| 1 | The Civil Justice Committee recommends the following: |
| 2 |
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| 3 | Council/Committee Substitute |
| 4 | Remove the entire bill and insert: |
| 5 | A bill to be entitled |
| 6 | An act relating to community associations; creating s. |
| 7 | 712.11, F.S.; authorizing certain associations to revive |
| 8 | lapsed covenants; amending s. 718.114, F.S.; providing |
| 9 | that certain leaseholds, memberships, or other possessory |
| 10 | or use interests shall be considered a material alteration |
| 11 | or substantial addition to certain real property; amending |
| 12 | s. 720.302, F.S.; revising application; amending s. |
| 13 | 720.303, F.S.; authorizing associations to charge |
| 14 | specified fees for providing certain information to |
| 15 | prospective purchasers or lienholders; limiting liability |
| 16 | for providing such information; revising what must be |
| 17 | included in an association's annual budget; providing for |
| 18 | reserve accounts for capital expenditures and deferred |
| 19 | maintenance; revising certain time requirements relating |
| 20 | to annual reports of associations; amending s. 720.305, |
| 21 | F.S.; prohibiting a fine levied by an association from |
| 22 | becoming a lien unless the governing documents claimed to |
| 23 | have been violated are recorded in the public records; |
| 24 | amending s. 720.306, F.S.; providing that certain mergers |
| 25 | or consolidations do not alter specified voting interests; |
| 26 | amending s. 720.307, F.S.; providing additional documents |
| 27 | that the developer must deliver at the time the |
| 28 | association members elect the board of directors; amending |
| 29 | s. 720.308, F.S.; providing that a guarantee of common |
| 30 | expenses shall be effective under certain circumstances; |
| 31 | requiring the guarantee to meet certain requirements; |
| 32 | authorizing the guarantee to provide certain requirements; |
| 33 | requiring the stated dollar amount of the guarantee to be |
| 34 | an exact dollar amount for each parcel identified in the |
| 35 | declaration; providing payments required from the |
| 36 | guarantor to be determined in a certain manner; providing |
| 37 | a formula to determine the guarantor's total financial |
| 38 | obligation to the association; providing that certain |
| 39 | expenses incurred in the production of certain revenues |
| 40 | shall not be included in the operating expenses; amending |
| 41 | s. 720.402, F.S., relating to publication of false or |
| 42 | misleading information; clarifying that the section does |
| 43 | not limit common-law rights; providing an effective date. |
| 44 |
|
| 45 | Be It Enacted by the Legislature of the State of Florida: |
| 46 |
|
| 47 | Section 1. Section 712.11, Florida Statutes, is created to |
| 48 | read: |
| 49 | 712.11 Covenant revitalization.--A homeowners' association |
| 50 | that is not subject to chapter 720 may use the procedures in ss. |
| 51 | 720.403-720.407 to revive covenants that have lapsed pursuant to |
| 52 | this chapter. |
| 53 | Section 2. Section 718.114, Florida Statutes, is amended |
| 54 | to read: |
| 55 | 718.114 Association powers.--An association has the power |
| 56 | to enter into agreements, to acquire leaseholds, memberships, |
| 57 | and other possessory or use interests in lands or facilities |
| 58 | such as country clubs, golf courses, marinas, and other |
| 59 | recreational facilities. It has this power whether or not the |
| 60 | lands or facilities are contiguous to the lands of the |
| 61 | condominium, if they are intended to provide enjoyment, |
| 62 | recreation, or other use or benefit to the unit owners. All of |
| 63 | these leaseholds, memberships, and other possessory or use |
| 64 | interests existing or created at the time of recording the |
| 65 | declaration must be stated and fully described in the |
| 66 | declaration. Subsequent to the recording of the declaration, |
| 67 | agreements acquiring these leaseholds, memberships, or other |
| 68 | possessory or use interests not entered into within 12 months |
| 69 | following the recording of the declaration shall be considered a |
| 70 | material alteration or substantial addition to the real property |
| 71 | that is association property, and the association may not |
| 72 | acquire or enter into agreements acquiring these leaseholds, |
| 73 | memberships, or other possessory or use interests except as |
| 74 | authorized by the declaration as provided in s. 718.113. The |
| 75 | declaration may provide that the rental, membership fees, |
| 76 | operations, replacements, and other expenses are common expenses |
| 77 | and may impose covenants and restrictions concerning their use |
| 78 | and may contain other provisions not inconsistent with this |
| 79 | chapter. A condominium association may conduct bingo games as |
| 80 | provided in s. 849.0931. |
| 81 | Section 3. Subsections (3) and (5) of section 720.302, |
| 82 | Florida Statutes, are amended to read: |
| 83 | 720.302 Purposes, scope, and application.-- |
| 84 | (3) Except as specifically provided in this chapter, this |
| 85 | chapter does not apply to: |
| 86 | (a) A community that is composed of property primarily |
| 87 | intended for commercial, industrial, or other nonresidential |
| 88 | use; or |
| 89 | (b) The commercial or industrial parcels in a community |
| 90 | that contains both residential parcels and parcels intended for |
| 91 | commercial or industrial use. |
| 92 | (5) Unless expressly stated to the contrary, corporations |
| 93 | not for profit that operate residential homeowners' associations |
| 94 | in this state shall be governed by and subject to chapter 617 |
| 95 | and this chapter or chapter 607 if incorporated under that |
| 96 | chapter. This subsection is intended to clarify existing law. |
| 97 | Section 4. Subsections (5), (6), and (7) of section |
| 98 | 720.303, Florida Statutes, are amended to read: |
| 99 | 720.303 Association powers and duties; meetings of board; |
| 100 | official records; budgets; financial reporting; association |
| 101 | funds; recalls.-- |
| 102 | (5) INSPECTION AND COPYING OF RECORDS.--The official |
| 103 | records shall be maintained within the state and must be open to |
| 104 | inspection and available for photocopying by members or their |
| 105 | authorized agents at reasonable times and places within 10 |
| 106 | business days after receipt of a written request for access. |
| 107 | This subsection may be complied with by having a copy of the |
| 108 | official records available for inspection or copying in the |
| 109 | community. If the association has a photocopy machine available |
| 110 | where the records are maintained, it must provide parcel owners |
| 111 | with copies on request during the inspection if the entire |
| 112 | request is limited to no more than 25 pages. |
| 113 | (a) The failure of an association to provide access to the |
| 114 | records within 10 business days after receipt of a written |
| 115 | request creates a rebuttable presumption that the association |
| 116 | willfully failed to comply with this subsection. |
| 117 | (b) A member who is denied access to official records is |
| 118 | entitled to the actual damages or minimum damages for the |
| 119 | association's willful failure to comply with this subsection. |
| 120 | The minimum damages are to be $50 per calendar day up to 10 |
| 121 | days, the calculation to begin on the 11th business day after |
| 122 | receipt of the written request. |
| 123 | (c) The association may adopt reasonable written rules |
| 124 | governing the frequency, time, location, notice, records to be |
| 125 | inspected, and manner of inspections, but may not impose a |
| 126 | requirement that a parcel owner demonstrate any proper purpose |
| 127 | for the inspection, state any reason for the inspection, or |
| 128 | limit a parcel owner's right to inspect records to less than one |
| 129 | 8-hour business day per month. The association may impose fees |
| 130 | to cover the costs of providing copies of the official records, |
| 131 | including, without limitation, the costs of copying. The |
| 132 | association may charge up to 50 cents per page for copies made |
| 133 | on the association's photocopier. If the association does not |
| 134 | have a photocopy machine available where the records are kept, |
| 135 | or if the records requested to be copied exceed 25 pages in |
| 136 | length, the association may have copies made by an outside |
| 137 | vendor and may charge the actual cost of copying. The |
| 138 | association shall maintain an adequate number of copies of the |
| 139 | recorded governing documents, to ensure their availability to |
| 140 | members and prospective members. Notwithstanding the provisions |
| 141 | of this paragraph, the following records shall not be accessible |
| 142 | to members or parcel owners: |
| 143 | 1. Any record protected by the lawyer-client privilege as |
| 144 | described in s. 90.502 and any record protected by the work- |
| 145 | product privilege, including, but not limited to, any record |
| 146 | prepared by an association attorney or prepared at the |
| 147 | attorney's express direction which reflects a mental impression, |
| 148 | conclusion, litigation strategy, or legal theory of the attorney |
| 149 | or the association and was prepared exclusively for civil or |
| 150 | criminal litigation or for adversarial administrative |
| 151 | proceedings or which was prepared in anticipation of imminent |
| 152 | civil or criminal litigation or imminent adversarial |
| 153 | administrative proceedings until the conclusion of the |
| 154 | litigation or adversarial administrative proceedings. |
| 155 | 2. Information obtained by an association in connection |
| 156 | with the approval of the lease, sale, or other transfer of a |
| 157 | parcel. |
| 158 | 3. Disciplinary, health, insurance, and personnel records |
| 159 | of the association's employees. |
| 160 | 4. Medical records of parcel owners or community |
| 161 | residents. |
| 162 | (d) The association is not required to give a prospective |
| 163 | purchaser or lienholder information about the subdivision or the |
| 164 | association other than that required to be disclosed under this |
| 165 | chapter. It may charge the prospective purchaser, lienholder, or |
| 166 | current parcel owner or member a reasonable fee not to exceed |
| 167 | $150 to provide such information, other than information |
| 168 | required by law, plus the reasonable cost of photocopying and |
| 169 | attorney's fees incurred by the association in connection with |
| 170 | the response. |
| 171 | (e) An association is not liable for providing such |
| 172 | information in good faith pursuant to a written request if the |
| 173 | person providing the information includes a written statement in |
| 174 | substantially the following form: "The responses herein are made |
| 175 | in good faith and to the best of my ability as to their |
| 176 | accuracy." |
| 177 | (6) BUDGETS.-- |
| 178 | (a) The association shall prepare an annual budget that |
| 179 | sets out the annual operating expenses. The budget must reflect |
| 180 | the estimated revenues and expenses for that year and the |
| 181 | estimated surplus or deficit as of the end of the current year. |
| 182 | The budget must set out separately all fees or charges paid for |
| 183 | by the association for recreational amenities, whether owned by |
| 184 | the association, the developer, or another person. The |
| 185 | association shall provide each member with a copy of the annual |
| 186 | budget or a written notice that a copy of the budget is |
| 187 | available upon request at no charge to the member. The copy must |
| 188 | be provided to the member within the time limits set forth in |
| 189 | subsection (5). |
| 190 | (b) In addition to annual operating expenses, the budget |
| 191 | may include reserve accounts for capital expenditures and |
| 192 | deferred maintenance for which the association is responsible to |
| 193 | the extent that the governing documents do not limit increases |
| 194 | in assessments, including reserves. If the budget of the |
| 195 | association includes reserve accounts, such reserves shall be |
| 196 | determined, maintained, and waived in the manner provided in |
| 197 | this subsection. Once an association provides for reserve |
| 198 | accounts in the budget, the association shall thereafter |
| 199 | determine, maintain, and waive reserves in compliance with the |
| 200 | provisions of this subsection. |
| 201 | (c) If the budget of the association does not provide for |
| 202 | reserve accounts governed by this subsection and is responsible |
| 203 | for the repair and maintenance of capital improvements that may |
| 204 | result in a special assessment, each financial report for the |
| 205 | preceding fiscal year required by subsection (7) shall contain |
| 206 | the following statement in conspicuous type: THE BUDGET OF THE |
| 207 | ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL |
| 208 | EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL |
| 209 | ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE ACCOUNTS |
| 210 | PURSUANT TO THE PROVISIONS OF SECTION 720.303(6), FLORIDA |
| 211 | STATUTES, UPON THE APPROVAL OF NOT LESS THAN A MAJORITY OF THE |
| 212 | TOTAL VOTING INTERESTS OF THE ASSOCIATION. |
| 213 | (d) An association shall be deemed to have provided for |
| 214 | reserve accounts when reserve accounts have been initially |
| 215 | established by the developer or when the membership of the |
| 216 | association affirmatively elects to provide for reserves. If |
| 217 | reserve accounts are not initially provided for by the |
| 218 | developer, the membership of the association may elect to do so |
| 219 | upon the affirmative approval of not less than a majority of the |
| 220 | total voting interests of the association. Such approval may be |
| 221 | attained by vote of the members at a duly called meeting of the |
| 222 | membership or upon a written consent executed by not less than a |
| 223 | majority of the total voting interests in the community. The |
| 224 | approval action of the membership shall state that reserve |
| 225 | accounts shall be provided for in the budget and shall designate |
| 226 | the components for which the reserve accounts are to be |
| 227 | established. Upon approval by the membership, the board of |
| 228 | directors shall provide for the required reserve accounts to be |
| 229 | included in the budget in the next fiscal year following the |
| 230 | approval and in each year thereafter. Once established as |
| 231 | provided in this paragraph, the reserve accounts shall be funded |
| 232 | or maintained or shall have their funding waived in the manner |
| 233 | provided in paragraph (f). |
| 234 | (e) The amount to be reserved in any account established |
| 235 | shall be computed by means of a formula that is based upon |
| 236 | estimated remaining useful life and estimated replacement cost |
| 237 | or deferred maintenance expense of each reserve item. The |
| 238 | association may adjust replacement reserve assessments annually |
| 239 | to take into account any changes in estimates of cost or useful |
| 240 | life of a reserve item. |
| 241 | (f) Once a reserve account is established, the membership |
| 242 | of the association, upon a majority vote at a meeting at which a |
| 243 | quorum is present, may provide for no reserves or less reserves |
| 244 | than required by this section. If a meeting of the unit owners |
| 245 | has been called to determine whether to waive or reduce the |
| 246 | funding of reserves and no such result is achieved or a quorum |
| 247 | is not attained, the reserves as included in the budget shall go |
| 248 | into effect. After the turnover of control of an association by |
| 249 | a developer to parcel owners, the developer may vote its voting |
| 250 | interest to waive or reduce the funding of reserves. Any vote |
| 251 | taken pursuant to this paragraph to waive or reduce reserves |
| 252 | shall be applicable only to one budget year. |
| 253 | (g) Funding formulas for reserves authorized by this |
| 254 | subsection shall be based on either a separate analysis of each |
| 255 | of the required assets or a pooled analysis of two or more of |
| 256 | the required assets. |
| 257 | 1. If the association maintains separate reserve accounts |
| 258 | for each of the required assets, the amount of the contribution |
| 259 | to each reserve account shall be the sum of the following two |
| 260 | calculations: |
| 261 | a. The total amount necessary, if any, to bring a negative |
| 262 | component balance to zero. |
| 263 | b. The total estimated deferred maintenance expense or |
| 264 | estimated replacement cost of the reserve component less the |
| 265 | estimated balance of the reserve component as of the beginning |
| 266 | of the period for which the budget will be in effect. The |
| 267 | remainder, if greater than zero, shall be divided by the |
| 268 | estimated remaining useful life of the component. The formula |
| 269 | may be adjusted each year for changes in estimates and deferred |
| 270 | maintenance performed during the year and may consider factors |
| 271 | such as inflation and earnings on invested funds. |
| 272 | 2. If the association maintains a pooled account of two or |
| 273 | more of the required reserve assets, the amount of the |
| 274 | contribution to the pooled reserve account as disclosed in the |
| 275 | proposed budget shall be not less than that required to ensure |
| 276 | that the balance on hand at the beginning of the period for |
| 277 | which the budget will go into effect plus the projected annual |
| 278 | cash inflows over the remaining estimated useful lives of all of |
| 279 | the assets that make up the reserve pool are equal to or greater |
| 280 | than the projected annual cash outflows over the remaining |
| 281 | estimated useful life of all of the assets that make up the |
| 282 | reserve pool, based on the current reserve analysis. The |
| 283 | projected annual cash inflows may include estimated earnings |
| 284 | from investment of principal. The reserve funding formula shall |
| 285 | not include any type of balloon payments. |
| 286 | (h) Reserve funds and any interest accruing thereon shall |
| 287 | remain in the reserve account or accounts and shall be used only |
| 288 | for authorized reserve expenditures unless their use for other |
| 289 | purposes is approved in advance by a majority vote at a meeting |
| 290 | at which a quorum is present. Prior to turnover of control of an |
| 291 | association by a developer to parcel owners, the developer- |
| 292 | controlled association shall not vote to use reserves for |
| 293 | purposes other than that for which they were intended without |
| 294 | the approval of a majority of all nondeveloper voting interests |
| 295 | voting in person or by limited proxy at a duly called meeting of |
| 296 | the association. |
| 297 | (7) FINANCIAL REPORTING.--The association shall prepare an |
| 298 | annual financial report by a date specified in the bylaws or |
| 299 | within 90 60 days after the close of the fiscal year. The |
| 300 | association shall, within the time limits set forth in |
| 301 | subsection (5), provide each member with a copy of the annual |
| 302 | financial report or a written notice that a copy of the |
| 303 | financial report is available upon request at no charge to the |
| 304 | member. Financial reports shall be prepared as follows: |
| 305 | (a) An association that meets the criteria of this |
| 306 | paragraph shall prepare or cause to be prepared a complete set |
| 307 | of financial statements in accordance with generally accepted |
| 308 | accounting principles as adopted by the Florida Board of |
| 309 | Accountancy. The financial statements shall be based upon the |
| 310 | association's total annual revenues, as follows: |
| 311 | 1. An association with total annual revenues of $100,000 |
| 312 | or more, but less than $200,000, shall prepare compiled |
| 313 | financial statements. |
| 314 | 2. An association with total annual revenues of at least |
| 315 | $200,000, but less than $400,000, shall prepare reviewed |
| 316 | financial statements. |
| 317 | 3. An association with total annual revenues of $400,000 |
| 318 | or more shall prepare audited financial statements. |
| 319 | (b)1. An association with total annual revenues of less |
| 320 | than $100,000 shall prepare a report of cash receipts and |
| 321 | expenditures. |
| 322 | 2. An association in a community of fewer than 50 parcels, |
| 323 | regardless of the association's annual revenues, may prepare a |
| 324 | report of cash receipts and expenditures in lieu of financial |
| 325 | statements required by paragraph (a) unless the governing |
| 326 | documents provide otherwise. |
| 327 | 3. A report of cash receipts and disbursement must |
| 328 | disclose the amount of receipts by accounts and receipt |
| 329 | classifications and the amount of expenses by accounts and |
| 330 | expense classifications, including, but not limited to, the |
| 331 | following, as applicable: costs for security, professional, and |
| 332 | management fees and expenses; taxes; costs for recreation |
| 333 | facilities; expenses for refuse collection and utility services; |
| 334 | expenses for lawn care; costs for building maintenance and |
| 335 | repair; insurance costs; administration and salary expenses; and |
| 336 | reserves if maintained by the association. |
| 337 | (c) If 20 percent of the parcel owners petition the board |
| 338 | for a level of financial reporting higher than that required by |
| 339 | this section, the association shall duly notice and hold a |
| 340 | meeting of members within 30 days of receipt of the petition for |
| 341 | the purpose of voting on raising the level of reporting for that |
| 342 | fiscal year. Upon approval of a majority of the total voting |
| 343 | interests of the parcel owners, the association shall prepare or |
| 344 | cause to be prepared, shall amend the budget or adopt a special |
| 345 | assessment to pay for the financial report regardless of any |
| 346 | provision to the contrary in the governing documents, and shall |
| 347 | provide within 90 days of the meeting or the end of the fiscal |
| 348 | year, whichever occurs later: |
| 349 | 1. Compiled, reviewed, or audited financial statements, if |
| 350 | the association is otherwise required to prepare a report of |
| 351 | cash receipts and expenditures; |
| 352 | 2. Reviewed or audited financial statements, if the |
| 353 | association is otherwise required to prepare compiled financial |
| 354 | statements; or |
| 355 | 3. Audited financial statements if the association is |
| 356 | otherwise required to prepare reviewed financial statements. |
| 357 | (d) If approved by a majority of the voting interests |
| 358 | present at a properly called meeting of the association, an |
| 359 | association may prepare or cause to be prepared: |
| 360 | 1. A report of cash receipts and expenditures in lieu of a |
| 361 | compiled, reviewed, or audited financial statement; |
| 362 | 2. A report of cash receipts and expenditures or a |
| 363 | compiled financial statement in lieu of a reviewed or audited |
| 364 | financial statement; or |
| 365 | 3. A report of cash receipts and expenditures, a compiled |
| 366 | financial statement, or a reviewed financial statement in lieu |
| 367 | of an audited financial statement. |
| 368 | Section 5. Subsection (2) of section 720.305, Florida |
| 369 | Statutes, is amended to read: |
| 370 | 720.305 Obligations of members; remedies at law or in |
| 371 | equity; levy of fines and suspension of use rights; failure to |
| 372 | fill sufficient number of vacancies on board of directors to |
| 373 | constitute a quorum; appointment of receiver upon petition of |
| 374 | any member.-- |
| 375 | (2) If the governing documents so provide, an association |
| 376 | may suspend, for a reasonable period of time, the rights of a |
| 377 | member or a member's tenants, guests, or invitees, or both, to |
| 378 | use common areas and facilities and may levy reasonable fines, |
| 379 | not to exceed $100 per violation, against any member or any |
| 380 | tenant, guest, or invitee. A fine may be levied on the basis of |
| 381 | each day of a continuing violation, with a single notice and |
| 382 | opportunity for hearing, except that no such fine shall exceed |
| 383 | $1,000 in the aggregate unless otherwise provided in the |
| 384 | governing documents. A fine shall not become a lien against a |
| 385 | parcel unless it is levied for a violation of governing |
| 386 | documents that have been recorded in the public records of the |
| 387 | county where the property is located. In any action to recover a |
| 388 | fine, the prevailing party is entitled to collect its reasonable |
| 389 | attorney's fees and costs from the nonprevailing party as |
| 390 | determined by the court. |
| 391 | (a) A fine or suspension may not be imposed without notice |
| 392 | of at least 14 days to the person sought to be fined or |
| 393 | suspended and an opportunity for a hearing before a committee of |
| 394 | at least three members appointed by the board who are not |
| 395 | officers, directors, or employees of the association, or the |
| 396 | spouse, parent, child, brother, or sister of an officer, |
| 397 | director, or employee. If the committee, by majority vote, does |
| 398 | not approve a proposed fine or suspension, it may not be |
| 399 | imposed. |
| 400 | (b) The requirements of this subsection do not apply to |
| 401 | the imposition of suspensions or fines upon any member because |
| 402 | of the failure of the member to pay assessments or other charges |
| 403 | when due if such action is authorized by the governing |
| 404 | documents. |
| 405 | (c) Suspension of common-area-use rights shall not impair |
| 406 | the right of an owner or tenant of a parcel to have vehicular |
| 407 | and pedestrian ingress to and egress from the parcel, including, |
| 408 | but not limited to, the right to park. |
| 409 | Section 6. Subsection (1) of section 720.306, Florida |
| 410 | Statutes, is amended to read: |
| 411 | 720.306 Meetings of members; voting and election |
| 412 | procedures; amendments.-- |
| 413 | (1) QUORUM; AMENDMENTS.-- |
| 414 | (a) Unless a lower number is provided in the bylaws, the |
| 415 | percentage of voting interests required to constitute a quorum |
| 416 | at a meeting of the members shall be 30 percent of the total |
| 417 | voting interests. Unless otherwise provided in this chapter or |
| 418 | in the articles of incorporation or bylaws, decisions that |
| 419 | require a vote of the members must be made by the concurrence of |
| 420 | at least a majority of the voting interests present, in person |
| 421 | or by proxy, at a meeting at which a quorum has been attained. |
| 422 | (b) Unless otherwise provided in the governing documents |
| 423 | or required by law, and other than those matters set forth in |
| 424 | paragraph (c), any governing document of an association may be |
| 425 | amended by the affirmative vote of two-thirds of the voting |
| 426 | interests of the association. |
| 427 | (c) Unless otherwise provided in the governing documents |
| 428 | as originally recorded or permitted by this chapter or chapter |
| 429 | 617, an amendment may not materially and adversely alter the |
| 430 | proportionate voting interest appurtenant to a parcel or |
| 431 | increase the proportion or percentage by which a parcel shares |
| 432 | in the common expenses of the association unless the record |
| 433 | parcel owner and all record owners of liens on the parcels join |
| 434 | in the execution of the amendment. For purposes of this section, |
| 435 | a change in quorum requirements is not an alteration of voting |
| 436 | interests. The merger or consolidation of associations under a |
| 437 | plan of merger or consolidation pursuant to chapter 607 or |
| 438 | chapter 617 is not a material or adverse alteration of the |
| 439 | proportionate voting interest appurtenant to a parcel. |
| 440 | Section 7. Paragraph (t) is added to subsection (3) of |
| 441 | section 720.307, Florida Statutes, to read: |
| 442 | 720.307 Transition of association control in a |
| 443 | community.--With respect to homeowners' associations: |
| 444 | (3) At the time the members are entitled to elect at least |
| 445 | a majority of the board of directors of the homeowners' |
| 446 | association, the developer shall, at the developer's expense, |
| 447 | within no more than 90 days deliver the following documents to |
| 448 | the board: |
| 449 | (t) The financial records, including financial statements |
| 450 | of the association, and source documents from the incorporation |
| 451 | of the association through the date of turnover. The records |
| 452 | shall be audited by an independent certified public accountant |
| 453 | for the period from the incorporation of the association or from |
| 454 | the period covered by the last audit, if an audit has been |
| 455 | performed for each fiscal year since incorporation. All |
| 456 | financial statements shall be prepared in accordance with |
| 457 | generally accepted accounting principles and shall be audited in |
| 458 | accordance with generally accepted auditing standards, as |
| 459 | prescribed by the Florida Board of Accountancy, pursuant to |
| 460 | chapter 473. The certified public accountant performing the |
| 461 | audit shall examine to the extent necessary supporting documents |
| 462 | and records, including the cash disbursements and related paid |
| 463 | invoices, to determine if expenditures were for association |
| 464 | purposes, and the billings, cash receipts, and related records |
| 465 | to determine that the developer was charged and paid the proper |
| 466 | amounts of assessments. This paragraph applies to associations |
| 467 | with a date of incorporation after December 31, 2006. |
| 468 | Section 8. Section 720.308, Florida Statutes, is amended |
| 469 | to read: |
| 470 | 720.308 Assessments and charges.-- |
| 471 | (1) ASSESSMENTS.--For any community created after October |
| 472 | 1, 1995, the governing documents must describe the manner in |
| 473 | which expenses are shared and specify the member's proportional |
| 474 | share thereof. Assessments levied pursuant to the annual budget |
| 475 | or special assessment must be in the member's proportional share |
| 476 | of expenses as described in the governing document, which share |
| 477 | may be different among classes of parcels based upon the state |
| 478 | of development thereof, levels of services received by the |
| 479 | applicable members, or other relevant factors. While the |
| 480 | developer is in control of the homeowners' association, it may |
| 481 | be excused from payment of its share of the operating expenses |
| 482 | and assessments related to its parcels for any period of time |
| 483 | for which the developer has, in the declaration, obligated |
| 484 | itself to pay any operating expenses incurred that exceed the |
| 485 | assessments receivable from other members and other income of |
| 486 | the association. This section does not apply to an association, |
| 487 | no matter when created, if the association is created in a |
| 488 | community that is included in an effective development-of- |
| 489 | regional-impact development order as of the effective date of |
| 490 | this act, together with any approved modifications thereto. |
| 491 | (2) GUARANTEE OF COMMON EXPENSES.-- |
| 492 | (a) Establishment of a guarantee.--If a guarantee of the |
| 493 | assessments of parcel owners is not included in the purchase |
| 494 | contracts or declaration, any agreement establishing a guarantee |
| 495 | shall be effective only upon the approval of a majority of the |
| 496 | voting interests of the members other than the developer. |
| 497 | Approval shall be expressed at a meeting of the members, voting |
| 498 | in person or by limited proxy, or by agreement in writing |
| 499 | without a meeting if provided in the bylaws. Such guarantee |
| 500 | shall meet the requirements of this section. |
| 501 | (b) Guarantee period.--The period of time for the |
| 502 | guarantee shall be indicated by a specific beginning and ending |
| 503 | date or event. |
| 504 | 1. The ending date or event shall be the same for all of |
| 505 | the members of a homeowners' association, including members in |
| 506 | different phases of the development. |
| 507 | 2. The guarantee may provide for different intervals of |
| 508 | time during a guarantee period with different dollar amounts for |
| 509 | each such interval. |
| 510 | (c) Guarantee extension.--The guarantee may provide that |
| 511 | after the initial stated period the developer has an option to |
| 512 | extend the guarantee for one or more additional stated periods. |
| 513 | The extension of a guarantee is limited to extending the ending |
| 514 | date or event; therefore, the developer does not have the option |
| 515 | of changing the level of assessments guaranteed. |
| 516 | (3) MAXIMUM LEVEL OF ASSESSMENTS.--The stated dollar |
| 517 | amount of the guarantee shall be an exact dollar amount for each |
| 518 | parcel identified in the declaration. Regardless of the stated |
| 519 | dollar amount of the guarantee, assessments charged to a member |
| 520 | shall not exceed the maximum obligation of the member based on |
| 521 | the total amount of the adopted budget and the member's |
| 522 | proportionate ownership share of the assessments. |
| 523 | (4) CASH FUNDING REQUIREMENTS DURING GUARANTEE.--The cash |
| 524 | payments required from the guarantor during the guarantee period |
| 525 | shall be determined as follows: |
| 526 | (a) If at any time during the guarantee period the funds |
| 527 | collected from member assessments at the guaranteed level and |
| 528 | other revenues collected by the association are not sufficient |
| 529 | to provide payment, on a timely basis, of all assessments, |
| 530 | including the full funding of the reserves unless properly |
| 531 | waived, the guarantor shall advance sufficient cash to the |
| 532 | association at the time such payments are due. |
| 533 | (b) Expenses incurred in the production of nonassessment |
| 534 | revenues, not in excess of the nonassessment revenues, shall not |
| 535 | be included in the assessments. If the expenses attributable to |
| 536 | nonassessment revenues exceed nonassessment revenues, only the |
| 537 | excess expenses must be funded by the guarantor. Interest earned |
| 538 | on the investment of association funds may be used to pay the |
| 539 | income tax expense incurred as a result of the investment; such |
| 540 | expense shall not be charged to the guarantor; and the net |
| 541 | investment income shall be retained by the association. Each |
| 542 | such nonassessment revenue-generating activity shall be |
| 543 | considered separately. Any portion of the parcel assessments |
| 544 | that is budgeted for designated capital contributions of the |
| 545 | association shall not be used to pay operating expenses. |
| 546 | (5) CALCULATION OF GUARANTOR'S FINAL OBLIGATION.--The |
| 547 | guarantor's total financial obligation to the association at the |
| 548 | end of the guarantee period shall be determined on the accrual |
| 549 | basis using the following formula: the guarantor shall pay any |
| 550 | deficits that exceed the guaranteed amount, less the total |
| 551 | regular periodic assessments earned by the association from the |
| 552 | members other than the guarantor during the guarantee period, |
| 553 | regardless of whether the actual level charged was less than the |
| 554 | maximum guaranteed amount. |
| 555 | (6) EXPENSES.--Expenses incurred in the production of |
| 556 | nonassessment revenues, not in excess of the nonassessment |
| 557 | revenues, shall not be included in the operating expenses. If |
| 558 | the expenses attributable to nonassessment revenues exceed |
| 559 | nonassessment revenues, only the excess expenses must be funded |
| 560 | by the guarantor. Interest earned on the investment of |
| 561 | association funds may be used to pay the income tax expense |
| 562 | incurred as a result of the investment; such expense shall not |
| 563 | be charged to the guarantor; and the net investment income shall |
| 564 | be retained by the association. Each such nonassessment revenue- |
| 565 | generating activity shall be considered separately. Any portion |
| 566 | of the parcel assessment that is budgeted for designated capital |
| 567 | contributions of the association shall not be used to pay |
| 568 | operating expenses. |
| 569 | Section 9. Subsection (3) is added to section 720.402, |
| 570 | Florida Statutes, to read: |
| 571 | 720.402 Publication of false and misleading information.-- |
| 572 | (3) This section does not limit any rights provided by |
| 573 | common law. |
| 574 | Section 10. This act shall take effect July 1, 2006. |