic election ballot and be able to store and keep electronic votes accessible to election officials for recount, inspection, and review purposes.

    • An Association must approve, in advance of using the online voting system, a board resolution, which establishes reasonable procedures and deadlines for members to consent, in writing to online voting, which provides that members receive notice of the opportunity to vote through an online voting system and which establishes reasonable procedures and deadlines for members to opt out of online voting after giving consent.

    • A member who votes electronically shall be counted as being in attendance at the meeting for purposes of determining a quorum.

  5. Obligations of Owners and Occupants (Section 720.305, Florida Statutes)
    • The board may not levy a fine exceeding $100, unless otherwise provided in the association’s governing documents. A fine may be levied by the board of directors and once levied the role of a committee is limited to determining whether to confirm or reject the fine or suspension levied by the board of directors.

    • Prohibits board members and persons who reside with board members from sitting on the committee charged with reviewing fines and penalties against members of the association.

    • When the voting or use rights of a unit owner are suspended such suspension applies to the member and when appropriate the member’s tenants, guests, or invitees even if the delinquency or failure that resulted in the suspension arose from less than all of the multiple units owned by a member.

    • When voting rights are suspended, the total number of voting interests of the association must be reduced by the number of suspended voting interests when calculating the total percentage or number required to take or approve any action, and that the suspended voting interests may not be used for any purpose.

  6. Quorum; Amendments (Section 720.306, Florida Statutes). Members that fail to pay a fine may be suspended from the board of directors or barred from running for a seat on the board.

VI. The following are other bills of interest which may have an impact upon community associations:

A. HB 775 (Foreclosures) - provides a court with authority to appoint an attorney, administrator or other guardian to represent the interests of someone who has been served with a law suit (a foreclosure, for example) by publication, and who has not filed an answer or other response within the time required by law. This change helps to remove a common roadblock in foreclosure cases.

B. HB 531 (Limited Liability Companies) - allows a recipient of a property transfer from an LLC to rely on the transfer instrument for authority to transfer, rather than requiring examination of the LLC corporate documents.

C. HB 307 (Mobile Homes) - revises procedures for the governance of mobile home parks governed by chapter 723, including changes to leases and providing educational programs.

D. HB 526 (Notaries) - allows electronic sealing of documents.

E. HB 766 (Privacy) - This Act prohibits persons, state agencies and political subdivisions from using drones equipped with still or video cameras from recording images of private property or the owners or occupants of such property, for the purpose of obtaining information about their identity, habits, conduct, movements, or whereabouts in violation of that person’s reasonable expectation of privacy, without their written consent. The Act also contains exceptions for such things as utility system operation and maintenance, environmental monitoring, delivering cargo, and, of course, law enforcement agencies working pursuant to a search warrant.

F. HB 361 (Taxation) - exempts from ad valorem taxation certain buildings on governmental lands controlled by private entities for the purpose of providing housing to members of the military.

G. HB 305 (Tenancies) - removers “transitory occupancy” from the Landlord-Tenant Act. HB 779 reinstates significant provisions which extend tenancies after a foreclosure, now for up to 30 days after notice is provided by the new owner.

H. House Bill 779 (Termination of Rental Agreements) - This Act creates Section 83.561, Florida Statutes under the Florida Residential Landlord and Tenant Act, and provides a tenant occupying a residential premises subject to a foreclosure with certain rights upon issuance of a certificate of title. The Act provides that a tenant protected under the Act may remain in possession of the premises for 30 days following the date of the purchaser’s delivery of a written 30 day notice of termination. The Act also provides for exceptions to these protections, including, but not limited to, if the tenant was the mortgagor (owner) in the foreclosure that resulted in certificate of title being issued (or the child, spouse, or parent of the mortgageor), the tenancy was not the result of an “arm’s length” transaction, and the rental agreement provides that the tenant is to pay “substantially less than the fair market value” of rent for the premises (unless the rent is reduced or subsidized pursuant to a federal, state, or local subsidy program).