Courtesy of The Daily Business Review
Commentary by Ruben Conitzer
Published May 16, 2017
Assuming Florida Gov. Rick Scott doesn’t veto the bill,
we may be seeing some changes to the law central to condominiums in the near
future. That’s because the state House approved a bill that would bring a
wide range of changes into law. The Senate gave its support last week.
Notably, both houses support the bill unanimously — adding to the likelihood
Scott will throw his support behind the measure as well. The bill adopted
large portions of a Miami-Dade County grand jury outline that made
recommendations on oversight and operational issues facing condominiums
earlier this year.
The bill makes long-awaited changes to rules concerning recordkeeping and
record requests, kickbacks, attorney representation, the provision of
financial statements and voting procedures. But for some, most remarkable is
that the proposed changes may subject condominium board members to criminal
The bill expands the list of prohibited acts by board members and adds
criminal penalties to the range of enforcement mechanisms. In addition, the
bill would prevent board members or certain others to purchase units at
foreclosure sale if the sale is due to the foreclosure of an association
lien. Also, a variety of rebuttable presumptions regarding the existence of
conflicts of interest are created that would apply to board members. Any
contract entered into absent full disclosure of such a presumed conflict
would be voidable by the association. If the bill is signed into law,
activities that would be subject to criminal penalty would include theft or
embezzlement, forgery of ballot envelopes and other election fraud, the
destruction of official records in the furtherance of a crime and the
acceptance of kickbacks.
Management Company Oversight.
Portions of the bill that will likely see the most positive reactions
include provisions requiring management companies to disclose financial
interests in any vendor recommended by the management company and provisions
requiring management companies to turn over all association records if and
when their contracts come to an end.
The proposed bill would also impact attorneys that represent condominium
boards and management companies. The bill forbids attorneys from
representing the board if that same attorney also represents the
association's management company.
In addition, the bill would authorize the condominium ombudsman to review
secret ballots when looking for misconduct, require the Department of
Business & Professional Regulation to certify arbitrators, creates board
term limits, require larger condo associations to create online records
databases, compels associations to report to the state all financial
institutions where they maintain accounts, and forbids officers from using
association debit cards. Furthermore, the proposed bill would require the
retention of bids for materials, equipment and services and subject them to
inspection by unit owners.
Many see the proposed legislation as offering much needed oversight and
director liability in the most egregious circumstances. But nonetheless, a
main issue is and will likely continue to be the underfunded Division of
Condominiums within the DBPR—the state's arm for enforcing large portions of
the state's condominium statutes. Assuming these new rules are enacted, how
to fund state enforcement agencies will continue to be a matter of great
While some of the proposals are expected to be widely accepted, issues like
subjecting directors to criminal and personal liability and increased
election monitoring will likely remain controversial for some time.