HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1223
w/CS Condominium Associations
SPONSOR(S): Representative
Robaina
TIED BILLS: IDEN./SIM.
BILLS:
REFERENCE
ACTION
ANALYST
STAFF DIRECTOR
1) Business Regulation
33 Y, 6 N w/CS Livingston
Liepshutz
2) State Administration
3) Appropriations
4)
5)
SUMMARY ANALYSIS
A condominium is
“that form of ownership of real property which is created pursuant to the
provisions of this chapter [ch.718, F.S.], which is comprised of units
that may be owned by one or more persons, and in which there is, appurtenant
to each unit, an undivided share in common elements.”
During the interim
prior to the 2004 legislative session, the Speaker of the Florida House
of Representatives appointed the Select Committee on Condominium Association
Governance. The charge of the committee was to take public testimony and
review current laws regulating the governance of condominium associations
to identify any improvements in those laws that might be recommended. The
select committee was instructed to issue a report prior to the beginning
of the 2004 session outlining any recommendations for legislation consistent
with the committee’s conclusions.
The select committee
issued its report on January 21, 2004. The chairman of the select committee,
Representative Robaina, states in the report that “after listening to all
public testimony throughout the State of Florida, I submit to you a number
of concerns proposed by the residents of this state and a number of my
suggestions along with those referred to me by my committee members….”
HB 1223 has been
proposed to implement the work of the select committee and amends various
provisions in chapter 718, F.S., the “Condominium Act.” The bill expands
several provisions to address the relationship between condominium unit
owners and condominium associations. The bill creates the Office of the
Condominium Ombudsman to be located in the Division of Land Sales, Condominiums,
and Mobile Homes for administrative purposes. The ombudsman is to be appointed
by the Joint Legislative Auditing Committee. The
bill creates a seven
member Advisory Council on Condominiums to assist in making recommendations
for improving the relationship between unit owners and their association.
The fiscal impact
of the bill has not been finalized at this time. However, the select committee
notes: monies allocated to the trust fund that are generated by condo unit
owners must be left to serve only the condo association’s needs and not
diverted from the account to help fund other initiatives of the state.
The trust fund is currently funded by a $4 unit fee paid by 1.1 million
unit owners in the state of Florida. These funds are essential in bringing
forth the much needed changes and also to further the education of home
owners and
board members.
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. DOES THE BILL:
1. Reduce government?
Yes[] No[X] N/A[]
2. Lower taxes?
Yes[] No[] N/A[X]
3. Expand individual
freedom? Yes[] No[] N/A[X]
4. Increase personal
responsibility? Yes[] No[] N/A[X]
5. Empower families?
Yes[] No[] N/A[X]
For any principle
that received a “no” above, please explain:
1. Reduce government
- The bill expands several provisions to address the relationship between
condominium unit owners and condominium associations. The bill creates
the Office of the Condominium Ombudsman and provides for duties and staffing.
The bill creates a seven member Advisory Council on Condominiums.
B. EFFECT OF PROPOSED
CHANGES:
During the interim
prior to the 2004 legislative session, the Speaker of the Florida House
of
Representatives
created the Select Committee on Condominium Association Governance. The
charge of the committee was to take public testimony and review current
laws regulating the governance of condominium associations to identify
any improvements in those laws that might be recommended. The select committee
was instructed to issue a report prior to the beginning of the 2004 session
outlining any recommendations for legislation consistent with the committee’s
conclusions. The select committee issued its report on January 21, 2004.
The chairman of the select committee, Representative Robaina, states in
the report that “after listening to all public testimony throughout the
State of Florida, I submit to you a number of concerns proposed by the
residents of this state and a number of my suggestions along with those
referred to me by my committee members….”
HB 1223 has been
crafted to implement the work of the select committee and amends various
provisions in chapter 718, F.S., the “Condominium Act,” governing condominium
associations. A condominium is “that form of ownership of real property
which is created pursuant to the provisions of this chapter, which is comprised
of units that may be owned by one or more persons, and in which there is,
appurtenant to each unit, an undivided share in common elements.”
Issues identified
by the Select Committee on Condominium Governance and implementing provisions
of HB 1223 are addressed below.
Section 1. The bill
amends s. 718.103, F.S., relating to definitions.
Identified issue:
Multiple family members or relatives were serving on the same board creating
a conflict of interest.
Board members or
family of board members are employed by management companies of many associations.
Recommendation:
The bill creates a definition of “immediate family member” for purposes
of clear application of several provisions of the bill relating to potential
conflict of interest.
Section 2. The bill
amends s. 718.110, F.S., relating to amendments to the condominium declaration.
Identified issue:
Owners are being impacted fiscally and through hardships by board member
decisions.
Recommendation:
The bill provides that amendments to the association declaration that restrict
specified rights of the unit owners shall only apply to owners who purchase
their unit after the effective date of that amendment. It also requires
a vote of three-fourths vote for approval.
Section 3. The bill
amends s. 718.112, F.S., relating to bylaws.
Identified issue:
Reserves not being maintained at any specific percentage rate.
Recommendation:
The bill requires a two-thirds vote, rather than a simple majority vote,
to provide no reserves or less reserves than are calculated by formula
under this subsection.
Section 4. The bill
creates s. 718.1125, F.S., relating to board eligibility restrictions.
Identified issue:
Multiple family members or relatives were serving on the same board creating
a conflict of interest.
Board members did
not live in the community and/or country due to the fact that they are
investment properties and not their primary residence.
Recommendation:
The bill prohibits a board member from sitting on the board alongside an
immediate family
member unless approved by a majority vote of the unit owners present and
voting.
The bill requires
that board members must live in the condominium for at least three months
prior to sitting on the board.
Section 5. The bill
amends s. 718.116, F.S., relating to assessments, liability, and liens.
Identified issue:
Liens being placed on unit owners and home owners without notice.
Unit owners are
not given sufficient time to respond or correct violations and are being
cited with fines immediately.
Board members willfully
and knowingly expediting the lien and foreclosure process in order to buy
the properties themselves at a foreclosure price.
Owners are being
impacted fiscally and through hardships by board member decisions.
Recommendation:
The bill specifies that liens may not be recorded without giving notice
of the claim of lien. The bill requires the association to deliver a notice
of intent to record a claim to the unit owner and provide a 30 day time
period for the owner to respond. The bill creates a penalty of a misdemeanor
of the first degree for those persons who willfully and maliciously place
liens in an attempt to foreclose on other unit owners’ properties.
Section 6. The bill
creates s. 718.130, F.S., relating to attorney’s fees.
Identified issue:
No caps exist on attorney’s fees and they can charge without limits.
Recommendation:
A cap on attorney’s fees for form letters sent to owners.
The bill prohibits
an attorney from charging in excess of $75 per letter for correspondence,
collection efforts, litigation, or other business arising under this chapter.
Section 7. The bill
amends s. 718.3025, F.S., relating to operation and management.
Identified issue:
Board members, community association managers (CAMs), and/or property management
companies are giving friends or family or companies that they are affiliated
with contracts for work in the condominium.
Multiple family
members or relatives were serving on the same board creating a conflict
of interest.
Board members do
not file any type of financial disclosures.
Board members or
family of board members are employed by the management company of many
associations.
Recommendation:
The bill requires disclosure of financial and ownership conflicts of interest
by board members, CAMs, and property management companies with contractors
doing maintenance or management business with that condominium. If the
conflicting contractor is selected by the board, the conflict must be disclosed
and approved by a majority vote of the unit owners.
Section 8. The bill
amends s. 718.3026, F.S., relating to contracts for products and services.
Identified issue:
Board members, community association managers (CAMs), and/or property management
companies are giving friends or family or companies that they are affiliated
with contracts for work in the community.
Contracts were given
out without a competitive bidding process.
Recommendation:
The bill requires that the association obtain no fewer than three competitive
bids for materials, equipment, or services if the aggregate cost exceeds
two and one half percent, rather than five percent, of the association
annual budget.
Section 9. The bill
amends s. 718.501, F.S., relating to duties of the division.
Identified issue:
Owners are being impacted fiscally and through hardships by board members
decisions.
Residents do not
know how the state addresses their rights and concerns.
Recommendation:
Currently, the division has the authority to provide training for board
members and unit owners. The bill requires mandatory training for newly
elected board members and current board members who have not previously
voluntarily attended training.
Section 10. The bill
creates s. 718.5011, F.S., relating to the Office of the Ombudsman.
Identified issue:
Currently, there is no department that has the power to settle disputes
between condominium owners and their respective associations, that can
help monitor elections and meetings, that can fine members, etc.
Recommendation:
The bill creates the Office of the Condominium Ombudsman to be located
in the
division for administrative
purposes. The ombudsman is to be appointed by the Joint Legislative Auditing
Committee by a majority vote of the committee members.
Section 11. The bill
creates s. 718.5012, F.S., relating to duties of the ombudsman.
Identified issue:
Currently, there is no department that has the power to settle disputes
between condominium owners and their respective associations, that can
help monitor elections and meetings, that can fine members, etc.
Recommendation:
The bill specifies the powers and duties of the ombudsman, including the
use of division records, making of recommendations for legislation, authority
to act as liaison between parties to a dispute or complaint, recommending
the initiation of enforcement proceedings, and making recommendations to
the division for addressing complaints.
Section 12. The bill
creates s. 718.5013, F.S., relating to ombudsman expenditures.
Identified issue:
Currently, there is no department that has the power to settle disputes
between condominium owners and their respective associations, that can
help monitor elections and meetings, that can fine members, etc.
Recommendation:
The bill authorizes that costs and expenditures of the ombudsman office
be paid out of the division operational trust fund. It authorizes the Joint
Legislative Auditing Committee to approve staffing for the office.
Section 13. The bill
creates s. 718.5014, F.S., relating to the location of the ombudsman office.
Identified issue:
Currently, there is no department that has the power to settle disputes
between condominium owners and their respective associations, that can
help monitor elections and meetings, that can fine members, etc.
Recommendation:
The bill specifies the ombudsman office be located in Leon county.
Section 14. The bill
creates s. 718.5015, F.S., relating to the creation of the Advisory Council
on Condominiums.
Identified issue:
Currently, there is no department that has the power to settle disputes
between condominium owners and their respective associations, that can
help monitor elections and meetings, that can fine members, etc.
Recommendation:
The bill creates a seven member Advisory Council on Condominiums. The council
has the responsibilities to receive and process input from the general
public relating to changes in the law and division rules, as well as, the
education programs of the division.
Section 15. The bill
amends s. 718.504, F.S., relating to litigation notification.
Identified issue:
Lack of awareness by potential buyers, such as, being notified whether
or not the association is or was in litigation or has incurred or will
be incurring liabilities.
Recommendation:
The bill expands the current “Frequently Asked Questions and Answers” sheet
to include additional information. The bill requires the prospectus or
offering circular to contain information relating to litigation or potential
litigation which may expose the association to liability.
Section 16. The bill
transfers the licensure program for community association managers to the
division by a type two transfer.
Section 17. The bill
authorizes the continuation of active administrative cases under the DBPR
against CAMs.
Section 18. The
bill creates s. 718.510, F.S., relating to the creation of a condominium
owner bill of rights brochure.
Identified issue:
Residents do not know how the state addresses their rights and concerns.
Recommendation:
The bill requires the division to adopt rules to provide for a brochure
entitled,
“Condominium Owners’
Bill of Rights.”
Section 19. Effective
date - upon becoming a law.
C. SECTION DIRECTORY:
See B. above.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT
ON STATE GOVERNMENT:
1. Revenues:
See D. fiscal comments,
below.
2. Expenditures:
See D. fiscal comments,
below.
B. FISCAL IMPACT
ON LOCAL GOVERNMENTS:
1. Revenues: NA
2. Expenditures:
NA
C. DIRECT ECONOMIC
IMPACT ON PRIVATE SECTOR:
See D. fiscal comments,
below.
D. FISCAL COMMENTS:
The report of the
select committee comments that:
Monies allocated
to the trust fund that are generated by condo unit owners must be left
to serve only the
condo association’s needs and not diverted from the account to help
fund other initiatives
of the state. The trust fund is currently funded by a $4 unit fee paid
by 1.1 million unit
owners in the state of Florida. These funds are essential in bringing
forth the much needed
changes and also to further the education of home owners and
board members.
III. COMMENTS
A. CONSTITUTIONAL
ISSUES:
1. Applicability
of Municipality/County Mandates Provision: NA
2. Other:
NA
B. RULE-MAKING
AUTHORITY:
Section 5 of the
bill authorized the FDLE, in consultation with the DBPR, to adopt rules
for processing criminal background checks of board members.
C. DRAFTING ISSUES
OR OTHER COMMENTS:
None noted.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
The CS differs from
the original bill as follows:
Removes the provision
specifying that a declaration or bylaw allowing a multiple unit owner in
the same condominium to exercise multiple votes shall be void.
Removes language
in the bill that creates a two year term limit for board members.
Removes language
in the bill relating to mandatory criminal background checks by the board
for all new potential unit owners and tenants.
Prohibits an attorney
from charging in excess of $75 per letter for correspondence, collection
efforts, litigation, or other business arising under this chapter. |