Radical changes will occur on January 1, 1998. The legislature set that date for the Division to enact "guidelines" for condominium and cooperative association fining. Instead of merely setting guidelines, the Division entered the fining arena with full gusto, setting forth pages of rules.

Setting minimum fines, not just guidelines, is not the only area the Division exceeded its statutory mandate. Though the legislature set maximum fines at $5,000, the mandatory rules encourage fines that grossly exceed the maximum. Further, though the legislature sought to encourage the Division's role in education of associations and volunteers, the rules fail to indicate any real effort to help, rather than hurt.

The fining rules have two roots. First, in response to complaints from some groups claiming to represent individual owners, particularly those in Dade and Broward counties, the legislature amended §718.504 requiring the Division of Land Sales to promulgate fining rules. See Memorandum to Clients July 1997. Second, the Division has had great difficulty regulating developers, especially time-share developers. The Division foresees that by hitting developers in the proverbial pocketbook, developers will have an incentive to follow the law. Unfortunately, the Division is hitting associations' and directors' pocketbooks.

Most condominium and cooperative association officers and directors will find these rules incredible. The fines are found in three proposed rules. Fla. Admin. Code R. 61B-21.001 provides general definitions. Fla. Admin. Code R. 61B-21.002 provides purpose and general provisions. Fla. Admin. Code R. 61B-21.003 provides penalties. Though the legislature has capped penalties at $5,000, and limits director finings for those instances where there was willful failure to follow a rule, the proposed rules do not effectively include these limitations.

The rules act almost as a checklist identifying who is responsible for doing what within a condominium and cooperative community. Certain items are obvious for their potential impact upon an association, such as failing to properly keep reserve funds. A great many others are less obvious, such as regulating a budget's title or not keeping a developer's receipt for association records. On a positive note, for the first time substantial fines for developers who violate the Condominium and Cooperative Act may be forthcoming.

Unfortunately, volunteers may be faced with the old adage "no good deed goes unpunished." The fining rules apparently seek to target "technical" violations. Association fines for even minor violations are set between $8 and $20 per unit. For example, consider an association administering a three hundred unit condominium. Under the proposal, if the condominium association's calendar year budget is entitled "1997 Budget" without specifying that the budget is from January 1 through December 31, then the association would be subject to a $6,000 fine! If the Division while reviewing a budget found that an association did not include a blank line for security, even if security was not an expense, then an additional $6,000 fine could be levied. To add insult to injury, the Division could invoke a harsher penalty if an association sought a hearing to claim innocence.

Recognizing the problems the rules create, The Florida Bar's Real Property Section's Condominium and Planned Development Committee authorized its Condominium Subcommittee to propose alternative rules. One goal is to protect directors and officers who are not professional managers. Unit owners may contact their state representatives and senators urging repeal of the law which called for fining guidelines.

Most of the conduct regulated by the Act does not occur in the association assessment context. It only applies to defined "debt collectors". Defined debt collectors are, for example, prohibited from making late night harassing telephone calls, addressing mail to "deadbeat" or "delinquent", or contacting debtors' employers. Notably, these outrageous types of debt collection efforts have not been seen in the association context.

This issue is important because if a debt is regulated by the Federal Fair Debt Collection Practices Act, then the methods used by those retained by an association to collect debts becomes heavily regulated. The decisions in conflict are Newman v. Boehm, Perlstein et. al, 119 F.3d 477 (7th Cir., July 2, 1997) and Bryan v. Clayton, _____ So.2d _____ (Fla. 5th DCA, September 12, 1997). Specifically, the Newman Court determined that assessments are a defined debt and those collecting debts are regulated under the Act. The Bryan Court held otherwise.

If the Act applies to assessment debt collectors, then the initial communication to a debtor must identify to whom the debt is owned. It must also specify that there is a right of verification and that the debtor has thirty days to seek a verification. Some courts have held that requiring a debt to be paid before the thirty days allowed to seek a verification would violate the law. Thus, those involved in regulated debt collection normally provide an initial payment period of thirty days.

For regulated consumer debts the firm will continue to provide consumer debtors thirty days from the date of the initial demand to pay the monies due. This means that a typical "Ten Day Demand Letter" will now have a thirty day payment deadline. Associations should adjust their collection policies accordingly.