HB 7031

1	A bill to be entitled
2	An act relating to community associations; amending s.
3	718.103, F.S.; redefining the term "land"; amending s.
4	718.111, F.S.; specifying that requirements relating to
5	the acquisition and maintenance of adequate insurance
6	apply to all residential condominiums; amending s.
7	718.115, F.S.; providing that common expenses include the
8	costs of certain insurance or self-insurance; amending s.
9	718.116, F.S.; requiring notice of special assessments for
10	certain insurance; amending s. 718.503, F.S.; requiring
11	additional disclosures in contracts for sale or lease of
12	residential units; requiring copies of budgets to be
13	furnished to buyers when a closing occurs more than 12
14	months after an offering circular is filed with the state;
15	amending s. 718.504, F.S.; requiring certain information
16	relating to the budget to be included in the offering
17	circular; requiring that an association budget be prepared
18	in good faith; amending s. 718.616, F.S.; requiring that
19	certain disclosures be compiled in a report; revising the
20	items required to be disclosed; requiring supplemental
21	reports in certain situations; amending s. 718.618, F.S.;
22	revising certain requirements for reserve accounts;
23	revising the method of computing the amounts required to
24	fund additional converter reserve accounts; deleting
25	references to specific items that are covered by an
26	implied warranty of fitness in the absence of reserve
27	accounts; requiring that a developer disclose in a
28	contract of sale compliance with certain obligations
29	regarding the maintenance of improvements; amending s.
30	719.104, F.S.; providing for cooperative associations and
31	similar organizations to acquire and maintain windstorm
32	insurance; amending s. 719.107, F.S.; providing that
33	common expenses include costs of certain insurance;
34	amending s. 719.108, F.S.; providing for notice of special
35	assessments levied in conjunction with certain insurance;
36	amending s. 719.503, F.S.; requiring additional
37	disclosures in contracts for sale or lease of residential
38	units; requiring copies of budgets to be furnished to
39	buyers when a closing occurs more than 12 months after an
40	offering circular is filed with the state; amending s.
41	719.504, F.S.; requiring certain information relating to
42	the budget to be included in the offering circular;
43	requiring that an association budget be prepared in good
44	faith; amending s. 720.303, F.S.; providing for
45	homeowners' associations to acquire and maintain windstorm
46	insurance; amending s. 720.308, F.S.; providing for
47	homeowners' associations to levy assessments for
48	insurance; providing an effective date.
49
50	Be It Enacted by the Legislature of the State of Florida:
51
52	Section 1.  Subsection (18) of section 718.103, Florida
53	Statutes, is amended to read:
54	718.103  Definitions.--As used in this chapter, the term:
55	(18)  "Land" means the surface of a legally described
56	parcel of real property and includes, unless otherwise specified
57	in the declaration and whether separate from or including such
58	surface, airspace lying above and subterranean space lying below
59	such surface. However, if so defined in the declaration, the
60	term "land" may mean all or any portion of the airspace or
61	subterranean space between two legally identifiable elevations
62	and may exclude the surface of a parcel of real property and may
63	mean any combination of the foregoing, whether or not
64	contiguous, or may mean a condominium unit.
65	Section 2.  Subsection (11) of section 718.111, Florida
66	Statutes, as amended by section 37 of chapter 2007-1, Laws of
67	Florida, is amended to read:
68	718.111  The association.--
69	(11)  INSURANCE.--In order to protect the safety, health,
70	and welfare of the people of the State of Florida and to ensure
71	consistency in the provision of insurance coverage to
72	condominiums and their unit owners, paragraphs (a), (b), and (c)
73	are deemed to apply to every residential condominium in the
74	state, regardless of the date of its declaration of condominium.
75	It is the intent of the Legislature to encourage lower or stable
76	insurance premiums for associations described in this section.
77	Therefore, the Legislature requires a report to be prepared by
78	the Office of Insurance Regulation of the Department of
79	Financial Services for publication 18 months from the effective
80	date of this act, evaluating premium increases or decreases for
81	associations, unit owner premium increases or decreases,
82	recommended changes to better define common areas, or any other
83	information the Office of Insurance Regulation deems
84	appropriate.
85	(a)  A unit-owner controlled association operating a
86	residential condominium shall use its best efforts to obtain and
87	maintain adequate insurance to protect the association, the
88	association property, the common elements, and the condominium
89	property required to be insured by the association pursuant to
90	paragraph (b). If the association is developer controlled, the
91	association shall exercise due diligence to obtain and maintain
92	such insurance. Failure to obtain and maintain adequate
93	insurance during any period of developer control shall
94	constitute a breach of fiduciary responsibility by the
95	developer-appointed members of the board of directors of the
96	association, unless said members can show that despite such
97	failure, they have exercised due diligence. The declaration of
98	condominium as originally recorded, or amended pursuant to
99	procedures provided therein, may require that condominium
100	property consisting of freestanding buildings where there is no
101	more than one building in or on such unit need not be insured by
102	the association if the declaration requires the unit owner to
103	obtain adequate insurance for the condominium property. An
104	association may also obtain and maintain liability insurance for
105	directors and officers, insurance for the benefit of association
106	employees, and flood insurance for common elements, association
107	property, and units. Adequate insurance, regardless of any
108	requirement in the declaration of condominium for coverage by
109	the association for "full insurable value," "replacement cost,"
110	or the like, may include reasonable deductibles as determined by
111	the board based upon available funds or predetermined assessment
112	authority at the time that the insurance is obtained.
113	1.  Windstorm insurance coverage for a group of no fewer
114	than three communities created and operating under this chapter,
115	chapter 719, chapter 720, or chapter 721 may be obtained and
116	maintained for the communities if the insurance coverage is
117	sufficient to cover an amount equal to the probable maximum loss
118	for the communities for a 250-year windstorm event. Such
119	probable maximum loss must be determined through the use of a
120	competent model that has been accepted by the Florida Commission
121	on Hurricane Loss Projection Methodology. Such insurance
122	coverage is deemed adequate windstorm insurance for the purposes
123	of this section.
124	2.  An association or group of associations may self-insure
125	against claims against the association, the association
126	property, and the condominium property required to be insured by
127	an association, upon compliance with the applicable provisions
128	of ss. 624.460-624.488, which shall be considered adequate
129	insurance for the purposes of this section. A copy of each
130	policy of insurance in effect shall be made available for
131	inspection by unit owners at reasonable times.
132	(b)  Every hazard insurance policy issued or renewed on or
133	after January 1, 2004, to protect the condominium shall provide
134	primary coverage for:
135	1.  All portions of the condominium property located
136	outside the units;
137	2.  The condominium property located inside the units as
138	such property was initially installed, or replacements thereof
139	of like kind and quality and in accordance with the original
140	plans and specifications or, if the original plans and
141	specifications are not available, as they existed at the time
142	the unit was initially conveyed; and
143	3.  All portions of the condominium property for which the
144	declaration of condominium requires coverage by the association.
145
146	Anything to the contrary notwithstanding, the terms "condominium
147	property," "building," "improvements," "insurable improvements,"
148	"common elements," "association property," or any other term
149	found in the declaration of condominium which defines the scope
150	of property or casualty insurance that a condominium association
151	must obtain shall exclude all floor, wall, and ceiling
152	coverings, electrical fixtures, appliances, air conditioner or
153	heating equipment, water heaters, water filters, built-in
154	cabinets and countertops, and window treatments, including
155	curtains, drapes, blinds, hardware, and similar window treatment
156	components, or replacements of any of the foregoing which are
157	located within the boundaries of a unit and serve only one unit
158	and all air conditioning compressors that service only an
159	individual unit, whether or not located within the unit
160	boundaries. The foregoing is intended to establish the property
161	or casualty insuring responsibilities of the association and
162	those of the individual unit owner and do not serve to broaden
163	or extend the perils of coverage afforded by any insurance
164	contract provided to the individual unit owner. Beginning
165	January 1, 2004, the association shall have the authority to
166	amend the declaration of condominium, without regard to any
167	requirement for mortgagee approval of amendments affecting
168	insurance requirements, to conform the declaration of
169	condominium to the coverage requirements of this section.
170	(c)  Every hazard insurance policy issued or renewed on or
171	after January 1, 2004, to an individual unit owner shall provide
172	that the coverage afforded by such policy is excess over the
173	amount recoverable under any other policy covering the same
174	property. Each insurance policy issued to an individual unit
175	owner providing such coverage shall be without rights of
176	subrogation against the condominium association that operates
177	the condominium in which such unit owner's unit is located. All
178	real or personal property located within the boundaries of the
179	unit owner's unit which is excluded from the coverage to be
180	provided by the association as set forth in paragraph (b) shall
181	be insured by the individual unit owner.
182	(d)  The association shall obtain and maintain adequate
183	insurance or fidelity bonding of all persons who control or
184	disburse funds of the association. The insurance policy or
185	fidelity bond must cover the maximum funds that will be in the
186	custody of the association or its management agent at any one
187	time. As used in this paragraph, the term "persons who control
188	or disburse funds of the association" includes, but is not
189	limited to, those individuals authorized to sign checks and the
190	president, secretary, and treasurer of the association. The
191	association shall bear the cost of bonding.
192	Section 3.  Present paragraph (f) of subsection (1) of
193	section 718.115, Florida Statutes, is redesignated as paragraph
194	(g), and a new paragraph (f) is added to that subsection, to
195	read:
196	718.115  Common expenses and common surplus.--
197	(1)
198	(f)  Common expenses include the costs of insurance
199	acquired by the association under the authority of s.
200	718.111(11), including costs and contingent expenses required to
201	participate in a self-insurance fund authorized and approved
202	pursuant to s. 624.462.
203	Section 4.  Subsection (10) of section 718.116, Florida
204	Statutes, is amended to read:
205	718.116  Assessments; liability; lien and priority;
206	interest; collection.--
207	(10)  The specific purpose or purposes of any special
208	assessment, including any contingent special assessment levied
209	in conjunction with the purchase of an insurance policy
210	authorized by s. 718.111(11), approved in accordance with the
211	condominium documents shall be set forth in a written notice of
212	such assessment sent or delivered to each unit owner. The funds
213	collected pursuant to a special assessment shall be used only
214	for the specific purpose or purposes set forth in such notice.
215	However, upon completion of such specific purpose or purposes,
216	any excess funds will be considered common surplus, and may, at
217	the discretion of the board, either be returned to the unit
218	owners or applied as a credit toward future assessments.
219	Section 5.  Paragraph (a) of subsection (1) of section
220	718.503, Florida Statutes, is amended, and paragraph (c) is
221	added to that subsection, to read:
222	718.503  Developer disclosure prior to sale; nondeveloper
223	unit owner disclosure prior to sale; voidability.--
224	(1)  DEVELOPER DISCLOSURE.--
225	(a)  Contents of contracts.--Any contract for the sale of a
226	residential unit or a lease thereof for an unexpired term of
227	more than 5 years shall:
228	1.  Contain the following legend in conspicuous type: THIS
229	AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF
230	THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF
231	EXECUTION OF THIS AGREEMENT BY THE BUYER, AND RECEIPT BY BUYER
232	OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED TO HIM OR HER BY
233	THE DEVELOPER UNDER SECTION 718.503, FLORIDA STATUTES. THIS
234	AGREEMENT IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE
235	OF THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE
236	OF RECEIPT FROM THE DEVELOPER OF ANY AMENDMENT WHICH MATERIALLY
237	ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS ADVERSE TO
238	THE BUYER. ANY PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS
239	SHALL BE OF NO EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR
240	A PERIOD OF NOT MORE THAN 15 DAYS AFTER THE BUYER HAS RECEIVED
241	ALL OF THE ITEMS REQUIRED. BUYER'S RIGHT TO VOID THIS AGREEMENT
242	SHALL TERMINATE AT CLOSING. FIGURES CONTAINED IN ANY BUDGET
243	DELIVERED TO THE BUYER PREPARED IN ACCORDANCE WITH THE
244	CONDOMINIUM ACT ARE ESTIMATES ONLY AND REPRESENT AN
245	APPROXIMATION OF FUTURE EXPENSES BASED ON FACTS AND
246	CIRCUMSTANCES EXISTING AT THE TIME OF THE PREPARATION OF THE
247	BUDGET BY THE DEVELOPER. ACTUAL COSTS OF SUCH ITEMS MAY EXCEED
248	THE ESTIMATED COSTS. SUCH CHANGES IN COST DO NOT CONSTITUTE
249	MATERIAL ADVERSE CHANGES IN THE OFFERING.
250	2.  Contain the following caveat in conspicuous type on the
251	first page of the contract: ORAL REPRESENTATIONS CANNOT BE
252	RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE
253	DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE
254	TO THIS CONTRACT AND THE DOCUMENTS REQUIRED BY SECTION 718.503,
255	FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR
256	LESSEE.
257	3.  If the unit has been occupied by someone other than the
258	buyer, contain a statement that the unit has been occupied.
259	4.  If the contract is for the sale or transfer of a unit
260	subject to a lease, include as an exhibit a copy of the executed
261	lease and shall contain within the text in conspicuous type: THE
262	UNIT IS SUBJECT TO A LEASE (OR SUBLEASE).
263	5.  If the contract is for the lease of a unit for a term
264	of 5 years or more, include as an exhibit a copy of the proposed
265	lease.
266	6.  If the contract is for the sale or lease of a unit that
267	is subject to a lien for rent payable under a lease of a
268	recreational facility or other commonly used facility, contain
269	within the text the following statement in conspicuous type:
270	THIS CONTRACT IS FOR THE TRANSFER OF A UNIT THAT IS SUBJECT TO A
271	LIEN FOR RENT PAYABLE UNDER A LEASE OF COMMONLY USED FACILITIES.
272	FAILURE TO PAY RENT MAY RESULT IN FORECLOSURE OF THE LIEN.
273	7.  State the name and address of the escrow agent required
274	by s. 718.202 and state that the purchaser may obtain a receipt
275	for his or her deposit from the escrow agent upon request.
276	8.  If the contract is for the sale or transfer of a unit
277	in a condominium in which timeshare estates have been or may be
278	created, contain within the text in conspicuous type: UNITS IN
279	THIS CONDOMINIUM ARE SUBJECT TO TIMESHARE ESTATES. The contract
280	for the sale of a fee interest in a timeshare estate shall also
281	contain, in conspicuous type, the following: FOR THE PURPOSE OF
282	AD VALOREM TAXES OR SPECIAL ASSESSMENTS LEVIED BY TAXING
283	AUTHORITIES AGAINST A FEE INTEREST IN A TIMESHARE ESTATE, THE
284	MANAGING ENTITY IS GENERALLY CONSIDERED THE TAXPAYER UNDER
285	FLORIDA LAW. YOU HAVE THE RIGHT TO CHALLENGE AN ASSESSMENT BY A
286	TAXING AUTHORITY RELATING TO YOUR TIMESHARE ESTATE PURSUANT TO
287	THE PROVISIONS OF CHAPTER 194, FLORIDA STATUTES.
288	(c)  Subsequent estimates; when provided.--If the closing
289	on a contract occurs more than 12 months after the filing of the
290	offering circular with the division, the developer shall provide
291	a copy of the current estimated operating budget of the
292	association to the buyer at closing, which shall not be
293	considered an amendment that modifies the offering provided any
294	changes to the association's budget from the budget given to the
295	buyer at the time of contract signing were the result of matters
296	beyond the developer's control. Changes in budgets of any master
297	association, recreation association, or club and similar budgets
298	for entities other than the association shall likewise not be
299	considered amendments that modify the offering. It is the intent
300	of this paragraph to clarify existing law.
301	Section 6.  Present paragraph (d) of subsection (21) of
302	section 718.504, Florida Statutes, is redesignated as paragraph
303	(f), and new paragraphs (d) and (e) are added to that
304	subsection, to read:
305	718.504  Prospectus or offering circular.--Every developer
306	of a residential condominium which contains more than 20
307	residential units, or which is part of a group of residential
308	condominiums which will be served by property to be used in
309	common by unit owners of more than 20 residential units, shall
310	prepare a prospectus or offering circular and file it with the
311	Division of Florida Land Sales, Condominiums, and Mobile Homes
312	prior to entering into an enforceable contract of purchase and
313	sale of any unit or lease of a unit for more than 5 years and
314	shall furnish a copy of the prospectus or offering circular to
315	each buyer. In addition to the prospectus or offering circular,
316	each buyer shall be furnished a separate page entitled
317	"Frequently Asked Questions and Answers," which shall be in
318	accordance with a format approved by the division and a copy of
319	the financial information required by s. 718.111. This page
320	shall, in readable language, inform prospective purchasers
321	regarding their voting rights and unit use restrictions,
322	including restrictions on the leasing of a unit; shall indicate
323	whether and in what amount the unit owners or the association is
324	obligated to pay rent or land use fees for recreational or other
325	commonly used facilities; shall contain a statement identifying
326	that amount of assessment which, pursuant to the budget, would
327	be levied upon each unit type, exclusive of any special
328	assessments, and which shall further identify the basis upon
329	which assessments are levied, whether monthly, quarterly, or
330	otherwise; shall state and identify any court cases in which the
331	association is currently a party of record in which the
332	association may face liability in excess of $100,000; and which
333	shall further state whether membership in a recreational
334	facilities association is mandatory, and if so, shall identify
335	the fees currently charged per unit type. The division shall by
336	rule require such other disclosure as in its judgment will
337	assist prospective purchasers. The prospectus or offering
338	circular may include more than one condominium, although not all
339	such units are being offered for sale as of the date of the
340	prospectus or offering circular. The prospectus or offering
341	circular must contain the following information:
342	(21)  An estimated operating budget for the condominium and
343	the association, and a schedule of the unit owner's expenses
344	shall be attached as an exhibit and shall contain the following
345	information:
346	(d)  The following statement in conspicuous type: THE
347	BUDGET CONTAINED IN THIS OFFERING CIRCULAR HAS BEEN PREPARED IN
348	ACCORDANCE WITH THE CONDOMINIUM ACT AND IS A GOOD FAITH ESTIMATE
349	ONLY AND REPRESENTS AN APPROXIMATION OF FUTURE EXPENSES BASED ON
350	FACTS AND CIRCUMSTANCES EXISTING AT THE TIME OF ITS PREPARATION.
351	ACTUAL COSTS OF SUCH ITEMS MAY EXCEED THE ESTIMATED COSTS. SUCH
352	CHANGES IN COST DO NOT CONSTITUTE MATERIAL ADVERSE CHANGES IN
353	THE OFFERING.
354	(e)  Each budget for an association prepared by a developer
355	consistent with this subsection shall be prepared in good faith
356	and shall reflect accurate estimated amounts for the required
357	items in paragraph (c) at the time of the filing of the offering
358	circular with the division, and subsequent increased amounts of
359	any item included in the association's estimated budget that are
360	beyond the control of the developer shall not be considered an
361	amendment that would give rise to rescission rights set forth in
362	s. 718.503(1)(a) or (b), nor shall such increases modify, void,
363	or otherwise affect any guarantee of the developer contained in
364	the offering circular or any purchase contract. It is the intent
365	of this paragraph to clarify existing law.
366	Section 7.  Section 718.616, Florida Statutes, is amended
367	to read:
368	718.616  Disclosure of condition of building and estimated
369	replacement costs and notification of municipalities.--
370	(1)  Each developer of a residential condominium created by
371	converting existing, previously occupied improvements to such
372	form of ownership shall prepare a report that discloses disclose
373	the condition of the improvements and the condition of certain
374	components and their current estimated replacement costs as of
375	the date of the report.
376	(2)  The following information shall be stated concerning
377	the improvements:
378	(a)  The date and type of construction.
379	(b)  The prior use.
380	(c)  Whether there is termite damage or infestation and
381	whether the termite damage or infestation, if any, has been
382	properly treated. The statement shall be substantiated by
383	including, as an exhibit, an inspection report by a certified
384	pest control operator.
385	(3)(a)  Disclosure of condition shall be made for each of
386	the following components that the existing improvements may
387	include:
388	1.  Roof.
389	2.  Structure.
390	3.  Fireproofing and Fire protection systems.
391	4.  Elevators.
392	5.  Heating and cooling systems.
393	6.  Plumbing.
394	7.  Electrical systems.
395	8.  Swimming pool.
396	9.  Seawalls, pilings, and docks.
397	10.  Pavement and concrete, including roadways, walkways,
398	and parking areas.
399	11.  Drainage systems.
400	12.  Irrigation systems.
401	(b)  For each component, the following information shall be
402	disclosed and substantiated by attaching a copy of a certificate
403	under seal of an architect or engineer authorized to practice in
404	this state:
405	1.  The age of the component as of the date of the report.
406	2.  The estimated remaining useful life of the component as
407	of the date of the report.
408	3.  The estimated current replacement cost of the component
409	as of the date of the report, expressed:
410	a.  As a total amount; and
411	b.  As a per-unit amount, based upon each unit's
412	proportional share of the common expenses.
413	4.  The structural and functional soundness of the
414	component.
415	(c)  Each unit owner and the association are third-party
416	beneficiaries of the report.
417	(d)  A supplemental report shall be prepared for any
418	structure or component that is renovated or repaired after
419	completion of the original report and prior to the recording of
420	the declaration of condominium. If the declaration is not
421	recorded within 1 year after the date of the original report,
422	the developer shall update the report annually prior to
423	recording the declaration of condominium.
424	(e)  The report may not contain representations on behalf
425	of the development concerning future improvements or repairs and
426	must be limited to the current condition of the improvements.
427	(4)  If the proposed condominium is situated within a
428	municipality, the disclosure shall include a letter from the
429	municipality acknowledging that the municipality has been
430	notified of the proposed creation of a residential condominium
431	by conversion of existing, previously occupied improvements and,
432	in any county, as defined in s. 125.011(1), acknowledging
433	compliance with applicable zoning requirements as determined by
434	the municipality.
435	Section 8.  Section 718.618, Florida Statutes, is amended
436	to read:
437	718.618  Converter reserve accounts; warranties.--
438	(1)  When existing improvements are converted to ownership
439	as a residential condominium, the developer shall establish
440	converter reserve accounts for capital expenditures and deferred
441	maintenance, or give warranties as provided by subsection (6),
442	or post a surety bond as provided by subsection (7). The
443	developer shall fund the converter reserve accounts in amounts
444	calculated as follows:
445	(a)1.  When the existing improvements include an air-
446	conditioning system serving more than one unit or property which
447	the association is responsible to repair, maintain, or replace,
448	the developer shall fund an air-conditioning reserve account.
449	The amount of the reserve account shall be the product of the
450	estimated current replacement cost of the system, as disclosed
451	and substantiated pursuant to s. 718.616(3)(b), multiplied by a
452	fraction, the numerator of which shall be the lesser of the age
453	of the system in years or 9, and the denominator of which shall
454	be 10. When such air-conditioning system is within 1,000 yards
455	of the seacoast, the numerator shall be the lesser of the age of
456	the system in years or 3, and the denominator shall be 4.
457	2.  The developer shall fund a plumbing reserve account.
458	The amount of the funding shall be the product of the estimated
459	current replacement cost of the plumbing component, as disclosed
460	and substantiated pursuant to s. 718.616(3)(b), multiplied by a
461	fraction, the numerator of which shall be the lesser of the age
462	of the plumbing in years or 36, and the denominator of which
463	shall be 40.
464	3.  The developer shall fund a roof reserve account. The
465	amount of the funding shall be the product of the estimated
466	current replacement cost of the roofing component, as disclosed
467	and substantiated pursuant to s. 718.616(3)(b), multiplied by a
468	fraction, the numerator of which shall be the lesser of the age
469	of the roof in years or the numerator listed in the following
470	table. The denominator of the fraction shall be determined based
471	on the roof type, as follows:
472
	Roof Type Numerator Denominator
473
	a. Built-up roof without insulation 4 5
474
	b. Built-up roof with insulation 4 5
475
	c. Cement tile roof 45 50
476
	d. Asphalt shingle roof 14 15
477
	e. Copper roof
478
	f. Wood shingle roof 9 10
479
	g. All other types 18 20
480
481	(b)  The age of any component or structure for which the
482	developer is required to fund a reserve account shall be
483	measured in years, rounded to the nearest whole year. The amount
484	of converter reserves to be funded by the developer for each
485	structure or component shall be based on the age of the
486	structure or component as disclosed in the inspection report.
487	The architect or engineer shall determine the age of the
488	component from the later of:
489	1.  The date when the component or structure was replaced
490	or substantially renewed, if the replacement or renewal of the
491	component at least met the requirements of the then-applicable
492	building code; or
493	2.  The date when the installation or construction of the
494	existing component or structure was completed.
495	(c)  When the age of a component or structure is to be
496	measured from the date of replacement or renewal, the developer
497	shall provide the division with a certificate, under the seal of
498	an architect or engineer authorized to practice in this state,
499	verifying:
500	1.  The date of the replacement or renewal; and
501	2.  That the replacement or renewal at least met the
502	requirements of the then-applicable building code.
503	(d)  In addition to establishing the reserve accounts
504	specified above, the developer shall establish those other
505	reserve accounts required by s. 718.112(2)(f), and shall fund
506	those accounts in accordance with the formula provided therein.
507	The vote to waive or reduce the funding or reserves required by
508	s. 718.112(2)(f) does not affect or negate the obligations
509	arising under this section.
510	(2)(a)  The developer shall fund the reserve account
511	required by subsection (1), on a pro rata basis upon the sale of
512	each unit. The developer shall deposit in the reserve account
513	not less than a percentage of the total amount to be deposited
514	in the reserve account equal to the percentage of ownership of
515	the common elements allocable to the unit sold. When a developer
516	deposits amounts in excess of the minimum reserve account
517	funding, later deposits may be reduced to the extent of the
518	excess funding. For the purposes of this subsection, a unit is
519	considered sold when a fee interest in the unit is transferred
520	to a third party or the unit is leased for a period in excess of
521	5 years.
522	(b)  When an association makes an expenditure of converter
523	reserve account funds before the developer has sold all units,
524	the developer shall make a deposit in the reserve account. Such
525	deposit shall be at least equal to that portion of the
526	expenditure which would be charged against the reserve account
527	deposit that would have been made for any such unit had the unit
528	been sold. Such deposit may be reduced to the extent the
529	developer has funded the reserve account in excess of the
530	minimum reserve account funding required by this subsection.
531	This paragraph applies only when the developer has funded
532	reserve accounts as provided by paragraph (a).
533	(3)  The use of reserve account funds, as provided in this
534	section, is limited as follows:
535	(a)  Reserve account funds may be spent prior to the
536	assumption of control of the association by unit owners other
537	than the developer; and
538	(b)  Reserve account funds may be expended only for repair
539	or replacement of the specific components for which the funds
540	were deposited, unless, after assumption of control of the
541	association by unit owners other than the developer, it is
542	determined by three-fourths of the voting interests in the
543	condominium to expend the funds for other purposes.
544	(4)  The developer shall establish the reserve account, as
545	provided in this section, in the name of the association at a
546	bank, savings and loan association, or trust company located in
547	this state.
548	(5)  A developer may establish and fund additional
549	converter reserve accounts. The amount of funding shall be the
550	product of the estimated current replacement cost of a
551	component, as disclosed and substantiated pursuant to s.
552	718.616(3)(b), multiplied by a fraction, the numerator of which
553	is the age of the component in years and the denominator of
554	which is the total estimated life of the component in years.
555	(6)  A developer makes no implied warranties when existing
556	improvements are converted to ownership as a residential
557	condominium and reserve accounts are funded in accordance with
558	this section. As an alternative to establishing such reserve
559	accounts, or when a developer fails to establish the reserve
560	accounts in accordance with this section, the developer shall be
561	deemed to have granted to the purchaser of each unit an implied
562	warranty of fitness and merchantability for the purposes or uses
563	intended, as to the roof and structural components of the
564	improvements; as to fireproofing and fire protection systems;
565	and as to mechanical, electrical, and plumbing elements serving
566	the improvements, except mechanical elements serving only one
567	unit. The warranty shall be for a period beginning with the
568	notice of intended conversion and continuing for 3 years
569	thereafter, or the recording of the declaration to condominium
570	and continuing for 3 years thereafter, or 1 year after owners
571	other than the developer obtain control of the association,
572	whichever occurs last, but in no event more than 5 years.
573	(a)  The warranty provided for in this section is
574	conditioned upon routine maintenance being performed, unless the
575	maintenance is an obligation of the developer or a developer-
576	controlled association.
577	(b)  The warranty shall inure to the benefit of each owner
578	and successor owner.
579	(c)  Existing improvements converted to residential
580	condominium may be covered by an insured warranty program
581	underwritten by an insurance company authorized to do business
582	in this state, if such warranty program meets the minimum
583	requirements of this chapter. To the degree that the warranty
584	program does not meet the minimum requirements of this chapter,
585	such requirements shall apply.
586	(7)  When a developer desires to post a surety bond, the
587	developer shall, after notification to the buyer, acquire a
588	surety bond issued by a company licensed to do business in this
589	state, if such a bond is readily available in the open market,
590	in an amount which would be equal to the total amount of all
591	reserve accounts required under subsection (1), payable to the
592	association.
593	(8)  The amended provisions of this section do not affect a
594	conversion of existing improvements when a developer has filed a
595	notice of intended conversion and the documents required by s.
596	718.503 or s. 718.504, as applicable, with the division prior to
597	the effective date of this law, provided:
598	(a)  The documents are proper for filing purposes.
599	(b)  The developer, not later than 6 months after such
600	filing:
601	1.  Records a declaration for such filing in accordance
602	with part I.
603	2.  Gives a notice of intended conversion.
604	(9)  This section applies only to the conversion of
605	existing improvements where construction of the improvement was
606	commenced prior to its designation by the developer as a
607	condominium. In such circumstances, s. 718.203 does not apply.
608	(10)  A developer who sells a condominium parcel that is
609	subject to this part shall disclose in conspicuous type in the
610	contract of sale whether the developer has established converter
611	reserve accounts, provided a warranty of fitness and
612	merchantability, or posted a surety bond for purposes of
613	complying with this section.
614	Section 9.  Subsection (3) of section 719.104, Florida
615	Statutes, is amended to read:
616	719.104  Cooperatives; access to units; records; financial
617	reports; assessments; purchase of leases.--
618	(3)  INSURANCE.--The association shall use its best efforts
619	to obtain and maintain adequate insurance to protect the
620	association property. The association may also obtain and
621	maintain liability insurance for directors and officers,
622	insurance for the benefit of association employees, and flood
623	insurance. A copy of each policy of insurance in effect shall be
624	made available for inspection by unit owners at reasonable
625	times.
626	(a)  Windstorm insurance coverage for a group of no fewer
627	than three communities created and operating under chapter 718,
628	this chapter, chapter 720, or chapter 721 may be obtained and
629	maintained for the communities if the insurance coverage is
630	sufficient to cover an amount equal to the probable maximum loss
631	for the communities for a 250-year windstorm event. Such
632	probable maximum loss must be determined through the use of a
633	competent model that has been accepted by the Florida Commission
634	on Hurricane Loss Projection Methodology. Such insurance
635	coverage is deemed adequate windstorm insurance for the purposes
636	of this section.
637	(b)  An association or group of associations may self-
638	insure against claims against the association, the association
639	property, and the cooperative property required to be insured by
640	an association, upon compliance with the applicable provisions
641	of ss. 624.460-624.488, which shall be considered adequate
642	insurance for purposes of this section.
643	Section 10.  Paragraph (e) is added to subsection (1) of
644	section 719.107, Florida Statutes, to read:
645	719.107  Common expenses; assessment.--
646	(1)
647	(e)  Common expenses include the costs of insurance
648	acquired by the association under the authority of s.
649	719.104(3), including costs and contingent expenses required to
650	participate in a self-insurance fund authorized and approved
651	pursuant to s. 624.462.
652	Section 11.  Subsection (9) of section 719.108, Florida
653	Statutes, is amended to read:
654	719.108  Rents and assessments; liability; lien and
655	priority; interest; collection; cooperative ownership.--
656	(9)  The specific purposes of any special assessment,
657	including any contingent special assessment levied in
658	conjunction with the purchase of an insurance policy authorized
659	by s. 719.104(3), approved in accordance with the cooperative
660	documents shall be set forth in a written notice of such
661	assessment sent or delivered to each unit owner. The funds
662	collected pursuant to a special assessment shall be used only
663	for the specific purpose or purposes set forth in such notice or
664	returned to the unit owners. However, upon completion of such
665	specific purposes, any excess funds shall be considered common
666	surplus and may, at the discretion of the board, either be
667	returned to the unit owners or applied as a credit toward future
668	assessments.
669	Section 12.  Paragraph (a) of subsection (1) of section
670	719.503, Florida Statutes, is amended, and paragraph (c) is
671	added to that subsection, to read:
672	719.503  Disclosure prior to sale.--
673	(1)  DEVELOPER DISCLOSURE.--
674	(a)  Contents of contracts.--Any contracts for the sale of
675	a unit or a lease thereof for an unexpired term of more than 5
676	years shall contain:
677	1.  The following legend in conspicuous type: THIS
678	AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF
679	THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF
680	EXECUTION OF THIS AGREEMENT BY THE BUYER, AND RECEIPT BY BUYER
681	OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED TO HIM OR HER BY
682	THE DEVELOPER UNDER SECTION 719.503, FLORIDA STATUTES. THIS
683	AGREEMENT IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE
684	OF THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE
685	OF RECEIPT FROM THE DEVELOPER OF ANY AMENDMENT WHICH MATERIALLY
686	ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS ADVERSE TO
687	THE BUYER. ANY PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS
688	SHALL BE OF NO EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR
689	A PERIOD OF NOT MORE THAN 15 DAYS AFTER THE BUYER HAS RECEIVED
690	ALL OF THE ITEMS REQUIRED. BUYER'S RIGHT TO VOID THIS AGREEMENT
691	SHALL TERMINATE AT CLOSING. FIGURES CONTAINED IN ANY BUDGET
692	DELIVERED TO THE BUYER PREPARED IN ACCORDANCE WITH THE
693	COOPERATIVE ACT ARE ESTIMATES ONLY AND REPRESENT AN
694	APPROXIMATION OF FUTURE EXPENSES BASED ON FACTS AND
695	CIRCUMSTANCES EXISTING AT THE TIME OF THE PREPARATION OF THE
696	BUDGET BY THE DEVELOPER. ACTUAL COSTS OF SUCH ITEMS MAY EXCEED
697	THE ESTIMATED COSTS. SUCH CHANGES IN COST DO NOT CONSTITUTE
698	MATERIAL ADVERSE CHANGES IN THE OFFERING.
699	2.  The following caveat in conspicuous type shall be
700	placed upon the first page of the contract: ORAL REPRESENTATIONS
701	CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS
702	OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD
703	BE MADE TO THIS CONTRACT AND THE DOCUMENTS REQUIRED BY SECTION
704	719.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A
705	BUYER OR LESSEE.
706	3.  If the unit has been occupied by someone other than the
707	buyer, a statement that the unit has been occupied.
708	4.  If the contract is for the sale or transfer of a unit
709	subject to a lease, the contract shall include as an exhibit a
710	copy of the executed lease and shall contain within the text in
711	conspicuous type: THE UNIT IS SUBJECT TO A LEASE (OR SUBLEASE).
712	5.  If the contract is for the lease of a unit for a term
713	of 5 years or more, the contract shall include as an exhibit a
714	copy of the proposed lease.
715	6.  If the contract is for the sale or lease of a unit that
716	is subject to a lien for rent payable under a lease of a
717	recreational facility or other common areas, the contract shall
718	contain within the text the following statement in conspicuous
719	type: THIS CONTRACT IS FOR THE TRANSFER OF A UNIT THAT IS
720	SUBJECT TO A LIEN FOR RENT PAYABLE UNDER A LEASE OF COMMON
721	AREAS. FAILURE TO PAY RENT MAY RESULT IN FORECLOSURE OF THE
722	LIEN.
723	7.  The contract shall state the name and address of the
724	escrow agent required by s. 719.202 and shall state that the
725	purchaser may obtain a receipt for his or her deposit from the
726	escrow agent, upon request.
727	8.  If the contract is for the sale or transfer of a unit
728	in a cooperative in which timeshare estates have been or may be
729	created, the following text in conspicuous type: UNITS IN THIS
730	COOPERATIVE ARE SUBJECT TO TIMESHARE ESTATES. The contract for
731	the sale of a timeshare estate must also contain, in conspicuous
732	type, the following: FOR THE PURPOSE OF AD VALOREM TAXES OR
733	SPECIAL ASSESSMENTS LEVIED BY TAXING AUTHORITIES AGAINST A
734	TIMESHARE ESTATE, THE MANAGING ENTITY IS GENERALLY CONSIDERED
735	THE TAXPAYER UNDER FLORIDA LAW. YOU HAVE THE RIGHT TO CHALLENGE
736	AN ASSESSMENT BY A TAXING AUTHORITY RELATING TO YOUR TIMESHARE
737	ESTATE PURSUANT TO THE PROVISIONS OF CHAPTER 194, FLORIDA
738	STATUTES.
739	(c)  Subsequent estimates; when provided.--If the closing
740	on a contract occurs more than 12 months after the filing of the
741	offering circular with the division, the developer shall provide
742	a copy of the current estimated operating budget of the
743	association to the buyer at closing, which shall not be
744	considered an amendment that modifies the offering provided any
745	changes to the association's budget from the budget given to the
746	buyer at the time of contract signing were the result of matters
747	beyond the developer's control. Changes in budgets of any master
748	association, recreation association, or club and similar budgets
749	for entities other than the association shall likewise not be
750	considered amendments that modify the offering. It is the intent
751	of this paragraph to clarify existing law.
752	Section 13.  Present paragraph (d) of subsection (20) of
753	section 719.504, Florida Statutes, is redesignated as paragraph
754	(f), and new paragraphs (d) and (e) are added to that
755	subsection, to read:
756	719.504  Prospectus or offering circular.--Every developer
757	of a residential cooperative which contains more than 20
758	residential units, or which is part of a group of residential
759	cooperatives which will be served by property to be used in
760	common by unit owners of more than 20 residential units, shall
761	prepare a prospectus or offering circular and file it with the
762	Division of Florida Land Sales, Condominiums, and Mobile Homes
763	prior to entering into an enforceable contract of purchase and
764	sale of any unit or lease of a unit for more than 5 years and
765	shall furnish a copy of the prospectus or offering circular to
766	each buyer. In addition to the prospectus or offering circular,
767	each buyer shall be furnished a separate page entitled
768	"Frequently Asked Questions and Answers," which must be in
769	accordance with a format approved by the division. This page
770	must, in readable language: inform prospective purchasers
771	regarding their voting rights and unit use restrictions,
772	including restrictions on the leasing of a unit; indicate
773	whether and in what amount the unit owners or the association is
774	obligated to pay rent or land use fees for recreational or other
775	commonly used facilities; contain a statement identifying that
776	amount of assessment which, pursuant to the budget, would be
777	levied upon each unit type, exclusive of any special
778	assessments, and which identifies the basis upon which
779	assessments are levied, whether monthly, quarterly, or
780	otherwise; state and identify any court cases in which the
781	association is currently a party of record in which the
782	association may face liability in excess of $100,000; and state
783	whether membership in a recreational facilities association is
784	mandatory and, if so, identify the fees currently charged per
785	unit type. The division shall by rule require such other
786	disclosure as in its judgment will assist prospective
787	purchasers. The prospectus or offering circular may include more
788	than one cooperative, although not all such units are being
789	offered for sale as of the date of the prospectus or offering
790	circular. The prospectus or offering circular must contain the
791	following information:
792	(20)  An estimated operating budget for the cooperative and
793	the association, and a schedule of the unit owner's expenses
794	shall be attached as an exhibit and shall contain the following
795	information:
796	(d)  The following statement in conspicuous type: THE
797	BUDGET CONTAINED IN THIS OFFERING CIRCULAR HAS BEEN PREPARED IN
798	ACCORDANCE WITH THE COOPERATIVE ACT AND IS A GOOD FAITH ESTIMATE
799	ONLY AND REPRESENTS AN APPROXIMATION OF FUTURE EXPENSES BASED ON
800	FACTS AND CIRCUMSTANCES EXISTING AT THE TIME OF ITS PREPARATION.
801	ACTUAL COSTS OF SUCH ITEMS MAY EXCEED THE ESTIMATED COSTS. SUCH
802	CHANGES IN COST DO NOT CONSTITUTE MATERIAL ADVERSE CHANGES IN
803	THE OFFERING.
804	(e)  Each budget for an association prepared by a developer
805	consistent with this subsection shall be prepared in good faith
806	and shall reflect accurate estimated amounts for the required
807	items in paragraph (c) at the time of the filing of the offering
808	circular with the division, and subsequent increased amounts of
809	any item included in the association's estimated budget that are
810	beyond the control of the developer shall not be considered an
811	amendment that would give rise to rescission rights set forth in
812	s. 719.503(1)(a) or (b), nor shall such increases modify, void,
813	or otherwise affect any guarantee of the developer contained in
814	the offering circular or any purchase contract. It is the intent
815	of this paragraph to clarify existing law.
816	Section 14.  Subsection (11) is added to section 720.303,
817	Florida Statutes, to read:
818	720.303  Association powers and duties; meetings of board;
819	official records; budgets; financial reporting; association
820	funds; recalls.--
821	(11)  WINDSTORM INSURANCE.--Windstorm insurance coverage
822	for a group of no fewer than three communities created and
823	operating under chapter 718, chapter 719, this chapter, or
824	chapter 721 may be obtained and maintained for the communities
825	if the insurance coverage is sufficient to cover an amount equal
826	to the probable maximum loss for the communities for a 250-year
827	windstorm event. Such probable maximum loss must be determined
828	through the use of a competent model that has been accepted by
829	the Florida Commission on Hurricane Loss Projection Methodology.
830	Such insurance coverage is deemed adequate windstorm coverage
831	for purposes of this chapter.
832	Section 15.  Section 720.308, Florida Statutes, is amended
833	to read:
834	720.308  Assessments and charges.--For any community
835	created after October 1, 1995, the governing documents must
836	describe the manner in which expenses are shared and specify the
837	member's proportional share thereof.
838	(1)  Assessments levied pursuant to the annual budget or
839	special assessment must be in the member's proportional share of
840	expenses as described in the governing document, which share may
841	be different among classes of parcels based upon the state of
842	development thereof, levels of services received by the
843	applicable members, or other relevant factors.
844	(2)  While the developer is in control of the homeowners'
845	association, it may be excused from payment of its share of the
846	operating expenses and assessments related to its parcels for
847	any period of time for which the developer has, in the
848	declaration, obligated itself to pay any operating expenses
849	incurred that exceed the assessments receivable from other
850	members and other income of the association.
851	(3)  Assessments or contingent assessments may be levied by
852	the board of directors of the association to secure the
853	obligation of the homeowners' association for insurance acquired
854	from a self-insurance fund authorized and operating pursuant to
855	s. 624.462.
856	(4)  This section does not apply to an association, no
857	matter when created, if the association is created in a
858	community that is included in an effective development-of-
859	regional-impact development order as of October 1, 1995 the
860	effective date of this act, together with any approved
861	modifications thereto.
862	Section 16.  This act shall take effect upon becoming a
863	law.

CODING: Words stricken are deletions; words underlined are additions.