2013 HOA Legislation Highlights

Last week the House of Representatives and the Senate passed Bill 7119 providing many needed amendments to Florida Statute 720, the statute regulating homeowner associations. We are now waiting for the governor to sign the bill into law, which would go into effect July 1, 2013.

One of the most important amendments to the statute removes a director or officer from the Board of Directors of an association if the director or officer has been accused of committing a crime of theft or embezzlement involving the association. The bill also includes an amendment to Chapter 468, which regulates community association managers ("CAM"), and calls for discipline by the Department of Business & Professional Regulation ("DBPR") if the CAM commits violations of Florida Statutes 720, 718 and 719, if the CAM contracts on behalf of an association with any entity in which the CAM has a financial interest without disclosure, obtaining a license or certification by fraud, misrepresentation or concealment, being convicted of or pleading no contest to a felony, violation of any DBPR order or rule, committing gross misconduct or gross negligence, or any other violation of Fla. Stat. 468.436.

Directors and officers of a HOA board, if the bill is signed by the governor, will now be required to certify in writing they have read the Declarations, Bylaws, Articles of Incorporation and any other rules and policy of the HOA or complete a certificate attesting they have completed a state-approved educational course. The bill also requires directors and officers to disclose their financial interest in any entity submitting a bid for a contract with the HOA and if a member objects to the contract, the contract must be put to a vote by the membership for approval. Additional language requires the HOA to insure and bond anyone handling HOA funds prohibits kickbacks. Yes, good old common sense needed to be put into the HOA statutes, but I wonder if those people affected by this law will actually care to stop accepting kickbacks!

Associations would now be required to keep the official records within 45 miles of the community or within the county where the community is located. (I predict we will have some legal battles over the use of the word "or" here.) There should never be a choice in a statute. Associations, at their discretion, can provide the records electronically by posting them on the Internet or allowing members to read them on a computer screen and then requesting a printed copy. If the HOA has a copy machine it must provide the copies if the request is 25 pages or less. The association could still charge 25 cents per page (down from 50 cents) for copies made with the HOA copier or, if the request exceeds 25 pages, the actual cost of copies plus any reasonable hourly fee NOT TO EXCEED $20 PER HOUR) for a vendor or employee to make the copies. No personnel charges are allowed if the request is under 25 pages. The HOA is also required to provide the member with a copy of the vendor's invoice for outside copying services. The new bill requires the HOA to allow members to scan documents with any portable device they may have or otherwise make electronic copies.

The new bill would require a developer to designate reserve funds by components rather than one general fund if the developer provides for reserves.

The new bill would require associations to register with DBPR. This is the first step to future legislation to regulate HOAs. Currently no one knows for certain how many HOAs are operating in the State of Florida.

The new bill would also require associations to provide copies of an amendment to its members within 30 days of recording an amendment.

One provision I do not like is HOAs would no longer be required to allow members to be nominated from the floor at elections if there is a process for nominations prior to the election. The HOAs will not be required to hold an election if the number of candidates is equal to or less than the vacancies. While this would save the HOAs money because of the expense involved, it takes away some of the power of the members if they cannot nominate at the election and they don't realize until the election not enough people stepped forward to be elected. Expect a lot of improper conduct with this one. If ever the members of associations needed to be motivated to be involved with their HOA, this provision of the bill should do it.

The new bill has provisions for forcing the turnover of control of the association to the members if the developer abandons its responsibility to maintain or complete amenities, files for Chapter 7 bankruptcy, loses or gives up title to common areas through foreclosure or pre-foreclosure, or a receiver is appointed. The bill also provides the members the right to elect at least one board member when 50% of the properties are no longer owned by the developer and also limits the rights of the developer to amend the governing documents.

Finally, the bill would not wipe out any past due assessments on a property if the HOA takes title to the property to foreclose its own lien. Any buyer would be liable for the past due assessments; however, any assessments accruing while the HOA has title are the responsibility of the HOA.

If you support this bill, please send Governor Rick Scott an email asking him to sign the bill into law. His email address is rick.scott@eog.myflorida.com.