Bryan Gonzalez
10 Nov 2024
Understanding Its Impact on Community Associations
Expert Blog Post: Understanding Florida’s New House Bill 1021 and Its Impact on Community Associations
The 2024 legislative session has introduced significant reforms for community associations in Florida with the enactment of House Bill (HB) 1021. This comprehensive Bill enhances transparency, governance, and accountability concerning Licensed Community Association Managers (LCAMs), recordkeeping, and condominium management. Below are some of the key takeaways from this critical legislation:
Community Association Managers
The Bill mandates that CAMs and CAM firms return all community association records in their possession within 20 business days of the termination of a service agreement or upon a written request—whichever occurs first.
Additionally, the Bill establishes stricter conflict of interest disclosure requirements for CAMs and CAM firms. If an association is considering a bid for services or goods exceeding $2,500 from a CAM or related party, it must also solicit bids from multiple third-party providers. To ensure transparency, any potential conflicts of interest must be fully disclosed, with all relevant contracts and documents attached to the board’s meeting agenda and entered into the meeting minutes. These contracts require approval by a two-thirds majority of directors present at the meeting to proceed.
Official Records – Condominiums
HB 1021 introduces several updates regarding access to condominium association records aimed at increasing transparency and compliance:
Record Recovery: If official records are lost or destroyed, the Bill imposes a good faith obligation on the association to recover those records reasonably.
Access to Personal Information: Unit owners will have access to other owners’ e-mail addresses and fax numbers, provided there is consent to receive notices electronically. Notably, the Bill prohibits selling or sharing this personal information with third parties.
Threshold for Digital Record Access: Starting January 1, 2026, associations with 25 or more units (down from 150) must make specified records available on a website or mobile app.
Website Complaints: The Bill also authorizes the division to request access to an association’s website to investigate any complaints regarding unit owner access to official records.
No-Charge Records for Subpoenas: If the Division of Condominiums, Timeshares, and Mobile Homes subpoenas records due to an association’s failure to provide them upon a unit owner’s request, the records must be delivered at no charge to the owner.
Expanded Financial Recordkeeping: Associations must maintain additional financial documentation, such as invoices and other documentation that substantiates any receipt or expenditure.
Checklist for Record Requests: Associations must provide a checklist of all available records in response to a request.
Criminal Violations – Condominiums
House Bill (HB) 1021 introduces significant criminal penalties for misconduct within condominium associations, particularly concerning the handling of official records and unethical activities. The Bill aims to hold officers, directors, and managers accountable for violations, ensuring higher standards of integrity in condominium governance. Key provisions include:
Second-degree misdemeanor: Directors or board members who knowingly, willfully, and repeatedly (two or more violations within 12 months) violate requirements related to the inspection and copying of official association records can be charged with a second-degree misdemeanor.
First-degree misdemeanor: Any intentional defacing or destruction of required accounting records or failing to maintain such records with the intent to harm the association or its members constitutes a first-degree misdemeanor. Also, engaging in or assisting with fraudulent voting activities during association elections is considered a first-degree misdemeanor.
Third-degree felony: Officers, directors, or managers who willfully refuse to release or produce association records to evade detection, arrest, or prosecution for a crime or to assist someone else in doing so face a third-degree felony charge. This also applies to accepting or soliciting kickbacks.
Removal: Officers or directors charged with any criminal violation under Chapter 718, F.S., will be immediately removed, and a vacancy will be declared.
Finances – Condominiums and Cooperatives
The Bill introduced several significant changes to condominium and cooperative associations’ financial management and reporting requirements. Key provisions include:
Prohibition on financial downgrades: Associations are prohibited from reducing the type of financial statement (compiled, reviewed, or audited) for consecutive years.
Structural Integrity Reserve Study (SIRS): Associations must notify unit owners that the SIRS is available for inspection and copying. The notice must be delivered within 45 days of completing the study and may be sent electronically.
Condominium and cooperative associations are required to notify the Division of Condominiums within 45 days of completing their SIRS.
Reserve funding flexibility in emergencies: Associations can temporarily pause or reduce reserve funding if a condominium building is deemed uninhabitable due to a natural emergency (as determined by the local enforcement agency). This decision requires majority member approval, allowing associations to prioritize recovery and repair efforts during crises.
Meetings of Condominium Associations
The Bill introduces new requirements for condominium association meetings, ensuring better transparency and member involvement.
Quarterly meetings: Associations with 10 or more units must meet quarterly. Four times each year, the agenda must allow members to ask questions concerning the status of construction or repair projects, revenues and expenditures, and other condominium issues. The notice for meetings on assessments must include the cost and purpose of assessments and a copy of any proposed contract.
Director Education – Condominiums
The Bill introduces specific education requirements for condominium association officers and directors to improve governance and accountability.
New director certification: Newly elected or appointed directors must submit a written certification confirming that they have read the association’s governing documents, will uphold the documents to the best of their ability, and faithfully discharge their duties. They must also submit a certificate of completion from an approved condominium education course.
Training requirements: Directors must complete four hours of training covering key topics such as milestone inspections, SIRS, elections, recordkeeping, financial literacy, transparency, levying fines, and meeting procedures.
Annual continuing education: Directors must complete at least one hour of continuing education annually, focusing on updates to condominium laws and rules from the previous year.
Directors, excluding those for timeshare condominiums, must certify—on a form provided by the division—that they have completed the necessary written certification and educational requirements.
Voting in Condominium and Cooperative Associations
The Bill changes the voting processes within condominium and cooperative associations to ensure transparency and accessibility. The key provisions include:
Notification of suspended voting rights: Associations are required to notify unit owners or members at least 90 days before an election if their voting rights may be suspended due to non-payment of fees or other monetary obligations.
Electronic voting consent: Cooperative and condominium owners can now use electronic means of consent to consent to electronic voting for elections.
Online voting requests: If a cooperative or condominium board authorizes online voting, it must honor any unit owner’s request to vote electronically in all subsequent elections unless the unit owner opts out.
Hurricane Protections – Condominiums
Bill 1021 revises the rules surrounding installing and maintaining hurricane protection in condominium buildings, aiming to standardize procedures and clarify financial responsibilities. Key updates include:
Uniform definition of hurricane protection: The Bill establishes a consistent definition of “hurricane protection” across all condominium associations.
Cost responsibilities: Condominium declarations must now clearly outline whether unit owners or the association are responsible for the maintenance, repair, and replacement of hurricane protections, as well as exterior doors, windows, and glass apertures.
Approval process: A standardized procedure is now required to approve hurricane protection installations. This helps streamline the process and avoid ambiguity in decision-making.
Cost of removal and reinstallation: Unit owners are not responsible for the cost of removing and reinstalling hurricane protection if such removal is necessary to repair the condominium property.
SLAPP and Defamation Suits
Bill 1021 expands protections against strategic lawsuits against public participation (SLAPP suits) to include condominium associations. SLAPP suits are lawsuits intended to intimidate or silence unit owners by targeting them for participating in matters related to association management. The Bill strengthens protections for unit owners, ensuring they can freely voice concerns without fear of retaliatory legal action. Key provisions include:
Inclusion of condominium associations in SLAPP prohibitions: Condominium associations are now explicitly prohibited from filing SLAPP suits against unit owners who make public statements, file complaints with government agencies, or speak out on matters concerning the association’s management.
Protection from retaliation: Associations are barred from retaliating against unit owners who exercise their rights by increasing assessments or threatening civil actions. These measures prevent associations from using financial or legal pressure to suppress member criticism.
Prohibition on using association funds for defamation claims: Associations cannot use community funds to pursue defamation, libel, or tortious interference actions against unit owners. This prevents associations from misusing association resources to silence criticism.
Condominium Officers and Directors
The attendance of a board officer or director at a meeting is enough to establish a quorum. This quorum holds even if the director needs to leave the room when there’s a vote on a contract in which they or a relative have a vested interest. This provision ensures that a quorum can be met for essential votes while preventing conflicts of interest from affecting decision-making.
Division of Condominium, Timeshares, and Mobile Homes
The Bill expands the Division of Condominiums, Timeshares, and Mobile Homes jurisdiction to oversee additional post-turnover matters within associations. New areas of oversight include:
Procedures and records related to financial issues, including annual financial reporting, assessments for everyday expenses, fines, and commingling funds;
Elections, including election and voting requirements and recall of board members;
The maintenance of and unit owner access to association records;
The procedural aspects of meetings, such as unit owner meetings, quorums, voting requirements, proxies, board of administration meetings, and budget meetings;
Disclosure of conflicts of interest;
Removal of a board director or officer under ch. 718, F.S.;
The procedural completion of structural integrity reserve studies;
Any written inquiries by unit owners to the association;
Requires that the division must refer to local law enforcement authorities any person it believes has engaged in any criminal activity and;
Provides that the division and the office of the condominium ombudsman may attend and observe any board meeting or unit owner meeting to perform the duties of the division or the office of the ombudsman.
Condominium Ombudsman
The Bill shifts the responsibility for appointing the Condominium Ombudsman from the Governor to the Secretary of the DBPR. Additionally, it removes the requirement that the ombudsman be an attorney, broadening the pool of qualified candidates.
Limitations on Actions by Condominium and Cooperative Associations
The Bill provides that the statute of limitations and statute of repose for specific actions available to a condominium association or a cooperative association will not begin to run until the unit owners have elected a majority of the members of the board of administration.
Pre-Sale Disclosures and Requirements
HB 1021 introduces updates to the pre-sale disclosure process, ensuring prospective buyers receive more complete information. Notable changes include:
A requirement to provide the most recent annual financial statement and annual budget of the association to potential buyers.
New options for developers of nonresidential condominiums to fulfill escrow requirements, such as using a surety bond or irrevocable letter of credit.
Updates to escrow processes for developers, offering greater flexibility.
These provisions take effect October 1, 2024, providing associations and developers time to adapt.
Condominiums Within a Portion of a Building or Multiple Parcel Buildings
The Bill revises the definition of the term “condominium property” to mean “the lands, leaseholds, improvements, any personal property, and all easements and rights appurtenant thereto, regardless of whether contiguous, which are subjected to condominium ownership.” Key updates include:
Enhanced disclosure requirements for condominiums created within part of a building or across multiple parcels.
Associations managing such condominiums gain the right to inspect financial records and annual budgets related to shared facilities.
These changes, effective October 1, 2024, ensure equitable management of shared spaces and costs.
Florida Building Commission – Water Intrusion Study
The Florida Building Commission is tasked with conducting a study on preventing water intrusion through sliding glass door tracks. Findings and recommendations must be submitted by December 1, 2024, to the Governor and legislative leaders, reinforcing the state’s commitment to addressing structural vulnerabilities.
Appropriation
To support the implementation of HB 1021, the Bill allocates over $7.4 million in recurring and nonrecurring funds to the DBPR, alongside funding for 65 new positions. This ensures adequate resources for overseeing and enforcing the new regulations.
Conclusion
House Bill 1021 represents a comprehensive overhaul of Florida’s community associations’ governance and operational practices. It introduces important reforms to enhance transparency, improve financial accountability, and provide greater protections for unit owners. These legislative changes also emphasize ethical management practices and clarify procedural responsibilities for boards and managers.
However, it’s essential to note that expert property managers and LCAMs provide this summary as an overview of significant legislative updates. This information does not constitute legal advice. Board members and association leaders should consult a qualified attorney for detailed legal guidance and to address specific questions or concerns regarding their obligations under the new law.
Contact Aurora Property Management for further assistance with the practical implementation of these changes or with association management. Our team is here to help your community navigate these updates and thrive under the new standards.
Source: The Florida Senate