2007 LEGISLATIVE UPDATE:
NEW LAWS, NEW REQUIREMENTS, ACT NOW!

The 2007 legislative session just ended. Governor Crist is signing bills into law as this is being printed. Some issues require immediate action. Condominium and homeowners= associations may be significantly impacted.

Homeowners= associations are alerted that at least one bill awaiting the Governor=s signature requires immediate action. The bill limits homeowners= associations= regulation of architectural issues unless there are specific covenants or rules; thus, many communities will have to undertake extensive amendments to their restrictions. In addition, budgeting may change, particularly for those homeowners= associations with reserves. Further, homeowners= associations will have to change the method in which they collect delinquent accounts.

Four bills appear to have the greatest impact upon day to day association governance. Senate Bill 902/ House Bill 433 appears to have the greatest impact. If signed by the Governor, this Bill will be effective on July 1, 2007, except as noted below. This long Bill is summarized into two areas: homeowners= association and condominium association issues.

HOMEOWNERS= ASSOCIATIONS.

Governance. '720.302 is amended to clarify that homeowner associations may be governed by either the Florida for-profit or not-for-profit corporations act.

Board Meetings. '720.303(2)(a) is amended to clarify that notice requirements for board of directors= meetings also apply to committees and similar bodies when they meet to make a final decision concerning spending association funds or with authority to approve or disapprove architectural decisions concerning parcels/lots and deletes contradictory provisions adopted in 2004.

Records. '720.303(5) is amended to clarify that the association is not required to provide information to individuals who are not owners; however, if the association desires to do so, then the association may charge a reasonable fee for a good faith disclosure, subject to a maximum of $150.00, for that effort.

Budgets. '720.303(6) is amended to provide that budgets must include annual operating expenses for all association expenses. The budget may also include reserve accounts. Once reserves have been kept, then reserves must be budgeted thereafter unless waived by the owners. A budget without reserves must include a conspicuous warning that reserves have not been kept. If reserves are kept, then the funds must be utilized for the purpose collected unless approved by a majority of all voting interests.

Financial Reporting. '720.303(7) is amended to provide longer dates for financial reporting of a fiscal year to members and to require compliance with Board of Accountancy regulations.

Architectural Control. '720.3035 is created to limit homeowners= associations architectural control to those matters that are specifically stated or reasonably inferred in the declaration of covenants. If a declaration provides that authority and the authority is not specific, then the association must publish guidelines as authorized by the declaration of covenants. Setbacks are defined, as well as remedies for associations failing to comply with the law. A parcel owner who suffers a loss because of unreasonable, knowing and willful infringement of rights may seek damages incurred in preserving or restoring the owner=s rights.

Fees. '720.305(1) is amended to clarify that a member who prevails in a lawsuit against the Association pursuant to the Homeowners= Association Act may not only recover their attorneys= fees, but also a sum to reimburse the member for the attorneys= fees expended by the association on that litigation.

Merger. '720.306(1)8 is amended to clarify that the merger of homeowners= associations is not a material or adverse alteration of proportional voting interests thus making it easier to merge homeowner associations.

Transition. '720.307(3) is amended to add a new provision to clarify the financial records that must be provided by a developer to the association at turnover which includes source documents of the association from the date of incorporation. An audit is required if the association has performed an audit for each year since incorporation. This applies to associations created after December 31, 2007.

Assessments. '720.308(2) is created permitting developers to guarantee the payment of assessments for a limited period of time before transition.

Mediation. '720.311 is significantly amended to remove the State of Florida from most mandatory pre-suit mediation efforts. Most covenant enforcement disputes still must proceed to mediation before a suit is filed, except for many matters seeking monetary damages. Emergency temporary injunctions can be sought in court. Instead of seeking mediation through the State of Florida, the Aaggrieved party,@ which is usually the association, provides a notice to a member/owner of a dispute and provides a list of alternative mediators.

CONDOMINIUM ASSOCIATIONS.

Beaches. '718.106(5) is created to prevent local governments from prohibiting unit owners or associations from allowing guests, licensees or invitees access to public beaches neighboring the condominium.

Mortgagee Consent. '718.110(11) is amended to provide that effective October 1, 2007, a new declaration of condominium, articles of incorporation or by-laws can require joinder of mortgage holders to amendments that would adversely affect priority or would materially affect mortgagees. However, a lender cannot veto amendments implementing new insurance laws. Only an adversely affected mortgage lender could challenge an amendment on the basis of a lack of that lenders consent, and only within five years after an the amendment=s recording. Associations may rely on the public records to identify mortgage holders.

Clubs. '718.114 is amended to limit associations from acquiring club memberships by construing the acquisition after twelve months of the recording of the declaration as a material alteration or substantial addition to association property.

Mixed Use Condominium. '718.404 is amended to clarify that commercial unit owners cannot exercise a veto by virtue of their status as commercial owners over residential owners voting. This is stated as being retroactive.

It is anticipated that the Governor will sign this Bill; thus, associations, especially homeowners= associations, must be quick to respond to the changes.

Homeowners= association collection efforts are impacted by Senate Bill 1844/House Bill 1465. If signed by the Governor, Senate Bill 1844/House Bill will be effective July 1, 2007. In response to the clamor arising because of the significant number of foreclosures and the perception that homeowners= associations foreclose too fast, the legislation requires homeowners= associations to provide owners notice 45 days before a lien is recorded and an additional 45 day notice before a lien foreclosure action is filed. An owner is also allowed to obtain an extension of time to pay during a foreclosure action.

House Bill 7031/Senate Bill 396 was signed by the Governor as Florida Law 2007-80, effective May 24, 2007. This law is intended to permit condominium associations to fund properly approved insurance pools.

Senate Bill 314/House Bill 407, if signed by the Governor, will be effective July 1, 2007. Senate Bill 314/House Bill 407 allows a condominium association to terminate a condominium. Provisions are included for communities devastated by a catastrophe, such as after a hurricane, as well as when a condominium=s infrastructure has so deteriorated that it does not make sense to rebuild the condominium.

As noted above, only one of the bills has actually been signed by the Governor; thus, there are questions as to whether each item will become law. If a bill becomes a law, then the bill will be subject to court interpretation and state regulations. Associations should consult with their corporate counsel so that they are prepared for the changes in the law.