| 1 | A bill to be entitled |
| 2 | An act relating to community associations; amending s. |
| 3 | 718.111, F.S.; revising and providing provisions relating |
| 4 | to condominium and condominium owner insurance coverage; |
| 5 | authorizing an association or group of associations to |
| 6 | provide adequate hazard insurance through a self-insurance |
| 7 | fund; providing coverage requirements for policies entered |
| 8 | into after a specified date; providing that policies may |
| 9 | include deductibles as determined by the board; providing |
| 10 | requirements for deductibles; requiring associations to |
| 11 | exercise best efforts to obtain and maintain certain kinds |
| 12 | of insurance; providing requirements for hazard insurance |
| 13 | policies; requiring owners to provide evidence of a |
| 14 | currently effective policy of hazard and liability |
| 15 | insurance upon request by the association; authorizing |
| 16 | operation of multiple condominiums as a single condominium |
| 17 | for insurance purposes under certain circumstances; |
| 18 | requiring an association to obtain and maintain adequate |
| 19 | insurance or fidelity bonding of all persons who control |
| 20 | or disburse funds of the association; authorizing the |
| 21 | amendment of the condominium declaration by the |
| 22 | association for certain purposes; specifying |
| 23 | responsibility for repair or reconstruction work under |
| 24 | specified circumstances; providing an exception; amending |
| 25 | s. 718.115, F.S.; specifying common responsibilities of |
| 26 | the association and unit owners; amending s. 718.116, |
| 27 | F.S.; providing persons that may request a certificate |
| 28 | signed by an officer or agent of the association stating |
| 29 | all assessments and other moneys owed to the association; |
| 30 | providing requirements for the charging of certain fees by |
| 31 | the board; amending s. 718.117, F.S.; revising priority |
| 32 | standards for the distribution of certain proceeds from |
| 33 | any sale of condominium properties and assets; creating s. |
| 34 | 720.3087, F.S.; providing requirements for the request and |
| 35 | provision of estoppel certificates; providing an effective |
| 36 | date. |
| 37 |
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| 38 | Be It Enacted by the Legislature of the State of Florida: |
| 39 |
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| 40 | Section 1. Subsection (11) of section 718.111, Florida |
| 41 | Statutes, is amended to read: |
| 42 | 718.111 The association.-- |
| 43 | (Substantial rewording of subsection. See |
| 44 | s. 718.111(11), F.S., for current text.) |
| 45 | (11) INSURANCE.--In order to protect the health, safety, |
| 46 | and welfare of the people of this state and to ensure |
| 47 | consistency in the provision of insurance coverage to |
| 48 | condominiums and their unit owners, this subsection shall be |
| 49 | deemed to apply to every residential condominium in the state, |
| 50 | regardless of the date of its declaration of condominium. It is |
| 51 | the intent of the Legislature to encourage lower or stable |
| 52 | insurance premiums for associations described in this |
| 53 | subsection. |
| 54 | (a) Adequate hazard insurance, regardless of any |
| 55 | requirement in the declaration of condominium for coverage by |
| 56 | the association for full insurable value, replacement cost, or |
| 57 | similar coverages, shall be based upon the replacement cost of |
| 58 | the property to be insured as determined by an independent |
| 59 | insurance appraisal or update of a prior appraisal. The full |
| 60 | insurable value shall be determined not less frequently than |
| 61 | every 36 months. |
| 62 | 1. An association or group of associations may provide |
| 63 | adequate hazard insurance through a self-insurance fund that |
| 64 | complies with the requirements of ss. 624.460-624.488. |
| 65 | 2. An association may also provide adequate hazard |
| 66 | insurance coverage individually or for a group of no fewer than |
| 67 | three communities created and operating under this chapter, |
| 68 | chapter 719, chapter 720, or chapter 721 by obtaining and |
| 69 | maintaining for such communities insurance coverage sufficient |
| 70 | to cover an amount equal to the probable maximum loss for the |
| 71 | communities for a 250-year windstorm event. Such probable |
| 72 | maximum loss must be determined through the use of a competent |
| 73 | model that has been accepted by the Florida Commission on |
| 74 | Hurricane Loss Projection Methodology. No policy or program |
| 75 | providing such coverage shall be issued or renewed after July 1, |
| 76 | 2008, unless it has been reviewed and approved by the Office of |
| 77 | Insurance Regulation. The review and approval shall include |
| 78 | approval of the policy and related forms pursuant to ss. 627.410 |
| 79 | and 627.411, approval of the rates pursuant to s. 627.062, a |
| 80 | determination that the loss model approved by the commission was |
| 81 | accurately and appropriately applied to the insured structures |
| 82 | to determine the 250-year probable maximum loss, and a |
| 83 | determination that complete and accurate disclosure of all |
| 84 | material provisions is provided to condominium unit owners prior |
| 85 | to execution of the agreement by a condominium association. |
| 86 | 3. In determining the adequate hazard insurance, an |
| 87 | association may consider deductibles as determined by this |
| 88 | subsection. |
| 89 | (b) If an association is controlled by a developer, the |
| 90 | association shall exercise best efforts to obtain and maintain |
| 91 | adequate hazard insurance. Failure to obtain and maintain |
| 92 | adequate hazard insurance during any period of control by a |
| 93 | developer constitutes a breach of fiduciary responsibility by |
| 94 | the members of the board of directors of the association |
| 95 | appointed by the developer unless such members can show that |
| 96 | despite such failure they have made their best efforts to obtain |
| 97 | and maintain such insurance. |
| 98 | (c) Policies may include deductibles as determined by the |
| 99 | board. |
| 100 | 1. The deductibles shall be consistent with industry |
| 101 | standards and prevailing practice for communities of like size |
| 102 | and age and having similar construction as facilities in the |
| 103 | locale where the condominium property is situated. |
| 104 | 2. The deductibles may be based upon available funds, |
| 105 | including reserve accounts, or predetermined assessment |
| 106 | authority at the time the insurance is obtained. |
| 107 | 3. At a meeting of the board, which shall be open to all |
| 108 | unit owners in the manner set forth in s. 718.112(2)(e), the |
| 109 | board shall establish the level of deductibles based upon the |
| 110 | level of available funds and predetermined assessment authority. |
| 111 | The notice of such meeting shall state the proposed deductibles, |
| 112 | the available funds, and the assessment authority relied upon by |
| 113 | the board and shall estimate any potential assessment amount |
| 114 | against each unit, if any. The meeting described in this |
| 115 | subparagraph may be held in conjunction with a meeting to |
| 116 | consider the proposed budget or an amendment to the proposed |
| 117 | budget. |
| 118 | (d) An association controlled by unit owners and operating |
| 119 | a residential condominium shall use its best efforts to obtain |
| 120 | and maintain adequate insurance to protect the association, the |
| 121 | association property, the common elements, and the condominium |
| 122 | property required to be insured by the association pursuant to |
| 123 | this subsection. |
| 124 | (e) The declaration of condominium as originally recorded, |
| 125 | or as amended pursuant to procedures provided in the |
| 126 | declaration, may require that condominium property consisting of |
| 127 | freestanding buildings where there is no more than one building |
| 128 | in or on such unit need not be insured by the association if the |
| 129 | declaration requires the unit owner to obtain adequate insurance |
| 130 | for the condominium property. An association may also obtain and |
| 131 | maintain liability insurance for directors and officers, |
| 132 | insurance for the benefit of association employees, and flood |
| 133 | insurance for common elements, association property, and units. |
| 134 | (f)1. Every hazard insurance policy issued or renewed on |
| 135 | or after January 1, 2009, to protect the condominium shall |
| 136 | provide primary coverage for: |
| 137 | a. All portions of the condominium property as originally |
| 138 | installed or any replacement of like kind and quality, in |
| 139 | accordance with the original plans and specifications. |
| 140 | b. All alterations or additions made to the condominium |
| 141 | property or association property pursuant to s. 718.113(2). |
| 142 | 2. The coverage shall exclude all personal property within |
| 143 | the unit or limited common elements, and floor, wall, and |
| 144 | ceiling coverings, electrical fixtures, appliances, water |
| 145 | heaters, water filters, built-in cabinets and countertops, and |
| 146 | window treatments, including curtains, drapes, blinds, hardware, |
| 147 | and similar window treatment components, or replacements of any |
| 148 | such items. |
| 149 | 3. This paragraph is intended to establish the property or |
| 150 | casualty insuring responsibilities of the association and the |
| 151 | individual unit owner and does not serve to broaden or extend |
| 152 | the perils of coverage afforded by any insurance contract |
| 153 | provided to the individual unit owner. |
| 154 | (g) Every hazard insurance policy issued or renewed on or |
| 155 | after January 1, 2009, to an individual unit owner shall provide |
| 156 | that the coverage afforded by such policy is in excess of the |
| 157 | amount recoverable under any other policy covering the same |
| 158 | property and shall include special assessment coverage of not |
| 159 | less than $2,000 per occurrence. Each insurance policy issued to |
| 160 | an individual unit owner providing such coverage shall be |
| 161 | without rights of subrogation against the condominium |
| 162 | association that operates the condominium in which such unit |
| 163 | owner's unit is located. |
| 164 | 1. All improvements or additions to the condominium |
| 165 | property that benefit less than all unit owners shall be insured |
| 166 | by any unit owners having the use of such property or may be |
| 167 | insured by the association at the cost and expense of the unit |
| 168 | owners having the use of such property. |
| 169 | 2. The association shall require each unit owner to |
| 170 | provide evidence of a currently effective policy of hazard and |
| 171 | liability insurance upon request but not more frequently than |
| 172 | annually. Upon the failure of a unit owner to provide a |
| 173 | certificate of insurance issued by an insurer approved to write |
| 174 | such insurance in this state within 30 days after a written |
| 175 | request, the association is entitled but is not obligated to |
| 176 | purchase a policy of insurance on behalf of an owner and the |
| 177 | cost of such policy, together with reconstruction costs |
| 178 | undertaken by the association but which are the responsibility |
| 179 | of the unit owner, may be collected in the manner provided for |
| 180 | collection of assessments in s. 718.116. |
| 181 | 3. All reconstruction work after a casualty loss shall be |
| 182 | undertaken by the association except as otherwise permitted in |
| 183 | this subparagraph. A unit owner may undertake reconstruction |
| 184 | work on portions of the unit with the prior written consent of |
| 185 | the board of administration, which may be conditioned upon the |
| 186 | approval of the repair methods, the qualifications of the |
| 187 | proposed contractor, and the contract that is used for that |
| 188 | purpose. A unit owner shall obtain all required governmental |
| 189 | permits and approvals prior to commencing reconstruction. |
| 190 | 4. Unit owners shall be responsible for the cost of |
| 191 | reconstruction of any portion of the condominium property for |
| 192 | which the unit owner is required to carry casualty insurance and |
| 193 | any such reconstruction work undertaken by the association shall |
| 194 | be chargeable to the unit and enforceable as an assessment |
| 195 | pursuant to s. 718.116. The association is designated as an |
| 196 | additional named insured and loss payee on all casualty |
| 197 | insurance policies issued to unit owners in the condominium |
| 198 | operated by the association. |
| 199 | 5. A multicondominium association may elect by a majority |
| 200 | vote of the collective members of the condominiums operated by |
| 201 | the association to operate such condominiums as a single |
| 202 | condominium for purposes of insurance matters, including, but |
| 203 | not limited to, the purchase of the hazard insurance required by |
| 204 | this section and the apportionment of deductibles and damages in |
| 205 | excess of coverage. The election to aggregate the treatment of |
| 206 | insurance premiums, deductibles, and excess damages shall be |
| 207 | treated as an amendment to the declaration of all condominiums |
| 208 | operated by the association and the costs of insurance shall be |
| 209 | stated in the association budget. The amendments shall be |
| 210 | recorded as required by s. 718.110. |
| 211 | (h) The association shall obtain and maintain adequate |
| 212 | insurance or fidelity bonding of all persons who control or |
| 213 | disburse funds of the association. The insurance policy or |
| 214 | fidelity bond must cover the maximum funds that will be in the |
| 215 | custody of the association or its management agent at any one |
| 216 | time. As used in this paragraph, the term "persons who control |
| 217 | or disburse funds of the association" includes, but is not |
| 218 | limited to, those individuals authorized to sign checks and the |
| 219 | president, secretary, and treasurer of the association. The |
| 220 | association shall bear the cost of bonding. |
| 221 | (i) An association may amend the declaration of |
| 222 | condominium, without regard to any requirement for mortgagee |
| 223 | approval of amendments affecting insurance requirements, to |
| 224 | conform the declaration of condominium to the coverage |
| 225 | requirements of this subsection. |
| 226 | (j) Any portion of the condominium property the |
| 227 | association is required to insure against casualty loss pursuant |
| 228 | to paragraph (f) that is damaged by a casualty shall be |
| 229 | reconstructed, repaired, or replaced as necessary by the |
| 230 | association as a common expense. All hazard insurance |
| 231 | deductibles, uninsured losses, and other damages in excess of |
| 232 | hazard insurance coverage under the hazard insurance policies |
| 233 | maintained by the association shall be a common expense of the |
| 234 | condominium, provided: |
| 235 | 1. A unit owner shall be responsible for the costs of |
| 236 | repair or replacement of any portion of the condominium property |
| 237 | not paid for by insurance proceeds when such damage is caused by |
| 238 | intentional conduct, negligence, or failure to comply with the |
| 239 | terms of the declaration or the rules of the association by a |
| 240 | unit owner, the members of his or her family, or unit occupants, |
| 241 | tenants, guests, or invitees and without compromise of the |
| 242 | subrogation rights of any insurer as set forth in paragraph (g). |
| 243 | 2. The provisions of subparagraph 1. relating to the |
| 244 | financial responsibility of a unit owner for the costs of |
| 245 | repairing or replacing other portions of the condominium |
| 246 | property also apply to the costs of repairing or replacing |
| 247 | personal property of other unit owners or the association as |
| 248 | well as other property, whether real or personal, the unit |
| 249 | owners are required to insure under paragraph (g). |
| 250 | 3. To the extent the cost of repair or reconstruction for |
| 251 | which the unit owner is responsible under this paragraph is |
| 252 | reimbursed to the association by insurance proceeds and to the |
| 253 | extent the association has collected the cost of such repair or |
| 254 | reconstruction from the unit owner, the association shall |
| 255 | reimburse the unit owner without the waiver of any rights of |
| 256 | subrogation. |
| 257 | 4. The association is not obligated to pay for repair or |
| 258 | reconstruction or repairs of casualty losses as a common expense |
| 259 | when the casualty losses were known or should have been known to |
| 260 | a unit owner and were not reported to the association until |
| 261 | after the insurance claim of the association for that casualty |
| 262 | loss has been settled and resolved with finality or is |
| 263 | considered untimely filed by the insurer and denied on that |
| 264 | basis. |
| 265 | (k) An association may, upon the approval of a majority of |
| 266 | the total voting interests in the association, opt out of the |
| 267 | provisions of paragraph (j) for the allocation of repair or |
| 268 | reconstruction expenses and allocate repair or reconstruction |
| 269 | expenses in the manner provided in the declaration as originally |
| 270 | recorded or as amended. Such vote may be approved by the voting |
| 271 | interests of the association without regard to any mortgagee |
| 272 | consent requirements. |
| 273 | (l) In a multicondominium association that has not |
| 274 | consolidated its financial operations under subsection (6), any |
| 275 | condominium operated by the association may opt out of the |
| 276 | provisions of paragraph (j) with the approval of a majority of |
| 277 | the total voting interests in that condominium. Such vote may be |
| 278 | approved by the voting interests without regard to any mortgagee |
| 279 | consent requirements. |
| 280 | (m) Any association or condominium voting to opt out of |
| 281 | the guidelines for repair or reconstruction expenses in |
| 282 | paragraph (j) shall record a notice setting forth the date of |
| 283 | the opt-out vote and the official records book and page at which |
| 284 | the declaration is recorded. The opt out shall be effective upon |
| 285 | the date of recording of the notice in the public records by the |
| 286 | association. An association that has voted to opt out of |
| 287 | paragraph (j) may reverse that decision by the same vote |
| 288 | required under paragraphs (k) and (l), and notice of such |
| 289 | reversal shall be recorded in the official records. |
| 290 | (n) An association shall not be obligated to pay for any |
| 291 | reconstruction or repair expenses due to casualty loss to any |
| 292 | improvements installed by a current or former unit owner or by |
| 293 | the developer when the improvement benefits only the unit for |
| 294 | which it was installed and is not part of the standard |
| 295 | improvements installed by the developer on all units as part of |
| 296 | original construction, whether or not such improvement is |
| 297 | located within the unit, except to the extent of any insurance |
| 298 | recovery specifically for any such improvements. |
| 299 | (o) The provisions of this subsection shall not apply to |
| 300 | timeshare condominium associations. Insurance for timeshare |
| 301 | condominium associations shall be maintained pursuant to s. |
| 302 | 721.165. |
| 303 | Section 2. Paragraph (a) of subsection (1) of section |
| 304 | 718.115, Florida Statutes, is amended to read: |
| 305 | 718.115 Common expenses and common surplus.-- |
| 306 | (1)(a) Common expenses include the expenses of the |
| 307 | operation, maintenance, repair, replacement, or protection of |
| 308 | the common elements and association property, costs of carrying |
| 309 | out the powers and duties of the association, and any other |
| 310 | expense, whether or not included in the foregoing, designated as |
| 311 | common expense by this chapter, the declaration, the documents |
| 312 | creating the association, or the bylaws. Common expenses also |
| 313 | include reasonable transportation services, insurance for |
| 314 | directors and officers, road maintenance and operation expenses, |
| 315 | in-house communications, and security services, which are |
| 316 | reasonably related to the general benefit of the unit owners |
| 317 | even if such expenses do not attach to the common elements or |
| 318 | property of the condominium. However, such common expenses must |
| 319 | either have been services or items provided on or after the date |
| 320 | control of the association is transferred from the developer to |
| 321 | the unit owners or must be services or items provided for in the |
| 322 | condominium documents or bylaws. Unless the manner of payment or |
| 323 | allocation of expenses is otherwise addressed in the declaration |
| 324 | of condominium, the expenses of any items or services required |
| 325 | by federal, state, or local government or required by any other |
| 326 | governmental entity to be installed, maintained, or supplied to |
| 327 | the condominium property by the association, including, but not |
| 328 | limited to, fire safety equipment, or water and sewer service |
| 329 | where a master meter serves the condominium, shall be common |
| 330 | expenses whether or not such items or services are specifically |
| 331 | identified as common expenses in the declaration of condominium |
| 332 | or articles of incorporation or bylaws of the association. Such |
| 333 | statement is intended to clarify existing law. |
| 334 | Section 3. Subsection (8) of section 718.116, Florida |
| 335 | Statutes, is amended to read: |
| 336 | 718.116 Assessments; liability; lien and priority; |
| 337 | interest; collection.-- |
| 338 | (8) Within 15 days after receiving a written request |
| 339 | therefor from a unit owner or a designee of a unit owner |
| 340 | purchaser, or unit mortgagee or a designee of a unit mortgagee, |
| 341 | the association shall provide a certificate signed by an officer |
| 342 | or agent of the association stating all assessments and other |
| 343 | moneys owed to the association by the unit owner with respect to |
| 344 | the condominium parcel. |
| 345 | (a) Any person other than the owner who relies upon such |
| 346 | certificate shall be protected thereby. |
| 347 | (b) A summary proceeding pursuant to s. 51.011 may be |
| 348 | brought to compel compliance with this subsection, and in any |
| 349 | such action the prevailing party is entitled to recover |
| 350 | reasonable attorney's fees. |
| 351 | (c) Notwithstanding any limitation on transfer fees |
| 352 | contained in s. 718.112(2)(i), the association or its authorized |
| 353 | agent may charge a reasonable fee for the preparation of the |
| 354 | certificate, which fee shall be set forth in the certificate. |
| 355 | (d) The authority to charge a fee for a certificate under |
| 356 | this section shall be established by written resolution adopted |
| 357 | by the board or provided by written management, bookkeeping, or |
| 358 | maintenance contract. The fee is payable upon the preparation of |
| 359 | the certificate. If the certificate is requested in conjunction |
| 360 | with the sale or mortgage of a unit, the closing does not occur, |
| 361 | and no later than 30 days after the closing date for which the |
| 362 | certificate was sought the preparer receives from a payor who is |
| 363 | not the unit owner a written request accompanied with reasonable |
| 364 | documentation that the sale did not occur, then the fee shall be |
| 365 | refunded to that payor within 30 days after the preparer's |
| 366 | receipt of the refund request. The amount of the refund shall |
| 367 | then become the obligation of the unit owner, which sum is |
| 368 | collectable from the unit owner in the same manner as an |
| 369 | assessment as provided in this section. |
| 370 | Section 4. Paragraph (c) of subsection (17) of section |
| 371 | 718.117, Florida Statutes, is amended to read: |
| 372 | 718.117 Termination of condominium.-- |
| 373 | (17) DISTRIBUTION.-- |
| 374 | (c) The proceeds from any sale of condominium property or |
| 375 | association property and any remaining condominium property or |
| 376 | association property, common surplus, and other assets shall be |
| 377 | distributed in the following priority: |
| 378 | 1. To pay the reasonable termination trustee's fees and |
| 379 | costs and accounting fees and costs. |
| 380 | 2. To lienholders of liens recorded prior to the recording |
| 381 | of the declaration. |
| 382 | 3. To purchase-money lienholders on units to the extent |
| 383 | necessary to satisfy their liens, but in no event shall the |
| 384 | distribution exceed a unit's share of the proceeds. |
| 385 | 4. To lienholders of liens of the association which have |
| 386 | been consented to under s. 718.121(1). |
| 387 | 5. To creditors of the association, as their interests |
| 388 | appear. |
| 389 | 6. To unit owners, the proceeds of any sale of condominium |
| 390 | property subject to satisfaction of liens on each unit in their |
| 391 | order of priority, in shares specified in the plan of |
| 392 | termination, unless objected to by a unit owner or lienor as |
| 393 | provided in paragraph (b). |
| 394 | 7. To unit owners, the remaining condominium property, |
| 395 | subject to satisfaction of liens on each unit in their order of |
| 396 | priority, in shares specified in the plan of termination, unless |
| 397 | objected to by a unit owner or a lienor as provided in paragraph |
| 398 | (b). |
| 399 | 8. To unit owners, the proceeds of any sale of association |
| 400 | property, the remaining association property, common surplus, |
| 401 | and other assets of the association, subject to satisfaction of |
| 402 | liens on each unit in their order of priority, in shares |
| 403 | specified in the plan of termination, unless objected to by a |
| 404 | unit owner or a lienor as provided in paragraph (b). |
| 405 | Section 5. Section 720.3087, Florida Statutes, is created |
| 406 | to read: |
| 407 | 720.3087 Estoppel certificates.--Within 15 days after |
| 408 | receiving a written request therefor from a parcel owner or the |
| 409 | designee of a parcel owner, or a parcel mortgagee or the |
| 410 | designee of a parcel mortgagee, the association shall provide a |
| 411 | certificate signed by an officer or agent of the association |
| 412 | stating all assessments and other moneys owed to the association |
| 413 | by the parcel owner with respect to the parcel. |
| 414 | (1) Any person other than the parcel owner who relies upon |
| 415 | such certificate shall be protected thereby. |
| 416 | (2) A summary procedure pursuant to s. 51.011 may be |
| 417 | brought to compel compliance with this section, and in any such |
| 418 | action the prevailing party is entitled to recover reasonable |
| 419 | attorney's fees. |
| 420 | (3) The authority to charge a fee under this section shall |
| 421 | be established by written resolution adopted by the board in |
| 422 | advance of the charge or provided by written management, |
| 423 | bookkeeping, or maintenance contract. The fee shall be payable |
| 424 | upon the preparation of the certificate; and, if the certificate |
| 425 | is requested in conjunction with the sale or mortgage of the |
| 426 | parcel and the closing does not take place, the fee shall be |
| 427 | promptly refunded upon written notice from the person requesting |
| 428 | the certificate stating that the sale or mortgage was not |
| 429 | effectuated. The fee for a certificate in conjunction with a |
| 430 | sale or mortgage that is not effectuated and a refund that is |
| 431 | paid to the party requesting the certificate shall be an |
| 432 | obligation of the parcel owner and shall be collectible as an |
| 433 | assessment provided by this chapter. |
| 434 | Section 6. This act shall take effect July 1, 2008. |