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House Bill 3321

Florida House of Representatives - 1998 HB 3321 By Representative Crow 1 A bill to be entitled 2 An act relating to condominiums; amending s. 3 718.103, F.S.; redefining the term "developer"; 4 amending s. 718.111, F.S.; revising language 5 with respect to the operation of the 6 association to provide for the regulation of 7 resort condominiums; providing criteria; 8 amending s. 718.112, F.S.; revising language 9 with respect to required provisions in the 10 bylaws; authorizing a member of the board of 11 administration or a committee to join by 12 written concurrence in certain actions; 13 providing requirements with respect to 14 telephone conferences; amending s. 718.116, 15 F.S.; providing for the payment of uninsured 16 common expenses under certain circumstances; 17 reenacting s. 718.115(1)(c), F.S.; to 18 incorporate said amendment in a reference; 19 amending s. 718.301, F.S.; authorizing the 20 division to adopt rules to ensure the efficient 21 and effective transition from developer control 22 of a condominium to a unit owner-controlled 23 association; amending s. 718.3026, F.S.; 24 providing conditions under which a worker is 25 considered an employee of an association; 26 amending s. 718.501, F.S.; authorizing the 27 division to establish timeframes for and 28 require information relating to the creation, 29 merger, and termination of condominiums and the 30 dissolution of condominium associations; 31 amending s. 718.502, F.S.; providing time 1 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 limitations on closing a contract for sale or 2 lease of a condominium for a period of more 3 than 5 years; providing for rules; amending s. 4 718.503, F.S.; providing an additional 5 requirement with respect to developer 6 disclosure; creating s. 718.621, F.S.; 7 providing for rulemaking authority; providing 8 an effective date. 9 10 Be It Enacted by the Legislature of the State of Florida: 11 12 Section 1. Subsection (15) of section 718.103, Florida 13 Statutes, is amended to read: 14 718.103 Definitions.--As used in this chapter, the 15 term: 16 (15) "Developer" means a person who creates a 17 condominium or offers condominium parcels for sale or lease in 18 the ordinary course of business, but does not include an owner 19 or lessee of a condominium or cooperative unit who has 20 acquired the unit for his or her own occupancy, nor does it 21 include a cooperative association which creates a condominium 22 by conversion of an existing residential cooperative after 23 control of the association has been transferred to the unit 24 owners if, following the conversion, the unit owners will be 25 the same persons who were unit owners of the cooperative and 26 no units are offered for sale or lease to the public as part 27 of the plan of conversion. For the purposes of this 28 subsection, a person is presumed to offer condominium parcels 29 for sale or lease in the ordinary course of business when that 30 person: 31 2 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 (a) Offers more than seven parcels, or for 2 condominiums comprised of less than 70 parcels, when that 3 person offers more than five parcels in the condominium within 4 a period of 1 year; or 5 (b) Participates in a common promotional plan which 6 offers more than seven parcels within a period of 1 year. A 7 person is not, however, deemed to have participated in a plan 8 merely by virtue of providing financial contributions or 9 professional or brokerage services. 10 11 The provisions of this subsection to the contrary 12 notwithstanding, the presumption that a person is offering 13 condominium units in the ordinary course of business will not 14 apply for filing purposes when all of the units are offered 15 and conveyed to a single purchaser in a single transaction. An 16 example of such a transaction would be a financial lending 17 institution receiving title to a number of condominium units 18 through foreclosure or deed in lieu of foreclosure and then 19 conveying all of such units to another person. In such 20 circumstances, the lending institution would be deemed to be a 21 developer for filing purposes. However, such entity shall, 22 upon conveyance to a single purchaser, notify the bureau in 23 writing of the identity and business address of the purchaser, 24 the name of the condominium involved, the date of the 25 conveyance, and the number of units conveyed. 26 Section 2. Subsection (6) of section 718.111, Florida 27 Statutes, is amended to read: 28 718.111 The association.-- 29 (6) OPERATION OF PHASE AND RESORT CONDOMINIUMS.-- 30 (a) Notwithstanding any provision of this chapter, an 31 association may operate residential condominiums in a phase 3 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 project initially created pursuant to former s. 711.64 and may 2 continue to so operate such project as though it were a single 3 condominium for purposes of financial matters, including 4 budgets, assessments, accounting, recordkeeping, and similar 5 matters, if provision is made for such consolidated operation 6 in the applicable declarations of each such condominium as 7 initially recorded or in the bylaws as initially adopted. 8 Notwithstanding any provision in this chapter, common expenses 9 for residential condominiums in such a project being operated 10 by a single association may be assessed against all unit 11 owners in such project pursuant to the proportions or 12 percentages established therefor in the declarations as 13 initially recorded or in the bylaws as initially adopted, 14 subject, however, to the limitations of ss. 718.116 and 15 718.302. 16 (b) If authorized by the bylaws, common expenses of 17 multiple condominiums operated by a single association may 18 also be assessed against all owners in such condominiums, 19 provided that such condominiums are all operated as part of a 20 rental pool in a hotel or resort-type setting, where each unit 21 of a similar type and square footage receives a uniform rental 22 income; the association determines that the proper maintenance 23 of the units and buildings in all condominiums participating 24 in such an agreement is important to the preservation of value 25 and marketability of each of the individual condominiums; and 26 the condominium units were registered and sold as securities 27 with the Securities and Exchange Commission (SEC), and the 28 prospectus did not state that the owners in each condominium 29 within the complex would be solely responsible for expenses 30 attributable to the individual condominium. 31 4 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 Section 3. Paragraph (b) of subsection (2) of section 2 718.112, Florida Statutes, is amended to read: 3 718.112 Bylaws.-- 4 (2) REQUIRED PROVISIONS.--The bylaws shall provide for 5 the following and, if they do not do so, shall be deemed to 6 include the following: 7 (b) Quorum; voting requirements; proxies.-- 8 1. Unless a lower number is provided in the bylaws, 9 the percentage of voting interests required to constitute a 10 quorum at a meeting of the members shall be a majority of the 11 voting interests. Unless otherwise provided in this chapter 12 or in the declaration, articles of incorporation, or bylaws, 13 and except as provided in subparagraph (d)3., decisions shall 14 be made by owners of a majority of the voting interests 15 represented at a meeting at which a quorum is present. 16 2. Except as specifically otherwise provided herein, 17 after January 1, 1992, unit owners may not vote by general 18 proxy, but may vote by limited proxies substantially 19 conforming to a limited proxy form adopted by the division. 20 Limited proxies and general proxies may be used to establish a 21 quorum. Limited proxies shall be used for votes taken to 22 waive or reduce reserves in accordance with subparagraph 23 (f)2.; for votes taken to waive financial statement 24 requirements as provided by s. 718.111(14); for votes taken to 25 amend the declaration pursuant to s. 718.110; for votes taken 26 to amend the articles of incorporation or bylaws pursuant to 27 this section; and for any other matter for which this chapter 28 requires or permits a vote of the unit owners. Except as 29 provided in paragraph (d), after January 1, 1992, no proxy, 30 limited or general, shall be used in the election of board 31 members. General proxies may be used for other matters for 5 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 which limited proxies are not required, and may also be used 2 in voting for nonsubstantive changes to items for which a 3 limited proxy is required and given. Notwithstanding the 4 provisions of this subparagraph, unit owners may vote in 5 person at unit owner meetings. Nothing contained herein shall 6 limit the use of general proxies or require the use of limited 7 proxies for any agenda item or election at any meeting of a 8 timeshare condominium association. 9 3. Any proxy given shall be effective only for the 10 specific meeting for which originally given and any lawfully 11 adjourned meetings thereof. In no event shall any proxy be 12 valid for a period longer than 90 days after the date of the 13 first meeting for which it was given. Every proxy is 14 revocable at any time at the pleasure of the unit owner 15 executing it. 16 4. A member of the board of administration or a 17 committee may join by written concurrence in any action taken 18 at a meeting of the board or committee, but such concurrence 19 may not be used for the purposes of creating a quorum. 20 5. When some or all of the board or committee members 21 meet by telephone conference, those board or committee members 22 attending by telephone conference may be counted toward 23 obtaining a quorum and may vote by telephone. A telephone 24 speaker shall be utilized so that the conversation of those 25 board members attending by telephone may be heard by the board 26 or committee members attending in person, as well as by unit 27 owners present at the meeting. 28 Section 4. Paragraph (a) of subsection (9) of section 29 718.116, Florida Statutes, is amended to read: 30 718.116 Assessments; liability; lien and priority; 31 interest; collection.-- 6 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 (9)(a) No unit owner may be excused from the payment 2 of his or her share of the common expense of a condominium 3 unless all unit owners are likewise proportionately excused 4 from payment, except as provided in subsection (1) and in the 5 following cases: 6 1. If the declaration so provides, a developer or 7 other person who owns condominium units offered for sale may 8 be excused from the payment of the share of the common 9 expenses and assessments related to those units for a stated 10 period of time subsequent to the recording of the declaration 11 of condominium. The period must terminate no later than the 12 first day of the fourth calendar month following the month in 13 which the closing of the purchase and sale of the first 14 condominium unit occurs. However, the developer must pay 15 those the portion of common expenses incurred during that 16 period which exceed the amount assessed against other unit 17 owners. However, if the developer-controlled association shall 18 have maintained all the insurance coverages required by s. 19 718.111(11), the common expenses incurred during the foregoing 20 period resulting from a natural disaster or an act of God, 21 which are not covered by insurance proceeds from the insurance 22 maintained by the association, shall be assessed against all 23 unit owners owning units on the date of such natural disaster 24 or act of God and their successors and assigns, including the 25 developer with respect to units owned by the developer. Each 26 unit owner and his or her unit shall be assessed a pro rata 27 amount of such uninsured costs based upon such unit's 28 undivided share of the common elements. 29 2. A developer or other person who owns condominium 30 units or who has an obligation to pay condominium expenses may 31 be excused from the payment of his or her share of the common 7 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 expense which would have been assessed against those units 2 during the period of time that he or she has guaranteed to 3 each purchaser in the purchase contract, declaration, or 4 prospectus, or by agreement between the developer and a 5 majority of the unit owners other than the developer, that the 6 assessment for common expenses of the condominium imposed upon 7 the unit owners would not increase over a stated dollar amount 8 and has obligated himself or herself to pay those any amount 9 of common expenses incurred during that period and not 10 produced by the assessments at the guaranteed level receivable 11 from other unit owners. The guarantee may provide that after 12 an initial stated period, the developer has an option or 13 options to extend the guarantee for one or more additional 14 stated periods. However, notwithstanding the foregoing 15 limitation, if the developer-controlled association shall have 16 properly maintained all insurance coverages required by s. 17 718.111(11), the common expenses incurred during the period of 18 guarantee resulting from a natural disaster or an act of God 19 which is not covered by insurance proceeds from the insurance 20 maintained by the association, shall be assessed against all 21 unit owners owning units on the date of such natural disaster 22 or act of God and their successors and assigns, including the 23 developer with respect to the units owned by the developer. 24 Each unit owner and his or her unit shall be assessed a pro 25 rata amount of such uninsured costs based upon such unit's 26 undivided share of common elements. 27 Section 5. Subsection (6) is added to section 718.301, 28 Florida Statutes, to read: 29 718.301 Transfer of association control.-- 30 (6) The division may establish rules to ensure the 31 efficient and effective transition from developer control of a 8 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 condominium to the establishment of a unit owner-controlled 2 association. 3 Section 6. Paragraph (a) of subsection (2) of section 4 718.3026, Florida Statutes, is amended to read: 5 718.3026 Contracts for products and services; in 6 writing; bids; exceptions.--Associations with less than 100 7 units may opt out of the provisions of this section if 8 two-thirds of the unit owners vote to do so, which opt-out may 9 be accomplished by a proxy specifically setting forth the 10 exception from this section. 11 (2)(a)1. Notwithstanding the foregoing, contracts with 12 employees of the association, and contracts for attorney, 13 accountant, architect, community association manager, 14 timeshare management firm, engineering, and landscape 15 architect services are not subject to the provisions of this 16 section. For purposes of this paragraph, a worker shall be 17 considered an employee of an association when the association 18 pays or deducts, for or on behalf of the worker, social 19 security taxes, unemployment compensation taxes, and federal 20 withholding taxes. 21 2. A contract executed before January 1, 1992, and any 22 renewal thereof, is not subject to the competitive bid 23 requirements of this section. If a contract was awarded under 24 the competitive bid procedures of this section, any renewal of 25 that contract is not subject to such competitive bid 26 requirements if the contract contains a provision that allows 27 the board to cancel the contract on 30 days' notice. 28 Materials, equipment, or services provided to a condominium 29 under a local government franchise agreement by a franchise 30 holder are not subject to the competitive bid requirements of 31 this section. A contract with a manager, if made by a 9 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 competitive bid, may be made for up to 3 years. A condominium 2 whose declaration or bylaws provides for competitive bidding 3 for services may operate under the provisions of that 4 declaration or bylaws in lieu of this section if those 5 provisions are not less stringent than the requirements of 6 this section. 7 (b) Nothing contained herein is intended to limit the 8 ability of an association to obtain needed products and 9 services in an emergency. 10 (c) This section shall not apply if the business 11 entity with which the association desires to enter into a 12 contract is the only source of supply within the county 13 serving the association. 14 (d) Nothing contained herein shall excuse a party 15 contracting to provide maintenance or management services from 16 compliance with s. 718.3025. 17 Section 7. Subsection (2) of section 718.501, Florida 18 Statutes, is amended to read: 19 718.501 Powers and duties of Division of Florida Land 20 Sales, Condominiums, and Mobile Homes.-- 21 (2)(a) Effective January 1, 1992, each condominium 22 association which operates more than two units shall pay to 23 the division an annual fee in the amount of $4 for each 24 residential unit in condominiums operated by the association. 25 If the fee is not paid by March 1, then the association shall 26 be assessed a penalty of 10 percent of the amount due, and the 27 association will not have standing to maintain or defend any 28 action in the courts of this state until the amount due, plus 29 any penalty, is paid. 30 (b) The division may, by rule, establish timeframes 31 for and require information relating to the creation, merger, 10 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 and termination of condominiums and dissolution of condominium 2 associations. 3 (c)(b) All fees shall be deposited in the Division of 4 Florida Land Sales, Condominiums, and Mobile Homes Trust Fund 5 as provided by law. 6 Section 8. Subsection (1) of section 718.502, Florida 7 Statutes, is amended to read: 8 718.502 Filing prior to sale or lease.-- 9 (1)(a) A developer of a residential condominium or 10 mixed-use condominium shall file with the division one copy of 11 each of the documents and items required to be furnished to a 12 buyer or lessee by ss. 718.503 and 718.504, if applicable. 13 Until the developer has so filed, a contract for sale of a 14 unit or lease of a unit for more than 5 years shall be 15 voidable by the purchaser or lessee prior to the closing of 16 his or her purchase or lease of a unit. A developer shall not 17 close on any contract for sale or contract for a lease period 18 of more than 5 years until the developer prepares and delivers 19 to a purchaser and to the division documents that comply with 20 this chapter and rules adopted by the division and until the 21 division notifies the developer that the filing is proper. 22 (b) The division may, by rule, develop filing and 23 review programs and relevant timetables necessary to ensure 24 compliance with the notice and disclosure requirements of this 25 chapter. 26 Section 9. Paragraph (b) of subsection (1) of section 27 718.503, Florida Statutes, is amended to read: 28 718.503 Developer disclosure prior to sale; 29 nondeveloper unit owner disclosure prior to sale; 30 voidability.-- 31 (1) DEVELOPER DISCLOSURE.-- 11 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 (b) Copies of documents to be furnished to prospective 2 buyer or lessee.--Until such time as the developer has 3 furnished the documents listed below to a person who has 4 entered into a contract to purchase a residential unit or 5 lease it for more than 5 years, the contract may be voided by 6 that person, entitling the person to a refund of any deposit 7 together with interest thereon as provided in s. 718.202. The 8 contract may be terminated by written notice from the proposed 9 buyer or lessee delivered to the developer within 15 days 10 after the buyer or lessee receives all of the documents 11 required by this section. The developer shall not close for 15 12 days following the execution of the agreement and delivery of 13 the documents to the buyer as evidenced by a signed receipt 14 for documents unless the buyer is informed in the 15-day 15 voidability period and agrees to close prior to the expiration 16 of the 15 days. The developer shall retain in his records 17 proof of purchaser's agreement to close prior to the 18 expiration of said voidability period. Said proof shall be 19 retained for a period of 5 years after the date of the closing 20 of the transaction. The documents to be delivered to the 21 prospective buyer are the prospectus or disclosure statement 22 with all exhibits, if the development is subject to the 23 provisions of s. 718.504, or, if not, then copies of the 24 following which are applicable: 25 1. The question and answer sheet described in s. 26 718.504, and declaration of condominium, or the proposed 27 declaration if the declaration has not been recorded, which 28 shall include the certificate of a surveyor approximately 29 representing the locations required by s. 718.104. 30 2. The documents creating the association. 31 3. The bylaws. 12 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 4. The ground lease or other underlying lease of the 2 condominium. 3 5. The management contract, maintenance contract, and 4 other contracts for management of the association and 5 operation of the condominium and facilities used by the unit 6 owners having a service term in excess of 1 year, and any 7 management contracts that are renewable. 8 6. The estimated operating budget for the condominium 9 and a schedule of expenses for each type of unit, including 10 fees assessed pursuant to s. 718.113(1) for the maintenance of 11 limited common elements where such costs are shared only by 12 those entitled to use the limited common elements. 13 7. The lease of recreational and other facilities that 14 will be used only by unit owners of the subject condominium. 15 8. The lease of recreational and other common 16 facilities that will be used by unit owners in common with 17 unit owners of other condominiums. 18 9. The form of unit lease if the offer is of a 19 leasehold. 20 10. Any declaration of servitude of properties serving 21 the condominium but not owned by unit owners or leased to them 22 or the association. 23 11. If the development is to be built in phases or if 24 the association is to manage more than one condominium, a 25 description of the plan of phase development or the 26 arrangements for the association to manage two or more 27 condominiums. 28 12. If the condominium is a conversion of existing 29 improvements, the statements and disclosure required by s. 30 718.616. 31 13. The form of agreement for sale or lease of units. 13 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 14. A copy of the floor plan of the unit and the plot 2 plan showing the location of the residential buildings and the 3 recreation and other common areas. 4 15. A copy of all covenants and restrictions which 5 will affect the use of the property and which are not 6 contained in the foregoing. 7 16. If the developer is required by state or local 8 authorities to obtain acceptance or approval of any dock or 9 marina facilities intended to serve the condominium, a copy of 10 any such acceptance or approval acquired by the time of filing 11 with the division under s. 718.502(1), or a statement that 12 such acceptance or approval has not been acquired or received. 13 17. Evidence demonstrating that the developer has an 14 ownership, leasehold, or contractual interest in the land upon 15 which the condominium is to be developed. 16 Section 10. Section 718.621, Florida Statutes, is 17 created to read: 18 718.621 Rulemaking authority.--The division is 19 authorized to make rules as necessary to implement and ensure 20 compliance with the developer's obligations with respect to 21 condominium conversions concerning the filing and noticing of 22 intended conversion, rental agreement extensions, right of 23 first refusal, and disclosure and post-disclosure protections. 24 Section 11. For the purpose of incorporating the 25 amendment to paragraph (a) of subsection (9) of section 26 718.116, Florida Statutes, in a reference thereto, paragraph 27 (c) of subsection (1) of section 718.115, Florida Statutes, is 28 reenacted to read: 29 718.115 Common expenses and common surplus.-- 30 (1) 31 14 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 (c) The expense of installation, replacement, 2 operation, repair, and maintenance of hurricane shutters by 3 the board pursuant to s. 718.113(5) shall constitute a common 4 expense as defined herein and shall be collected as provided 5 in this section. Notwithstanding the provisions of s. 6 718.116(9), a unit owner who has previously installed 7 hurricane shutters in accordance with s. 718.113(5) or 8 laminated glass architecturally designed to function as 9 hurricane protection which complies with the applicable 10 building code shall receive a credit equal to the pro rata 11 portion of the assessed installation cost assigned to each 12 unit. However, such unit owner shall remain responsible for 13 the pro rata share of expenses for hurricane shutters 14 installed on common elements and association property by the 15 board pursuant to s. 718.113(5), and shall remain responsible 16 for a pro rata share of the expense of the replacement, 17 operation, repair, and maintenance of such shutters. 18 Section 12. This act shall take effect upon becoming a 19 law. 20 21 22 23 24 25 26 27 28 29 30 31 15 CODING: Words stricken are deletions; words underlined are additions. Florida House of Representatives - 1998 HB 3321 568-135B-98 1 ***************************************** 2 HOUSE SUMMARY 3 Revises provisions of law relating to condominiums to: 4 1. Redefine the term "developer." 2. Provide for the operation of resort condominiums 5 and to provide that when authorized by bylaws, common expenses of multiple condominiums operated by a single 6 association may also be assessed against all unit owners in such condominiums under described circumstances. 7 3. Authorize members of the board of administration or a committee to join by written concurrence in certain 8 actions and to provide requirements with respect to the constitution of a quorum. 9 4. Provide for the payment of uninsured common expenses under described circumstances. 10 5. Authorize the division to adopt rules to ensure the efficient and effective transition from developer 11 control of a condominium to a unit owner-controlled association. 12 6. Provide conditions under which a worker is considered an employee of the association. 13 7. Authorize the division to establish timeframes for and require information relating to the creation, 14 merger, and termination of condominiums and the dissolution of condominium associations. 15 8. Provide limitations on the closing of a contract for sale or lease of a condominium for a period of more 16 than 5 years. 9. Provide additional requirements with respect to 17 developer disclosure. 18 See bill for details. 19 20 21 22 23 24 25 26 27 28 29 30 31 16