Florida Senate - 2013              PROPOSED COMMITTEE SUBSTITUTE
       Bill No. SB 580
                                Barcode 524072                          
       Proposed Committee Substitute by the Committee on Regulated
    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 that such
   27         certification is valid while the director is on the
   28         board; providing penalties for failure to file such
   29         certification; requiring the association secretary to
   30         retain such certification for 5 years; requiring the
   31         board to follow specified procedures relating to
   32         contracts or transactions between the association and
   33         certain entities; providing for disclosure of the
   34         contract or transaction to members; providing for the
   35         cancellation of such contract or transaction under
   36         certain circumstances; prohibiting any association
   37         officer, director, or manager from soliciting or
   38         receiving certain personal benefits from any person
   39         providing or offering to provide goods or services to
   40         the association and providing for removal for
   41         knowingly taking such action; providing an exception;
   42         providing for the removal of any director or officer
   43         charged with a felony theft or embezzlement offense
   44         involving association funds or property; providing for
   45         the reinstatement of such person under certain
   46         circumstances; prohibiting a member with pending
   47         criminal charges from certain positions; requiring the
   48         association to maintain insurance or a bond to cover
   49         funds that will be in the custody of the association
   50         or its management agent; providing a definition;
   51         amending s. 720.306, F.S.; revising procedures for the
   52         election of directors; amending s. 720.307, F.S.;
   53         providing additional circumstances for authorizing
   54         members to elect a majority of association board
   55         members; providing circumstances under which members
   56         other than the developer are authorized to elect a
   57         specified number of members to the board of directors;
   58         amending s. 720.308, F.S.; prohibiting the levy of
   59         special assessments or an increase in assessments
   60         levied pursuant to the annual budget under certain
   61         circumstances; providing an effective date.
   63  Be It Enacted by the Legislature of the State of Florida:
   65         Section 1. Paragraph (b) of subsection (2) of section
   66  468.436, Florida Statutes, is amended to read:
   67         468.436 Disciplinary proceedings.—
   68         (2) The following acts constitute grounds for which the
   69  disciplinary actions in subsection (4) may be taken:
   70         (b)1. Violation of any provision of this part.
   71         2. Violation of any lawful order or rule rendered or
   72  adopted by the department or the council.
   73         3. Being convicted of or pleading nolo contendere to a
   74  felony in any court in the United States.
   75         4. Obtaining a license or certification or any other order,
   76  ruling, or authorization by means of fraud, misrepresentation,
   77  or concealment of material facts.
   78         5. Committing acts of gross misconduct or gross negligence
   79  in connection with the profession.
   80         6. Contracting, on behalf of an association, with any
   81  entity in which the licensee has a financial interest that is
   82  not disclosed.
   83         7. Failing to report to the division as required in s.
   84  720.303(13).
   85         8. Violating any provision of chapter 720 during the course
   86  of performing community association management services pursuant
   87  to a contract with a homeowners’ association.
   88         Section 2. Subsection (5) and paragraph (b) of subsection
   89  (6) of section 720.303, Florida Statutes, are amended, and
   90  subsection (13) is added to that section, to read:
   91         720.303 Association powers and duties; meetings of board;
   92  official records; budgets; financial reporting; association
   93  funds; recalls.—
   94         (5) INSPECTION AND COPYING OF RECORDS.—The official records
   95  shall be maintained within the state for at least 7 years and
   96  shall be made available to a parcel owner for inspection or
   97  photocopying within 45 miles of the community or within the
   98  county in which the association is located within 10 business
   99  days after receipt by the board or its designee of a written
  100  request must be open to inspection and available for
  101  photocopying by members or their authorized agents at reasonable
  102  times and places within 10 business days after receipt of a
  103  written request for access. This subsection may be complied with
  104  by having a copy of the official records available for
  105  inspection or copying in the community or, at the option of the
  106  association, by making the records available to a parcel owner
  107  electronically via the Internet or by allowing the records to be
  108  viewed in electronic format on a computer screen and printed
  109  upon request. If the association has a photocopy machine
  110  available where the records are maintained, it must provide
  111  parcel owners with copies on request during the inspection if
  112  the entire request is limited to no more than 25 pages. An
  113  association shall allow a member or his or her authorized
  114  representative to use a portable device, including a smartphone,
  115  tablet, portable scanner, or any other technology capable of
  116  scanning or taking photographs, to make an electronic copy of
  117  the official records in lieu of providing the member or his or
  118  her authorized representative with a copy of such records. The
  119  association may not charge a fee to a member or his or her
  120  authorized representative for such use of a portable device.
  121         (a) The failure of an association to provide access to the
  122  records within 10 business days after receipt of a written
  123  request submitted by certified mail, return receipt requested,
  124  creates a rebuttable presumption that the association willfully
  125  failed to comply with this subsection.
  126         (b) A member who is denied access to official records is
  127  entitled to the actual damages or minimum damages for the
  128  association’s willful failure to comply with this subsection.
  129  The minimum damages are to be $50 per calendar day up to 10
  130  days, the calculation to begin on the 11th business day after
  131  receipt of the written request.
  132         (c) The association may adopt reasonable written rules
  133  governing the frequency, time, location, notice, records to be
  134  inspected, and manner of inspections, but may not require a
  135  parcel owner to demonstrate any proper purpose for the
  136  inspection, state any reason for the inspection, or limit a
  137  parcel owner’s right to inspect records to less than one 8-hour
  138  business day per month. The association may impose fees to cover
  139  the costs of providing copies of the official records,
  140  including, without limitation, the costs of copying and the
  141  costs required for personnel to retrieve and copy the records if
  142  retrieving the records exceeds one-half hour and if the
  143  personnel costs do not exceed $20 per hour. The association may
  144  charge up to 25 50 cents per page for copies made on the
  145  association’s photocopier. If the association does not have a
  146  photocopy machine available where the records are kept, or if
  147  the records requested to be copied exceed 25 pages in length,
  148  the association may have copies made by an outside duplicating
  149  service vendor or association management company personnel and
  150  may charge the actual cost of copying, as supported by the
  151  vendor invoice including any reasonable costs involving
  152  personnel fees and charges at an hourly rate for vendor or
  153  employee time to cover administrative costs to the vendor or
  154  association. The association shall maintain an adequate number
  155  of copies of the recorded governing documents, to ensure their
  156  availability to members and prospective members. Notwithstanding
  157  this paragraph, the following records are not accessible to
  158  members or parcel owners:
  159         1. Any record protected by the lawyer-client privilege as
  160  described in s. 90.502 and any record protected by the work
  161  product privilege, including, but not limited to, a record
  162  prepared by an association attorney or prepared at the
  163  attorney’s express direction which reflects a mental impression,
  164  conclusion, litigation strategy, or legal theory of the attorney
  165  or the association and which was prepared exclusively for civil
  166  or criminal litigation or for adversarial administrative
  167  proceedings or which was prepared in anticipation of such
  168  litigation or proceedings until the conclusion of the litigation
  169  or proceedings.
  170         2. Information obtained by an association in connection
  171  with the approval of the lease, sale, or other transfer of a
  172  parcel.
  173         3. Personnel records of the association’s employees,
  174  including, but not limited to, disciplinary, payroll, health,
  175  and insurance records. For purposes of this subparagraph, the
  176  term “personnel records” does not include written employment
  177  agreements with an association employee or budgetary or
  178  financial records that indicate the compensation paid to an
  179  association employee.
  180         4. Medical records of parcel owners or community residents.
  181         5. Social security numbers, driver’s license numbers,
  182  credit card numbers, electronic mailing addresses, telephone
  183  numbers, facsimile numbers, emergency contact information, any
  184  addresses for a parcel owner other than as provided for
  185  association notice requirements, and other personal identifying
  186  information of any person, excluding the person’s name, parcel
  187  designation, mailing address, and property address. However, an
  188  owner may consent in writing to the disclosure of protected
  189  information described in this subparagraph. The association is
  190  not liable for the disclosure of information that is protected
  191  under this subparagraph if the information is included in an
  192  official record of the association and is voluntarily provided
  193  by an owner and not requested by the association.
  194         6. Any electronic security measure that is used by the
  195  association to safeguard data, including passwords.
  196         7. The software and operating system used by the
  197  association which allows the manipulation of data, even if the
  198  owner owns a copy of the same software used by the association.
  199  The data is part of the official records of the association.
  200         (d) The association or its authorized agent is not required
  201  to provide a prospective purchaser or lienholder with
  202  information about the residential subdivision or the association
  203  other than information or documents required by this chapter to
  204  be made available or disclosed. The association or its
  205  authorized agent may charge a reasonable fee to the prospective
  206  purchaser or lienholder or the current parcel owner or member
  207  for providing good faith responses to requests for information
  208  by or on behalf of a prospective purchaser or lienholder, other
  209  than that required by law, if the fee does not exceed $150 plus
  210  the reasonable cost of photocopying and any attorney’s fees
  211  incurred by the association in connection with the response.
  212         (6) BUDGETS.—
  213         (b) In addition to annual operating expenses, the budget
  214  may include reserve accounts for capital expenditures and
  215  deferred maintenance for which the association is responsible.
  216  If reserve accounts are established, the budget must designate
  217  the components for which the reserve accounts may be used. If
  218  reserve accounts are not established pursuant to paragraph (d),
  219  funding of such reserves is limited to the extent that the
  220  governing documents limit increases in assessments, including
  221  reserves. If the budget of the association includes reserve
  222  accounts established pursuant to paragraph (d), such reserves
  223  shall be determined, maintained, and waived in the manner
  224  provided in this subsection. Once an association provides for
  225  reserve accounts pursuant to paragraph (d), the association
  226  shall thereafter determine, maintain, and waive reserves in
  227  compliance with this subsection. This section does not preclude
  228  the termination of a reserve account established pursuant to
  229  this paragraph upon approval of a majority of the total voting
  230  interests of the association. Upon such approval, the
  231  terminating reserve account shall be removed from the budget.
  232         (13) REPORTING REQUIREMENT.—The community association
  233  manager, or the association when there is no community
  234  association manager, shall report to the division by November
  235  22, 2013, and annually thereafter, in a manner and form
  236  prescribed by the division.
  237         (a) The report shall include the association’s:
  238         1. Legal name.
  239         2. Federal employer identification number.
  240         3. Mailing and physical addresses.
  241         4. Total number of parcels.
  242         5. Total amount of revenues and expenses from the
  243  association’s annual budget.
  244         (b) For associations in which control of the association
  245  has not been transitioned to nondeveloper members, as set forth
  246  in s. 720.307, the report shall also include the developer’s:
  247         1. Legal name.
  248         2. Mailing address.
  249         3. Total number of parcels owned on the date of reporting.
  250         (c) By October 1, 2013, the department shall establish and
  251  implement a registration system through an Internet website that
  252  provides for the reporting requirements of paragraphs (a) and
  253  (b).
  254         (d) On or before December 1, 2013, and annually thereafter
  255  by December 1, the department shall submit a report to the
  256  Governor, the President of the Senate, and the Speaker of the
  257  House of Representatives providing the homeowner association
  258  data reported pursuant to this subsection.
  259         (e) The department may adopt rules pursuant to ss.
  260  120.536(1) and 120.54 to implement the provisions of this
  261  subsection.
  262         (f) This subsection shall expire on July 1, 2016, unless
  263  reenacted by the Legislature.
  264         Section 3. Section 720.3033, Florida Statutes, is created
  265  to read:
  266         720.3033 Officers and directors.—
  267         (1)(a) Within 90 days after being elected or appointed to
  268  the board, each director shall certify in writing to the
  269  secretary of the association that he or she has read the
  270  association’s declaration of covenants, articles of
  271  incorporation, bylaws, and current written rules and policies;
  272  that he or she will work to uphold such documents and policies
  273  to the best of his or her ability; and that he or she will
  274  faithfully discharge his or her fiduciary responsibility to the
  275  association’s members.
  276         (b) The written certification is valid for the
  277  uninterrupted tenure of the director on the board. A director
  278  who does not timely file the written certification shall be
  279  suspended from the board until he or she complies with the
  280  requirement. The board may temporarily fill the vacancy during
  281  the period of suspension.
  282         (c) The secretary shall retain each director’s written
  283  certification for inspection by the members for 5 years after
  284  the director’s election.
  285         (2) If the association enters into a contract or other
  286  transaction with any of its directors or a corporation, firm,
  287  association, or other entity in which an association director is
  288  also a director or officer or is financially interested, the
  289  board must:
  290         (a) Comply with the requirements of s. 617.0832.
  291         (b) Enter the disclosures required by s. 617.0832 into the
  292  written minutes of the meeting.
  293         (c) Approve the contract or other transaction by an
  294  affirmative vote of two-thirds of the directors present.
  295         (d) At the next regular or special meeting of the members,
  296  disclose the existence of the contract or other transaction to
  297  the members. Upon motion of any member, the contract or
  298  transaction shall be brought up for a vote and may be canceled
  299  by a majority vote of the members present. If the members cancel
  300  the contract, the association is only liable for the reasonable
  301  value of goods and services provided up to the time of
  302  cancellation and is not liable for any termination fee,
  303  liquidated damages, or other penalty for such cancellation.
  304         (3) An officer, director, or manager may not solicit, offer
  305  to accept, or accept any good or service of value for which
  306  consideration has not been provided for his or her benefit or
  307  for the benefit of a member of his or her immediate family from
  308  any person providing or proposing to provide goods or services
  309  to the association. If the board finds that an officer or
  310  director has violated this subsection, the board shall
  311  immediately remove from office the officer or director. The
  312  vacancy shall be filled according to law until the end of the
  313  period of the end of the director’s term of office. However, an
  314  officer, director, or manager may accept food to be consumed at
  315  a business meeting with a value of less than $25 per individual
  316  or a service or good received in connection with trade fairs or
  317  education programs.
  318         (4) The board shall immediately remove from office a
  319  director or officer charged by information or indictment with a
  320  felony theft or embezzlement offense involving the association’s
  321  funds or property. The vacancy shall be filled according to
  322  general law until the end of the period of the suspension or the
  323  end of the director’s term of office, whichever occurs first.
  324  However, if the charges are resolved without a finding of guilt
  325  or without acceptance of a plea of guilt or nolo contendere, the
  326  director or officer shall be reinstated for any remainder of his
  327  or her term of office. A member who has criminal charges pending
  328  may not be appointed or elected to a position as a director or
  329  officer.
  330         (5) All associations shall maintain insurance or a fidelity
  331  bond for all persons who control or disburse funds of the
  332  association. The insurance policy or fidelity bond must cover
  333  the maximum funds that will be in the custody of the association
  334  or its management agent at any one time. As used in this
  335  subsection, the term “persons who control or disburse funds of
  336  the association” includes, but is not limited to, persons
  337  authorized to sign checks on behalf of the association, and the
  338  president, secretary, and treasurer of the association. The
  339  association shall bear the cost of any insurance or bond.
  340         Section 4. Paragraph (a) of subsection (9) of section
  341  720.306, Florida Statutes, is amended to read:
  342         720.306 Meetings of members; voting and election
  343  procedures; amendments.—
  344         (9)(a) ELECTIONS AND BOARD VACANCIES.—Elections of
  345  directors must be conducted in accordance with the procedures
  346  set forth in the governing documents of the association. All
  347  members of the association are eligible to serve on the board of
  348  directors, and a member may nominate himself or herself as a
  349  candidate for the board at a meeting where the election is to be
  350  held; provided, however, that or, if the election process allows
  351  candidates to nominate themselves voting by absentee ballot, in
  352  advance of the balloting, the association is not required to
  353  allow nominations at the meeting. An election is not required
  354  unless more candidates are nominated than vacancies exist.
  355  Except as otherwise provided in the governing documents, boards
  356  of directors must be elected by a plurality of the votes cast by
  357  eligible voters.
  358         Section 5. Subsection (1) of section 720.307, Florida
  359  Statutes, is amended, present subsections (2) through (4) are
  360  renumbered as subsections (4) through (6), respectively, and new
  361  subsections (2) and (3) are added to that section, to read:
  362         720.307 Transition of association control in a community.
  363  With respect to homeowners’ associations:
  364         (1) Members other than the developer are entitled to elect
  365  at least a majority of the members of the board of directors of
  366  the homeowners’ association when the earlier of the following
  367  events occurs:
  368         (a) Three months after 90 percent of the parcels in all
  369  phases of the community that will ultimately be operated by the
  370  homeowners’ association have been conveyed to members; or
  371         (b) Such other percentage of the parcels has been conveyed
  372  to members, or such other date or event has occurred, as is set
  373  forth in the governing documents in order to comply with the
  374  requirements of any governmentally chartered entity with regard
  375  to the mortgage financing of parcels;
  376         (c) Two years after the developer has ceased construction
  377  or ceased to offer parcels for sale in the ordinary course of
  378  business;
  379         (d) Upon the developer abandoning or deserting its
  380  responsibility to maintain and complete the advertised amenities
  381  or infrastructure. There is a rebuttable presumption that the
  382  developer has abandoned and deserted the property if the
  383  developer has not engaged in construction or sale of properties
  384  or has unpaid assessments or guaranteed amounts under s. 720.308
  385  for a period of more than 2 years;
  386         (e) Upon the developer filing a petition seeking protection
  387  under chapter 7 of the federal Bankruptcy Code;
  388         (f) Upon the developer losing title to the property through
  389  a foreclosure action or the transfer of a deed in lieu of
  390  foreclosure; or
  391         (g) Upon a receiver for the developer being appointed by a
  392  circuit court and not being discharged within 30 days after such
  393  appointment, unless the court determines within 30 days after
  394  such appointment that transfer of control would be detrimental
  395  to the association or its members.
  397  For purposes of this section, the term “members other than the
  398  developer” shall not include builders, contractors, or others
  399  who purchase a parcel for the purpose of constructing
  400  improvements thereon for resale.
  401         (2) Members other than the developer are entitled to elect
  402  at least one member of the board of directors of the homeowners’
  403  association if 15 percent of the parcels in all phases of the
  404  community which will ultimately be operated by the association
  405  have been conveyed to members.
  406         (3) Members other than the developer are entitled to elect
  407  at least two members of the board of directors of the
  408  homeowners’ association if 50 percent of the parcels in all
  409  phases of the community which will ultimately be operated by the
  410  association have been conveyed to members.
  411         Section 6. Subsection (7) is added to section 720.308,
  412  Florida Statutes, to read:
  413         720.308 Assessments and charges.—
  414         (7) Assessments levied pursuant to the annual budget may
  415  not be increased, and special assessments may not be levied,
  416  without the approval of the majority of nondeveloper voting
  417  interests while the developer is in control of the association
  418  and entitled to elect the majority of the members of the board,
  419  unless the budget specifically describes and justifies the
  420  increased assessment or the levy of the special assessment.
  421         Section 7. This act shall take effect July 1, 2013.