Florida Senate - 2017                              CS for SB 294
       
       
        
       By the Committee on Judiciary; and Senator Bracy
       
       
       
       
       
       590-04113-17                                           2017294c1
    1                        A bill to be entitled                      
    2         An act relating to condominium, cooperative, and
    3         homeowners’ associations; amending ss. 718.111,
    4         719.104, and 720.303, F.S.; deleting exemptions for
    5         certain associations from specified reporting
    6         requirements; deleting provisions prohibiting certain
    7         associations from waiving certain financial reporting
    8         requirements for more than 3 years; providing an
    9         effective date.
   10          
   11  Be It Enacted by the Legislature of the State of Florida:
   12  
   13         Section 1. Subsection (13) of section 718.111, Florida
   14  Statutes, is amended to read:
   15         718.111 The association.—
   16         (13) FINANCIAL REPORTING.—Within 90 days after the end of
   17  the fiscal year, or annually on a date provided in the bylaws,
   18  the association shall prepare and complete, or contract for the
   19  preparation and completion of, a financial report for the
   20  preceding fiscal year. Within 21 days after the final financial
   21  report is completed by the association or received from the
   22  third party, but not later than 120 days after the end of the
   23  fiscal year or other date as provided in the bylaws, the
   24  association shall mail to each unit owner at the address last
   25  furnished to the association by the unit owner, or hand deliver
   26  to each unit owner, a copy of the financial report or a notice
   27  that a copy of the financial report will be mailed or hand
   28  delivered to the unit owner, without charge, upon receipt of a
   29  written request from the unit owner. The division shall adopt
   30  rules setting forth uniform accounting principles and standards
   31  to be used by all associations and addressing the financial
   32  reporting requirements for multicondominium associations. The
   33  rules must include, but not be limited to, standards for
   34  presenting a summary of association reserves, including a good
   35  faith estimate disclosing the annual amount of reserve funds
   36  that would be necessary for the association to fully fund
   37  reserves for each reserve item based on the straight-line
   38  accounting method. This disclosure is not applicable to reserves
   39  funded via the pooling method. In adopting such rules, the
   40  division shall consider the number of members and annual
   41  revenues of an association. Financial reports shall be prepared
   42  as follows:
   43         (a) An association that meets the criteria of this
   44  paragraph shall prepare a complete set of financial statements
   45  in accordance with generally accepted accounting principles. The
   46  financial statements must be based upon the association’s total
   47  annual revenues, as follows:
   48         1. An association with total annual revenues of $150,000 or
   49  more, but less than $300,000, shall prepare compiled financial
   50  statements.
   51         2. An association with total annual revenues of at least
   52  $300,000, but less than $500,000, shall prepare reviewed
   53  financial statements.
   54         3. An association with total annual revenues of $500,000 or
   55  more shall prepare audited financial statements.
   56         (b)1. An association with total annual revenues of less
   57  than $150,000 shall prepare a report of cash receipts and
   58  expenditures.
   59         2. An association that operates fewer than 50 units,
   60  regardless of the association’s annual revenues, shall prepare a
   61  report of cash receipts and expenditures in lieu of financial
   62  statements required by paragraph (a).
   63         2.3. A report of cash receipts and disbursements must
   64  disclose the amount of receipts by accounts and receipt
   65  classifications and the amount of expenses by accounts and
   66  expense classifications, including, but not limited to, the
   67  following, as applicable: costs for security, professional and
   68  management fees and expenses, taxes, costs for recreation
   69  facilities, expenses for refuse collection and utility services,
   70  expenses for lawn care, costs for building maintenance and
   71  repair, insurance costs, administration and salary expenses, and
   72  reserves accumulated and expended for capital expenditures,
   73  deferred maintenance, and any other category for which the
   74  association maintains reserves.
   75         (c) An association may prepare, without a meeting of or
   76  approval by the unit owners:
   77         1. Compiled, reviewed, or audited financial statements, if
   78  the association is required to prepare a report of cash receipts
   79  and expenditures;
   80         2. Reviewed or audited financial statements, if the
   81  association is required to prepare compiled financial
   82  statements; or
   83         3. Audited financial statements if the association is
   84  required to prepare reviewed financial statements.
   85         (d) If approved by a majority of the voting interests
   86  present at a properly called meeting of the association, an
   87  association may prepare:
   88         1. A report of cash receipts and expenditures in lieu of a
   89  compiled, reviewed, or audited financial statement;
   90         2. A report of cash receipts and expenditures or a compiled
   91  financial statement in lieu of a reviewed or audited financial
   92  statement; or
   93         3. A report of cash receipts and expenditures, a compiled
   94  financial statement, or a reviewed financial statement in lieu
   95  of an audited financial statement.
   96  
   97  Such meeting and approval must occur before the end of the
   98  fiscal year and is effective only for the fiscal year in which
   99  the vote is taken, except that the approval may also be
  100  effective for the following fiscal year. If the developer has
  101  not turned over control of the association, all unit owners,
  102  including the developer, may vote on issues related to the
  103  preparation of the association’s financial reports, from the
  104  date of incorporation of the association through the end of the
  105  second fiscal year after the fiscal year in which the
  106  certificate of a surveyor and mapper is recorded pursuant to s.
  107  718.104(4)(e) or an instrument that transfers title to a unit in
  108  the condominium which is not accompanied by a recorded
  109  assignment of developer rights in favor of the grantee of such
  110  unit is recorded, whichever occurs first. Thereafter, all unit
  111  owners except the developer may vote on such issues until
  112  control is turned over to the association by the developer. Any
  113  audit or review prepared under this section shall be paid for by
  114  the developer if done before turnover of control of the
  115  association. An association may not waive the financial
  116  reporting requirements of this section for more than 3
  117  consecutive years.
  118         Section 2. Paragraphs (b) and (c) of subsection (4) of
  119  section 719.104, Florida Statutes, are amended to read:
  120         719.104 Cooperatives; access to units; records; financial
  121  reports; assessments; purchase of leases.—
  122         (4) FINANCIAL REPORT.—
  123         (b) Except as provided in paragraph (c), an association
  124  whose total annual revenues meet the criteria of this paragraph
  125  shall prepare or cause to be prepared a complete set of
  126  financial statements according to the generally accepted
  127  accounting principles adopted by the Board of Accountancy. The
  128  financial statements shall be as follows:
  129         1. An association with total annual revenues between
  130  $150,000 and $299,999 shall prepare a compiled financial
  131  statement.
  132         2. An association with total annual revenues between
  133  $300,000 and $499,999 shall prepare a reviewed financial
  134  statement.
  135         3. An association with total annual revenues of $500,000 or
  136  more shall prepare an audited financial statement.
  137         4. The requirement to have the financial statement
  138  compiled, reviewed, or audited does not apply to an association
  139  if a majority of the voting interests of the association present
  140  at a duly called meeting of the association have voted to waive
  141  this requirement for the fiscal year. In an association in which
  142  turnover of control by the developer has not occurred, the
  143  developer may vote to waive the audit requirement for the first
  144  2 years of operation of the association, after which time waiver
  145  of an applicable audit requirement shall be by a majority of
  146  voting interests other than the developer. The meeting shall be
  147  held prior to the end of the fiscal year, and the waiver shall
  148  be effective for only one fiscal year. An association may not
  149  waive the financial reporting requirements of this section for
  150  more than 3 consecutive years.
  151         (c)1. An association with total annual revenues of less
  152  than $150,000 shall prepare a report of cash receipts and
  153  expenditures.
  154         2. An association in a community of fewer than 50 units,
  155  regardless of the association’s annual revenues, shall prepare a
  156  report of cash receipts and expenditures in lieu of the
  157  financial statements required by paragraph (b), unless the
  158  declaration or other recorded governing documents provide
  159  otherwise.
  160         2.3. A report of cash receipts and expenditures must
  161  disclose the amount of receipts by accounts and receipt
  162  classifications and the amount of expenses by accounts and
  163  expense classifications, including the following, as applicable:
  164  costs for security, professional, and management fees and
  165  expenses; taxes; costs for recreation facilities; expenses for
  166  refuse collection and utility services; expenses for lawn care;
  167  costs for building maintenance and repair; insurance costs;
  168  administration and salary expenses; and reserves, if maintained
  169  by the association.
  170         Section 3. Paragraph (b) of subsection (7) of section
  171  720.303, Florida Statutes, is amended to read:
  172         720.303 Association powers and duties; meetings of board;
  173  official records; budgets; financial reporting; association
  174  funds; recalls.—
  175         (7) FINANCIAL REPORTING.—Within 90 days after the end of
  176  the fiscal year, or annually on the date provided in the bylaws,
  177  the association shall prepare and complete, or contract with a
  178  third party for the preparation and completion of, a financial
  179  report for the preceding fiscal year. Within 21 days after the
  180  final financial report is completed by the association or
  181  received from the third party, but not later than 120 days after
  182  the end of the fiscal year or other date as provided in the
  183  bylaws, the association shall, within the time limits set forth
  184  in subsection (5), provide each member with a copy of the annual
  185  financial report or a written notice that a copy of the
  186  financial report is available upon request at no charge to the
  187  member. Financial reports shall be prepared as follows:
  188         (b)1. An association with total annual revenues of less
  189  than $150,000 shall prepare a report of cash receipts and
  190  expenditures.
  191         2. An association in a community of fewer than 50 parcels,
  192  regardless of the association’s annual revenues, may prepare a
  193  report of cash receipts and expenditures in lieu of financial
  194  statements required by paragraph (a) unless the governing
  195  documents provide otherwise.
  196         2.3. A report of cash receipts and disbursement must
  197  disclose the amount of receipts by accounts and receipt
  198  classifications and the amount of expenses by accounts and
  199  expense classifications, including, but not limited to, the
  200  following, as applicable: costs for security, professional, and
  201  management fees and expenses; taxes; costs for recreation
  202  facilities; expenses for refuse collection and utility services;
  203  expenses for lawn care; costs for building maintenance and
  204  repair; insurance costs; administration and salary expenses; and
  205  reserves if maintained by the association.
  206         Section 4. This act shall take effect July 1, 2017.