Florida Senate - 2018                                    SB 1858
       By Senator Passidomo
       28-01379A-18                                          20181858__
    1                        A bill to be entitled                      
    2         An act relating to improvements to real property;
    3         amending s. 163.08, F.S.; defining terms; revising the
    4         term “qualifying improvement”; specifying that a
    5         financing agreement may not be used to fund ancillary
    6         work except under certain conditions; specifying
    7         conditions that must be determined before a financing
    8         agreement may be approved; specifying that the failure
    9         of a property owner to disclose specified information
   10         does not invalidate a financing agreement; specifying
   11         that the existence of a prior financing agreement is
   12         not evidence meeting program requirements; specifying
   13         the information that must be verified for residential
   14         properties regarding a property owner’s ability to pay
   15         the annual assessment; providing requirements for a
   16         program administrator’s review of a property owner’s
   17         ability to pay; specifying how the fair market value
   18         on the property on which a qualifying improvement will
   19         be placed is derived and requiring such value to be
   20         disclosed to the property owner before execution of a
   21         financing agreement; requiring a program administrator
   22         to orally review specified information to specified
   23         persons before the execution of a financing agreement
   24         and record and receive written acknowledgement of such
   25         provision; prohibiting the use of a prerecorded device
   26         for certain purposes; requiring the program
   27         administrator to develop additional procedures to
   28         protect vulnerable adults; requiring certain local
   29         governments to develop a written disclosure form that
   30         contains specified information; requiring that such
   31         form be provided to a property owner before executing
   32         the property agreement; requiring that certain
   33         statements on such form be individually acknowledged;
   34         requiring a program administrator to provide a
   35         cancellation form within a specified period;
   36         specifying situations in which a contract to sell or
   37         install a qualifying improvement on a residential
   38         property is unenforceable; prohibiting a contractor
   39         from beginning work under such a contract; providing
   40         procedures for returning or restoring residential
   41         property in specified situations in which a contract
   42         is unenforceable; specifying circumstances where an
   43         otherwise unenforceable contract is enforceable;
   44         specifying practices in which a program administrator
   45         may not engage; providing exceptions; specifying
   46         actions that a program administrator, contractor, or
   47         third party may not engage in regarding financing
   48         agreements; specifying the circumstance in which a
   49         program administrator may make final payment to a
   50         contractor; requiring a program to have publicly
   51         available specified information regarding qualifying
   52         improvements; authorizing a program administrator to
   53         include additional products under specified
   54         conditions; specifying that agreements need not be
   55         notarized; requiring the qualifying improvements
   56         program to make an annual report available on its
   57         website; specifying items to be included in such
   58         report; providing an effective date.
   60  Be It Enacted by the Legislature of the State of Florida:
   62         Section 1. Subsections (7) and (10) through (16), of
   63  section 163.08, Florida Statutes, are redesignated as
   64  subsections (17), (19) through (24), and (26), respectively,
   65  present subsection (8) is redesignated as subsection (18) and
   66  amended, present subsections (2) and (9) are amended, and new
   67  subsections (7) through (16) and (25) are added to that section,
   68  to read:
   69         163.08 Supplemental authority for improvements to real
   70  property.—
   71         (2) As used in this section, the term:
   72         (a) “Facility” means any portion of a building, structure,
   73  or site improvement located on a site as defined in Section 202
   74  of the 2017 Florida Building Code.
   75         (b) “Local government” means a county, a municipality, a
   76  dependent special district as defined in s. 189.012, or a
   77  separate legal entity created pursuant to s. 163.01(7).
   78         (c)“Non-residential property” means any property type that
   79  is not a residential property.
   80         (d)“Program administrator” means an entity which
   81  administers a qualifying improvement program for a local
   82  government.
   83         (e)(b) “Qualifying improvement” includes any:
   84         1. Energy conservation and efficiency improvement, which is
   85  a measure to reduce consumption through conservation or a more
   86  efficient use of electricity, natural gas, propane, or other
   87  forms of energy on the property, including, but not limited to,
   88  air sealing; installation of insulation; installation of energy
   89  efficient heating, cooling, or ventilation systems; building
   90  modifications to increase the use of daylight; replacement of
   91  windows; installation of energy controls or energy recovery
   92  systems; installation of electric vehicle charging equipment;
   93  and installation of efficient lighting equipment.
   94         2. Renewable energy improvement, which is the installation
   95  of any system in which the electrical, mechanical, or thermal
   96  energy is produced from a method that uses one or more of the
   97  following fuels or energy sources: hydrogen, solar energy,
   98  geothermal energy, bioenergy, and wind energy.
   99         3. Wind resistance improvement, which includes the products
  100  and installation for, but is not limited to:
  101         a. Improving the strength of the roof deck attachment;
  102         b. Creating a secondary water barrier to prevent water
  103  intrusion;
  104         c. Installing Wind-resistant shingles;
  105         d. Installing Gable-end bracing;
  106         e. Reinforcing roof-to-wall connections;
  107         f. Installing Storm shutters; or
  108         g. Installing Opening protections.
  109         (f)“Qualifying improvements program” means a program that
  110  includes financing and administration activities undertaken by a
  111  program administrator for property owners to purchase and
  112  install qualifying improvements on a building or facility.
  113         (g)“Residential property” means real estate on which any
  114  of the following is located:
  115         1.One single-family residential unit or one multifamily
  116  structure containing one to four residential units.
  117         2.Single-family residential units such as condominiums,
  118  townhouses, timeshares, mobile homes, or houses in a subdivision
  119  that may be legally sold, leased, or otherwise conveyed on a
  120  unit-by-unit basis, regardless of whether the units are a part
  121  of a larger building or parcel containing more than four
  122  residential units.
  123         (7)A financing agreement may not be used to fund ancillary
  124  work unless the scope of the ancillary work is directly related
  125  to and necessary for the installation and safe operation of a
  126  qualifying improvement and the cost of the ancillary work does
  127  not exceed the cost of the individual qualifying improvement to
  128  which it is directly related.
  129         (8)A program administrator may not approve a financing
  130  agreement before reasonably determining that:
  131         (a)The property taxes and other assessments on the
  132  property are current and that the property owner has not been
  133  delinquent in making such payments for the preceding 3 years or
  134  for the time the property owner has owned the property,
  135  whichever is less.
  136         (b)The property has no recorded and outstanding
  137  involuntary liens in excess of $1,000.
  138         (c)There are no notices of default currently recorded on
  139  the property which have not been rescinded.
  140         (d)For residential properties, the property owner has not
  141  been subject to a bankruptcy proceeding within the last 7 years
  142  unless it was discharged or dismissed more than 2 years before
  143  the application date.
  144         (e)For residential properties, the property owner is
  145  current on nonmortgage debt excluding medical debt, and has had
  146  no more than one late payment exceeding 30 days during the 12
  147  months immediately preceding the application date.
  148         (f)The property owner is current on all mortgage debt on
  149  the property and has had no more than one late payment exceeding
  150  30 days during the 12 months immediately preceding the
  151  application date.
  152         (g)The property is within the geographic boundaries of the
  153  applicable qualifying improvements program.
  154         (h)The total financed amount and mortgage-related debt on
  155  the property does not exceed 97 percent of the fair market value
  156  of the property, as determined pursuant to subsection (10).
  157         (i)The term of the financing agreement does not exceed the
  158  estimated useful life of the qualifying improvement for which
  159  the majority of the financing has been provided. The program
  160  administrator shall determine the useful life using established
  161  third-party standards or certification criteria from government
  162  agencies or nationally recognized standards and testing
  163  organizations.
  164         (j)The program administrator must obtain a statement from
  165  the property owner as to whether the property owner has obtained
  166  or sought to obtain additional qualifying improvements on the
  167  same property which have not yet been recorded.
  169  The failure of a property owner to disclose information
  170  specified in this subsection does not invalidate a financing
  171  agreement or any obligation thereunder, even if the total
  172  financed amount of the qualifying improvement exceeds the amount
  173  that would otherwise be authorized under paragraph (h) or
  174  subsection (18). The existence of a prior qualifying improvement
  175  assessment or a prior financing agreement is not evidence that
  176  the financing agreement under consideration is affordable or
  177  meets other program requirements.
  178         (9)In addition to the determinations in subsection (8),
  179  and before a program administrator approves a qualifying
  180  improvement on a residential property, he or she must use
  181  information contained in the property owner’s application,
  182  reasonably reliable third-party records, or an automated
  183  verification system to reasonably determine whether the property
  184  owner has the ability to pay the annual assessment for the
  185  qualifying improvement. The program administrator must review
  186  the property owner’s household income, housing expenses, assets,
  187  and other debt obligations. If the program administrator uses an
  188  automated verification system, it must be a system that can
  189  verify the property owner’s income, is not based on predictive
  190  or estimation methodologies, and has been determined sufficient
  191  for such verification purposes by a federal mortgage lending
  192  authority or regulator. In reviewing the property owner’s
  193  ability to pay, the program administrator:
  194         (a)When determining the household income, may include the
  195  income of any property owner 18 years of age or older whose name
  196  is on the property title. If a person’s income is considered,
  197  that person’s debt obligations must also be considered.
  198         (b)May not consider the equity of the property that will
  199  secure the assessment.
  200         (c)Shall determine the property owner’s debt obligations
  201  using reasonably reliable third-party records, including at
  202  least one consumer credit report from an agency that meets the
  203  requirements of 15 U.S.C. s. 1681a(p). Debt obligations to be
  204  reviewed must include:
  205         1.Secured and unsecured debt.
  206         2.Housing expenses. A program administrator shall make a
  207  reasonable estimate of the basic housing expenses based on the
  208  number of persons in the household.
  209         3.Stated alimony or child support obligations.
  210         (d)Shall determine whether the property owner has
  211  sufficient income to pay the annual assessment and whether he or
  212  she has sufficient residual income to meet his or her household
  213  living expenses.
  214         (10)A program administrator must derive the fair market
  215  value of the property using one of the following methods and
  216  must disclose the value to the property owner before the
  217  property owner executes the financing agreement:
  218         (a)The value derived using an automated valuation model
  219  provided by a third-party vendor that contains estimation models
  220  with confidence scores, if available. To use this method:
  221         1.The third-party vendor must provide regular statistical
  222  calibration.
  223         2.The program administrator must use at least three
  224  automated valuation models for each property. If a model
  225  provides a range of values, the value for the model must be the
  226  average between the high and low values.
  227         3.The program administrator must use the value with the
  228  highest confidence score for a property. If an automated
  229  valuation model does not provide a confidence score for a
  230  subject property, the program administrator must use the average
  231  of all estimated values to determine the fair market value.
  232         (b)The property appraiser’s determination of just value.
  233         (c)An appraisal prepared by an independent third party, a
  234  broker price opinion, a comparative market analysis, or any
  235  other methodology commonly used in the real estate finance
  236  industry.
  237         (11)(a)Before a residential property owner executes a
  238  financing agreement, the program administrator must orally
  239  review the key terms of the financing agreement, using plain
  240  language, with at least one property owner or the verified
  241  authorized representative of the owner, and that person must
  242  provide written acknowledgment that the oral review was given.
  243  The program administrator may not use a prerecorded device to
  244  convey any required disclosures.
  245         (b)The program administrator must record the oral review
  246  in an audio format and protect the information as required by
  247  law.
  248         (c)The program administrator shall develop additional
  249  procedures under this subsection to prevent exploitation of
  250  vulnerable adults.
  251         (12)(a)Each local government that offers a qualifying
  252  improvements program must develop a written disclosure form that
  253  must be provided to the residential property owner before he or
  254  she executes the financing agreement and which contains the key
  255  terms of the agreement, including:
  256         1.A description of the qualifying improvement and
  257  ancillary work;
  258         2.The total financed amount, including the cost of the
  259  qualifying improvement, ancillary work, installation, program
  260  fees, and prepaid interest, if any;
  261         3.The annual assessment process and yearly schedule;
  262         4.The amount of the annual assessment;
  263         5.The term of the total financed amount;
  264         6.The interest rate for the financed amount; and
  265         7.The annual percentage rate.
  266         (b)The disclosure form must also contain the following
  267  statements which must be individually acknowledged by the
  268  residential property owner:
  269         1.“I understand that if I sell or refinance the property,
  270  I may be required to pay off the outstanding financed amount as
  271  a condition of the sale or the refinance.”
  272         2.“I understand that I cannot be assessed a penalty if I
  273  prepay the outstanding financed amount.”
  274         3.“I understand that utility savings are not guaranteed
  275  and will not reduce the assessment payments or total financed
  276  amount.”
  277         4.“I understand that the annual assessment will be paid
  278  when property taxes are paid and will result in a lien being
  279  placed on my property.”
  280         5.“I understand that the annual assessment will be added
  281  to my property tax bill, and if I pay my property taxes through
  282  my mortgage payment using an escrow or impound account, I should
  283  notify my mortgage lender, so that my monthly mortgage payment
  284  can be adjusted to cover the increased property tax bill.”
  285         6.“I understand that if I fail to pay the annual
  286  assessment, I may incur penalties and fees, and the local
  287  government could issue a tax certificate which might result in
  288  me losing my property.”
  289         7.“I understand that I should seek professional tax advice
  290  if I have questions regarding tax credits, tax deductibility, or
  291  the tax impact on the annual assessment or the financing
  292  agreement.”
  293         8.“I understand that I have 3 days to cancel the financing
  294  agreement. The 3-day-right-to-cancel period expires on midnight
  295  of the third business day after I sign the agreement.”
  296         (c)In addition, a program administrator must provide a
  297  printed cancellation form to the residential property owner no
  298  later than the time the property owner signs the financing
  299  agreement which would allow the property owner to cancel the
  300  contract.
  301         (13)(a)A contract to sell or install a qualifying
  302  improvement that is related to an application for financing in a
  303  qualifying improvements program for a residential property is
  304  unenforceable and a contractor may not begin work under such a
  305  contract if:
  306         1.The property owner would not have entered into the
  307  contract but for the belief that the qualifying improvement or
  308  its installation would be paid under the financing agreement; or
  309         2.The property owner applied for, accepted, and canceled a
  310  qualifying improvement financing agreement within the 3-day
  311  right-to-cancel period set forth in subparagraph (12)(b)8.
  312         (b)If a contractor has initiated work on a residential
  313  property under an unenforceable contract as determined under
  314  paragraph (a), the contractor:
  315         1.May not receive compensation for that work under the
  316  financing agreement.
  317         2.Shall restore the property to its original condition at
  318  no cost to the property owner.
  319         3.Shall immediately return any money, property, and other
  320  consideration given by the property owner. If the property owner
  321  provided any property and the contractor does not or cannot
  322  return it, the contractor shall immediately return the fair
  323  market value of the property or its value as designated in the
  324  contract, whichever is greater.
  325         (c)If the contractor has delivered chattel or fixtures to
  326  the residential property pursuant to an unenforceable contract,
  327  the contractor shall have 90 days from the date the contract was
  328  executed to retrieve the chattel or fixtures provided that:
  329         1.The contractor has fulfilled the requirements of
  330  subparagraphs (b)2. and 3.
  331         2.The chattel and fixtures can be removed at the
  332  contractor’s expense without damaging the property owner’s
  333  property and can be practically returned.
  334         (d)The residential property owner may retain any chattel
  335  or fixtures provided pursuant to an unenforceable contract if a
  336  contractor fails to comply with this subsection.
  337         (e)A contract which is otherwise unenforceable under this
  338  subsection remains enforceable if the residential property owner
  339  waives his or her right to cancel the contract, allows the
  340  contractor to proceed with the installation of the qualifying
  341  improvement, and cancels the financing agreement.
  342         (14)(a)A program administrator may not authorize a
  343  contractor or third party to advertise the availability of
  344  financing agreements or solicit property owners on behalf of the
  345  program administrator, unless:
  346         1.The contractor or third party maintains the appropriate
  347  registration or certification from the Construction Industry
  348  Licensing Board or any other permit, license, or registration
  349  required to conduct business in the jurisdiction where it
  350  operates, and provides proof of having the required bond and
  351  insurance coverage amounts; and
  352         2.The program administrator obtains the contractor’s or
  353  third party’s written agreement that the contractor or third
  354  party will meet applicable laws and rules and qualifying
  355  improvement program policies and procedures, including those on
  356  advertising and marketing.
  357         (b)A program administrator may not provide any direct or
  358  indirect cash payment or thing of material value to a contractor
  359  in excess of the actual price charged by that contractor for the
  360  sale and installation of the qualifying improvements that are
  361  financed by a financing agreement. However, a program
  362  administrator may provide information or service to a contractor
  363  to facilitate the installation of a qualifying improvement for a
  364  property owner.
  365         (c)A program administrator may not reimburse a contractor
  366  for its expenses for advertising and marketing campaigns and
  367  materials. A program administrator and a contractor may share
  368  expenses in connection with joint advertising and marketing
  369  campaigns and materials, if the expenses are shared on a
  370  commercially reasonable basis.
  371         (d)A program administrator may not provide any direct cash
  372  payment or other thing of material value to a property owner
  373  explicitly conditioned upon the property owner entering into a
  374  financing agreement. However, a program administrator may offer
  375  programs or promotions that provide reduced fees or interest
  376  rates if the reduced fees or interest rates are reflected in the
  377  financing agreements and are not provided to the property owners
  378  as cash consideration.
  379         (e)A program administrator, contractor, or a third party
  380  may not make any representation as to the tax deductibility of a
  381  financing agreement unless that representation is consistent
  382  with representations, statements, or opinions of the Internal
  383  Revenue Service or an applicable state tax agency with regard to
  384  the tax treatment of non-ad valorem assessments.
  385         (f)A program administrator may not provide to a contractor
  386  engaged in soliciting financing agreements on its behalf any
  387  information that discloses the amount of funds for which a
  388  property owner is eligible for qualifying improvements or the
  389  amount of equity in a property.
  390         (g)For residential properties, a contractor may not
  391  provide a different price for a qualifying improvement financed
  392  under this section than the contractor would provide if the
  393  property owner paid for the improvement in cash.
  394         (15)A program administrator may not make the final payment
  395  to a contractor unless the property owner has signed a
  396  certificate of completion.
  397         (16)(a)The qualifying improvements program must make
  398  available, on its website, an updated list of products that have
  399  been approved by the local government as qualifying
  400  improvements. The list shall, at a minimum, include the
  401  following information for each product on that list:
  402         1.A name or description of the product.
  403         2.Eligibility criteria, including performance thresholds,
  404  certification requirements, and installation criteria.
  405         (b)A product may not be included on the list unless the
  406  product meets one or more standards or certification criteria
  407  established by appropriate federal government agencies or by
  408  credible third-party private organizations.
  409         (c)A program administrator may include additional products
  410  as part of an overall project for qualifying improvements that
  411  are not included in the list of products if the following items
  412  are available:
  413         1.An application process, approved by the local
  414  government, that allows a contractor or property owner to
  415  request a product to be considered as a qualifying improvement;
  416  and
  417         2.Guidelines approved by the local government which the
  418  program administrator will use in reviewing the application for
  419  a custom improvement. The guidelines must identify minimum
  420  requirements needed for approval of a custom improvement.
  421         (18)(8) A local government may enter into a financing
  422  agreement only with the record owner of the affected property.
  423  Any financing agreement entered into pursuant to this section or
  424  a summary memorandum of such agreement must shall be recorded in
  425  the public records of the county within which the property is
  426  located by the sponsoring unit of local government within 5 days
  427  after execution of the agreement. The recorded agreement must
  428  shall provide constructive notice that the assessment to be
  429  levied on the property constitutes a lien of equal dignity to
  430  county taxes and assessments from the date of recordation. An
  431  agreement, including its supporting documents and disclosures,
  432  entered into under this section, does not need to be notarized.
  433         (9)Before entering into a financing agreement, the local
  434  government shall reasonably determine that all property taxes
  435  and any other assessments levied on the same bill as property
  436  taxes are paid and have not been delinquent for the preceding 3
  437  years or the property owner’s period of ownership, whichever is
  438  less; that there are no involuntary liens, including, but not
  439  limited to, construction liens on the property; that no notices
  440  of default or other evidence of property-based debt delinquency
  441  have been recorded during the preceding 3 years or the property
  442  owner’s period of ownership, whichever is less; and that the
  443  property owner is current on all mortgage debt on the property.
  444         (25)The qualifying improvements program must make
  445  available on its website a report by December 31 each year
  446  containing the following information, separated by city, county,
  447  and zip code, and all methodologies and supporting assumptions
  448  or sources relied upon in preparing the report:
  449         (a)The number of qualifying improvements funded.
  450         (b)The aggregate, average, and median dollar amounts of
  451  annual and total qualifying improvements assessments funded.
  452         (c)The percentage, the number, and the dollar value of
  453  qualifying improvements assessments represented by the following
  454  category types:
  455         1.Energy efficiency;
  456         2.Renewable energy; and
  457         3.Wind resistance.
  458         (d)The number of defaulted assessments including the total
  459  number and defaulted amount, the number and dates of missed
  460  payments, the total number of parcels defaulted and years in
  461  default, and the percentage of defaults by total assessments.
  462         (e)The total amount of energy saved, the total dollar
  463  amount of such savings by property owners categorized by
  464  qualifying improvements installed, the total number of energy
  465  savings improvements, and the number of improvements installed
  466  that meet standards of the Energy Star program of the United
  467  States Environmental Protection Agency, including the overall
  468  average efficiency rating of installed products for each
  469  category type specified in paragraph (c).
  470         (f)The total amount of renewable energy produced
  471  categorized by the type of qualifying improvement installed and
  472  the total number of renewable energy installations, including
  473  the average and median system size.
  474         (g)Estimated amount of greenhouse gas emissions
  475  reductions.
  476         (h)Estimated number of jobs created.
  477         (i)The number and percentage of homeowners 60 years of age
  478  or older.
  479         Section 2. This act shall take effect July 1, 2018.