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