Homeowners’ Associations Must Now Be More Accountable Than Ever to Members

Homeowners’ Associations Must Now Be More Accountable Than Ever to Members

By Theresa McDowell / Published December 2023

Photo by iStockphoto.com/SIphotography

     On October 1, 2023, what is known as the “Homeowners’ Association Bill of Rights” took effect in Florida. This new law aims to reduce fraud and abuse, while increasing transparency and accountability for homeowners’ associations and their respective officers, directors, and management companies.

     In 2022 several current board members as well as former board members and management of South Florida’s Hammocks Community Association were arrested for criminal activity ranging from embezzlement to money laundering and racketeering. Those arrested were largely in positions of power within the Hammocks and were charged with abusing their roles as leaders in the community, using their authority and access to embezzle millions of dollars in community funds and harassing members with whom they had personal grievances. In response to uncovering this web of fraud and abuse, the Florida Legislature began crafting the Homeowners’ Association Bill of Rights, with the goal of revising certain portions of Chapter 720, Florida Statutes, also known as the Homeowners’ Association Act, for the protection of homeowners.

     The original intent of the Bill was to drastically increase penalties for officers and directors who abuse their powers by accepting kickbacks and embezzling funds. Early drafts contemplated severe felony charges and penalties for violators. However, at the close of the legislative process, only misdemeanor penalties were included.

     One of the most important components of the new law is the imposition of criminal penalties for election interference. Advocates of the legislation argue that by ensuring fair elections, the cycle of abuse of power can be cut short. Per §720. 3065, Florida Statutes, fraudulent voting activities include (among other conduct) menacing, threatening, or using bribery or any other corruption to attempt, directly or indirectly, to influence, deceive, or deter a member when the member is voting. This type of activity is punishable as a first-degree misdemeanor. In addition to election tampering provisions, the Florida State 2023 Summary on Legislation Passed outlines other revisions of the new law as follows:

  • Requires all notices for homeowners’ association board meetings to specifically identify the agenda items for the meetings
  • Revises the requirements for the association’s use of a member’s email to send notices, including allowing a member to designate an address different than the property address for all required notices
  • Requires that if a homeowners’ association collects a deposit from a member for any reason, including to pay for expenses that may be incurred as a result of construction on a member’s parcel or other reason for such deposit, such funds must not be comingled with any other association funds, the member may request an accounting of such funds, and the association must remit payment of unused funds within 30 days after completion
  • Provides that an officer, director, or manager who accepts kickbacks is subject to monetary damages under s. 617.0834, F.S., relating to the conditions imposing civil liability on the officers and directors of corporations and associations not for profit
  • Provides that an officer or director must be removed from office, and his or her access to official records denied, if charged with the crimes of forgery of a ballot envelope or voting certificate used in a homeowners’ association election; theft or embezzlement of association funds; destruction of or refusing to allow inspection of association records, if such records are accessible by association members, in furtherance of any crime; or obstruction of justice
  • Requires directors and officers of an association, including a developer-controlled association, to disclose specified activities which may pose a conflict of interest
  • Clarifies that a developer’s appointment of an officer or director does not create a presumption that the officer or director has a conflict of interest with regard to the performance of his or her official duties
  • Revises the notice requirements for imposing and collecting fines, including providing members notice of how to cure a violation, if applicable

     But what does this new law mean for Florida homeowners’ associations? Traditionally, between homeowners’ associations and condominium associations, homeowners’ associations have been far less regulated. This Bill of Rights is another step toward greater regulation of associations of single-family homes and townhomes and steering them in the direction of greater restriction and oversight similar to condominium associations. Associations, directors, and managers must take care, now more than ever, to appropriately notice meetings, clearly communicate violations and remedies to owners whenever possible, not overstep the boundaries and authority of the governing documents, and encourage directors and officers to be above reproach in their conduct. This is especially true in the handling of association funds. Accountability, transparency, and the communication of these tenets will be paramount as the law develops in the future to protect owners against association corruption. If there is any question as to how to manage the association’s funds, communicate agendas or issues to owners, or comply with any other portion of the Homeowners’ Association Act, an association should contact their legal counsel for guidance. 

Theresa McDowell

Senior Associate,  Haber Law

    Theresa McDowell is a senior associate at Haber Law and a member of the firm’s condominium and HOA department. She is a knowledgeable attorney with experience in a broad range of residential and commercial transactions. She has first-hand experience representing both community associations and real estate developers. Theresa has experience in the forming of community associations, including initial drafting of community documents and annexation of community property as well as general day-to-day governance issues, including assisting community association with collections, covenant enforcement, amendments to governing documents, document preservation, and contract drafting and review. For more information, email tmcdowell@haber.law or visit www.haber.law.