Condominium Associations

Florida Legislature

HOA House Bill 1203 Becomes Law

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House Bill 1203 approved by the Florida Legislature and signed by the Governor of Florida is a mixed bag of 44 pages of new laws affecting Homeowners Associations that will become effective on 7/1/24.

House Bill 1203 is a large and wordy bill covering numerous topics concerning the governance and operation of Homeowners Associations (not Condos- they got House Bill 1021 which was reviewed a few weeks ago). This review is not to go over every change made by the Bill but rather to highlight the changes in no particular order that can be of more importance to most Homeowners Associations. Again, a few overzealous folks in a few isolated HOA’s with some bad actors in their community apparently persuaded their State Legislatures to blindly sponsor and run this bill through the Legislature so that all the well run HOA’s in the State get to suffer from the one off wrongdoings.

OFFICER, DIRECTOR MANAGER CRIMINAL PENAL TIES:

Any Office, Director or Manager who solicits, offers to accept or accepts anything or service of value from any persons providing or proposing to provide goods or services to the Association, or a kickback, without paying consideration for it, commits a third­ degree felony and shall be deemed to be removed from office (excepted is small gifts associated with a trade show or educational program).

Any Office, Director or Manager who knowingly, wilfully and repeatedly violates any of the statutory requirements to provide access to inspect and obtain copies of Association records to a unit owner or an owner’s authorized representative, with an intent to cause harm to an owner, commits a second-degree misdemeanor and shall be deemed removed from office. Repeatedly is defined as two or more violations within a 12 month period.

Any person who knowingly and intentionally defaces or destroys accounting records that are required by this chapter to be maintained during the period for which such records are required to be maintained, or who knowingly or intentionally defaces or destroys accounting records that are required to be maintained during the period required to be maintained, or who intentionally fails to create or maintain accounting records that are required to be created or maintained, with the intent of causing harm to the association or one or more of its members commits a first-degree misdemeanor.

Any person who will fully and knowingly refuses to release or otherwise produce association records, with the intent to avoid or escape detection, arrest, trial, or punishment for the commission of a crime, or to assist another person with such avoidance or escape commits a felony of the third-degree.
Use of an Association debit card for an expense that has not been properly pre­-approved by the Board and reflected in the written minutes or the written budget, even if otherwise a valid Association expense is the commission of theft under Florida Statutes. Depending upon the amount of the theft, it will be punished as a first, second or third degree felony or misdemeanor.

Numerous acts involving Association elections are each a first-degree misdemeanor. Including making a wilfully false affidavit; fraudulently seeking to change a ballot, ballot enveloper, vote or voting certificate; using force or violence or any “tactic of coercion or intimidation: or bribery, menace, threat, or “any other corruption” to try to influence a group of unit owner’s vote; seeking to corruptly influence a vote by giving or promising “anything of value” to someone, other than a wearable campaigning advertisement of nominal value or food at an election rally or aiding an election fraud offender to avoid consequences.

In addition to the present actions providing grounds for an Officer or Director being deemed removed from office (including being charged or indicted for felony theft or embezzlement of Association funds or property), the removal grounds include the above new crimes listed above, as well as forgery of a ballot envelope or voting certificate used in an election and failure to timely provide a unit owner with access to an Association record to inspect or obtain a copy, or the destruction of an Association record which is accessible to unit owners. Repeat violations are not required for not providing the records access.

While a criminal charge is pending, the person is prohibited from serving as a Director or Officer, or having access to official records of any Condominium Association except by a court order.

MANDATORY MANAGEMENT DUTIES:

A Manager or Management Company for an HOA must now attend in person at least one membership or Board Meeting of an Association annually and must provide to the members of the HOA (which the HOA must also post on its website) the name and contact information for each manager or management company representative assigned to the HOA, such persons’ hours of availability and a summary of the duties for which each such person is responsible (this info must be updated within 14 business days of any change).

MANAGER CONTINUING EDUCATION:

Of the 10 hours of continuing education requirement for CAM’s, 5 hours must now pertain specifically to HOA’s and 3 of such hours must be related to record keeping.

ASSOCIATION RECORDS:

HOA’s of 100 or more parcels must post a long list of its records on its website or make them available through a mobile device app. That includes timely notice of membership and Board meetings, with agendas. The posted notices of membership meetings must also include any item to be voted on at the meeting. The notices of Board meetings must include any document required for the meeting (such as proposed contracts to be voted on).

The HOA’s website and any app must include a section accessible to owners and employees only by a user name and password. The law does not state what must be included in the protected portion of the website other than that the protected section must contain the official documents of the association.
The Association cannot post confidential and inaccessible to owners’ access information on the website or app.

The Association must adopt written rules which govern the method or policy for retaining its records, including the retention time periods, which rules must be made available to parcel owners through the website or app.

If the Association receives a subpoena for records from a law enforcement agency, the association must provide a copy of such records or otherwise make the records available for inspection and copying within 5 business days after receipt of the subpoena. The Association must assist a law enforcement agency in its investigation to the extent permissible by law.

ANNUAL FINANCIAL REPORTING:

Unit owners may only vote to reduce the level of annual financial reporting every other year now.

DEBIT CARDS:

An Association and 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 the payment of any Association expense. Credit cards are stilled allowed.

OWNERS REQUEST FOR ACCOUNTING OF SUMS DUE:

A parcel owner may make a written request to the board for a detailed accounting of any amounts he or she owes to the association related to the parcel, and the board shall provide such information within 15 business days after receipt of the written request. After a parcel owner makes such written request to the Board he or she may not request another detailed accounting for at least 90 days.

Failure by the Board to respond within 15 business days to such a written request for a parcel accounting constitutes a complete waiver of any outstanding fines of the person who requested such accounting which are more than 30 days past due for which the association has not given prior written notice of imposition of the fines. The waiver of fines applies only to fines and not apply to assessments or other sums due to the Association.

ELECTRONIC VOTING:

It has been clarified that a unit owner may consent to participate in electronic voting “electronically” rather than only “in writing”.

ARCHITECTURAL REVIEW:

A notice of denial by an Association to an owner “for the construction of a structure or other improvement on a parcel must include specification of the rule or covenant relied upon by the Association and the specific aspect of the improvement which does not conform to that covenant or rule.

PROHIBITED RESTRICTIONS:

The Association can only restrict such things as artificial turf, boats, flags, recreational vehicles, vegetable gardens or clotheslines from being located or installed on a unit parcel if they would be visible from the parcel’s frontage, an adjacent parcel, common area or community golf course.
The Association may not restrict pickup trucks in the owner’s driveway or elsewhere that the owner or tenant, guest or invitee has a right to park under state, county, or city regulation.

The Association may not restrict the parking of a work vehicle of the owner or tenant, guest or invitee, regardless of official insignia or visible designation, in the owner’s driveway. Excepted work vehicles the Association can still restrict are non-governmental vehicles weighing more than 26,001 pounds or has three or more axles. Excepted from the large vehicle exception which the Association must also allow is “race care transports” (obvious constituent or lobbyist special cave out).

In addition to Associations not being able to restrict parking of law enforcement vehicles, now it cannot also restrict vehicles used by firefighters, . EMT’s, and paramedics (first responder vehicles).

Associations cannot restrict an owner from using a contractor or worker solely because the contractor or worker is not on the Association’s preferred vendor list.
Associations can no longer levy a fine or suspension of use of common area use rights for leaving garbage receptacles at the curb or end of the driveway within 24 hours before or after the designated garbage collection day or time.

Associations can no longer levy a fine or suspension of use of common area use rights for leaving holiday decorations or light on a structure or other improvement on a parcel longer than indicated in the governing documents, unless such decorations or lights are left up for longer than 1 week after the association provides written notice of the violation to the parcel owner.

ENFORCEMENT FINES AND SUSPENSIONS:

The 14 day minimum notice to an owner of an intent to impose an enforcement fine or suspension of common area use rights must be in writing and must now include a statement of the right to a hearing, date and location of the hearing and a description of the violation and action required to cure it.
The hearing before a fining or suspension committee must now be held within 90 days of the issuance of that notice.

The fining or suspension committee may hold the hearing by telephone or other electronic means (Zoom) and if so the notice of the hearing must state so.
If the owner cures the violation before the hearing, a fine or suspension shall not be imposed.

After a hearing, the notice of fine or suspension levied must state how the owner may cure the violation, how the suspension may be fulfilled and when the fine must be paid {not sooner than 30 days). This notice must be provided to the owner not later than 7 days after the hearing.

If the violation is cured after the post notice hearing, then the fine or suspension may not be imposed. So the post hearing notice should probably state a deadline to cure the violation (such as 30 days) in order to negate the fine or suspension.

Attorney’s fees and costs incurred after the deadline to cure or pay the fine in the post hearing notice may be awarded to the Association, but not those incurred prior to that date. This would assume court action would be needed to collect the fine or enforce a suspension where the court could award prevailing party attorney’s fees.

MANDATORY DIRECTOR EDUCATION:

Previously, a new Director could choose between attending a Director Education class or sign a certificate that the Director has read the condominium documents. Now both are required for new and existing Directors by June 30, 2025. New Directors will have 90 days from the election or appointment. The education requirement is valid for 4 years from the date of the certificate and must be repeated for any Board service after that. Directors of Associations must complete at least 4 hours of continuing education annually.

Florida Legislature

Condo House Bill 1021 Becomes Law

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House Bill 1021 approved by the Florida Legislature and signed by the Governor of Florida on 6/14/24, is a mixed bag of laws affecting Condominium Associations that will become effective on 7 /1 /24.

House Bill 1021 is an extensive bill covering numerous topics concerning the governance and operation of Condominium Associations (not HOA’s- they got House Bill 1203 which will be reviewed at a later date). This review is not to go over every change made by the Bill but rather to highlight the changes in no particular order that can be of more importance to most Condominium Associations. Well it look like the East Coast of Florida strikes again with a few disgruntled owners selling to their Legislatures some overwhelming and burdensome new rules and regulations that are now forced on all Condominium Associations in the State to suffer apparently just because of a few large Condominiums who may have had some bad apple Managers, Directors or Officers over there. Sounds like one bad apple is spoiling the whole bunch.

HURRICANE PROTECTION:

Rather than just having to have hurricane shutter specifications on file, a Condominium Association must now have “hurricane protection” specifications which can include hurricane shutters, impact glass, code compliant windows or doors or other type of code compliant hurricane protection. The Board may adopt color, style, and other factors deemed relevant by the Board which may include adhering to the existing unified external appearance of the building scheme.

In addition to allowing the Association to install hurricane protection within unit boundaries with the approval of a majority of the owners, the law now allows the Association to require unit owners to make the installations with the same majority vote of the owners or if such requirement is contained in the Declaration. Those who already have the same type of hurricane protection previously installed by the owner and are current code compliant are not required to install new until the useful life of their existing protection has been reached or their protection could damage the common elements or units.

If hurricane protection needs to be removed so the Association can maintain, repair or replace other condominium property for which the Association is responsible for, the Association can decide if the removal and replacement work is to be done by the Association or the unit owner with costs reimbursed by the Association.

OFFICER, DIRECTOR MANAGER CRIMINAL PENAL TIES:

Any Office, Director or Manager who solicits, offers to accept or accepts anything or service of value from any persons providing or proposing to provide goods or services to the Association, without paying consideration for it, except in connection with a trade fair or education program, or a kickback, commits a third-degree felony and shall be deemed to be removed from office.

Any Office, Director or Manager who knowingly, wilfully and repeatedly violates any of the statutory requirements to provide access to inspect and obtain copies of Association records to a unit owner or an owner’s authorized representative, with an intent to cause harm to an owner, commits a second-degree misdemeanor and shall be deemed removed from office. Repeatedly is defined as two or more violations within a 12 month period.

Any person who knowingly or intentionally defaces or destroys accounting records that are required by this chapter to be maintained during the period for which such records are required to be maintained, or who knowingly or intentionally defaces or destroys accounting records that are required to be maintained during the period required to be maintained, or who knowingly or intentionally fails to create or maintain accounting records that are required to be created or maintained, with the intent of causing harm to the association or one or more of its members commits a first-degree misdemeanor and shall be deemed removed from office.
Any person who will fully and knowingly refuses to release or otherwise produce association records, with the intent to avoid or escape detection, arrest, trial, or punishment for the commission of a crime, or to assist another person with such avoidance or escape commits a felony of the third-degree and shall be deemed removed from office.

Use of an Association debit card for an expense that has not been properly pre­-approved by the Board and reflected in the written minutes or the written budget, even if otherwise a valid Association expense is the commission of theft under Florida Statutes.

Numerous acts involving Association elections are each a first-degree misdemeanor. Including making a wilfully false affidavit; fraudulently seeking to change a ballot, ballot enveloper, vote or voting certificate; using force or violence or any “tactic of coercion or intimidation: or bribery, menace, threat, or “any other corruption” to try to influence a group of unit owner’s vote; seeking to corruptly influence a vote by giving or promising “anything of value” to someone, other than a wearable campaigning advertisement of nominal value or food at an election rally or aiding an election fraud offender to avoid consequences.

In addition to the present actions providing grounds for an Officer or Director being deemed removed from office (including being charged or indicted for felony theft or embezzlement of Association funds or property), the removal grounds include the above new crimes listed above, as well as forgery of a ballot envelope or voting certificate used in an election and failure to timely provide a unit owner with access to an Association record to inspect or obtain a copy, or the destruction of an Association record which is accessible to unit owners. Repeat violations are not required for not providing the records access.

While a criminal charge is pending, the person is prohibited from serving as a Director or Officer, or having access to official records of any Condominium Association except by a court order.

MANAGEMENT RECORDS TRANSFER:

When a management contract is terminated, the manager must turn over all Association records to a new management company within 20 days. Penalty for non­compliance is the manager subject to a CAM license suspension and a civil penalty of $1,000 a day up to ten business days.

MANAGEMENT CONFLICTS OF INTEREST:

Management Companies, Manager, or any Directors, Officers or other Person with a financial interest in the Management Companies or a defined relative thereof, must disclose in writing any conflict of interest, including a contract or business with the Association for other than management services.

In such instances, if the bid for goods or services exceeds $2,500 (other than Association management services), the Association must solicit multiple competitive bids from other providers. Disclosure of the conflict must be listed on all contracts and transactional documents related to the proposed activity and disclosed in agenda text and attachments and meeting minutes. Board approval of a contract or transaction with a conflict requires approval of 2/3rds of the Directors present, and disclosure at the next members meeting unless the contract is disclosed in the management services contract. A violation allows the Association to cancel the contract for management services without penalty and subjects the manager or the management company to license discipline.

ASSOCIATION RECORDS:

Added to the list of official Association records accessible to unit owners include all invoices, transaction receipts, or deposit slips that substantiate any receipt or expenditure of funds by the Association, copy of all building permits and copy of all satisfactorily completed board member educational certificates.

The official records must be maintained in a manner that facilitates inspection of the records by a unit owner. In the event that the records are lost, destroyed, otherwise unavailable, the obligation to maintain official records includes a good faith obligation to recover those records as may be reasonably possible.
The Association may fulfill its obligation to provide access to Association records if the requested records are posted on the Association’s website, or are available for download through an application on a mobile device, and the Association directs that the records be accessed in that manner.

In response to a written request to inspect records, the Association must simultaneously provide a checklist to the requestor of all records made available for inspection and copying. The checklist must also identify any of Association’s official records that were not made available to the requestor. The checklist must be maintained for 7 years.

An Association which operates a condominium with 25 units or more must post on its website or through a mobile device an extremely long list of Association records and notices which must be constantly updated.

ANNUAL FINANCIAL REPORTING:

Unit owners may only vote to reduce the level of annual financial reporting every other year now.

BOARD MEETINGS:

If the Association operates a condominium with more than 10 units, the Board must meet at least quarterly and must include on the agenda an opportunity for Association members to ask questions with respect to reports on the status of construction or repair projects, status of revenues and expenditures during the current fiscal year, and other issues affecting the condominium. There is no requirements that anyone answer the questions. This is in addition to the right of members to comment on agenda items at any Board meeting.

If a board meeting agenda item relates to the approval of a contract for goods or services, a copy of the contract must be provided with the notice, made available for inspection and copying upon a written request from a unit owner, or made available on the association’s website or through an application that can downloaded on a mobile device.

MANDATORY DIRECTOR EDUCATION:

Previously, a new Director could choose between attending a Director Education class or sign a certificate that the Director has read the condominium documents. Now both are required for new and existing Directors by June 30, 2025. New Directors will have 90 days from the election or appointment. The education requirement is valid for 7 years from the date of the certificate and must be repeated for any Board service after that. The education course must last at least 4 hours.

Condominium Associations

“Surfside” Condo Bills SB 4-D and SB 154 are Law of the Land

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Florida Senate Bill 154, approved by the Florida Legislature on 5/3/23 and signed by the Governor of Florida on 6/9/23, tweaks Florida Senate Bill 4-D that became law on 3/26/22 in response to the collapse of the Surfside hi-rise in Miami.

Senate Bill 4-D requires new mandatory milestone structural inspections, structural integrity reserve studies and the removal of waiver of certain reserves for condominium buildings by 12/31/24. Recently approved Senate Bill 154 made changes to Senate Bill 4-D this year. We will again review SB-4-D and show the changes to it enacted this year by SB-154 in underlined below.

MILESTONE STRUCTURAL INSPECTION:

For condominium or cooperative buildings three (3) stories or more in height, by December 31st of the year in which the building reaches thirty (30) years old [twenty five

(25) years old for buildings that the local enforcement agency determines that local circumstances. including environmental conditions such as proximity to salt water should be 25 years located within three (3) miles from the coastline], and every ten (10) years thereafter, a Milestone Structural Inspection must be performed by a licensed architect or engineer. Excepted from having to do these inspections are 3 story buildings or less that only house single-family, two family, or three-family residences.

If the building’s certificate of occupancy was issued on or before July 1, 1992, the buildings initial Milestone Structural Inspection must be performed before 12/31/24. If thirty (30) years is reached between 1/1/2022 and 13/21/24 the inspection must be performed before 12/31/25

A local enforcement agency (City or County) must provide written notice of the required Milestone Inspection to the Association and the Association then has 180 days to complete Phase One of the Milestone Inspection. Once the local enforcement agency has provided notice to the Association the Association must notify the owners within 14 days after receipt of the written notice and provide a date that the milestone inspection must be completed. The 180 day clock starts after the owners have received the notice from the Association. The local enforcement agency may extend the date the by which the initial Milestone Inspection must be completed by a showing of good cause by the Condo or Co-op Association that the inspection cannot be timely completed if the Association has entered into a contract with an architect or engineer to perform the inspection and the inspection cannot reasonably be completed before the deadline or other circumstances to justify an extension.

Phase One of the Milestone Inspection requires the architect or engineer to perform a visual inspection of the building, including the major structural components, and provide a qualitative assessment of the structural conditions of the building. If the architect or engineer finds no sign of substantial structural deterioration to any building components, then Phase Two of the inspection is not required and the professional doing the inspection then submits its inspection report to the local enforcement agency.

However, if substantial structural deterioration is found (substantial structural distress that negatively affects a building’s general structural condition and integrity and does not includes surface imperfections), then Phase Two of the Milestone Inspection must be performed. This inspection may be as extensive or as limited as necessary to fully assess areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use and to recommend a program for fully assessing and repairing distresses and damaged portions of the building. If a phase two inspection is required, within 180 days after submitting a phase one inspection report, the architect or engineer performing the phase 2 inspection must submit to the local enforcement agency a phase two progress report with a timeline for completion of the phase two inspection.

Upon completion of the Phase One or Phase Two inspections, the inspection professional must submit a sealed copy of the inspection report, with a summary, findings, and recommendations for repairs, to the Association and the local building official with jurisdiction. The Association is also required to distribute the summary to each unit owner and post a copy of the summary in a conspicuous place on the property within 45 days after receiving the applicable inspection report.

Such repairs must be commenced within 365 days after receiving the Phase Two inspection report and the Association must provide the local enforcement agency with proof that repairs have been scheduled or commenced and if Association fails to provide such the local enforcement agency must review and determine if the building is unsafe for human occupancy.

The Association is responsible for all costs associated with the inspection. If the officers or directors of an association wilfully and knowingly fail to have a Milestone Inspection performed, as required, such failure is deemed a breach of the officers’ and directors’ fiduciary duties to the owners.

STRUCTURAL RESERVE STUDY:

For condominium and cooperative buildings three (3) stories or more high, for associations existing on or before July 1, 2022 and before a developer can turnover an association to its members, a Structural Integrity Reserve Study must be completed before December 31, 2024. However, if an extension has been granted by the local enforcement agency for completion of the Milestone Structural Inspection, then the Structural Integrity Reserve Study can be completed with the Milestone Structural Inspection and then no later than 12/31/2026. (So, if an extension is granted by the local enforcement agency for the Milestone Inspection to be completed after 12/31/24, then so can the initial Structural Integrity Reserve Study to either sometime in 2025 or 2026 depending upon the length of the extension granted.)

The Structural Integrity Reserve Study shall include a study, at a minimum, of the roof, structure, including load-bearing walls primary structural members and primary structural systems, floor, foundation, fire protection systems, plumbing, electrical systems, waterproofing, exterior painting, windows and exterior doors and any other items that have a deferred maintenance expense or replacement cost exceed $10,000 the failure of which to replace or maintain would have a negative effect on these listed items (items for which reserve funding cannot be waived).

The Study must be performed by a qualified person and the visual inspection portion must be performed by a licensed architect or engineer or a person certified as a reserve specialist or professional reserve analyst by the Community Associations Institute or the Association of Professional Reserve Analysts. The Study must identify each item of the condominium property being visually inspected common areas inspected, the estimated remaining useful life, and the estimated replacement cost or deferred maintenance expense of each item of the area inspected, and provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense by the end of the estimated useful life of the area inspected.

If an association fails to complete a Structural Integrity, as required, such failure will be considered a breach of an officers’ or directors’ fiduciary duty to unit owners.

Effective 12/31/24, the members of a unit owner controlled association may not determine to provide no reserves or less reserves than required by the Structural Integrity Reserve Study for reserve items that cannot be waived as discussed above)

In addition, an association may not vote to use reserve funds identified in the Structural Integrity Reserve Study, or any interest accruing thereon, for any other purposes other than for the reserves’ intended purposes as identified in the Study for those reserve items that cannot be waived as discussed above. All other reserve items the owners could vote to waive funding by a majority vote of the owners. The Structural Integrity Reserve Study may recommend that reserves do not need to be maintained for any item for which an estimate of useful life and an estimate of replacement cost cannot be determined, or the study may recommend a deferred maintenance expense amount for such item. The Structural Integrity Reserve Study may recommend that reserves for replacement costs do not need to be maintained for any item with an estimated remaining useful life of greater than 25 years, but the study may recommend a deferred maintenance expense amount for such time.

Sellers of Units must provide copies of the Milestone Inspections and Structural Integrity Reserve Studies if completed or status of same if not completed with particular wording and in conspicuous type for all contracts entered into after 12/31/2024. After providing same, the Buyers will have 3 Days to void the sales contract if desired.

 

 

Condominium Associations

Do you need to have a “physical place” for your association meetings?

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During the early Covid times many Associations moved their board and members meetings to Zoom or to Telephone Conference under emergency powers granted by the Governor and the Legislature to Condominium and Homeowners Associations.

For Condominium Associations, Section 718.1265(1)(a), Florida Statues and for Homeowner’s Associations, Section 720.316(1)(a), Florida Statutes state that if a State of Emergency has been called in the area encompassed by the association, the board of directors may “Conduct board meetings, committee meetings, elections, or membership meeting, in whole or in part by telephone, real-time videoconferencing, or similar real-time electronic or video communication . . .” (emphasis added)

During the Covid State of Emergency, many Florida Condominium and Homeowners’ Associations got used to having their meetings purely on Zoom or Teleconference with no physical location stated our used for the meetings.

A lot of Associations liked these totally electronic meetings, especially in the off Season when many owners were out of town, and want to continue to do have them this way.

Now that the Covid State of Emergency rules and regulations have been lifted, we recommend that in addition to notice of the Zoom meeting sign-in or Teleconference call in number, a physical location of all Association meetings should also be stated and used to conform with the spirit of the law and to accommodate those who may not be computer savvy or have a handicap.

Section 617.0820(1), Florida Statutes provides that “the board of directors may hold regular or special meetings in or out of this state” wherever the board finds it prudent.  The place may include the offices of the association’s attorney, accountant, manage or other location deemed appropriate by the board.

It does not appear that a Zoom meeting or Teleconference meeting is being held at any “place”.  Place is described in the dictionary as “a physical environment”.  Physical is defined as “having material existence.” So, an “electronic environment” of Zoom or Teleconference does not appear to be the same as a physical environment or place.

Once you have named a physical location for a meeting, Section 617.0820(4), Florida Statutes provides that unless prohibited by the articles of incorporation or bylaws, the board of directors may permit any or all directors to participate in a meeting by means of telecommunication, such as by conference call so long as all directors may simultaneously hear each other during the meeting. Those participating in a board meeting in this manner is considered to be present at the meeting.”

Now the physical location of the meeting does not need to be onsite or even in the County or Country where the property is located.  However, it probably should be near the community to accommodate in house owners.

For the annual meeting of members in Condominiums, Section 718.11292)(d)1., Florida Statutes provides that: “Annual meeting of the unit owners must be held at a location provided for in the association bylaws and, if the bylaws are silent as to the location, the meeting must be held within 45 miles of the condominium property.”

Although it is fine to still have your Zoom or Teleconference Association meetings, remember to also designate a physical place for the meeting such as the board room, social room, pool house, club house, or manager’s office for most meetings of the members and the board.

Condos and HOA's

Your assigned condo parking space may be more valuable if it is transferable

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In the vast majority of Residential Condominium in Southwest Florida, the Developers have assigned certain parking spaces to certain units as limited common elements appurtenant to those units.

Chapter 718, Florida Statutes defines limited common elements as: “those common elements which are reserved for the use of a certain unit or units to the exclusion of all other units, as specified in the declaration.”

Typically the original declaration of condominium locks a developer assigned limited element common parking space to the unit it has been assigned in perpetuity and the space therefore cannot be assigned, transferred, swapped or sold to another unit owner.

This can be an issue for some owners as some may want to get a parking space closer and more convenient to their unit or one that is better designed or located to parking their unusual sized or handicap equipped vehicle. Sometimes an owner will acquire two (2) units and want to swap the units assigned spaces and then sell one (1) of the units along with the exclusive right to use the other unit’s original assigned space.

The inability to reassign such parking spaces left by the developer can be overcome if the declaration is amended by a vote of the owners to allow for such.

Section 718.106(2)(b), Florida Statutes now provides that:  “There shall pass with a unit, as appurtenances thereto: . . . (b) The exclusive right to use such portion of the common elements as may be provided by the declaration, including the right to transfer such right to other units or unit owners to the extent authorized by the declaration as originally recorded, or amendments to the declaration adopted pursuant to the provisions contained therein. Amendments to declarations of condominium providing for the transfer of use rights with respect to limited common elements are not amendments that materially modify unit appurtenances as described in s. 718.110(4).  However, in order to be effective, the transfer of use rights with respect to limited common elements must be effectuated in conformity with the procedures set forth in the declaration as originally recorded or as amended under the procedures provided therein.”

So if you want to allow your owners to buy, sell or trade their assigned parking spaces with other unit owners, you can go for a vote of the owners to amend your declaration to permit such transfers.  Many times we will add such transfer ability language when we do a total rewrite and update of an Association’s governing documents if that is the consensus desire of the Condominium’s owners.

What if the owners of a condominium believe they were assigned limited common element parking spaces but their declaration of condominium does not reference any such assignments?

Section 718.110(14), Florida Statutes provides that:  “Except for those portions of the common elements designed and intended to be used by all unit owners, a portion of the common elements serving only one or a group of units may be reclassified as a limited common element upon the vote required to amend the declaration as provided therein or as required under paragraph (1)(a), and shall not be considered an amendment pursuant to subsection (4).”

So, such an amendment would work to codify owners’ assigned parking spaces or to limit other areas of the property to certain owners such as particular stairways,  elevators, landings, storage lockers or floor specific amenities) only as intended by the developer or the property layout but never specified in the original declaration.

Florida Legislature

Florida Senate Bill 4-D Part II

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Last month we looked at the requirements for Mandatory Milestone Structural Inspections for condominium and cooperative buildings that are three (3) stories or more in height before 12/31/24 under Florida Senate Bill 4-D approved in a special session of the Florida Legislature this year in response to the Surfside hi-rise collapse in Miami last year.

Today, we will look at three other major requirements of Senate Bill 4-D.  Requirements for Structural Integrity Reserve Studies, removal of membership’s ability to waiver reserves and the Division of Condominiums, Timeshares and Mobile Homes’ jurisdiction to hear complaints about these building inspections and reserve studies.

For condominium and cooperative buildings three (3) stories or more high, for associations existing on or before July 1, 2022 and before a developer can turnover an association to its members, a Structural Integrity Reserve Study must be completed before December 31, 2024.

The Structural Integrity Reserve Study shall include a study, at a minimum, of the roof, load-bearing walls, floor, foundation, fire protection systems, plumbing, electrical systems, waterproofing, exterior painting, windows and any other items that have a deferred maintenance expense or replacement cost exceed $10,000.

The Study must be performed by a qualified person and the visual inspection portion must be performed by a licensed architect or engineer.  The Study must identify common areas inspected, the estimated remaining useful life, and the estimated replacement cost or deferred maintenance expense of the area inspected, and provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense by the end of the estimated useful life of the area inspected.

If an association fails to complete a Structural Integrity, as required, such failure will be considered a breach of an officers’ or directors’ fiduciary duty to unit owners.

Effective 12/31/24, the members of a unit owner controlled association may not determine to provide no reserves or less reserves than required by the Structural Integrity Reserve Study.

In addition, an association may not vote to use reserve funds identified in the Structural Integrity Reserve Study, or any interest accruing thereon, for any other purposes other than for the reserves’ intended purposes as identified in the Study.

On or before 1/1/23, a condominium or cooperative must provide the Division of Condominiums, Timeshares and Mobile Homes (Division), on a form provided for on the Division’s website, the number of buildings on the property that are three (3) stories or higher, the total number of units in all such buildings, the addresses of all such buildings and the counties in which such buildings are located. The Division has jurisdiction to receive complaints related to the Mandatory Milestone Structural Inspections and the Structural Integrity Reserve Studies.

Many believe these new laws of Bill 4-D will be heavily tweaked in the 2023 regular legislative session to lessen the heavy burdens these laws place on Florida Condominium owners who cannot afford such large reserve requirements in order to prevent large numbers of foreclosures and condominium terminations that could result if these laws are left as is.

Florida Legislature

Florida Senate bill 4-D Approved in Special Legislative Session

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On May 26, 2022, the Governor of Florida signed into law Senate Bill 4-D in response to the Surfside hi-rise collapse in Miami.  In order to minimize the chances of similar residential building collapses in the future, the new law will require mandatory structural inspections, structural integrity reserve studies and removal of waiver of reserves for condominium or cooperative buildings by 12/31/24.

While some Associations are engaging engineers and architects now to meet the new law provisions, as the new requirements either need not be completed before, or commence after 12/31/24, many Associations are planning to wait until after the 2023 legislative session next spring to see how the new law may be tweaked by the legislature to make its provisions less onerous to implement for most Associations.

In this article we will look at the requirements for the mandatory milestone structural inspections.  Next month we will look at the details of the structural integrity reserve studies and removal of the ability for Association members to vote to waive reserve study reserves.

For condominium or cooperative buildings three (3) stories or more in height, by December 31st of the year in which the building reaches thirty (30) years old [twenty five (25) years old for buildings located within three (3) miles from the coastline], and every ten (10) years thereafter, a Milestone Structural Inspection must be performed by a licensed architect or engineer.

If the building’s certificate of occupancy was issued on or before July 1, 1992, the buildings initial Milestone Structural Inspection must be performed before 12/31/24.

A local enforcement agency (City or County) must provide written notice of the required Milestone Inspection to the Association and the Association then has 180 days to complete Phase One of the Milestone Inspection.

Phase One of the Milestone Inspection requires the architect or engineer to perform a visual inspection of the building, including the major structural components, and provide a qualitative assessment of the structural conditions of the building.  If the architect or engineer finds no sign of substantial structural deterioration to any building components, then Phase Two of the inspection is not required and the professional doing the inspection then submits its inspection report to the local enforcement agency.

However, if substantial structural deterioration is found (substantial structural distress that negatively affects a building’s general structural condition and integrity and does not includes surface imperfections), then Phase Two of the Milestone Inspection must be performed.  This inspection may be as extensive or as limited as necessary to fully assess areas of structural distress in order to confirm that the building is structurally sound and safe for its intended use and to recommend a program for fully assessing and repairing distresses and damaged portions of the building.

Upon completion of the Phase One or Phase Two inspections, the inspection professional must submit a sealed copy of the inspection report, with a summary, findings, and recommendations for repairs, to the Association and the local building official with jurisdiction.  The Association is also required to distribute the summary to each unit owner and post a copy of the summary in a conspicuous place on the property.

Such repairs must be commenced within 365 days after receiving the Phase Two inspection report and the Association must provide the local enforcement agency with proof that repairs have been scheduled or commenced and if Association fails to provide such the local enforcement agency must review and determine if the building is unsafe for human occupancy.

The Association is responsible for all costs associated with the inspection.  If the officers or directors of an association wilfully and knowingly fail to have a Milestone Inspection performed, as required, such failure is deemed a breach of the officers’ and directors’ fiduciary duties to the owners.

Homeowners Associations

Who is going to button down before and clean up after the next hurricane?

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We found out from Irma and Wilma that it is not a good idea to have loose items left outside a home or condominium unit and that the power can be out for many days after the hurricane passes.  The loose items can blow around damaging themselves and other property and food can rot quickly and appliances leak when the power is out for a prolonged period.

If your part time residents have departed for the year and have no one checking on their home, damage can greatly increase from the next storm.  In order to mitigate and minimize such damage, many Associations have now adopted or approved rules and regulations requiring owners to remove all items from their balconies or yards prior to a storm approaching or prior to the owner will be leaving for the summer for a long duration.

Some Associations will even require that the owner designate a “condo or home checker” who will periodically check on the unit over the summer to make sure there are no water leaks and to button down the unit or home before an approaching hurricane.  This could include moving anything not nailed down outside on the balcony or yard to the inside of the building, putting pool furniture in the pool, and deploying hurricane shutters.  The contact information for the checker should be provided to the Association and the checker could be a paid company or local friend or family member.

The checker could also be required to empty out the fridges and freezers before or after the power goes out to prevent rotting food smelling and leaking from the appliances and resulting mold growth from emanating throughout the home or condominium building.

When the storm is rapidly approaching and Southwest Florida is in the cone, there is usually not much time to button down everything.  Usually, there is only a skeleton crew of owners still in residence and limited management personnel (who have not evacuated).  Therefore, it is so important that there are condo checkers (additional resources) still around to do the best they can in securing everything.

If an Association has implemented such home checker and button up rules and an owner fails to secure the home before they leave or engage a checker to do so while they are gone, some association’s rules will charge the owner for damage resulting from their negligent act of not preparing their home for the storm or not cleaning out their appliances after the power goes out.

Another important matter to consider is engaging a landscape or tree trimming company before the storm to be on a priority list to be onsite right after the storm to clear debris and tree limbs expeditiously from the property.  This could be especially important for folks who are around full time and may have mobility issues making it difficult to come and go.  Another priority list that may be good to get on is an inspection and emergency repair list from a superior local roofer.

To alleviate the power outages, there has been a lot of interest in obtaining generators for the condo building or for single family homes.  Sometimes an installed permanent building generator can power the entire building or just the elevators and common area lighting.  We have been hearing of some condo unit owners wanting to use portable gas generators on their balconies.  This would most likely be prohibited as a violation of local fire codes the same as propane grills are not allowed to be used, nor propane tanks stored, less than 10 feet from the multi-family building. An Association should always check with their local fire department prior to allowing any portable generators in or around the buildings.

Condominium Associations

When do Condominium Associations need to get competitive bids?

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The Snow Birds are returning North so now begins the time, when less residents are around, for many Condominium and Homeowners’ Associations to perform needed building repairs and/or do that exciting lobby, social room or clubhouse renovation.

When hiring contractors to perform the repairs or renovations, we are often asked whether the Association needs to obtain competitive bids or not. With today’s supply chain issues and contractor back-ups getting competitive bids sometimes is not as easy as it used to be.

First we should look at where hiring professionals “do not” require competitive bids. First, pursuant to Section 718.3026, Florida Statutes, small Condominium Associations with 10 or fewer units may opt out of having to get competitive bids if two-thirds of the unit owners vote to do so.  Second contracts with employees of the association, and contracts for the following professionals: attorneys, accountants, architects, community association managers, timeshare management firms, engineers and landscape architect services, do not require competitive bids.  Also, if products or services are needed because of an emergency, or if the business entity with which the Association wishes to engage is the only source of supply within the county service the Association, competitive bids are not needed.

In a Condominium, if a contract for the purchase, lease, or renting of materials or equipment, or for the provision of services, require payment by the association on behalf of any condominium operated by the association in the aggregate that exceeds 5 percent of the total annual budget of the Association, including reserves, the Association must obtain competitive bids for materials, equipment or services.

There is no requirement to accept the lowest bid and you only need to get at least two (2) bids; not three (3) as many believe.

In addition to the bidding issues, it is also important to know that any contract that is not to be fully performed within 1 year for the purchase, lease, or renting of materials or equipment and all contracts to provide services shall be “in writing”. Also, pursuant to Section 718.3025, Florida Statutes, a contract to provide maintenance or management services shall not be valid unless it: “(a) Specifies the services, obligations, and responsibilities of the party contracting to provide maintenance or management services to the unit owners. (b) Specifies those costs incurred in the performance of those services, obligations, or responsibilities which are to be reimbursed by the association to the party contracting to provide maintenance or management services. (c) Provides an indication of how often each service, obligation, or responsibility is to be performed, whether stated for each service, obligation, or responsibility or in categories thereof. (d) Specifies a minimum number of personnel to be employed by the party contracting to provide maintenance or management services for the purpose of providing service to the association. (e) Disclose any financial or ownership interest which the developer, f the developer is in control of the association, holds with regard to the party contracting to provide maintenance or management services. (f) Discloses any financial or ownership interest a board member or any party providing maintenance or management services to the association holds with the contracting party.”

Selling Real Estate

The Surfside Tower collapsed last year in Miami and the Surfside Bills collapsed in this year’s Florida Legislature

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There were two Florida Senate bills and one House of Representative bill considered by the Florida Legislature in this year’s session to address the collapse of the Surfside Tower last year.  The intent of the proposed bills were to help prevent similar Condo Building collapses in the future.  The bills were withdrawn prior to legislative vote.

Although the legislation was not voted upon or approved, it is instructive to review the bills that were proposed as they could return again in the 2023 State Legislature and may be approved then.

It is important to note that there are nearly one million condominium units in Florida condominium buildings that are at least 20 years old and of these about 630,000 are at least 40 to 60 years old.

Senate Bill 1702 was to establish a mandatory structural inspection program for multi-family residential buildings in Florida. Residential buildings greater than 3 stories and larger than 3,500 square feet were to be required to have a “milestone inspection” once the building reaches 30 years in age and every 10 years thereafter. If the building is within 3 miles of the coastline the inspection would be required at 20 years and every 7 years thereafter. The inspection would be done by a licensed architect or engineer. There was a two phase inspection process including a visual inspection and a structural distress inspection of the visual inspection warranted a second phase. The inspection report would be submitted to the condo board and the local building official. The board would then have to distribute the report to all the unit owners. The report would be an official Association record and would have to be provided to prospective unit purchasers. Local enforcement agencies could prescribe timelines and penalties with respect to compliance with the milestone inspections.

House Bill 7069 was substituted for Senate Bill 1702 on March 10.  The Bill would have revised the list of official records, reserve accounts and mandate reserve studies.  It would have eliminated reserve pooling.  It would have created milestone inspections and inspection reports.  It revised the information that must be provided to potential buyers and information included in the prospectus offering circular.  House Bill 7069 was withdrawn prior to a vote on March 12.

Last, Senate Bill 7042 would have revised the types of records that constitute the official records of a condominium association, revised the requirements for association budgets by limiting pooling of reserves and waiver of reserves.  The list of required reserve items would have increased to all items included in the building turnover inspection report. It would have also required milestone inspections performed at specific times.  It would have required associations to provide for maintenance, repair, and replacement of association property and would have authorized boards to adopt a special assessment or borrow money for certain reasons without unit owner approval.  Senate Bill 7042 was withdrawn on March 12 also.

Apparently there was lots of push back from owners and Associations who did not want to see drastic increases in their quarterly or monthly assessments that would be necessitated if these bills were adopted.

It is not unusual for such bills not to make it to a vote the first year they are trotted out and the proposals are usually tweaked to remove the more onerous provisions and brought back again in the following year where they may go to vote and get approved.  So, we will have to see what tweaks will occur and what will be on the agenda for the 2023 legislature to address the structural decay issues that lead to the tragic Surfside Tower collapse to lessen the change of a repeat.