By Kathy Danforth / Published July 2018
After the laws, rumors of laws, and legal proceedings settle down, communities must act based on whatever the new laws and rulings dictate. With many laws taking effect July 1 of this year, it is important to review those that will require immediate change and also take note of those that may apply in circumstances down the road.
Yeline Goin, attorney with Becker and Executive Director of Community Association Leadership Lobby (CALL), states that the main legislative impact on communities is from HB 841, filed by Representative George Moraitis. “A lot of this bill was fixing glitches from last year’s bill,” she notes.
“Last year the legislature adopted language that any condominium managing 150 units or more must post many official records on a website. That deadline was extended from July 1, 2018, to January 1, 2019, and what documents must be on the website was clarified. Under the old law, all contracts had to be posted, though now a list or summary is permitted. Then if an owner wants to look at the contract, they can request it.”
Barbara Stage, attorney with the Law Offices of Stage & Associates PA, explains, “The requirement to post a summary of bids has been changed to allow the posting of actual bids and only those in excess of $500. The requirement to post proposed financial reports to be discussed at meetings has been changed to monthly income-expense statements to be considered at a meeting. Language has been added which would not invalidate any action or decision at a meeting for the failure to post the required information.”
“Term limits were added for condominiums only in the 2017 session,” Goin shares. “The language used was for no more than four, two-year terms, but there was a problem in not addressing one-year terms. Now, a director cannot serve more than eight consecutive years unless it is approved by two thirds of those voting in the election or there are not enough candidates. In last year’s law, a problem was that it required a two-thirds vote of all owners, and it is rare to get that level of participation.”
“Despite the overwhelming amount of discussion outlining the need to determine if the eight-year limit applies when the statute was enacted July 1, 2017, or is retroactive, the Florida legislature failed to clarify this issue,” Stage points out. “The Division of Condominiums has indicated it would interpret the eight-year limit to start when the statute is enacted, but it has yet to be tested.”
A new provision, F.S. 718.113(8), facilitates the use of electric vehicles, though communities are not required to initiate any action. Nicole Kurtz, attorney with Siegfried, Rivera, et al., explains, “Specifically, the new law stipulates that a declaration of condominium may not be enforced to prohibit a unit owner from installing an electric-vehicle charging station at their own cost and within the boundaries of their design-ated parking area. However, an association may require that the installation comply with all applicable building codes, recognized safety standards, and reasonable architectural standards that it adopts. The law also shields condominium associations from construction liens resulting from the installation of charging stations by unit owners, although liens may be filed against the owners installing such stations.
“The new legislation further provides that the installation of electric-vehicle charging stations may not cause irreparable damage to the association’s property, and the electricity consumed on account of the charging station must be separately metered and payable by the unit owner who installed such station.
A Box of Legislative Trail Mix
…concentrated bits of this and that…
Condominiums must comply with a request to inspect records within 10 days. F.S. 718.111(12)
Electronic voting records must be kept for one year. F.S. 718.111(12)
If a unit owner and the Division of Condominiums request the annual financial report and the association does not comply, the association may not waive reporting requirements that year or the next. F.S. 718.111(13)(e)
Documents such as plans, permits, warranties, condominium documents, rules, and minutes must be retained permanently. Also, the association is not liable for accidental disclosure of confidential information. F.S. 718.111(12)(b)
For members opting in for electronic notices, these may be posted on the website with a link sent by email. If regular or special assessments will be discussed, the meeting notice must include the purpose and cost. F.S. 718.112(c)(1) Owners are responsible for removing any filters that might prevent receiving notices (the “spam folder ate it” excuse is terminated). F.S. 718. 112(2)(c)(6)
Directors must designate the location of posted meeting notices. F.S. 718.112(2)(d)(3) Stage reports, “Recent court rulings have required associations to record a resolution of the adopted rule in the county records and to mail a copy to owners within 30 days of recording the rule.”
Condominiums with 5 or fewer units must have at least 3 directors. F.S. 718.112(2)(a)(1)
Details of director recall procedures are provided in F.S. 718.112(2)(j).
To clarify conflicts of interest, sections 718.3026 and 718.3027 were combined. Two thirds of the directors must approve any agreement where a director has a conflict of interest, and that director cannot vote.
Unit owner approval must be obtained before material common area alterations are made. F.S. 718.113(2)(a)
“As the use of electric vehicles continues to grow, progressive-minded condominium association boards of directors that embrace this technology and ‘go green,’ either by installing EV charging stations within their parking garages or by developing a plan of action to administer owners’ requests for the installation and use of such charging stations in line with the new law, may gain a significant marketing edge in providing such convenience to their unit owners.”
Stage points out, “The statute does not address the right to a charging station if the unit owner does not have a limited common element parking area.”
For a homeowners association, Stage notes, “F.S. 720.303(2) has been amended to allow board members to discuss board business by email, but board members may not vote by email.”
The presentation of amended homeowners association documents now must be similar to the requirements for condominiums. “HOAs must use underline (for new language) and strike-through (for deletions) unless the changes are extensive. In that case, a notice of substantial rewording must be provided,” explains Goin. “The amendments must be recorded in the public record for the change to be effective.”
Stage adds, “F.S. 720.306(1)(f) was to provide that an immaterial error or omission in the amendment process will not invalidate an otherwise properly adopted amendment. Without a definition of ‘immaterial,’ we can expect this to be a source of litigation.”
The responsibility for sending notices to the proper address has been shifted to the association, according to Goin. “Normally it has been up to the owner to let the association know of changes in address, but now any notices sent pursuant to 720.306 must be sent to the address on the property appraiser’s website. This puts the onus on the association.”
Regarding elections, the statute was revised to allow HOAs to forgo an election if there are no more candidates than board vacancies, provided that write-ins are not permitted and the opportunity for nominations from the floor is not required. Stage advises, “Watch out for HOAs which have a nominations committee without a provision in the bylaws authorizing nominations from the floor. The HOA could control the outcome of the election by nominating only candidates they like and not nominating more candidates than vacancies.”
Stage reports, “F.S. 720.3085(3)(b) has been revised to require HOAs to accept all payments from owners and allows the HOA to ignore any restrictive endorsements or letters accompanying the payment stating the amount tendered is payment in full.” This clarifies the handling of checks for disputed or partial amounts so the association does not weaken its claims in accepting payment.
Fines are now due and payable within 5 days after they are imposed, and Stage warns, “Watch out for HOAs claiming the payment was not received in a timely manner, or not sending the notice before the fine is due. There is no deadline to provide the notice.” An additional provision is that electronic notices can be sent by facsimile (as well as email) when approved by a member as a means of communication.
HOAs of a certain age should note that changes to the Marketable Record Title Act (MRTA) were added in chapter 720 since HOAs are more attuned to requirements in that chapter. Goin remarks, “Previously, chapter 712 has had language that covenants and restrictions (unless exempted) expire after 30 years unless they are extended before that time. This was adopted in 1963 as a way to extinguish old title transactions and simplify a title search. To preserve the covenants and restrictions only requires a board vote before the 30 years is up, but after that time, it takes a majority of the owners to revitalize the community. Some communities have had restrictions expire, and they didn’t revitalize.”
Stage notes, “The required two-thirds vote of the board and the mailing of the notice of preservation [involved in complying with the MRTA] to members has been deleted. The failure to index the notice of preservation against the lots of the members will not affect the validity of the notice and the restrictions are preserved. Likewise, the revitalization statute in F.S. 720.403-407 has been revised to remove the requirement that a vote for revitalization be done at a meeting and allows revitalization to be done in writing. An owner has one year after expiration to file a court action exempting their property from the revitalization process.”
Jacob Epstein, attorney with Haber Slade, explains certain changes for communities that are pursuing claims due to a construction defect. “In December of 2017, the Florida Supreme Court issued a ruling that will likely expedite the Chapter 558 pre-litigation process for condominium and homeowners associations in construction defect cases, ensuring the involvement of insurance carriers earlier in the Chapter 558 pre-suit process. In Altman Contractors, Inc. v. Crum & Foster Specialty Insurance Co., Case No. SC16-1420, 2017 WL 6379535 (Fla. Dec. 14, 2017), the Florida Supreme Court held that the notice and repair process pursuant to Chapter 558 qualifies as a “suit” pursuant to the language of a typical construction defendant’s general commercial liability (“CGL”) insurance policy. Condominium and homeowners associations can therefore expect a more worthwhile Chapter 558 pre-suit process, as each defendant’s insurance carrier holds great influence and ultimate monetary responsibility for any final settlement.
“Assuming that a defendant’s insurance carrier does not disclaim coverage, construction defendants in 558 lawsuits are typically represented by their carrier’s appointed counsel. Prior to Altman, insurance carriers would commonly delay their appearance in any given case until after a lawsuit was filed pursuant to language in the typical CGL policy. This procedural delay would typically lead to a situation where (i) coverage counsel is not representing the construction defendant during the pre-suit process; and (ii) the final decision maker -— the insurance carrier — has no involvement in the pre-suit process. Therefore, the entire pre-suit process could go by without any involvement by the carrier, who would miss pre-suit inspections, the exchange of documents pursuant to Chapter 558, and any testing conducted prior to the filing of a lawsuit. In the second half of 2018, we will likely see coverage counsel getting involved much earlier in the 558-process, which will expedite pre-suit discovery, will enable the insurance carriers to set their reserves much earlier in the process, and will similarly help facilitate the purpose of Chapter 558, Florida Statutes — to encourage early resolution of construction defect disputes and to streamline the claims process.”
Whatever the changes, it is prudent to consult with an attorney regarding the application to your specific community and situation since what appears to be a loophole may turn out to be a snare. Obtaining a professional opinion, rather than giving it your best shot, is often a large part of performing due diligence.
Yeline Goin is with Becker. For more information, visit www.beckerlawyers.com.
Barbara Stage is with the Law Offices of Stage & Associates PA. For more information, visit www.stagelaw.com.
Nicole Kurtz is with Siegfried, Rivera, Hyman, Lerner, de la Torre, Mars & Sobel. For more information, visit www.srhl-law.com.
Jacob Epstein is with Haber Slade. For more information, visit www.haberslade.com.