Florida Senate - 2021 CS for SB 1490
By the Committee on Community Affairs; and Senator Pizzo
1 A bill to be entitled
2 An act relating to investments by condominium
3 associations; amending s. 718.111, F.S.; requiring
4 condominium associations to maintain a copy of their
5 investment policy statement as an official record;
6 requiring associations that make certain investments
7 to prepare financial statements in a specified manner;
8 authorizing associations to invest funds in specified
9 investment products; requiring certain association
10 boards to obtain prior approval before investing funds
11 in certain investment products, annually develop an
12 investment policy statement, and select an investment
13 adviser who meets specified requirements; authorizing
14 investment fees and commissions to be paid from
15 invested reserve funds or operating funds; requiring
16 investment advisers to invest certain operating or
17 reserve funds in compliance with a specified rule;
18 requiring investment advisers to act as association
19 fiduciaries; providing construction; requiring that
20 certain funds be held in specified accounts; requiring
21 associations to provide their investment adviser with
22 certain documents at least annually; requiring
23 investment advisers to annually review such documents
24 and provide the association with a portfolio
25 allocation model that meets specified requirements;
26 providing that portfolios may not contain certain
27 investments; requiring investment advisers to annually
28 provide to the association a certain certification and
29 to periodically submit certain reports; requiring that
30 certain funds be made available to associations within
31 a certain timeframe after they submit a written or
32 electronic request; amending s. 718.3026, F.S.;
33 exempting registered investment advisers from certain
34 provisions relating to contracts for products and
35 services; providing an effective date.
37 Be It Enacted by the Legislature of the State of Florida:
39 Section 1. Paragraph (a) of subsection (12) and subsection
40 (13) of section 718.111, Florida Statutes, are amended, and
41 subsection (16) is added to that section, to read:
42 718.111 The association.—
43 (12) OFFICIAL RECORDS.—
44 (a) From the inception of the association, the association
45 shall maintain each of the following items, if applicable, which
46 constitutes the official records of the association:
47 1. A copy of the plans, permits, warranties, and other
48 items provided by the developer pursuant to s. 718.301(4).
49 2. A photocopy of the recorded declaration of condominium
50 of each condominium operated by the association and each
51 amendment to each declaration.
52 3. A photocopy of the recorded bylaws of the association
53 and each amendment to the bylaws.
54 4. A certified copy of the articles of incorporation of the
55 association, or other documents creating the association, and
56 each amendment thereto.
57 5. A copy of the current rules of the association.
58 6. A book or books that contain the minutes of all meetings
59 of the association, the board of administration, and the unit
61 7. A current roster of all unit owners and their mailing
62 addresses, unit identifications, voting certifications, and, if
63 known, telephone numbers. The association shall also maintain
64 the e-mail addresses and facsimile numbers of unit owners
65 consenting to receive notice by electronic transmission. The e
66 mail addresses and facsimile numbers are not accessible to unit
67 owners if consent to receive notice by electronic transmission
68 is not provided in accordance with sub-subparagraph (c)3.e.
69 However, the association is not liable for an inadvertent
70 disclosure of the e-mail address or facsimile number for
71 receiving electronic transmission of notices.
72 8. All current insurance policies of the association and
73 condominiums operated by the association.
74 9. A current copy of any management agreement, lease, or
75 other contract to which the association is a party or under
76 which the association or the unit owners have an obligation or
78 10. Bills of sale or transfer for all property owned by the
80 11. Accounting records for the association and separate
81 accounting records for each condominium that the association
82 operates. Any person who knowingly or intentionally defaces or
83 destroys such records, or who knowingly or intentionally fails
84 to create or maintain such records, with the intent of causing
85 harm to the association or one or more of its members, is
86 personally subject to a civil penalty pursuant to s.
87 718.501(1)(d). The accounting records must include, but are not
88 limited to:
89 a. Accurate, itemized, and detailed records of all receipts
90 and expenditures.
91 b. A current account and a monthly, bimonthly, or quarterly
92 statement of the account for each unit designating the name of
93 the unit owner, the due date and amount of each assessment, the
94 amount paid on the account, and the balance due.
95 c. All audits, reviews, accounting statements, and
96 financial reports of the association or condominium.
97 d. All contracts for work to be performed. Bids for work to
98 be performed are also considered official records and must be
99 maintained by the association.
100 12. Ballots, sign-in sheets, voting proxies, and all other
101 papers and electronic records relating to voting by unit owners,
102 which must be maintained for 1 year from the date of the
103 election, vote, or meeting to which the document relates,
104 notwithstanding paragraph (b).
105 13. All rental records if the association is acting as
106 agent for the rental of condominium units.
107 14. A copy of the current question and answer sheet as
108 described in s. 718.504.
All other written records of the association not
110 specifically included in the foregoing which are related to the
111 operation of the association.
112 16. A copy of the inspection report as described in s.
114 16. 17. Bids for materials, equipment, or services.
115 17. A copy of the investment policy statement adopted
116 pursuant to sub-subparagraph (16)(b)2.
117 18. All other written records of the association not
118 specifically included in the foregoing which are related to the
119 operation of the association.
120 (13) FINANCIAL REPORTING.—Within 90 days after the end of
121 the fiscal year, or annually on a date provided in the bylaws,
122 the association shall prepare and complete, or contract for the
123 preparation and completion of, a financial report for the
124 preceding fiscal year. Within 21 days after the final financial
125 report is completed by the association or received from the
126 third party, but not later than 120 days after the end of the
127 fiscal year or other date as provided in the bylaws, the
128 association shall mail to each unit owner at the address last
129 furnished to the association by the unit owner, or hand deliver
130 to each unit owner, a copy of the most recent financial report
131 or a notice that a copy of the most recent financial report will
132 be mailed or hand delivered to the unit owner, without charge,
133 within 5 business days after receipt of a written request from
134 the unit owner. The division shall adopt rules setting forth
135 uniform accounting principles and standards to be used by all
136 associations and addressing the financial reporting requirements
137 for multicondominium associations. The rules must include, but
138 not be limited to, standards for presenting a summary of
139 association reserves, including a good faith estimate disclosing
140 the annual amount of reserve funds that would be necessary for
141 the association to fully fund reserves for each reserve item
142 based on the straight-line accounting method. This disclosure is
143 not applicable to reserves funded via the pooling method. In
144 adopting such rules, the division shall consider the number of
145 members and annual revenues of an association. Financial reports
146 shall be prepared as follows:
147 (a) An association that meets the criteria of this
148 paragraph shall prepare a complete set of financial statements
149 in accordance with generally accepted accounting principles. The
150 financial statements must be based upon the association’s total
151 annual revenues, as follows:
152 1. An association with total annual revenues of $150,000 or
153 more, but less than $300,000, shall prepare compiled financial
155 2. An association with total annual revenues of at least
156 $300,000, but less than $500,000, shall prepare reviewed
157 financial statements.
158 3. An association with total annual revenues of $500,000 or
159 more shall prepare audited financial statements.
160 (b)1. An association with total annual revenues of less
161 than $150,000 shall prepare a report of cash receipts and
163 2. A report of cash receipts and disbursements must
164 disclose the amount of receipts by accounts and receipt
165 classifications and the amount of expenses by accounts and
166 expense classifications, including, but not limited to, the
167 following, as applicable: costs for security, professional and
168 management fees and expenses, taxes, costs for recreation
169 facilities, expenses for refuse collection and utility services,
170 expenses for lawn care, costs for building maintenance and
171 repair, insurance costs, administration and salary expenses, and
172 reserves accumulated and expended for capital expenditures,
173 deferred maintenance, and any other category for which the
174 association maintains reserves.
175 (c) An association may prepare, without a meeting of or
176 approval by the unit owners:
177 1. Compiled, reviewed, or audited financial statements, if
178 the association is required to prepare a report of cash receipts
179 and expenditures;
180 2. Reviewed or audited financial statements, if the
181 association is required to prepare compiled financial
182 statements; or
183 3. Audited financial statements if the association is
184 required to prepare reviewed financial statements.
185 (d) Unless an association invests funds pursuant to
186 paragraph (16)(b), and only if approved by a majority of the
187 voting interests present at a properly called meeting of the
188 association, an association may prepare:
189 1. A report of cash receipts and expenditures in lieu of a
190 compiled, reviewed, or audited financial statement;
191 2. A report of cash receipts and expenditures or a compiled
192 financial statement in lieu of a reviewed or audited financial
193 statement; or
194 3. A report of cash receipts and expenditures, a compiled
195 financial statement, or a reviewed financial statement in lieu
196 of an audited financial statement.
198 Such meeting and approval must occur before the end of the
199 fiscal year and is effective only for the fiscal year in which
200 the vote is taken, except that the approval may also be
201 effective for the following fiscal year. If the developer has
202 not turned over control of the association, all unit owners,
203 including the developer, may vote on issues related to the
204 preparation of the association’s financial reports, from the
205 date of incorporation of the association through the end of the
206 second fiscal year after the fiscal year in which the
207 certificate of a surveyor and mapper is recorded pursuant to s.
208 718.104(4)(e) or an instrument that transfers title to a unit in
209 the condominium which is not accompanied by a recorded
210 assignment of developer rights in favor of the grantee of such
211 unit is recorded, whichever occurs first. Thereafter, all unit
212 owners except the developer may vote on such issues until
213 control is turned over to the association by the developer. Any
214 audit or review prepared under this section shall be paid for by
215 the developer if done before turnover of control of the
217 (e) If an association invests funds pursuant to paragraph
218 (16)(b), the association must prepare financial statements
219 pursuant to paragraphs (a) and (b).
220 (16) INVESTMENT OF ASSOCIATION FUNDS.—
221 (a) Unless otherwise prohibited in the declaration, and in
222 accordance with s. 718.112(2)(f), an association, including a
223 multicondominium association, may invest any funds in one or any
224 combination of investment products described in this subsection.
225 (b) If an association invests funds in any type of
226 investment product other than a depository account described in
227 s. 215.47(1)(h), the association must meet all of the following
229 1. The board must obtain prior approval by a majority vote
230 of the unit owners or all nondeveloper voting interests at a
231 duly called meeting of the association before investing funds in
232 investment products other than a depository account described in
233 s. 215.47(1)(h).
234 2. The board must develop a written investment policy
235 statement and such statement must be annually approved during a
236 budget meeting. An investment policy statement must, at minimum,
238 a. Liquidity;
239 b. Safety;
240 c. Yield;
241 d. Short-term and long-term goals;
242 e. Authorized investments;
243 f. The mix of investments allowed; and
244 g. The limits of authority relative to investment
246 3. The board must select an investment adviser who is
247 registered under s. 517.12 and who is not related by affinity or
248 consanguinity to any board member or unit owner. Any investment
249 fees and commissions may be paid from the invested reserve funds
250 or operating funds. The investment adviser selected by the board
251 shall invest any funds not deposited into a depository account
252 described in s. 215.47(1)(h) by the board and shall comply with
253 the prudent investor rule in s. 518.11. The investment adviser
254 shall act as a fiduciary to the association in compliance with
255 the standards set forth in the Employee Retirement Income
256 Security Act of 1974 at 29 U.S.C. s. 1104(a)(1)(A)-(C). In case
257 of conflict with other provisions of law authorizing
258 investments, the investment and fiduciary standards set forth in
259 this subparagraph shall prevail.
260 4. At least once each calendar year, the association shall
261 provide the investment adviser with the association’s investment
262 policy statement, the most recent reserve study report or a good
263 faith estimate disclosing the annual amount of reserve funds
264 which would be necessary for the association to fully fund
265 reserves for each reserve item, and the financial reports
266 prepared pursuant to subsection (13). The investment adviser
267 shall annually review these documents and provide the
268 association with a portfolio allocation model that is suitably
269 structured to match projected reserve fund and liability
270 liquidity requirements. There must be at least 36 months of
271 projected reserves in cash or cash equivalents available to the
272 association at all times.
273 (c) Portfolios managed by the investment adviser may
274 contain any type of investment necessary to meet the objectives
275 in the investment policy statement; however, portfolios may not
276 contain stocks, securities, or other obligations that the State
277 Board of Administration is prohibited from investing in under
278 ss. 215.471, 215.4725, and 215.473 or that state agencies are
279 prohibited from investing in under s. 215.472, as determined by
280 the investment adviser.
281 (d) The investment adviser shall:
282 1. Annually provide the association with a written
283 certification of compliance with this section; and
284 2. Submit monthly, quarterly, and annual reports to the
285 association which are prepared in accordance with investment
286 industry standards.
287 (e) Any principal, earnings, or interest managed under this
288 subsection must be available at no cost or charge to the
289 association within 15 business days after delivery of the
290 association’s written or electronic request.
291 Section 2. Paragraph (a) of subsection (2) of section
292 718.3026, Florida Statutes, is amended to read:
293 718.3026 Contracts for products and services; in writing;
294 bids; exceptions.—Associations with 10 or fewer units may opt
295 out of the provisions of this section if two-thirds of the unit
296 owners vote to do so, which opt-out may be accomplished by a
297 proxy specifically setting forth the exception from this
299 (2)(a) Notwithstanding the foregoing, contracts with
300 employees of the association, and contracts for attorney,
301 accountant, architect, community association manager, timeshare
302 management firm, engineering, registered investment adviser, and
303 landscape architect services are not subject to the provisions
304 of this section.
305 Section 3. This act shall take effect July 1, 2021.