Help Is on the Way for Florida's Homeowner Associations

By Eric M. Glazer, Esq.

Published July 2013

For far too long, homeowner associations have been treated like the red-headed stepchild of the Florida Legislature. Condominium associations in Florida are governed by a superior and more detailed statute. Furthermore, unit owners in condominiums get assistance from the Department of Business and Professional Regulation (DBPR) through an informative website with online forms, a hotline to answer condominium law questions, investigators to answer complaints, and document examiners to review developer filings, declaratory statements, and more. It was time to at least try and level the playing field. This past legislative session Cyber Citizens for Justice (www.ccfj,net) made it their priority to get much needed legislative help to Florida homeowner associations and sought my firm's legal assistance and the assistance of Richard Pinsky, a lobbyist with Akerman.

The first task was to find legislators who were willing to come to the aid of the millions of homeowners in the state. This is not the easiest of tasks, considering the fact that last year the Florida Legislature passed a law that removed developer warranties in homeowner associations for driveways, roads, sidewalks, utilities, and drainage. Finding legislators willing to take on the developer lobby was even harder. Luckily, Senator Alan Hays, Representative Michael LaRosa, and Representative Debbie Mayfield accepted the challenge and stepped up to the plate to help.

  
There were several glaring examples of how unfairly homeowners in an HOA were treated as compared to condominium owners, so my focus on creating new legislation started with that.

For example, the condominium statute automatically removes board members who are arrested for stealing association funds. The HOA statute did not contain such a provision. As a result, there have actually been cases of HOA presidents being arrested for stealing money from the association and continuing to serve as president of the HOA... from prison. That won't be the case any longer.

In addition, the condominium statute required the purchase of insurance or fidelity bonding for all persons who
handle association funds. The HOA statute did not, but it HOA statute allowed managers to charge members hourly fees, with no cap, for access to association records. There are horror stories of HOA members being charged hundreds of dollars for a few pages of records. Now, there will be a $20 per hour cap, and the first haJf hour is free.

In addition, homeowners will now be able to use their cell phone or camera to take pictures of the association's records free of charge. The topic of education is near and dear to my heart. I have taught a Board Certification course for condominium directors for the past few years, now having certified approximately 5,000 Floridians all around the state. It made no sense that HOA board members did not have to get certified, inasmuch as their responsibilities as board members are certainly equal to condominium directors. So starting July 1, HOA board members will now have to be certified as well.

In a condominium association, if a director wants to do business with the association, the contract must be disclosed, two-thirds of the non-interested directors must vote in favor, and the owners have a right to cancel the contract. HOA owners had no such protection until now. And believe it or not, only the condominium statute contains a provision that prevents board members from receiving kickbacks from vendors for awarding the vendor an association contract. Now HOA owners get the same protection in their association.

Owners in a condominium get to control their own destiny and get "turnover" from the developer to the unit owners far quicker than HOA members do. There are stories out there of HOA developers staying in control of communities for decades. HOA developers now must turn over control of the association if they file a Chapter 7 Bankruptcy petition, if a receiver is appointed, if they lose the property to foreclosure, or if they abandon or desert the property. Homeowners will also now be allowed one seat on the board when 50 percent of the units are sold. Let's just say that the developer lobby wasn't particularly happy with this new legislation.

My original proposed legislation would have allowed members in a homeowners association to get much needed assistance from the Department of Business and Professional Regulation. Some people believe that this is simply an expansion of government and bureaucracy, and another example of overregulation by the government.

My opinion differs. Providing assistance to owners, as mentioned above, is not overregulation. It is simply much needed assistance to homeowners, a means of getting help from developer abuse, and having simple questions answered and matters addressed, without the need to hire an expensive attorney. At no point along the way did I ever get the feeling that any legislator was against the DBPR providing help and assistance to HOA owners.
  

The problem in getting the legislation passed was that at present, the state of Florida simply has no idea who the homeowner associations are, where they are located, or how many homes in our state are actually situated within an HOA. So, effective July 1, homeowner associations will now be required to register with the DBPR and provide their name, address, employer i.d. number, number of parcels, and amount of their budget. It will not cost the association anything to register. If the community is managed by a licensed manager, that manager has the duty of complying with the statute. The thinking this year was to first find out who the associations are, and perhaps next year lean toward getting these associations the help they need from the DBPR.

I had the honor and privilege of appearing before committees of the Florida House and Senate to promote this legislation and personally met with senators, house members, and their staff in an effort to get the legislation passed. As the bill picked up steam by unanimously passing each sub-committee, additional excellent provisions were suggested by others.

For example, associations will now be required to send owners copies of amendments to the governing documents within 30 days of the amendment being recorded. In addition, in order to thwart a recent decision of the 3rd OCA, an association will no longer be financially penalized should the association foreclose on a unit and take title by having the unit ledger automatically go to zero. That court decision, unfortunately, resulted in associations not being paid a dime in past due assessments by subsequent purchasers at a bank's foreclosure sale. 

Additionally, now in an HOA, the right of the developer to amend the association's governing documents is subject to a test of reasonableness, which prohibits the developer from unilaterally making amendments to the governing documents that are arbitrary, capricious, or in bad faith; destroy the general plan of development; prejudice the rights of existing nondeveloper members to use and enjoy the benefits of common property; or materially shift economic burdens from the developer to the existing non-developer members.

All of these amendments to the HOA Statute were codified in House Bill 7119. The bill passed the House of Representatives by a vote of 114 to 4. The bill passed the Florida Senate by a vote of 37 to 0.

Governor Scott signed the bill into law on June 14. The effective date of all of these statutory amendments is July 1. All in all, it was a pretty successful year for homeowner associations in Florida, and for the first time in a long time, homeowner associations certainly have the legislature's ear. 

Of course, there is a lot of work still left undone, but after years of no help and even going in reverse, this year was the jump start needed to pass additional laws next year in the best interest of our Florida community associations.

Eric M. Glazer, Esquire is with Glazer & Associates, P.A., with offices throughout Florida.
He is also the host of the CondoCraze and HOA's radio show that airs each Sunday at noon on 850 WFTL.
For more, information, call (954) 983-1112 or visit www.hoa-laws.com.