What Did the 2014 Legislative Session Bring for Your Community Association, Part 2

by Donna DiMaggio Berger, ESQ. / Published September 2014

Editor’s Note: This is Part II of a two-part series. Part I can be found in the August 2014 issue of FLCAJ.
     Another condominium bill, which passed this session, was HB 425 (Rep. Rodriguez) and SB 440 (Sen. Altman), Relating to Condominiums.

This legislation clarified that the following provisions apply only to residential condominiums:

• The requirement to respond to certified, written inquiries; 
• The prohibition against voting by general proxy; 
• Board member terms; 
• The prohibition of co-owners of a unit serving on the board;
• Legal and financial eligibility requirements for board members;
• The requirement that the board elections take place via written ballot or voting machine; 
• The requirement that new directors be certified within 90 days after being elected or appointed to the board;
• Mandatory nonbinding arbitration;
• Fire sprinkler opt-out provisions; 
• Opting out of the requirements of Section 553.509(2), Florida Statutes, dealing with the Americans with Disabilities Act Standards for Accessible Design; and 
• Hurricane shutter specifications and hurricane protection provisions. 

The foregoing requirements no longer apply to vacation, timeshare, or commercial condominium associations as of July 1, 2014.

MANAGEMENT

Another bill, which was watched closely in the community association industry, was HB 7037 (Civil Justice Subcommittee) and SB 1466 (Sen. Lee), Relating to Residential Communities and Community Association Managers.

This bill added the following activities to the definition of “community association management”:

• Determining the number of days required for statutory notices; 
• Determining amounts due the association; 
• Calculating the votes required for a quorum or to approve a proposition or amendment; 
• Completing forms related to the management of a community association that have been created by statute or by a state agency; 
• Drafting meeting notices and agendas; 
• Calculating and preparing certificates of assessments and estoppel certificates;
• Responding to requests for a certificate of assessment; 
• Negotiating monetary or performance terms of a contract subject to approval by an association;
• Drafting pre-arbitration demands; 
• Coordinating or performing maintenance for real or personal property and other routine services involved in the operation of a community association; and
• Complying with the association’s governing documents and the requirements of law as necessary to perform any of the foregoing. 

The bill also amended Chapters 718, 719, and 720 of the Florida Statutes to provide a statutory form for a release of lien, 30-day pre-lien letter, and 30-day notice of intent to foreclose letter, which will allow managers to prepare and file those documents. (Note: The original bills also included a form for a claim of lien, but that has been removed from the bills).

The bill further created Section 468.4334 of the Florida Statutes to provide that:

• A CAM or a community association management firm are deemed to act as agent on behalf of a community association as principal within the scope of authority authorized by a written contract or under Chapter 468. 
• A CAM or a community association management firm shall discharge duties performed on behalf of the association as authorized by this chapter loyally,skillfully, and diligently; dealing honestly and fairly; in good faith; with care and full disclosure to the community association; and accounting for all funds. 
• A contract between a CAM (or a community association management firm) and a community association may provide that the community association indemnifies and holds harmless the CAM (or the community association management firm) for ordinary negligence resulting from the manager or management firm’s act or omission that is the result of an instruction or direction of the community association. However, such does not preclude any other negotiated indemnity or hold harmless provision. 
• The indemnification may not cover any act or omission that violates a criminal law; derives an improper personal benefit, either directly or indirectly; is grossly negligent; or is reckless, is in bad faith, is with malicious purpose, or is in a manner exhibiting wanton and willful disregard of human rights, safety, or property. 

The foregoing provisions all became effective on July 1, 2014.

REAL PROPERTY

One of the real property issues, which surfaced earlier this year (pardon the pun), pertained to developers retaining subsurface mineral rights unbeknownst to their purchasers. Retaining these rights allows developers (or the entities to whom they sell or transfer these rights) to later drill to remove minerals and other resources long after the property has been purchased.

HB 489 (Rep. Spano) and SB 1032 (Sen. Latvala), Relat-ing to Residential Property Sales/Subsurface Rights became effective on July 1, 2014; this bill addresses the problem by requiring sellers of new dwellings to provide written notification to prospective buyers of the seller’s intent to retain subsurface rights prior to entering into any sales contract. There is now a statutory form notice to be used by sellers in this regard.

Problems with owners flouting association rental restrictions by engaging in short-term vacation rentals have plagued some communities for a while, and a solution became even more remote with a legislative change three years ago, which took control of the issue out of the hands of local government. 

SB 356 (Sen. Thrasher) and HB 307 (Rep. Hutson), Relating to Public Lodging Establishments & Public Service Establishments was originally drafted to address this problem by repealing a measure passed three years ago that exempted vacation rentals from city and local governmental control. The original version of this bill sought to rectify this situation by again granting local government the ability to deal with issues related to these seasonal residences.

However, the vacation rental industry lobbied hard and the bill was amended with the final version once again prohibiting local governments from passing local ordinances prohibiting vacation rentals or regulating the duration of vacation rentals. While other types of regulation would presumably be permitted at the local level, that does not solve the problem of communities having to solve an issue that could be better handled by local government.

This bill became law on July 1, 2014.

INSURANCE

It should come as no surprise that insurance issues always take up a considerable percentage of our legislative session in a geographically vulnerable state like Florida. 

SB 542 (Sen. Brandes), Relating to Flood Insurance was designed to mitigate the Biggert-Waters Flood Insurance Reform Act of 2012, which was expected to increase premiums for many coastal Floridians by attracting more insurance providers to the state. 

HB 1089 (Rep. Raschein), Relating to Citizens Property Insurance Corporation, provides that with respect to wind-only coverage for commercial lines residential condominiums, effective July 1, 2014, a condominium shall be deemed ineligible for coverage if 50 percent or more of the units are rented more than eight times in a calendar year for a rental agreement period of less than 30 days. 

SB 1672 (Banking and Insurance), Relating to Property Insurance, allows surplus lines companies (out of state companies whose rates are not regulated by Florida) to participate in the Citizens clearinghouse program that shops policies in the private market by 2015. Among other things, the bill also prohibits Citizens from covering new multi-peril condominium building policies and delays a ban on Citizens coverage for new construction within coastal areas for one year. 

The number of proposals that actually became law should underscore the fact that it is not only necessary to understand when the shared ownership laws change but equally important to understand the steps your board needs to take to implement those changes each year. As such, it is more important than ever that your board members stay abreast of these changes by attending classes, obtaining and utilizing educational resource material, and choosing the professionals who assist you wisely.