While much of the 2017 legislation recently passed into law affects only condominium associations, Senate Bill 39 (a.k.a., the “Estoppel Bill”) affects condominium, homeowners’, and cooperative associations.
In regard to the Estoppel Bill, remember that in addition to the statutorily required information which must be provided in the association’s estoppel (the subject of prior articles which can be viewed at www.rembaumsassociationroundup.com), the association must provide the estoppel within 10 business days of receipt of the request, and if not so provided, a fee cannot be charged. The association must designate on its website a person or entity with a street or e–mail address for receipt of the estoppel certificate request. The estoppel certificate may be completed by any board member, authorized agent, or authorized representative of the association, including any authorized agent, authorized representative, or authorized employee of the association’s management company. While the fees for the estoppel, a rush estoppel, and a delinquent owner estoppel are set out in the legislation, the authority to charge a fee for the preparation and delivery of the estoppel certificate must be established by written resolution adopted by the board or provided by a written management, bookkeeping, or maintenance contract and is payable upon preparation of the certificate. On the face of it, it would appear prudent for every association to adopt such a resolution. At a minimum, doing so should be discussed with the association’s lawyer.
House Bill 6027 also applies to condominium, homeowners’, and cooperative associations. The requirement that an association may not waive the financial reporting requirements for more than three consecutive years was removed from the Statutes. In addition, the ability of an association comprised of fewer than 50 units, or lots, regardless of the annual revenues, to only prepare a report of cash receipts and expenditures in lieu of the more strenuous financial statement requirements was deleted.
Senate Bill 1520 addresses condominium terminations. Importantly, if 5% or more of the total voting interests of the condominium reject the plan of termination, then the termination may not proceed. This threshold used to be 10%.
House Bill 1237 pertains to condominium associations only. Criminal penalties are now in effect as to any officer or director or manager who knowingly solicits, offers to accept, or accepts anything of value or service of value or who receives a kickback. Similarly, criminal penalties are now available in the event of a forged ballot envelope or voting certificate provided, for theft or embezzlement of association funds, and for the destruction or the refusal to allow the inspection or copying of official records.
The association may not hire an attorney who represents the management company of the association.
In regard to suspension of use rights due to an owner’s failure to pay any fee, fund, or other monetary obligation to the association for a period of greater than 90 days, the amount of money due and owing must be at least $1,000 or more and proof of the obligation must be provided to the unit owner at least 30 days before the suspension may take effect.
Excluding timeshare condominiums, a board member, manager, or management company may not purchase a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments or take title by deed in lieu of foreclosure. In addition, the party contracting to provide maintenance or management services to a condominium association managing a residential condominium, post turnover, which is not a timeshare condominium association, or an officer or board member may not purchase a unit at a foreclosure sale resulting from the association’s foreclosure of an association lien for unpaid assessments or take a deed in lieu of foreclosure. If 50% 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 after turnover, which is not a timeshare condominium association, or by an officer or board member of such party, the contract with the party providing maintenance or management services may be canceled by majority vote of the unit owners other than the contracting party for an officer or board member of such party.
As to which records comprise a part of the “official records” of the Association, “bids for materials, equipment or services” are now specifically included.
Renters now have a right to inspect and copy the association’s bylaws and rules. Oddly, this does not extend to other association records, such as the declaration of condominium and the articles of incorporation.
Insofar as providing unit owners a copy of the most recent financial report, the aggrieved unit owner may file a complaint with the Division of Florida Condominiums, Timeshares, and Mobile Homes (the “Division”). Then, the Division may notify the association of the complaint and provide the association five business days to provide the financial report, and if not, then as a penalty, the association may not waive the financial reporting requirements.
A condominium association and its officers, directors, and employees and agents may NOT use a debit card issued in the name of the association or billed directly to the association for the payment of ANY association expense. Doing so, can lead to criminal charges prosecuted as credit card fraud.
Clarification is provided that condominium association board members may serve two-year terms if permitted by the bylaws or articles of incorporation. In addition, a board member may not serve more than four consecutive two-year terms, unless approved by the affirmative vote of two-thirds of the total voting interests of the association or unless there are not enough eligible candidates to fill the vacancies.
There are even changes to the “recall” provisions. In the past, once served with a recall petition, the board is obligated to hold a board meeting within five days, and if it did not certify the recall, then the association was obligated to petition the Division. While the board meeting must still be held within five days, it is no longer incumbent upon the condominium association to notify the Division if it does not certify the recall. Still in effect is the requirement of the board to hold the board meeting within five days to consider whether to deem the recall successful, or not, and if not, then the recall will be deemed effective.
Except for timeshare condominium associations, the condominium association may not 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. However, this does not apply to a service provider in which a board member or officer or relative within the third degree of consanguinity by blood or marriage of a board member or officer, owns less than 1% of the equity shares.
In order to better handle the ever-growing number of condominium association arbitration petitions facing the Division, new provisions are in effect for qualified attorneys to serve as arbitrators. The arbitrator must conduct a hearing within 30 days after being assigned. The failure of such an arbitrator to render a decision within 30 days of the final hearing can lead to the arbitrator’s removal as an arbitrator. There are various requirements to become certified to serve as such an arbitrator.
While new requirements are provided for director and officer conflict of interest situations, they do not apply to timeshare condominium associations. A rebuttable presumption of such a conflict exists if:
1. a director or officer or a relative of a director or officer, enters into a contract for goods or services with the association; or
2. a director or officer, or a relative of a director or an officer, an interest in a corporation, limited liability corporation, partnership, limited liability partnership, or other business entity that conducts business with the association of the process to enter into a contract or other transaction with the association.
If a director or officer or a relative of a director or an officer, proposes to engage in an activity that is a conflict of interest, as described above, the proposed activities must be listed on all contracts and transactional documents related to the proposed activity and must be attached to the meeting agenda. If the board votes against the proposed activity, the director or officer, or the relatives of the director or officer, must notify the board in writing of his or her intention not to pursue the proposed activity or to withdraw from office. If the board finds that an officer or director has violated this provision, then such officer or director shall be deemed to be removed from office vacancy is filled according to general law.
A director or officer or a relative of a director or an officer who is a party to, or has an interest in, any activity that is a possible conflict of interest, as described above, may attend a meeting at which the activity is to be considered by the board and is authorized to make a presentation to the board regarding the activity. After the presentation, the person with the possible conflict of interest must leave the meeting during the discussion of and the vote on the activity. In addition, a director or an officer who is a party to, or has an interest in, the activity must recuse themselves from the vote.
A contract entered into between a director or officer, or a relative of a director or an officer, and the association, that has not been properly disclosed as a conflict of interest or potential conflict of interest is voidable and terminates upon the filing of a written notice terminating the contract with the board of directors which contains the consent of at least 20% of the voting interests of the association.
The legislation also clarifies that the term “relative” means a relative within the third of consanguinity by blood or marriage.
A “receiver” may not exercise any voting rights of the unit owner whose unit is placed in receivership for the benefit of the association.
Importantly, by July 1, 2018, a condominium association with 150 or more units, which does not manage timeshare units, must post digital copies of many official records on the association’s website. The website must be an independent website or a web portal wholly owned and operated by the association. A recorded copy of the declaration of condominium, bylaws, articles of incorporation, and rules, as amended from time to time, must be posted on the website. In addition, the management agreement and all other contracts must be posted, most especially those contracts where a conflict of interest or possible conflict of interest is present. Bids for materials, equipment or services must be on the website for at least one year. The annual budget, financial reports, and proof of director certification requirements must also be on the website. Both unit owner meeting notices and agendas along with board meeting notice and agendas must be posted, too. Finally, the association has an obligation to ensure that those records which are not permitted to be accessible to unit owners are not posted on the website or are properly redacted.
For those following this year’s legislative process, House Bill 653 was vetoed by the Governor. As set forth in his letter vetoing the legislation, the reason for the veto had to do with fire safety opt-out provisions that he indicated appeared to be all the more dangerous given the recent overseas high-rise fire.
Jeffrey Rembaum, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. He is a regular columnist for The Condo News, a biweekly publication and was inducted into the 2012, 2013 & 2014 Florida Super Lawyers. He can be reached at 561-241-4462.