Article
Courtesy of The Miami Herald
By Michael J. Hyman
Published March 16, 2024
In response to cases such as the alleged theft of more
than $4 million at the Hammocks HOA in Kendall and the arrests of four of
its former board members and one of their spouses, the Florida Legislature
has passed two bills to strengthen criminal penalties for association fraud
and malfeasance. The bills, which were passed with unanimous votes in both
chambers of the legislature, are now pending final approval by Gov. Ron
DeSantis.
Both bills impose the exact same strict criminal
penalties for a number of violations. They make it a first-degree
misdemeanor to intentionally deface and destroy accounting records, or to
fail to create and maintain them with ill intent. They also call for
second-degree misdemeanors for board members or property managers who fail
to provide requested records or maintain them for seven years, and
third-degree felonies for anyone who “willfully 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.” Board members or
property managers who solicit or accept a kickback also face a third-degree
felony.
The new legislation mandates that homeowners associations furnish records
that are under legal subpoena within five business days, and they must also
assist law enforcement agencies in their investigations to the extent
permissible by law.
HOA board members will be required to complete a state-approved educational
course covering financial literacy and transparency, fines, recordkeeping
and meeting notices. Directors of HOAs with fewer than 2,500 homes must
complete four hours of continuing education annually, while those for
communities with more than 2,500 homes must complete eight hours per year.
Homeowners associations must maintain their official records, including
meeting minutes, vendor contracts, election ballots, financial/tax records
and others for at least seven years. Those with at least 100 homes are
required to post many of their records on a community website, which must
also include meeting notices/agendas for all open board meetings at least 14
days in advance. Any contracts that are up for a vote at a meeting need to
be posted at least seven days in advance.
HOAs will not be allowed to issue suspensions of voting rights or the use of
community amenities for some minor types of rule violations. In addition,
liens against homeowners involving relatively low fines will require the
approval of 75 percent of all the owners, and some fines for certain traffic
and landscaping infractions are precluded from becoming liens.
Regular assessments not including insurance can increase by only 10 percent
over the prior year for HOAs, and special assessments are capped at five
percent of the annual budgeted expenses unless 60 percent of the voting
members approve a larger assessment. HOAs are also barred from charging
compound interest on overdue assessments.
The new legislation also addresses election fraud in condominium
associations. Those who prevent owners from voting, use threats to influence
a vote, buy votes and aid in voter fraud will face first-degree
misdemeanors.
Condominium association directors who are charged with such infractions as
ballot forgery, embezzlement of association funds, obstruction of justice,
and destruction of records must be removed from office. All condominium
directors will need to complete a four-hour course that covers structural
inspections, reserves, elections, recordkeeping, fines, meetings,
budgets/financing, records transparency and other matters, plus they will be
required to complete an hour of continuing education during every year of
service.
Condominium association property managers or management firms that are
terminated by a client association are required to turn over all of the
records in their possession within 20 days. The failure to do so could lead
to the loss of their state license and $1,000 daily fines.
By the start of 2025, the state’s Department of Business and Professional
Regulation must create a database on its website of associations that have
completed their newly mandated structural integrity reserve studies. Within
45 days of completing the study, associations have to provide a copy to each
owner and also alert the DBPR that it was completed.
The new legislation allocates $7.4 million and 65 full-time employees, at a
total salary of $3.2 million, in this year’s state budget for the DBPR to
implement and enforce the new measures.
The cases of alleged brazen thefts and fraud at Florida HOAs and condominium
associations required a legislative fix, and the unanimous votes for both of
these bills in both chambers is a clear signal that the problem has become a
priority for the state’s lawmakers. Gov. DeSantis should sign the bills into
law, which will then take effect on July 1.
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