Florida Senate - 2013                CS for CS for CS for SB 580
       By the Committees on Rules; Community Affairs; and Regulated
       Industries; and Senator Hays
       595-04603-13                                           2013580c3
    1                        A bill to be entitled                      
    2         An act relating to homeowners’ associations; amending
    3         s. 468.436, F.S.; providing grounds for disciplinary
    4         actions against community association managers;
    5         amending s. 720.303, F.S.; requiring official records
    6         to be maintained within a specified distance of the
    7         association for a specified time; authorizing
    8         associations to maintain such records online;
    9         requiring associations to allow a member to use a
   10         portable device to make an electronic copy of the
   11         official records and prohibiting associations from
   12         charging a fee for such an electronic copy; removing
   13         provisions allowing the association to charge fees for
   14         personnel costs related to records access; requiring
   15         budgets to designate permissible uses of reserve
   16         accounts; requiring a community association manager,
   17         or the association in the absence of a community
   18         association manager, to report certain information to
   19         the Division of Florida Condominiums, Timeshares, and
   20         Mobile Homes; providing an expiration date for the
   21         reporting requirements; creating s. 720.3033, F.S.;
   22         requiring association directors to file with the
   23         association secretary written certification that they
   24         have read certain association documents, will uphold
   25         the documents, and will uphold their fiduciary
   26         responsibility to the members; providing for an
   27         educational certificate in lieu of written
   28         certification; providing that such certification is
   29         valid while the director is on the board; providing
   30         penalties for failure to file such certification;
   31         requiring the association secretary to retain such
   32         certification for 5 years; requiring the board to
   33         follow specified procedures relating to contracts or
   34         transactions between the association and certain
   35         entities; providing for disclosure of the contract or
   36         transaction to members; providing for the cancellation
   37         of such contract or transaction under certain
   38         circumstances; prohibiting any association officer,
   39         director, or manager from soliciting or receiving
   40         certain personal benefits from any person providing or
   41         offering to provide goods or services to the
   42         association and providing for removal for knowingly
   43         taking such action; providing an exception; providing
   44         for the removal of any director or officer charged
   45         with a felony theft or embezzlement offense involving
   46         association funds or property; providing for the
   47         reinstatement of such person under certain
   48         circumstances; prohibiting a member with pending
   49         criminal charges from certain positions; requiring the
   50         association to maintain insurance or a bond to cover
   51         funds that will be in the custody of the association
   52         or its management agent; providing a definition;
   53         amending s. 720.306, F.S.; revising procedures for the
   54         election of directors; amending s. 720.307, F.S.;
   55         providing additional circumstances for authorizing
   56         members to elect a majority of association board
   57         members; providing circumstances under which members
   58         other than the developer are authorized to elect a
   59         specified number of members to the board of directors;
   60         amending s. 720.3075, F.S.; providing public policy
   61         regarding prohibited clauses in association documents;
   62         providing prohibited clauses in association documents;
   63         amending s. 720.3085, F.S.; defining the term
   64         “previous owner” to exclude certain associations from
   65         provisions relating to the liability of previous
   66         owners of parcels for unpaid assessments; limiting a
   67         present owner’s liability for certain assessments;
   68         providing an effective date.
   70  Be It Enacted by the Legislature of the State of Florida:
   72         Section 1. Paragraph (b) of subsection (2) of section
   73  468.436, Florida Statutes, is amended to read:
   74         468.436 Disciplinary proceedings.—
   75         (2) The following acts constitute grounds for which the
   76  disciplinary actions in subsection (4) may be taken:
   77         (b)1. Violation of any provision of this part.
   78         2. Violation of any lawful order or rule rendered or
   79  adopted by the department or the council.
   80         3. Being convicted of or pleading nolo contendere to a
   81  felony in any court in the United States.
   82         4. Obtaining a license or certification or any other order,
   83  ruling, or authorization by means of fraud, misrepresentation,
   84  or concealment of material facts.
   85         5. Committing acts of gross misconduct or gross negligence
   86  in connection with the profession.
   87         6. Contracting, on behalf of an association, with any
   88  entity in which the licensee has a financial interest that is
   89  not disclosed.
   90         7. Violating any provision of chapters 718, 719, or 720
   91  during the course of performing community association management
   92  services pursuant to a contract with a community association as
   93  defined in s. 468.431(1).
   94         Section 2. Subsection (5) and paragraph (d) of subsection
   95  (6) of section 720.303, Florida Statutes, are amended, and
   96  subsection (13) is added to that section, to read:
   97         720.303 Association powers and duties; meetings of board;
   98  official records; budgets; financial reporting; association
   99  funds; recalls.—
  100         (5) INSPECTION AND COPYING OF RECORDS.—The official records
  101  shall be maintained within the state for at least 7 years and
  102  shall be made available to a parcel owner for inspection or
  103  photocopying within 45 miles of the community or within the
  104  county in which the association is located within 10 business
  105  days after receipt by the board or its designee of a written
  106  request must be open to inspection and available for
  107  photocopying by members or their authorized agents at reasonable
  108  times and places within 10 business days after receipt of a
  109  written request for access. This subsection may be complied with
  110  by having a copy of the official records available for
  111  inspection or copying in the community or, at the option of the
  112  association, by making the records available to a parcel owner
  113  electronically via the Internet or by allowing the records to be
  114  viewed in electronic format on a computer screen and printed
  115  upon request. If the association has a photocopy machine
  116  available where the records are maintained, it must provide
  117  parcel owners with copies on request during the inspection if
  118  the entire request is limited to no more than 25 pages. An
  119  association shall allow a member or his or her authorized
  120  representative to use a portable device, including a smartphone,
  121  tablet, portable scanner, or any other technology capable of
  122  scanning or taking photographs, to make an electronic copy of
  123  the official records in lieu of providing the member or his or
  124  her authorized representative with a copy of such records. The
  125  association may not charge a fee to a member or his or her
  126  authorized representative for such use of a portable device.
  127         (a) The failure of an association to provide access to the
  128  records within 10 business days after receipt of a written
  129  request submitted by certified mail, return receipt requested,
  130  creates a rebuttable presumption that the association willfully
  131  failed to comply with this subsection.
  132         (b) A member who is denied access to official records is
  133  entitled to the actual damages or minimum damages for the
  134  association’s willful failure to comply with this subsection.
  135  The minimum damages are to be $50 per calendar day up to 10
  136  days, the calculation to begin on the 11th business day after
  137  receipt of the written request.
  138         (c) The association may adopt reasonable written rules
  139  governing the frequency, time, location, notice, records to be
  140  inspected, and manner of inspections, but may not require a
  141  parcel owner to demonstrate any proper purpose for the
  142  inspection, state any reason for the inspection, or limit a
  143  parcel owner’s right to inspect records to less than one 8-hour
  144  business day per month. The association may impose fees to cover
  145  the costs of providing copies of the official records,
  146  including, without limitation, the costs of copying and the
  147  costs required for personnel to retrieve and copy the records if
  148  the time spent retrieving and copying the records exceeds one
  149  half hour and if the personnel costs do not exceed $20 per hour.
  150  No personnel costs may be charged for records requests that
  151  result in 25 or fewer pages. The association may charge up to 25
  152  50 cents per page for copies made on the association’s
  153  photocopier. If the association does not have a photocopy
  154  machine available where the records are kept, or if the records
  155  requested to be copied exceed 25 pages in length, the
  156  association may have copies made by an outside duplicating
  157  service vendor or association management company personnel and
  158  may charge the actual cost of copying, as supported by the
  159  vendor invoice including any reasonable costs involving
  160  personnel fees and charges at an hourly rate for vendor or
  161  employee time to cover administrative costs to the vendor or
  162  association. The association shall maintain an adequate number
  163  of copies of the recorded governing documents, to ensure their
  164  availability to members and prospective members. Notwithstanding
  165  this paragraph, the following records are not accessible to
  166  members or parcel owners:
  167         1. Any record protected by the lawyer-client privilege as
  168  described in s. 90.502 and any record protected by the work
  169  product privilege, including, but not limited to, a record
  170  prepared by an association attorney or prepared at the
  171  attorney’s express direction which reflects a mental impression,
  172  conclusion, litigation strategy, or legal theory of the attorney
  173  or the association and which was prepared exclusively for civil
  174  or criminal litigation or for adversarial administrative
  175  proceedings or which was prepared in anticipation of such
  176  litigation or proceedings until the conclusion of the litigation
  177  or proceedings.
  178         2. Information obtained by an association in connection
  179  with the approval of the lease, sale, or other transfer of a
  180  parcel.
  181         3. Personnel records of the association’s employees,
  182  including, but not limited to, disciplinary, payroll, health,
  183  and insurance records. For purposes of this subparagraph, the
  184  term “personnel records” does not include written employment
  185  agreements with an association employee or budgetary or
  186  financial records that indicate the compensation paid to an
  187  association employee.
  188         4. Medical records of parcel owners or community residents.
  189         5. Social security numbers, driver’s license numbers,
  190  credit card numbers, electronic mailing addresses, telephone
  191  numbers, facsimile numbers, emergency contact information, any
  192  addresses for a parcel owner other than as provided for
  193  association notice requirements, and other personal identifying
  194  information of any person, excluding the person’s name, parcel
  195  designation, mailing address, and property address. However, an
  196  owner may consent in writing to the disclosure of protected
  197  information described in this subparagraph. The association is
  198  not liable for the disclosure of information that is protected
  199  under this subparagraph if the information is included in an
  200  official record of the association and is voluntarily provided
  201  by an owner and not requested by the association.
  202         6. Any electronic security measure that is used by the
  203  association to safeguard data, including passwords.
  204         7. The software and operating system used by the
  205  association which allows the manipulation of data, even if the
  206  owner owns a copy of the same software used by the association.
  207  The data is part of the official records of the association.
  208         (d) The association or its authorized agent is not required
  209  to provide a prospective purchaser or lienholder with
  210  information about the residential subdivision or the association
  211  other than information or documents required by this chapter to
  212  be made available or disclosed. The association or its
  213  authorized agent may charge a reasonable fee to the prospective
  214  purchaser or lienholder or the current parcel owner or member
  215  for providing good faith responses to requests for information
  216  by or on behalf of a prospective purchaser or lienholder, other
  217  than that required by law, if the fee does not exceed $150 plus
  218  the reasonable cost of photocopying and any attorney’s fees
  219  incurred by the association in connection with the response.
  220         (6) BUDGETS.—
  221         (d) An association is deemed to have provided for reserve
  222  accounts if reserve accounts have been initially established by
  223  the developer or if the membership of the association
  224  affirmatively elects to provide for reserves. If reserve
  225  accounts are established by the developer, the budget must
  226  designate the components for which the reserve accounts may be
  227  used. If reserve accounts are not initially provided by the
  228  developer, the membership of the association may elect to do so
  229  upon the affirmative approval of a majority of the total voting
  230  interests of the association. Such approval may be obtained by
  231  vote of the members at a duly called meeting of the membership
  232  or by the written consent of a majority of the total voting
  233  interests of the association. The approval action of the
  234  membership must state that reserve accounts shall be provided
  235  for in the budget and must designate the components for which
  236  the reserve accounts are to be established. Upon approval by the
  237  membership, the board of directors shall include the required
  238  reserve accounts in the budget in the next fiscal year following
  239  the approval and each year thereafter. Once established as
  240  provided in this subsection, the reserve accounts must be funded
  241  or maintained or have their funding waived in the manner
  242  provided in paragraph (f).
  243         (13) REPORTING REQUIREMENT.—The community association
  244  manager or management firm, or the association when there is no
  245  community association manager or management firm, shall report
  246  to the division by November 22, 2013, in a manner and form
  247  prescribed by the division.
  248         (a) The report shall include the association’s:
  249         1. Legal name.
  250         2. Federal employer identification number.
  251         3. Mailing and physical addresses.
  252         4. Total number of parcels.
  253         5. Total amount of revenues and expenses from the
  254  association’s annual budget.
  255         (b) For associations in which control of the association
  256  has not been transitioned to nondeveloper members, as set forth
  257  in s. 720.307, the report shall also include the developer’s:
  258         1. Legal name.
  259         2. Mailing address.
  260         3. Total number of parcels owned on the date of reporting.
  261         (c) The reporting requirement provided in this subsection
  262  shall be a continuing obligation on each association until the
  263  required information is reported to the division.
  264         (d) By October 1, 2013, the department shall establish and
  265  implement a registration system through an Internet website that
  266  provides for the reporting requirements of paragraphs (a) and
  267  (b).
  268         (e) On or before December 1, 2013, and annually thereafter
  269  by December 1, the department shall submit a report to the
  270  Governor, the President of the Senate, and the Speaker of the
  271  House of Representatives providing the homeowner association
  272  data reported pursuant to this subsection.
  273         (f) The division may adopt rules pursuant to ss. 120.536(1)
  274  and 120.54 to implement the provisions of this subsection.
  275         (g) This subsection shall expire on July 1, 2016, unless
  276  reenacted by the Legislature.
  277         Section 3. Section 720.3033, Florida Statutes, is created
  278  to read:
  279         720.3033 Officers and directors.—
  280         (1)(a) Within 90 days after being elected or appointed to
  281  the board, each director shall certify in writing to the
  282  secretary of the association that he or she has read the
  283  association’s declaration of covenants, articles of
  284  incorporation, bylaws, and current written rules and policies;
  285  that he or she will work to uphold such documents and policies
  286  to the best of his or her ability; and that he or she will
  287  faithfully discharge his or her fiduciary responsibility to the
  288  association’s members. Within 90 days after being elected or
  289  appointed to the board, in lieu of this written certification,
  290  the newly elected or appointed director may submit a certificate
  291  of having satisfactorily completed the educational curriculum
  292  administered by a division-approved education provider within 1
  293  year before or 90 days after the date of election or
  294  appointment.
  295         (b) The written certification or educational certificate is
  296  valid for the uninterrupted tenure of the director on the board.
  297  A director who does not timely file the written certification or
  298  educational certificate shall be suspended from the board until
  299  he or she complies with the requirement. The board may
  300  temporarily fill the vacancy during the period of suspension.
  301         (c) The association shall retain each director’s written
  302  certification or educational certificate for inspection by the
  303  members for 5 years after the director’s election. However, the
  304  failure to have the written certification or educational
  305  certificate on file does not affect the validity of any board
  306  action.
  307         (2) If the association enters into a contract or other
  308  transaction with any of its directors or a corporation, firm,
  309  association that is not an affiliated homeowners’ association,
  310  or other entity in which an association director is also a
  311  director or officer or is financially interested, the board
  312  must:
  313         (a) Comply with the requirements of s. 617.0832.
  314         (b) Enter the disclosures required by s. 617.0832 into the
  315  written minutes of the meeting.
  316         (c) Approve the contract or other transaction by an
  317  affirmative vote of two-thirds of the directors present.
  318         (d) At the next regular or special meeting of the members,
  319  disclose the existence of the contract or other transaction to
  320  the members. Upon motion of any member, the contract or
  321  transaction shall be brought up for a vote and may be canceled
  322  by a majority vote of the members present. If the members cancel
  323  the contract, the association is only liable for the reasonable
  324  value of goods and services provided up to the time of
  325  cancellation and is not liable for any termination fee,
  326  liquidated damages, or other penalty for such cancellation.
  327         (3) An officer, director, or manager may not solicit, offer
  328  to accept, or accept any good or service of value for which
  329  consideration has not been provided for his or her benefit or
  330  for the benefit of a member of his or her immediate family from
  331  any person providing or proposing to provide goods or services
  332  to the association. If the board finds that an officer or
  333  director has violated this subsection, the board shall
  334  immediately remove from office the officer or director. The
  335  vacancy shall be filled according to law until the end of the
  336  period of the end of the director’s term of office. However, an
  337  officer, director, or manager may accept food to be consumed at
  338  a business meeting with a value of less than $25 per individual
  339  or a service or good received in connection with trade fairs or
  340  education programs.
  341         (4) A director or officer charged by information or
  342  indictment with a felony theft or embezzlement offense involving
  343  the association’s funds or property is removed from office. The
  344  board shall fill the vacancy according to general law until the
  345  end of the period of the suspension or the end of the director’s
  346  term of office, whichever occurs first. However, if the charges
  347  are resolved without a finding of guilt or without acceptance of
  348  a plea of guilty or nolo contendere, the director or officer
  349  shall be reinstated for any remainder of his or her term of
  350  office. A member who has such criminal charges pending may not
  351  be appointed or elected to a position as a director or officer.
  352         (5) All associations shall maintain insurance or a fidelity
  353  bond for all persons who control or disburse funds of the
  354  association. The insurance policy or fidelity bond must cover
  355  the maximum funds that will be in the custody of the association
  356  or its management agent at any one time. As used in this
  357  subsection, the term “persons who control or disburse funds of
  358  the association” includes, but is not limited to, persons
  359  authorized to sign checks on behalf of the association, and the
  360  president, secretary, and treasurer of the association. The
  361  association shall bear the cost of any insurance or bond.
  362         Section 4. Paragraph (a) of subsection (9) of section
  363  720.306, Florida Statutes, is amended to read:
  364         720.306 Meetings of members; voting and election
  365  procedures; amendments.—
  366         (9)(a) ELECTIONS AND BOARD VACANCIES.—Elections of
  367  directors must be conducted in accordance with the procedures
  368  set forth in the governing documents of the association. All
  369  members of the association are eligible to serve on the board of
  370  directors, and a member may nominate himself or herself as a
  371  candidate for the board at a meeting where the election is to be
  372  held; provided, however, that or, if the election process allows
  373  candidates to be nominated in advance of the meeting voting by
  374  absentee ballot, in advance of the balloting, the association is
  375  not required to allow nominations at the meeting. An election is
  376  not required unless more candidates are nominated than vacancies
  377  exist. Except as otherwise provided in the governing documents,
  378  boards of directors must be elected by a plurality of the votes
  379  cast by eligible voters.
  380         Section 5. Subsection (1) of section 720.307, Florida
  381  Statutes, is amended, present subsections (2) through (4) are
  382  renumbered as subsections (3) through (5), respectively, and new
  383  subsection (2) is added to that section, to read:
  384         720.307 Transition of association control in a community.
  385  With respect to homeowners’ associations:
  386         (1) Members other than the developer are entitled to elect
  387  at least a majority of the members of the board of directors of
  388  the homeowners’ association when the earlier of the following
  389  events occurs:
  390         (a) Three months after 90 percent of the parcels in all
  391  phases of the community that will ultimately be operated by the
  392  homeowners’ association have been conveyed to members; or
  393         (b) Such other percentage of the parcels has been conveyed
  394  to members, or such other date or event has occurred, as is set
  395  forth in the governing documents in order to comply with the
  396  requirements of any governmentally chartered entity with regard
  397  to the mortgage financing of parcels;
  398         (c) Upon the developer abandoning or deserting its
  399  responsibility to maintain and complete the amenities or
  400  infrastructure as disclosed in the governing documents. There is
  401  a rebuttable presumption that the developer has abandoned and
  402  deserted the property if the developer has unpaid assessments or
  403  guaranteed amounts under s. 720.308 for a period of more than 2
  404  years;
  405         (d) Upon the developer filing a petition seeking protection
  406  under chapter 7 of the federal Bankruptcy Code;
  407         (e) Upon the developer losing title to the property through
  408  a foreclosure, or the transfer of a deed in lieu of foreclosure,
  409  unless the successor owner has accepted an assignment of
  410  developer rights and responsibilities first arising after the
  411  date of such assignment; or
  412         (f) Upon a receiver for the developer being appointed by a
  413  circuit court and not being discharged within 30 days after such
  414  appointment, unless the court determines within 30 days after
  415  such appointment that transfer of control would be detrimental
  416  to the association or its members.
  418         For purposes of this section, the term “members other than
  419  the developer” shall not include builders, contractors, or
  420  others who purchase a parcel for the purpose of constructing
  421  improvements thereon for resale.
  422         (2) Members other than the developer are entitled to elect
  423  at least one member of the board of directors of the homeowners’
  424  association if 25 percent of the parcels in all phases of the
  425  community which will ultimately be operated by the association
  426  have been conveyed to members.
  427         Section 6. Subsection (5) is added to section 720.3075,
  428  Florida Statutes, to read:
  429         720.3075 Prohibited clauses in association documents.—
  430         (5) It is declared that the public policy of this state is
  431  that prior to transition of homeowners’ association control in a
  432  community from the developer to the nondeveloper members, as set
  433  forth in s. 720.307, a developer is prohibited from unilaterally
  434  making amendments to the governing documents which bind members
  435  of the association, which would unreasonably modify the original
  436  plan of development, radically change the community scheme, or
  437  prejudice the rights of the existing nondeveloper members to use
  438  and enjoy the benefits of the common property. An amendment to
  439  the governing documents shall not be deemed to unreasonably
  440  modify the original plan of development, radically change the
  441  community scheme, or prejudice the rights of the existing
  442  nondeveloper members to use and enjoy the benefits of the common
  443  property unless the developer’s authority to make such
  444  amendments was not reserved in the original governing documents,
  445  and the amendment is arbitrary, capricious or in bad faith,
  446  destroys the general plan of development, or materially shifts
  447  economic burdens from the developer to the existing nondeveloper
  448  members.
  449         Section 7. Paragraph (b) of subsection (2) of section
  450  720.3085, Florida Statutes, is amended to read:
  451         720.3085 Payment for assessments; lien claims.—
  452         (2)
  453         (b) A parcel owner is jointly and severally liable with the
  454  previous parcel owner for all unpaid assessments that came due
  455  up to the time of transfer of title. This liability is without
  456  prejudice to any right the present parcel owner may have to
  457  recover any amounts paid by the present owner from the previous
  458  owner. For the purposes of this subsection, the term “previous
  459  owner” shall not include an association that acquires title to a
  460  delinquent property through foreclosure or by deed in lieu of
  461  foreclosure. The present parcel owner’s liability for unpaid
  462  assessments is limited to any unpaid assessments that accrued
  463  before the association acquired title to the delinquent property
  464  through foreclosure or by deed in lieu of foreclosure.
  465         Section 8. This act shall take effect July 1, 2013.