2017 LEGISLATIVE CHANGES

The 2017 Legislative Session was fairly active with respect to issues involving Community Associations. The following is a brief outline of some of the significant changes that became effective July 1, 2017.

Estoppel Certificates: Senate Bill 398: Applies to Condominium, Cooperative & Homeowners’ Associations.

Content and cost limits for estoppel certificates were issues attempted to be addressed several times in the past few years, but this year, SB 398 passed and substantially changed the content and procedure for responding to requests for information when a unit or property within the community is transferring, as well as setting up specific costs for the information. An “estoppel certificate” is defined to be a signed document establishing certain specific facts related to a particular transaction. In the past the estoppel certificate typically consisted of a basic statement of account, notifying the buyer/lender whether the account was current and identifying upcoming or ongoing financial obligations. The new law has the following affects: (a) reduces the time period for responding to a request for an estoppel certificate from 15 days to 10 business days, and if not delivered within 10 business days no fee can be charged for the estoppel; (b) the association’s website, if it exists, must contain the name and street address or e-mail address of the person to whom requests for estoppel certificates are to be sent; and, estoppel certificates must be delivered by hand, mail or e-mail on the date the estoppel is issued.

The estoppel must contain specific information, as follows:

Date of Issuance;
Name of the owner of the property to which the estoppel information pertains;
The property designation and address;
Any assigned parking or garage space;
Contact information for the association’s counsel if the account is in collection;
The amount of the fee for preparation of the estoppel; and,
Identify the person/entity requesting the information.

Assessment Information required to be included:

Payments required on a periodic basis for “regular” assessments, including the required frequency of payment;
Date through which payment has been received;
The date due and amount of the next “regular” payment;
Itemized list of any amounts currently due; and,
An itemization of the amounts to become due while the certificate is pending.

Other Information required:

Disclose the existence and amount of any capital contribution fee;
Whether there are any open violations;
Whether the governing documents require the buyer to be approved and if so, whether the buyer has been approved;
Whether the association has a right of first refusal and exercised it;
A list of and contact information for any other associations governing the property;
Contact information for insurance verification; and,
Contain the signature of an officer or authorized association agent (management, etc.).

An estoppel certificate is effective for 30 days (35 if delivered by regular mail). The fee for an estoppel certificate may not exceed $250 unless (a) the estoppel is requested on an expedited basis and is delivered within 3 days, in which case an additional fee of up to $100 is allowed, or (b) delinquent assessments are owed in which case an additional fee of up to $150 is allowed. The statutorily set fees shall be adjusted every 5 years based on the CPI.

Condominium Crime & Penalties: House Bill 1237: Applies to Condominium Associations

While portions of the bill have been criticized for “criminalizing” certain activities, these initiatives were largely in response to what has been considered as the scathing Miami-Dade grand jury report issued earlier in the year. The report found tremendous abuse associated with elections, conflicts of interest and association records. Records were purposely withheld in some cases and modified in others. The bill emphasizes that forgery of ballot envelopes or voting certificates is a crime punishable by law. Destruction of or the refusal to allow inspection or copying of an official record of a condominium association within the time periods required by law in furtherance of any crime is punishable as tampering with physical evidence or as obstruction of justice.

Kickbacks are specifically prohibited and could result in criminal penalties if accepted by condominium association officers, director and/or CAMs.

Condominium election ballot and voting certificate forgery could result in criminal penalties.

Theft of condominium funds, and destruction or refusal to allow access to official records of a condominium in furtherance of a crime are all subject to criminal penalties.

New conflict provisions are added. Under the new law the following is prohibited:

An association may not hire an attorney who represents the management company of the association.
A board member, manager, or management company may not purchase a unit foreclosed as a result of the association’s lien (or take title by deed in lieu of foreclosure).
The association cannot employ or contract with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer, or a relative within the third degree of consanguinity by blood or marriage of a board member or officer. (This does not apply if the board member or officer [or relative as described] owns less than 1 percent of the equity shares.)
An officer or board member of an association’s contract provider of maintenance or management services is likewise precluded from purchases a unit at the association’s lien foreclosure sale (or take title by deed in lieu).

Cancellation – Majority Ownership Contract
If 50 percent or more of the units in the condominium are owned by a party contracting to provide maintenance or management services to an association managing a residential condominium, (or an officer or board member of such), the contract may be cancelled by a majority vote of the non-interested unit owners.

Disclosure and Termination of Contract
Includes new conflict of interest provisions for directors and officers, and their relatives. Any activity that may reasonably be construed to be a conflict of interest must be disclosed.

A rebuttable presumption of a conflict of interest exists if any of the following occurs without prior notice:

A director or officer, or a relative, enters into a contract for goods and services with the association; or,
A director or an officer, or a relative that holds an interest in a corporation, limited liability corporation, partnership, limited liability partnership, or other business entity that conducts business with the association or proposes to enter into a contract or other transaction with the association.

A proposal for any service in which a director or officer, or a relative to the association must be clearly disclosed on all contracts and transactional documents and those actual documents must be attached to the meeting agenda.

If the board votes against the contract or service, the interested party must notify the board in writing that he/they will not continue to pursue the relationship, failing which the interested director must withdraw from office. If the board finds that an officer or a director has violated this provision, they are automatically removed from office.

Any contract, agreement or other relationship that has not been properly disclosed, is voidable and terminates after written notice from the board of directors supported by the consent (petition) of at least 20 percent of the voting interests of the association.
(For purposes of the conflict of interest provisions, the term “relative” means a relative within the third degree of consanguinity by blood or marriage.)

Records Access – Renters are now permitted access to certain records.

Website for Condominiums with 150 or more Units – Condominium associations with more than 150 units will be required to post (upload) copies of a whole host of documents on websites created for this purpose. The website must requires updating throughout each year. Condominium associations without websites or use of websites, web portals or web pages will need to create them or hire third-parties to do so. Among other documents, the website must contain:

The recorded declaration with all amendments;
The recorded bylaws with all amendments;
The articles of incorporation with all amendments and current rules;
All management contracts, leases or other contracts where the association is a party of which unit owners have obligations;
Summaries of bids for materials, equipment or services;
The adopted annual budget and any proposed budget to be considered at the annual meeting;
The year-end financial reports required by statute;
Each director’s self-certification or evidence of participation in a Division approved educational program;
All contracts or transactions between the association and any director, officer, corporation, firm or any other entity in which an association director is financially interested;
Conflict of interest disclosures; and,
Notices and agendas for both membership and board meetings.

Condominium associations that operate fewer than 50 units and homeowners associations of less than 50 parcels must comply with the financial reporting requirements based upon the total revenues of the association (although another bill permits the members to waive financial reporting requirements).

Annual condominium financial reports must be provided within 5 days of request by a unit owner, and specific remedies and enforcement by the Division are provided for failure to meet this requirement.

A condominium association, its officers, directors, employees, and agents may not use a debit card issued in the name of the association or billed directly to the association for payment of any association expense. Doing so can be prosecuted as credit card fraud.

A board member of a condominium association may not serve for more than 4 consecutive two-year terms unless approved by an affirmative vote of two-thirds of the total voting interests of the association, or there are not enough eligible candidates to fill the vacancies. (The new law does not contain limitations if directors serve one year terms.)

The recall provisions have been substantially revised – the board will no longer have the obligation or opportunity to vote whether or not to certify the recall. Recalled board members are immediately removed and could challenge the recall by filing a petition for arbitration at their personal expense.

Associations must furnish the Division of Florida Condominiums, Timeshares and Mobile Homes with the names of all financial institutions with which it maintains and accounts on an annual basis.

The right of a condominium association to suspend voting rights of an owner for non-payment of a monetary obligation to the association is limited to a monetary obligation of more than $1,000, and proof of such non-payment must be provided to the unit owner at least 30 days before such suspension takes effect.

Arbitrator qualifications have been strengthened as well as an intent to speed up the arbitration process.

The foregoing is general in nature, not intended to be an exhaustive and complete rendition of all of the legislative changes for 2017, nor should it be considered legal advice. If you have any specific questions regarding any of the items set forth herein, as well as any other legislative change, please contact this office.