New HOA law approved; Sen. Hays fulfills promise

Article Courtesy of The Ocala Star Banner

By Bill Thompson

Published June 25, 2013

Some advocates for expanded homeowners’ rights are heartened by a new law that seeks to rein in some questionable, if not outright bad, practices by developers and homeowners associations.

Gov. Rick Scott on June 14 signed a wide-ranging reform bill affecting how HOAs operate, including new provisions covering record keeping, elections, on-site management and homeowners’ control of the community.

The reforms are designed to address complaints, as have been voiced by local activists for years, that developers are often unaccountable.

State Sen. Alan Hays, a Umatilla Republican who represents part of southern Marion County, offered the bulk of the key reform provisions in the new law, which takes effect Monday.

For example, the law requires that HOA records must be kept within 45 miles of the community in question, or within the same county.

Current state law says those documents only must be maintained somewhere in the state.

Members of HOAs will now be able to photograph association records by using electronic devices, such as tablets, cell phones, or portable scanners, upon inspecting them.

The law previously allowed HOA managers to make such records available only after a written request and then gave them up to 10 days to comply.

The new revisions also cap how much HOA managers can charge for producing association records, both in personnel costs and for copying, reducing the maximum for that service from 50 cents per page to 25 cents.

The new law also borrowed from many of the regulations governing the management of condominium associations.

For the first time, for instance, HOA officers and directors will have to certify in writing that they have actually read the rules governing the community. That must happen within 90 days of their election to the board.

The new law also forces directors to disclose a conflict of interest if they are a contractor involved with the association they run, and mandates that such deals be approved by at least a two-thirds majority of the HOA board.

If the board changes its mind and decides it doesn’t like the arrangement, then the contract can be voided by a majority vote.

Under the new law, directors can also be penalized for accepting kickbacks from anyone seeking to do business with the HOA, including immediate removal from office.

Directors who are charged with and convicted of embezzlement of association funds can also be removed from office.

Governing a subdivision HOA under state law, unlike with condo groups, was left to the developers until one of two conditions were met.

That meant either 90 percent of the lots within the community were sold to homeowners, or the handoff could occur sooner if the developer permitted it by setting a lower threshold.

The new law, in contrast, implements homeowner control if the developer fails to finish advertised amenities or infrastructure, files for bankruptcy, loses the property because of foreclosure, or has appointed in his or her stead a court-ordered receiver who remains in that post for more than 30 days after being named.

Homeowners are also entitled to elect at least one of their own to the HOA board once 50 percent of the parcels in all phases of the community are sold.

Moreover, the law attempts to further empower homeowners by banning a developer from unilaterally changing the community’s covenants.

Another condo-style provision incorporated into the new law gives state business regulators the power to investigate and discipline complaints against community association managers with authority over HOAs.

These managers are considered professional administrators and must be licensed by the state if they run a property that has more than 10 units or an HOA whose budget exceeds $100,000 a year, as well as having duties that include control of the association’s funds, responsibility for drafting its budget and overseeing its services.

The Department of Professional and Business Regulation, once the new law kicks in, can investigate complaints brought against those administrators for violations of laws specific to the operation of HOAs.

Another first under the new statute is a requirement that community managers provide information about their HOA to the Department of Professional and Business Regulation. If the HOA does not have a community manager then the association itself must comply.

One of those groups will now file the HOA’s legal name, its federal employer identification number, its address, the total number of parcels under its control and the total amount of revenues and expenditures from the association’s yearly budget.

That led some opponents to urge the governor to veto the bill, arguing that they didn’t want information about their communities publicly available and that it would only lead to more intense regulation from Tallahassee.

Jan Lentz, a homeowner in west Marion who for years has been part of a group advocating for tighter regulation of developers, was pleased with the new legislation.

“On balance we are happy with final version of the bill,” she said in an email, “as it gives property owners new recourse to remedy problems.”

Jan Bergemann, president of the DeLand-based Cyber Citizens For Justice, billed as Florida’s largest statewide property owners’ advocacy group, noted that Sen. Hays had promised at the Marion County delegation meeting prior to the 2013 session he would push for reforming HOA laws.

“He delivered,” Bergemann said in an email. The law has “a lot of great developer provisions.”

Bergemann noted that he was most excited by the provision requiring the HOAs to be registered because that, for the first time, would give the state an idea of how many Floridians are affected by the lack of oversight on developers.

Writing on his group’s blog, Bergemann thanked Hays and also wanted to praise state Reps. Debbie Mayfield, R-Vero Beach, and Mike LaRosa R-St. Cloud, who sponsored the House version.

“Florida’s homeowners living in mandatory homeowners’ associations ... really owe these legislators a big debt of gratitude,” he wrote.