2018 Legislative Guide 007 - kayebenderlaw.com · Condominium Director Recall: A recall is only...

Legislative Guide-2018-

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Kaye Bender Rembaum • Broward 954.928.0680 • Palm Beach 561.241.4462 • KBRLegal.com

1. Condominium AssociationsHouse Bill 841 containing this year’s communityassociation legislation (“HB 841” or “Bill”) hasmade its way through the 2018 Florida legislativesession and was signed into law by GovernorScott on March 23, 2018. As the Bill is now signedinto law, it became effective on July 1, 2018.

Condominium Official Record-keeping:

Certain official records must be permanentlymaintained from the inception of theassociation, including the following:

(i) a copy of the plans, permits, warranties, andother items provided by the developer;

(ii) a copy of the recorded declaration ofcondominium and all amendments thereto

(iii) a copy of the recorded bylaws and allamendments thereto;

(iv) a certified copy of the articles of incorporationand all amendments thereto;

(v) a copy of the current rules; and

(vi) all meeting minutes.

All other official records of the association mustbe maintained within the state for at least sevenyears, unless otherwise provided by general law.Notwithstanding, all election records, includingelectronic election records, must only bemaintained for one year from the election.

Condominium Website: As a result of the 2017legislative session, the website postingrequirement applies to condominiumscontaining 150 or more non-timeshare units. The

deadline to post digital copies of the governingdocuments, association contracts, budget,financial report, and other required documentson the association’s website is extended toJanuary 1, 2019. Of the documents to be postedto the website, a list of bids received by theassociation within the past year for contractsentered into by the association and any monthlyincome and expense statement must also beposted.

Notwithstanding this requirement, the failure topost these documents on the website does not,in and of itself, invalidate any action or decisionof the association. Additionally, in complying withthe posting requirement, there is no liability fordisclosing information that is protected orrestricted unless such disclosure was made witha knowing or intentional disregard of theprotected or restricted nature of suchinformation.

2018 Legislative Guide for Community Associations

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Condominium Financial Reporting: In theevent an association fails to comply with anorder by the Division of Florida Condominiums,Timeshares, and Mobile Homes to provide anowner with a copy of the financial report withina specified amount of days, then the associationis prohibited from waiving the financial reportingrequirement for the fiscal year in which theowner’s initial request for a copy was made andfor the following fiscal year, too.

Condominium Posting Board MeetingNotices: Board meeting notices must be postedon the condominium property, in a specificlocation designated by the board. (Previously, anassociation was permitted to post on thecondominium property or the association property.)

Condominium Board Meeting Notices: Noticeof any board meeting in which regular or specialassessments against unit owners are to beconsidered must specifically state thatassessments will be considered and provide theestimated cost and description of the purposesfor such assessments.

Condominium Meeting Notices:The association may adopt a rule forconspicuously posting meeting notices andagendas on the association’s website for at leastthe minimum period of time for which a noticeof a meeting is also required to be physicallyposted on the condominium property. This rulemust include a requirement that the associationsend an electronic notice in the same manner asa notice for a meeting of the members, including

a hyperlink to the website where the notice isposted. (As yet, it is not patently clear whether thisis in place of the existing “posting ina conspicuous place" requirement or in lieu of it.The safer course of action is to do both.)

Condominium Director Term: A director canserve a term longer than one year if permittedby the bylaws or articles of incorporation.However, a director cannot serve more thaneight consecutive years, unless approved bytwo-thirds of all votes cast in the election orunless there are not enough eligible candidatesto fill vacancies on the board. This part of thelegislation replaces and fixes last year’sridiculous new law that a director could not servemore than four consecutive two-year terms. (Itappears that based on this year’s legislativechanges, directors can serve any length of term solong as authorized by the articles or bylaws. Atpresent, directors can only serve one or two yearterms depending on the provisions of the articlesand bylaws. Also, staggered terms remainpermitted.)


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Condominium Director Recall: A recall is onlyeffective if it is facially valid. (Of course, as whatthe term of art “facially valid” is intended to meanis left out of the legislation.) In any event, if therecall is determined to be facially invalid by theboard, then the unit owner representative of therecall effort may file a petition challenging theboard’s determination on facial validity. Similarly,a recalled board member may file a petitionchallenging the facial validity of the recall effort.If the arbitrator determines that the recall wasinvalid, the petitioning board member isimmediately reinstated and the recall is null andvoid. In some instances, the arbitrator mayaward prevailing party attorney fees.

Condominium Material Alterations:In situations where the declaration as amendeddoes not specify the procedure for approvingmaterial alterations or substantial additions tothe common elements or association property,the already statutorily required approval ofseventy-five percent of the total voting interestsof the association must now be obtained beforethe material alterations or substantial additionsto the common elements or association propertyare commenced. (Clearly then, if the declarationis silent as to the procedure for material alterationsor substantial additions to common elements orassociation property, this new legislation impliesthat a curative vote of the members to approve thechanges is a thing of the past. It does not makesense to force the association to restore theproperty to its prior condition where the membersmight vote to approve the change. Hopefully, thiswill be fixed in next year’s legislative proposals.)

Condominium Electric Vehicles: A declarationof condominium or restrictive covenant may notprohibit or be enforced so as to prohibit any unitowner from installing an electric vehicle chargingstation within the boundaries of the unit owner'slimited common element parking area.Moreover, the board may not prohibit a unitowner from installing an electric vehicle chargingstation for an electric vehicle within theboundaries of his or her limited commonelement parking area. The unit owner is entirelyresponsible for the charging station, including itsinstallation, maintenance, utilities charges (whichmust be separately metered), insurance, andremoval if no longer needed.

The association may impose certainrequirements upon the installation andoperation of the charging station, including, forexample, that the unit owner comply with allsafety requirements and building codes, that theunit owner comply with reasonable architecturalstandards adopted by the association governingcharging stations, and that the unit owner usethe services of a licensed and registeredelectrical contractor or engineer knowledgeablein charging stations. Labor performed on ormaterials furnished for the installation of acharging station may not be the basis for filing aconstruction lien against the association, butsuch a lien may be filed against the unit owner.


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Condominium Director Conflicts of Interest:The process allowing a director to enter into acontract with the director’s association hasbecome better organized. Disclosurerequirements that were set out in section718.3026(3), Florida Statutes were deleted fromthat location and relocated to section 718.3027,Florida Statutes. In brief, directors and officersof non-timeshare condominiums must discloseto the board any activity that could bereasonably considered a conflict of interest. Arebuttable presumption of such a conflict existsif:

i) directors or officers of the association (includingtheir relatives) enter into a contract for goods orservices with the association;

ii) directors or officers of the association (includingtheir relatives) holds an interest in a corporation.Limited liability corporation, partnership or otherbusiness entity that conducts business with theassociation.

In the event of such a conflict, then the proposedactivity and all relevant contracts must beattached to the meeting agenda and therequirements of section 617.0832, FloridaStatutes must be adhered to, as well. Therelevant provisions of section 617.0832, FloridaStatutes follow:

"No contract or other transaction between acorporation and one or more of its directors or anyother corporation, firm, association, or entity inwhich one or more of its directors are directors orofficers or are financially interested shall be either

void or voidable because of such relationship orinterest, because such director or directors arepresent at the meeting of the board of directors ora committee thereof which authorizes, approves, orratifies such contract or transaction, or because hisor her or their votes are counted for such purpose,if:

i) The fact of such relationship or interest isdisclosed or known to the board of directors orcommittee which authorizes, approves, or ratifiesthe contract or transaction by a vote or consentsufficient for the purpose without counting the votesor consents of such interested directors;

ii) The fact of such relationship or interest isdisclosed or known to the members entitled to voteon such contract or transaction, if any, and theyauthorize, approve, or ratify it by vote or writtenconsent; or

iii.) The contract or transaction is fair andreasonable as to the corporation at the time it isauthorized by the board, a committee, or themembers.”


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In addition, section 718.3027, Florida Statutes,provides that the disclosures required by thissection must be set out in the meeting minutes,and the contract must be approved by two-thirdsof all of the directors present (excluding theconflicted director). At the next membershipmeeting, the existence of the contract must bedisclosed to the members and then may becanceled by a majority vote of the memberspresent. If the contract is canceled, theassociation is only liable for the reasonable valueof the goods and services provided up to thetime of cancellation and is not liable for anytermination fee, liquidated damages, or otherform of penalty for such cancellation.

Finally, in the event of a failure to disclose aconflict or potential conflict, the contract isvoidable and terminates upon the filing of awritten notice terminating the contract whichcontains at least 20 percent of the votinginterests of the association.

(Note that section 718.112(2)(p) Florida Statutes,pertaining to service provider contracts still providesthat "an association, which is not a timesharecondominium association, may not employ orcontract with any service provider that is owned oroperated by a board member or with any person whohas a financial relationship with a board member orofficer, or a relative within the third degree ofconsanguinity by blood or marriage of a boardmember or officer. This paragraph does not apply toa service provider in which a board member or officer,or a relative within the third degree of consanguinityby blood or marriage of a board member or officer,owns less than 1 percent of the equity shares.")

Condominium Electronic Notice: A unit ownerwho consents to receiving notices by electronictransmission is solely responsible for removingor bypassing filters that block receipt of massemails sent to members on behalf of theassociation in the course of giving electronicnotices.

Condominium Grievance Committee:The grievance committee appointed by theboard to conduct hearings for fines and use rightsuspensions for violations of the governingdocuments must be comprised of at least threemembers who are not officers, directors, oremployees of the association, or the spouse,parent, child, brother, or sister of an officer,director, or employee. (The restriction against notallowing someone living with the director fromserving on the committee was removed.) The fineor suspension can only be imposed if approvedby a majority of the committee. If a fine isapproved, the fine payment is due five days afterthe date of the committee meeting at which thefine is approved. (This seems illogical in that theoffending member may not have received therequired written confirmation of the fine from theassociation.) The association must providewritten notice of the approved fine orsuspension by mail or hand delivery.


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2. Cooperative AssociationsHouse Bill 841 - Effective July 1, 2018

Cooperative Official Records: The officialrecords must be made available to a unit ownerwithin ten working days after receipt of writtenrequest by the board or its designee.

Cooperative Director/Officer Eligibility: In aresidential cooperative association of more thanten units, co-owners of a unit may not serve asmembers of the board at the same time unlessthe co-owners own more than one unit or unlessthere are not enough eligible candidates to fillthe vacancies on the board at the time of thevacancy.

Cooperative Director/Officer FinancialDelinquency: A director or officer more than 90days delinquent in the payment of any monetaryobligation due to the association shall bedeemed to have abandoned the office, creatinga vacancy in the office to be filled according tolaw.

Cooperative Bulk Communication Contracts:Cooperatives are now lawfully permitted to enterinto bulk communication contracts which caninclude internet services and such expenses aredeemed common expenses of the cooperative.

Cooperative Electronic Notice: A unit ownerwho consents to receiving notices by electronictransmission is solely responsible for removingor bypassing filters that block receipt of massemails sent to members on behalf of theassociation in the course of giving electronicnotices.

Cooperative Grievance Committee:The grievance committee appointed by theboard to conduct hearings for fines and use rightsuspensions for violations of the governing

documents must be comprised of at least threemembers who are not officers, directors, oremployees of the association, or the spouse,parent, child, brother, or sister of an officer,director, or employee. (The restriction against notallowing someone living with the director fromserving on the committee was removed.) The fineor suspension can only be imposed if approvedby a majority of the committee. If a fine isapproved, the fine payment is due five days afterthe date of the committee meeting at which thefine is approved. (This seems illogical in that theoffending member may not have received therequired written confirmation of the fine from theassociation.) The association must providewritten notice of the approved fine orsuspension by mail or hand delivery.

Cooperative Board Meeting Notices: Notice ofany board meeting in which regular or specialassessments against unit owners are to beconsidered must specifically state thatassessments will be considered and provide theestimated cost and description of the purposesfor such assessments.

Cooperative Meeting Notices: The associationmay adopt a rule for conspicuously postingmeeting notices and agendas on theassociation’s website for at least the minimumperiod of time for which a notice of a meeting isalso required to be physically posted on thecondominium property. This rule must includea requirement that the association send anelectronic notice in the same manner as a noticefor a meeting of the members, including ahyperlink to the website where the notice isposted. (As yet, it is not patently clear whether thisis in place of the existing “posting ina conspicuous place" requirement or in lieu of it.The safer course of action is to do both.)


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3. Homeowners’ AssociationsHouse Bill 841 - Effective July 1, 2018

HOA/Cooperative Board Email Use: Membersof the board may use email as a means ofcommunication but may not cast a vote on anassociation matter via email.

HOA Fines: If a fine levied by the board isapproved by the grievance committee, the finepayment is due five days after the date of thecommittee meeting at which the fine isapproved. (This seems illogical in that theoffending member may not have received therequired written confirmation of the fine from theassociation.)

HOA Amendments: A proposal to amend thegoverning documents must contain the full textof the provision to be amended with newlanguage underlined and deleted languagestricken. However, if the proposed change is soextensive that underlining and striking throughlanguage would hinder, rather than assist, theunderstanding of the proposed amendment,the following notation must be insertedimmediately preceding the proposedamendment: "Substantial rewording. Seegoverning documents for current text." Anamendment to a governing document iseffective when recorded in the public records ofthe county in which the community is located.(In other words, HOA proposed amendments mustbe presented in the same manner as proposedcondominium amendments have been required todo for years and years.) Furthermore, the definitionof “governing documents” in the HOA Act includesrules and regulations and, therefore, amendments

to rules and regulations must now be recorded inthe public records, too).

HOA Election by Acclamation: If an election isnot required because there are either an equalnumber or fewer qualified candidates thanvacancies exist, and if nominations from thefloor are not required and write-in nominationsare not permitted, then such qualifiedcandidates shall commence service on theboard of directors, regardless of whether aquorum is attained at the annual meeting. (Thisis a major change!)

HOA Application of Payments: The applicationof assessment payments received by theassociation is applicable regardless of anypurported accord and satisfaction or anyrestrictive endorsement, designation, orinstruction placed on or accompanying apayment.


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4. Marketable Record Title ActHouse Bill 617. Approved by Governor March21, 2018. Effective October 1, 2018.

It is clarified that Part III of Chapter 720, FloridaStatutes, is intended to provide mechanisms forthe revitalization of covenants or restrictions forall types of communities and propertyassociations and is not solely limited toresidential communities. In plain English, thismeans that commercial associations can bothpreserve and revitalize their covenants. As such,and as you will read below, the terms used inother statutory sections affected by this changeare also changed. A new summary process topreserve the covenants is also included in thelegislation.

Short Title – Chapter 712 of the Florida Statutesis given the short title, “Marketable Record TitleAct.”

Definitions – Terms and definitions were addedand revised to the Marketable Record Title Act.

The new term “community covenant orrestriction” is defined to mean any agreement orlimitation contained in a document recorded inthe public records of the county in which aparcel is located which subjects the parcel toany use restriction that may be enforced by aproperty owners' association or authorizes aproperty owners' association to impose acharge or assessment against the parcel or theparcel owner.

The term “homeowners’ association” is replacedby the term “property owners’ association” whichterm also includes a corporation or other entity

responsible for the operation of property inwhich the voting membership is made up of theowners of the property and/or their agents andmembership is a mandatory condition ofproperty ownership.

The definition for the term “parcel” is revised toremove the requirement that the real propertybe residential and be subject to exclusiveownership.

Finally, the definition for the term “covenant orrestriction” was simplified to remove referenceto enforcement of such covenant or restrictionby a homeowners’ association or the FloridaDepartment of Environmental Protection andauthorization of a homeowners’ association toimpose a charge or assessment against theparcel or the parcel owner.

Preservation of Covenants Process – Anyperson claiming an interest in land or other rightsubject to extinguishment under the MarketableRecord Title Act will be able to preserve suchright by filing a written notice in accordance withthe Marketable Record Title Act at any timeduring the 30-year period immediately followingthe effective date of the root of title. As to aproperty owners’ association, preservation maybe accomplished in one of three ways:

i) by filing a written notice in accordance with theMarketable Record Title Act, which is a processcurrently available;


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ii) by filing a summary notice in accordance withsection 720.3032(2), Florida Statutes, (a newstatute); or

iii) by filing an amendment to a covenant orrestriction indexed under the legal name of theproperty owners’ association which referencesthe recording information of the covenant orrestriction being preserved.

In the event a summary notice or amendmentfiling is not “indexed” to the current owners ofthe property affected by the preservation, thevalidity of the summary notice or theamendment to protect the covenants orrestrictions is not affected.

An association is not required to mail a seven-day notice to the members providing thestatement of marketable title action for thesummary notice.

At the first board meeting, excluding theorganizational meeting, which follows the annualmeeting of the members, the board mustconsider the desirability of filing notices topreserve the covenants or restrictions affectingthe community or association fromextinguishment under the Marketable RecordTitle Act and to authorize and direct theappropriate officer to file notice in accordancewith section 720.3032, Florida Statutes. This wasadded as a constant reminder to Boards to preventinadvertent extinguishment of existing covenants.

As to the existing “notice” method to preserve,the requirements of what must be in the notice

have been clarified and revised to reflect andaccommodate the newly defined terms.

As to the new method of preservation bysummary notice, a new section 720.3032(2),Florida Statutes, is created to provide forpreservation by the recording of a summarynotice containing the following information:

● The legal name of the association.

● The mailing and physical addresses of theassociation.

● The names of the affected subdivision platsand condominiums or, if not applicable, thecommon name of the community.

● The name, address, and telephone numberfor the current community associationmanagement company or communityassociation manager, if any.

● Indication as to whether the associationdesires to preserve the covenants orrestrictions affecting the community orassociation from extinguishment under theMarketable Record Title Act.


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● A listing by name and recording informationof those covenants or restrictions affectingthe community which the association desiresto be preserved from extinguishment.

● The legal description of the communityaffected by the covenants or restrictions,which may be satisfied by a reference to arecorded plat.

● The signature of a duly authorized officer ofthe association, acknowledged in the samemanner as deeds are acknowledged forrecord.

This new section provides a form which satisfiesthe required information, as set out above. Theoriginally executed notice must be recorded inthe official records of the applicable circuit courtclerk or county. A copy of the notice, as recorded,must be included with the next meeting noticeor other mailing to all members.Revitalization of Covenants – A new section712.12 is added to the Marketable Record TitleAct regarding the revitalization of covenants byparcel owners who are not subject to ahomeowners’ association.

This new section sets out its own defined terms,including the term “parcel,” which, unlike for thepreservation of covenants, is required to beresidential and subject to exclusive ownership.

The term “covenant or restriction,” which isdefined to mean any agreement or limitationimposed by a private party and not required bya governmental agency as a condition of adevelopment permit which is contained in adocument recorded in the public records of thecounty in which a parcel is located and which

subjects the parcel to any use restriction thatmay be enforced by a parcel owner.

This new section allows for the revitalization ofcovenants by parcel owners who are not subjectto a homeowners’ association by the samerevitalization procedures as applicable to ahomeowners’ association, except that there is noneed to reference a homeowners’ association orarticles of incorporation or bylaws of ahomeowners’ association.

The approval necessary to revitalize must be inwriting, and not at a meeting.

An organizing committee, as opposed to thepresident and secretary of a homeowners’association, may execute the revitalizedcovenants or restrictions; and the communityname in the covenants or restrictions areindexed as the grantee and the parcel ownersare indexed as the grantors.

Newly created owner rights - The owner of aparcel that has ceased to be governed bycovenants or restrictions as of October 1, 2018may commence an action by October 1, 2019 fora judicial determination that the covenants orrestrictions did not govern that parcel as ofOctober 1, 2018 and that any revitalization ofsuch covenants or restrictions as to that parcelwould unconstitutionally deprive the parcelowner of rights or property. Revitalization ofcovenants or restrictions against the parcel aftersuch judicial determination is not affectiveagainst the parcel, and the rights of the parcelowner so recognized may not be subsequentlyaltered by revived covenants or restrictionswithout the consent of the affected parcel owner.


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5. Tax Deed SurplusHouse Bill 1383. Signed by Governor on April 6,2018. Effective July 1, 2018 (although it appliesto tax deed applications filed on or after October1, 2018).

From time to time, community associations areserved with a notice from the Clerk of Court thata unit or lot owner has not paid their propertytaxes and, as a result, the home will be sold at asale with open bidding. By way of oversimplification, delinquent tax obligations areauctioned to buyers that pay the delinquent taxon behalf of the owner and charge the ownerinterest. The buyers receive what is known as atax certificate. After several years, the taxcertificate holder can apply for a tax deed. Thetax certificate holder can bid at the tax deed salein the amount of the delinquent tax.

If the winning bid at the tax deed sale is in excessof the tax certificate holder’s bid amount, thenany excess amount of surplus proceeds, afterthe tax certificate holder is made whole, will beheld by the Clerk of Court. The Clerk of Courtsmust now issue, to all known lienholders, anotice to file a claim for the surplus. The Clerk ofCourt determines the priority of the claims based

on the information provided by the claimantsand pays out from the surplus accordingly. A newhard deadline of 120 days from the date of theClerk of Court’s notice of surplus is now imposedto file a claim for surplus funds, except for claimsby a property owner. (Believe it or not, there wasno such deadline in the past.) The newrequirement will apply to tax deed applicationsfiled on or after October 1, 2018. Since manydeclarations impose a lien for assessments, itremains to be seen whether an association willneed to record an assessment lien to ensureentitlement to surplus, or if the declaration itselfwill suffice for receiving notice of surplus.


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