HB 433

A bill to be entitled
2An act relating to community associations; creating s.
3712.11, F.S.; providing for the revival of certain
4covenants that have lapsed; amending s. 718.106, F.S.;
5prohibiting local governments from limiting the access of
6certain persons to beaches adjacent to or adjoining
7condominium property; amending s. 718.110, F.S.; revising
8provisions relating to the amendment of declarations;
9providing legislative findings and a finding of compelling
10state interest; providing criteria for consent to an
11amendment; requiring notice regarding proposed amendments
12to mortgagees; providing criteria for notification;
13providing for voiding certain amendments; amending s.
14718.114, F.S.; providing that certain leaseholds,
15memberships, or other possessory or use interests shall be
16considered a material alteration or substantial addition
17to certain real property; amending s. 718.404, F.S.;
18providing retroactive application of provisions relating
19to mixed-use condominiums; amending s. 719.103, F.S.;
20providing a definition; amending s. 719.507, F.S.;
21prohibiting laws, ordinances, or regulations that apply
22only to improvements that are or may be subjected to an
23equity club form of ownership; amending s. 720.302, F.S.;
24revising governing provisions relating to corporations
25that operate residential homeowners' associations;
26amending s. 720.303, F.S.; revising application to include
27certain meetings; requiring the association to provide
28certain information to prospective purchasers or
29lienholders; authorizing the association to charge a
30reasonable fee for providing certain information;
31requiring the budget to provide for annual operating
32expenses; authorizing the budget to include reserve
33accounts for capital expenditures and deferred
34maintenance; providing a formula for calculating the
35amount to be reserved; authorizing the association to
36adjust replacement reserve assessments annually;
37authorizing the developer to vote to waive the reserves or
38reduce the funding of reserves for a certain period;
39revising provisions relating to financial reporting;
40revising time periods in which the association must
41complete its reporting; repealing s. 720.303(2), F.S., as
42amended, relating to board meetings, to remove conflicting
43versions of that subsection; creating s. 720.3035, F.S.;
44providing for architectural control covenants and parcel
45owner improvements; authorizing the review and approval of
46plans and specifications; providing limitations; providing
47rights and privileges for parcel owners as set forth in
48the declaration of covenants; amending s. 720.305, F.S.;
49providing that, where a member is entitled to collect
50attorney's fees against the association, the member may
51also recover additional amounts as determined by the
52court; amending s. 720.306, F.S.; providing that certain
53mergers or consolidations of an association shall not be
54considered a material or adverse alteration of the
55proportionate voting interest appurtenant to a parcel;
56amending s. 720.307, F.S.; requiring developers to deliver
57financial records to the board in any transition of
58association control to members; requiring certain
59information to be included in the records and for the
60records to be prepared in a specified manner; amending s.
61720.308, F.S.; providing circumstances under which a
62guarantee of common expenses shall be effective; providing
63for approval of the guarantee by association members;
64providing for a guarantee period and extension thereof;
65requiring the stated dollar amount of the guarantee to be
66an exact dollar amount for each parcel identified in the
67declaration; providing payments required from the
68guarantor to be determined in a certain manner; providing
69a formula to determine the guarantor's total financial
70obligation to the association; providing that certain
71expenses incurred in the production of certain revenues
72shall not be included in the operating expenses; amending
73s. 720.311, F.S.; revising provisions relating to dispute
74resolution; providing that the filing of any petition for
75arbitration or the serving of an offer for presuit
76mediation shall toll the applicable statute of
77limitations; providing that certain disputes between an
78association and a parcel owner shall be subject to presuit
79mediation; revising provisions to conform; providing that
80temporary injunctive relief may be sought in certain
81disputes subject to presuit mediation; authorizing the
82court to refer the parties to mediation under certain
83circumstances; requiring the aggrieved party to serve on
84the responding party a written offer to participate in
85presuit mediation; providing a form for such offer;
86providing that service of the offer is effected by the
87sending of such an offer in a certain manner; providing
88that the prevailing party in any subsequent arbitration or
89litigation proceedings is entitled to seek recovery of all
90costs and attorney's fees incurred in the presuit
91mediation process; requiring the mediator or arbitrator to
92meet certain certification requirements; removing a
93requirement relating to development of an education
94program to increase awareness of the operation of
95homeowners' associations and the use of alternative
96dispute resolution techniques; providing effective dates.
98Be It Enacted by the Legislature of the State of Florida:
100     Section 1.  Section 712.11, Florida Statutes, is created to
102     712.11  Covenant revitalization.--A homeowners' association
103not otherwise subject to chapter 720 may use the procedures set
104forth in ss. 720.403-720.407 to revive covenants that have
105lapsed under the terms of this chapter.
106     Section 2.  Subsection (5) is added to section 718.106,
107Florida Statutes, to read:
108     718.106  Condominium parcels; appurtenances; possession and
110     (5)  A local government may not prohibit condominium unit
111owners or an association from permitting guests, licensees, or
112invitees access to a public beach adjacent to or adjoining the
113condominium property.
114     Section 3.  Effective October 1, 2007, subsection (11) of
115section 718.110, Florida Statutes, is amended to read:
116     718.110  Amendment of declaration; correction of error or
117omission in declaration by circuit court.--
118     (11)  The Legislature finds that the procurement of
119mortgagee consent to amendments that do not affect the rights or
120interests of mortgagees is an unreasonable and substantial
121logistical and financial burden on the unit owners and that
122there is a compelling state interest in enabling the members of
123a condominium association to approve amendments to the
124condominium documents through legal means. Accordingly, and
125notwithstanding any provision to the contrary contained in this
127     (a)  As to any mortgage recorded on or after October 1,
1282007, any provision in the declaration, articles of
129incorporation, or bylaws that requires recorded after April 1,
1301992, may not require the consent or joinder of some or all
131mortgagees of units or any other portion of the condominium
132property to or in amendments to the declaration, articles of
133incorporation, or bylaws or for any other matter shall be
134enforceable only as to the following matters: unless the
135requirement is limited to amendments materially affecting the
136rights or interests of the mortgagees, or as otherwise required
137by the Federal National Mortgage Association or the Federal Home
138Loan Mortgage Corporation, and unless the requirement provides
139that such consent may not be unreasonably withheld. It shall be
140presumed that, except as to
141     1.  Those matters described in subsections (4) and (8).,
142     2.  Amendments to the declaration, articles of
143incorporation, or bylaws that adversely affect the priority of
144the mortgagee's lien or the mortgagee's rights to foreclose its
145lien or that otherwise materially affect the rights and
146interests of the mortgagees.
147     (b)  As to mortgages recorded before October 1, 2007, any
148existing provisions in the declaration, articles of
149incorporation, or bylaws requiring mortgagee consent shall be
151     (c)  In securing consent or joinder, the association shall
152be entitled to rely upon the public records to identify the
153holders of outstanding mortgages. The association may use the
154address provided in the original recorded mortgage document,
155unless there is a different address for the holder of the
156mortgage in a recorded assignment or modification of the
157mortgage, which recorded assignment or modification must
158reference the official records book and page on which the
159original mortgage was recorded. Once the association has
160identified the recorded mortgages of record, the association
161shall, in writing, request of each unit owner whose unit is
162encumbered by a mortgage of record any information the owner has
163in his or her possession regarding the name and address of the
164person to whom mortgage payments are currently being made.
165Notice shall be sent to such person if the address provided in
166the original recorded mortgage document is different from the
167name and address of the mortgagee or assignee of the mortgage as
168shown by the public record. The association shall be deemed to
169have complied with this requirement by making the written
170request of the unit owners required under this paragraph. Any
171notices required to be sent to the mortgagees under this
172paragraph shall be sent to all available addresses provided to
173the association.
174     (d)  Any notice to the mortgagees required under paragraph
175(c) may be sent by a method that establishes proof of delivery,
176and any mortgagee who fails to respond within 60 days after the
177date of mailing shall be deemed to have consented to the
179     (e)  For those amendments requiring mortgagee consent on or
180after October 1, 2007, do not materially affect the rights or
181interests of mortgagees. in the event mortgagee consent is
182provided other than by properly recorded joinder, such consent
183shall be evidenced by affidavit of the association recorded in
184the public records of the county where the declaration is
185recorded. Any amendment adopted without the required consent of
186a mortgagee shall be voidable only by a mortgagee who was
187entitled to notice and an opportunity to consent. An action to
188void an amendment shall be subject to the statute of limitations
189beginning 5 years from the date of discovery as to the
190amendments described in subparagraphs (a)1. and 2. and 5 years
191from the date of recordation of the certificate of amendment for
192all other amendments. This provision shall apply to all
193mortgages, regardless of the date of recordation of the
195     Section 4.  Section 718.114, Florida Statutes, is amended
196to read:
197     718.114  Association powers.--An association has the power
198to enter into agreements, to acquire leaseholds, memberships,
199and other possessory or use interests in lands or facilities
200such as country clubs, golf courses, marinas, and other
201recreational facilities. It has this power whether or not the
202lands or facilities are contiguous to the lands of the
203condominium, if they are intended to provide enjoyment,
204recreation, or other use or benefit to the unit owners. All of
205these leaseholds, memberships, and other possessory or use
206interests existing or created at the time of recording the
207declaration must be stated and fully described in the
208declaration. Subsequent to the recording of the declaration,
209agreements acquiring these leaseholds, memberships, or other
210possessory or use interests not entered into within 12 months
211following the recording of the declaration shall be considered a
212material alteration or substantial addition to the real property
213that is association property, and the association may not
214acquire or enter into agreements acquiring these leaseholds,
215memberships, or other possessory or use interests except as
216authorized by the declaration as provided in s. 718.113. The
217declaration may provide that the rental, membership fees,
218operations, replacements, and other expenses are common expenses
219and may impose covenants and restrictions concerning their use
220and may contain other provisions not inconsistent with this
221chapter. A condominium association may conduct bingo games as
222provided in s. 849.0931.
223     Section 5.  Subsections (1) and (2) of section 718.404,
224Florida Statutes, are amended to read:
225     718.404  Mixed-use condominiums.--When a condominium
226consists of both residential and commercial units, the following
227provisions shall apply:
228     (1)  The condominium documents shall not provide that the
229owner of any commercial unit shall have the authority to veto
230amendments to the declaration, articles of incorporation,
231bylaws, or rules or regulations of the association. This
232subsection shall apply retroactively as a remedial measure.
233     (2)  Subject to s. 718.301, where the number of residential
234units in the condominium equals or exceeds 50 percent of the
235total units operated by the association, owners of the
236residential units shall be entitled to vote for a majority of
237the seats on the board of administration. This subsection shall
238apply retroactively as a remedial measure.
239     Section 6.  Subsections (18) through (27) of section
240719.103, Florida Statutes, are renumbered as subsections (19)
241through (28), respectively, and a new subsection (18) is added
242to that section to read:
243     719.103  Definitions.--As used in this chapter:
244     (18)  "Equity facilities club" means a club comprised of
245recreational facilities in which proprietary membership
246interests are sold to individuals, which membership interests
247entitle the individuals to use certain physical facilities owned
248by the equity club. Such physical facilities do not include a
249residential unit or accommodation. For purposes of this
250definition, the term "accommodation" shall include, but is not
251limited to, any apartment, residential cooperative unit,
252residential condominium unit, cabin, lodge, hotel or motel room,
253or any other accommodation designed for overnight occupancy for
254one or more individuals.
255     Section 7.  Section 719.507, Florida Statutes, is amended
256to read:
257     719.507  Zoning and building laws, ordinances, and
258regulations.--All laws, ordinances, and regulations concerning
259buildings or zoning shall be construed and applied with
260reference to the nature and use of such property, without regard
261to the form of ownership. No law, ordinance, or regulation shall
262establish any requirement concerning the use, location,
263placement, or construction of buildings or other improvements
264which are, or may thereafter be, subjected to the cooperative or
265equity facilities club form of ownership, unless such
266requirement shall be equally applicable to all buildings and
267improvements of the same kind not then, or thereafter to be,
268subjected to the cooperative or equity facilities club form of
269ownership. This section does not apply if the owner in fee of
270any land enters into and records a covenant that existing
271improvements or improvements to be constructed shall not be
272converted to the cooperative form of residential ownership prior
273to 5 years after the later of the date of the covenant or
274completion date of the improvements. Such covenant shall be
275entered into with the governing body of the municipality in
276which the land is located or, if the land is not located in a
277municipality, with the governing body of the county in which the
278land is located.
279     Section 8.  Subsections (4) and (5) of section 720.302,
280Florida Statutes, are amended to read:
281     720.302  Purposes, scope, and application.--
282     (4)  This chapter does not apply to any association that is
283subject to regulation under chapter 718, chapter 719, or chapter
284721; or to any nonmandatory association formed under chapter
285723, except to the extent that a provision of chapter 718,
286chapter 719, or chapter 721 is expressly incorporated into this
287chapter for the purpose of regulating homeowners' associations.
288     (5)  Unless expressly stated to the contrary, corporations
289not for profit that operate residential homeowners' associations
290in this state shall be governed by and subject to chapter 607,
291if the association was incorporated under that chapter, or to
292chapter 617, if the association was incorporated under that
293chapter, and this chapter. This subsection is intended to
294clarify existing law.
295     Section 9.  Paragraph (a) of subsection (2), subsection
296(6), and subsection (7) of section 720.303, Florida Statutes, as
297amended by section 18 of chapter 2004-345 and section 135 of
298chapter 2005-2, Laws of Florida, are amended, and paragraph (d)
299is added to subsection (5) of that section, to read:
300     720.303  Association powers and duties; meetings of board;
301official records; budgets; financial reporting; association
302funds; recalls.--
303     (2)  BOARD MEETINGS.--
304     (a)  A meeting of the board of directors of an association
305occurs whenever a quorum of the board gathers to conduct
306association business. All meetings of the board must be open to
307all members except for meetings between the board and its
308attorney with respect to proposed or pending litigation where
309the contents of the discussion would otherwise be governed by
310the attorney-client privilege. The provisions of this subsection
311shall also apply to the meetings of any committee or other
312similar body when a final decision will be made regarding the
313expenditure of association funds and to meetings of any body
314vested with the power to approve or disapprove architectural
315decisions with respect to a specific parcel of residential
316property owned by a member of the community.
317     (5)  INSPECTION AND COPYING OF RECORDS.--The official
318records shall be maintained within the state and must be open to
319inspection and available for photocopying by members or their
320authorized agents at reasonable times and places within 10
321business days after receipt of a written request for access.
322This subsection may be complied with by having a copy of the
323official records available for inspection or copying in the
324community. If the association has a photocopy machine available
325where the records are maintained, it must provide parcel owners
326with copies on request during the inspection if the entire
327request is limited to no more than 25 pages.
328     (d)  The association or its authorized agent is not
329required to provide a prospective purchaser or lienholder with
330information about the residential subdivision or the association
331other than information or documents required by this chapter to
332be made available or disclosed. The association or its
333authorized agent may charge a reasonable fee to the prospective
334purchaser or lienholder or the current parcel owner or member
335for providing good faith responses to requests for information
336by or on behalf of a prospective purchaser or lienholder, other
337than that required by law, if the fee does not exceed $150 plus
338the reasonable cost of photocopying and any attorney's fees
339incurred by the association in connection with the response.
340     (6)  BUDGETS.--
341     (a)  The association shall prepare an annual budget that
342sets out the annual operating expenses. The budget must reflect
343the estimated revenues and expenses for that year and the
344estimated surplus or deficit as of the end of the current year.
345The budget must set out separately all fees or charges paid for
346by the association for recreational amenities, whether owned by
347the association, the developer, or another person. The
348association shall provide each member with a copy of the annual
349budget or a written notice that a copy of the budget is
350available upon request at no charge to the member. The copy must
351be provided to the member within the time limits set forth in
352subsection (5).
353     (b)  In addition to annual operating expenses, the budget
354may include reserve accounts for capital expenditures and
355deferred maintenance for which the association is responsible to
356the extent that the governing documents do not limit increases
357in assessments, including reserves. If the budget of the
358association includes reserve accounts, such reserves shall be
359determined, maintained, and waived in the manner provided in
360this subsection. Once an association provides for reserve
361accounts in the budget, the association shall thereafter
362determine, maintain, and waive reserves in compliance with the
363provisions of this subsection.
364     (c)  If the budget of the association does not provide for
365reserve accounts governed by this subsection and the association
366is responsible for the repair and maintenance of capital
367improvements that may result in a special assessment if reserves
368are not provided, each financial report for the preceding fiscal
369year required by subsection (7) shall contain the following
370statement in conspicuous type: THE BUDGET OF THE ASSOCIATION
377     (d)  An association shall be deemed to have provided for
378reserve accounts when reserve accounts have been initially
379established by the developer or when the membership of the
380association affirmatively elects to provide for reserves. If
381reserve accounts are not initially provided for by the
382developer, the membership of the association may elect to do so
383upon the affirmative approval of not less than a majority of the
384total voting interests of the association. Such approval may be
385attained by vote of the members at a duly called meeting of the
386membership or upon a written consent executed by not less than a
387majority of the total voting interests in the community. The
388approval action of the membership shall state that reserve
389accounts shall be provided for in the budget and designate the
390components for which the reserve accounts are to be established.
391Upon approval by the membership, the board of directors shall
392provide for the required reserve accounts for inclusion in the
393budget in the next fiscal year following the approval and in
394each year thereafter. Once established as provided in this
395subsection, the reserve accounts shall be funded or maintained
396or shall have their funding waived in the manner provided in
397paragraph (f).
398     (e)  The amount to be reserved in any account established
399shall be computed by means of a formula that is based upon
400estimated remaining useful life and estimated replacement cost
401or deferred maintenance expense of each reserve item. The
402association may adjust replacement reserve assessments annually
403to take into account any changes in estimates of cost or useful
404life of a reserve item.
405     (f)  Once a reserve account or reserve accounts are
406established, the membership of the association, upon a majority
407vote at a meeting at which a quorum is present, may provide for
408no reserves or less reserves than required by this section. If a
409meeting of the unit owners has been called to determine whether
410to waive or reduce the funding of reserves and no such result is
411achieved or a quorum is not present, the reserves as included in
412the budget shall go into effect. After the turnover, the
413developer may vote its voting interest to waive or reduce the
414funding of reserves. Any vote taken pursuant to this subsection
415to waive or reduce reserves shall be applicable only to one
416budget year.
417     (g)  Funding formulas for reserves authorized by this
418section shall be based on either a separate analysis of each of
419the required assets or a pooled analysis of two or more of the
420required assets.
421     1.  If the association maintains separate reserve accounts
422for each of the required assets, the amount of the contribution
423to each reserve account shall be the sum of the following two
425     a.  The total amount necessary, if any, to bring a negative
426component balance to zero.
427     b.  The total estimated deferred maintenance expense or
428estimated replacement cost of the reserve component less the
429estimated balance of the reserve component as of the beginning
430of the period for which the budget will be in effect. The
431remainder, if greater than zero, shall be divided by the
432estimated remaining useful life of the component.
434The formula may be adjusted each year for changes in estimates
435and deferred maintenance performed during the year and may
436include factors such as inflation and earnings on invested
438     2.  If the association maintains a pooled account of two or
439more of the required reserve assets, the amount of the
440contribution to the pooled reserve account as disclosed on the
441proposed budget shall not be less than that required to ensure
442that the balance on hand at the beginning of the period for
443which the budget will go into effect plus the projected annual
444cash inflows over the remaining estimated useful life of all of
445the assets that make up the reserve pool are equal to or greater
446than the projected annual cash outflows over the remaining
447estimated useful lives of all of the assets that make up the
448reserve pool, based on the current reserve analysis. The
449projected annual cash inflows may include estimated earnings
450from investment of principal. The reserve funding formula shall
451not include any type of balloon payments.
452     (h)  Reserve funds and any interest accruing thereon shall
453remain in the reserve account or accounts and shall be used only
454for authorized reserve expenditures unless their use for other
455purposes is approved in advance by a majority vote at a meeting
456at which a quorum is present. Prior to turnover of control of an
457association by a developer to parcel owners, the developer-
458controlled association shall not vote to use reserves for
459purposes other than those for which they were intended without
460the approval of a majority of all nondeveloper voting interests
461voting in person or by limited proxy at a duly called meeting of
462the association.
463     (7)  FINANCIAL REPORTING.--Within 90 days after the end of
464the fiscal year, or annually on the date provided in the bylaws,
465the association shall prepare and complete, or contract with a
466third party for the preparation and completion of, a financial
467report for the preceding fiscal year. Within 21 days after the
468final financial report is completed by the association or
469received from the third party, but not later than 120 days after
470the end of the fiscal year or other date as provided in the
471bylaws, the association shall prepare an annual financial report
472within 60 days after the close of the fiscal year. The
473association shall, within the time limits set forth in
474subsection (5), provide each member with a copy of the annual
475financial report or a written notice that a copy of the
476financial report is available upon request at no charge to the
477member. Financial reports shall be prepared as follows:
478     (a)  An association that meets the criteria of this
479paragraph shall prepare or cause to be prepared a complete set
480of financial statements in accordance with generally accepted
481accounting principles as adopted by the Board of Accountancy.
482The financial statements shall be based upon the association's
483total annual revenues, as follows:
484     1.  An association with total annual revenues of $100,000
485or more, but less than $200,000, shall prepare compiled
486financial statements.
487     2.  An association with total annual revenues of at least
488$200,000, but less than $400,000, shall prepare reviewed
489financial statements.
490     3.  An association with total annual revenues of $400,000
491or more shall prepare audited financial statements.
492     (b)1.  An association with total annual revenues of less
493than $100,000 shall prepare a report of cash receipts and
495     2.  An association in a community of fewer than 50 parcels,
496regardless of the association's annual revenues, may prepare a
497report of cash receipts and expenditures in lieu of financial
498statements required by paragraph (a) unless the governing
499documents provide otherwise.
500     3.  A report of cash receipts and disbursement must
501disclose the amount of receipts by accounts and receipt
502classifications and the amount of expenses by accounts and
503expense classifications, including, but not limited to, the
504following, as applicable: costs for security, professional, and
505management fees and expenses; taxes; costs for recreation
506facilities; expenses for refuse collection and utility services;
507expenses for lawn care; costs for building maintenance and
508repair; insurance costs; administration and salary expenses; and
509reserves if maintained by the association.
510     (c)  If 20 percent of the parcel owners petition the board
511for a level of financial reporting higher than that required by
512this section, the association shall duly notice and hold a
513meeting of members within 30 days of receipt of the petition for
514the purpose of voting on raising the level of reporting for that
515fiscal year. Upon approval of a majority of the total voting
516interests of the parcel owners, the association shall prepare or
517cause to be prepared, shall amend the budget or adopt a special
518assessment to pay for the financial report regardless of any
519provision to the contrary in the governing documents, and shall
520provide within 90 days of the meeting or the end of the fiscal
521year, whichever occurs later:
522     1.  Compiled, reviewed, or audited financial statements, if
523the association is otherwise required to prepare a report of
524cash receipts and expenditures;
525     2.  Reviewed or audited financial statements, if the
526association is otherwise required to prepare compiled financial
527statements; or
528     3.  Audited financial statements if the association is
529otherwise required to prepare reviewed financial statements.
530     (d)  If approved by a majority of the voting interests
531present at a properly called meeting of the association, an
532association may prepare or cause to be prepared:
533     1.  A report of cash receipts and expenditures in lieu of a
534compiled, reviewed, or audited financial statement;
535     2.  A report of cash receipts and expenditures or a
536compiled financial statement in lieu of a reviewed or audited
537financial statement; or
538     3.  A report of cash receipts and expenditures, a compiled
539financial statement, or a reviewed financial statement in lieu
540of an audited financial statement.
541     Section 10.  Subsection (2) of section 720.303, Florida
542Statutes, as amended by section 2 of chapter 2004-345 and
543section 15 of chapter 2004-353, Laws of Florida, is repealed.
544     Section 11.  Section 720.3035, Florida Statutes, is created
545to read:
546     720.3035  Architectural control covenants; parcel owner
547improvements; rights and privileges.--
548     (1)  The authority of an association or any architectural,
549construction improvement, or other such similar committee of an
550association to review and approve plans and specifications for
551the location, size, type, or appearance of any structure or
552other improvement on a parcel, or to enforce standards for the
553external appearance of any structure or improvement located on a
554parcel, shall only be permitted to the extent that the authority
555is specifically stated or reasonably inferred as to such
556location, size, type, or appearance in the declaration of
557covenants or other published guidelines and standards authorized
558by the declaration of covenants.
559     (2)  If the declaration of covenants or other published
560guidelines and standards authorized by the declaration of
561covenants provides options for the use of material, the size of
562the structure or improvement, the design of the structure or
563improvement, or the location of the structure or improvement on
564the parcel, neither the association nor any architectural,
565construction improvement, or other such similar committee of the
566association shall restrict the right of a parcel owner to select
567from the options provided in the declaration of covenants or
568other published guidelines and standards authorized by the
569declaration of covenants.
570     (3)  Unless otherwise specifically stated in the
571declaration of covenants or other published guidelines and
572standards authorized by the declaration of covenants, each
573parcel shall be deemed to have only one front for purposes of
574determining the required front setback even if the parcel is
575bounded by a roadway or other easement on more than one side.
576When the declaration of covenants or other published guidelines
577and standards authorized by the declaration of covenants do not
578provide for specific setback limitations, the applicable county
579or municipal setback limitations shall apply, and neither the
580association nor any architectural, construction improvement, or
581other such similar committee of the association shall enforce or
582attempt to enforce any setback limitation that is inconsistent
583with the applicable county or municipal standard or standards.
584     (4)  Each parcel owner shall be entitled to the rights and
585privileges set forth in the declaration of covenants or other
586published guidelines and standards authorized by the declaration
587of covenants concerning the architectural use of the parcel, and
588the construction of permitted structures and improvements on the
589parcel and such rights and privileges shall not be unreasonably
590infringed upon or impaired by the association or any
591architectural, construction improvement, or other such similar
592committee of the association. If the association or any
593architectural, construction improvement, or other such similar
594committee of the association should unreasonably, knowingly, and
595willfully infringe upon or impair the rights and privileges set
596forth in the declaration of covenants or other published
597guidelines and standards authorized by the declaration of
598covenants, the adversely affected parcel owner shall be entitled
599to recover damages caused by such infringement or impairment,
600including any costs and reasonable attorney's fees incurred in
601preserving or restoring the rights and privileges of the parcel
602owner set forth in the declaration of covenants or other
603published guidelines and standards authorized by the declaration
604of covenants.
605     (5)  Neither the association nor any architectural,
606construction improvement, or other such similar committee of the
607association shall enforce any policy or restriction that is
608inconsistent with the rights and privileges of a parcel owner
609set forth in the declaration of covenants or other published
610guidelines and standards authorized by the declaration of
611covenants, whether uniformly applied or not. Neither the
612association nor any architectural, construction improvement, or
613other such similar committee of the association may rely upon a
614policy or restriction that is inconsistent with the declaration
615of covenants or other published guidelines and standards
616authorized by the declaration of covenants, whether uniformly
617applied or not, in defense of any action taken in the name of or
618on behalf of the association against a parcel owner.
619     Section 12.  Subsection (1) of section 720.305, Florida
620Statutes, is amended to read:
621     720.305  Obligations of members; remedies at law or in
622equity; levy of fines and suspension of use rights; failure to
623fill sufficient number of vacancies on board of directors to
624constitute a quorum; appointment of receiver upon petition of
625any member.--
626     (1)  Each member and the member's tenants, guests, and
627invitees, and each association, are governed by, and must comply
628with, this chapter, the governing documents of the community,
629and the rules of the association. Actions at law or in equity,
630or both, to redress alleged failure or refusal to comply with
631these provisions may be brought by the association or by any
632member against:
633     (a)  The association;
634     (b)  A member;
635     (c)  Any director or officer of an association who
636willfully and knowingly fails to comply with these provisions;
638     (d)  Any tenants, guests, or invitees occupying a parcel or
639using the common areas.
641The prevailing party in any such litigation is entitled to
642recover reasonable attorney's fees and costs. A member
643prevailing in an action between the association and the member
644under this section, in addition to recovering his or her
645reasonable attorney's fees, may recover additional amounts as
646determined by the court to be necessary to reimburse the member
647for his or her share of assessments levied by the association to
648fund its expenses of the litigation. This relief does not
649exclude other remedies provided by law. This section does not
650deprive any person of any other available right or remedy.
651     Section 13.  Paragraph (c) of subsection (1) of section
652720.306, Florida Statutes, is amended to read:
653     720.306  Meetings of members; voting and election
654procedures; amendments.--
655     (1)  QUORUM; AMENDMENTS.--
656     (c)  Unless otherwise provided in the governing documents
657as originally recorded or permitted by this chapter or chapter
658617, an amendment may not materially and adversely alter the
659proportionate voting interest appurtenant to a parcel or
660increase the proportion or percentage by which a parcel shares
661in the common expenses of the association unless the record
662parcel owner and all record owners of liens on the parcels join
663in the execution of the amendment. For purposes of this section,
664a change in quorum requirements is not an alteration of voting
665interests. The merger or consolidation of one or more
666associations under a plan of merger or consolidation under
667chapter 607 or chapter 617 shall not be considered a material or
668adverse alteration of the proportionate voting interest
669appurtenant to a parcel.
670     Section 14.  Paragraph (t) is added to subsection (3) of
671section 720.307, Florida Statutes, to read:
672     720.307  Transition of association control in a
673community.--With respect to homeowners' associations:
674     (3)  At the time the members are entitled to elect at least
675a majority of the board of directors of the homeowners'
676association, the developer shall, at the developer's expense,
677within no more than 90 days deliver the following documents to
678the board:
679     (t)  The financial records, including financial statements
680of the association, and source documents from the incorporation
681of the association through the date of turnover. The records
682shall be audited by an independent certified public accountant
683for the period from the incorporation of the association or from
684the period covered by the last audit, if an audit has been
685performed for each fiscal year since incorporation. All
686financial statements shall be prepared in accordance with
687generally accepted accounting principles and shall be audited in
688accordance with generally accepted auditing standards, as
689prescribed by the Board of Accountancy, pursuant to chapter 473.
690The certified public accountant performing the audit shall
691examine to the extent necessary supporting documents and
692records, including the cash disbursements and related paid
693invoices to determine if expenditures were for association
694purposes and the billings, cash receipts, and related records of
695the association to determine that the developer was charged and
696paid the proper amounts of assessments. This paragraph applies
697to associations with a date of incorporation after December 31,
699     Section 15.  Section 720.308, Florida Statutes, is amended
700to read:
701     720.308  Assessments and charges.--
702     (1)  ASSESSMENTS.--For any community created after October
7031, 1995, the governing documents must describe the manner in
704which expenses are shared and specify the member's proportional
705share thereof. Assessments levied pursuant to the annual budget
706or special assessment must be in the member's proportional share
707of expenses as described in the governing document, which share
708may be different among classes of parcels based upon the state
709of development thereof, levels of services received by the
710applicable members, or other relevant factors. While the
711developer is in control of the homeowners' association, it may
712be excused from payment of its share of the operating expenses
713and assessments related to its parcels for any period of time
714for which the developer has, in the declaration, obligated
715itself to pay any operating expenses incurred that exceed the
716assessments receivable from other members and other income of
717the association. This section does not apply to an association,
718no matter when created, if the association is created in a
719community that is included in an effective development-of-
720regional-impact development order as of the effective date of
721this act, together with any approved modifications thereto.
723     (a)  Establishment of a guarantee.--If a guarantee of the
724assessments of parcel owners is not included in the purchase
725contracts or declaration, any agreement establishing a guarantee
726shall only be effective upon the approval of a majority of the
727voting interests of the members other than the developer.
728Approval shall be expressed at a meeting of the members voting
729in person or by limited proxy or by agreement in writing without
730a meeting if provided in the bylaws. Such guarantee shall meet
731the requirements of this section.
732     (b)  Guarantee period.--The period of time for the
733guarantee shall be indicated by a specific beginning and ending
734date or event.
735     1.  The ending date or event shall be the same for all of
736the members of an association, including members in different
737phases of the development.
738     2.  The guarantee may provide for different intervals of
739time during a guarantee period with different dollar amounts for
740each such interval.
741     3.  The guarantee may provide that after the initial stated
742period, the developer has an option to extend the guarantee for
743one or more additional stated periods. The extension of a
744guarantee is limited to extending the ending date or event;
745therefore, the developer does not have the option of changing
746the level of assessments guaranteed.
747     (3)  MAXIMUM LEVEL OF ASSESSMENTS.--The stated dollar
748amount of the guarantee shall be an exact dollar amount for each
749parcel identified in the declaration. Regardless of the stated
750dollar amount of the guarantee, assessments charged to a member
751shall not exceed the maximum obligation of the member based on
752the total amount of the adopted budget and the member's
753proportionate ownership share of the common elements.
755payments required from the guarantor during the guarantee period
756shall be determined as follows:
757     (a)  If at any time during the guarantee period the funds
758collected from member assessments at the guaranteed level and
759other revenues collected by the association are not sufficient
760to provide payment, on a timely basis, of all assessments,
761including the full funding of the reserves unless properly
762waived, the guarantor shall advance sufficient cash to the
763association at the time such payments are due.
764     (b)  Expenses incurred in the production of nonassessment
765revenues, not in excess of the nonassessment revenues, shall not
766be included in the assessments. If the expenses attributable to
767nonassessment revenues exceed nonassessment revenues, only the
768excess expenses must be funded by the guarantor. Interest earned
769on the investment of association funds may be used to pay the
770income tax expense incurred as a result of the investment; such
771expense shall not be charged to the guarantor; and the net
772investment income shall be retained by the association. Each
773such nonassessment-revenue-generating activity shall be
774considered separately. Any portion of the parcel assessment that
775is budgeted for designated capital contributions of the
776association shall not be used to pay operating expenses.
778guarantor's total financial obligation to the association at the
779end of the guarantee period shall be determined on the accrual
780basis using the following formula: the guarantor shall pay any
781deficits that exceed the guaranteed amount, less the total
782regular periodic assessments earned by the association from the
783members other than the guarantor during the guarantee period
784regardless of whether the actual level charged was less than the
785maximum guaranteed amount.
786     (6)  EXPENSES.--Expenses incurred in the production of
787nonassessment revenues, not in excess of the nonassessment
788revenues, shall not be included in the operating expenses. If
789the expenses attributable to nonassessment revenues exceed
790nonassessment revenues, only the excess expenses must be funded
791by the guarantor. Interest earned on the investment of
792association funds may be used to pay the income tax expense
793incurred as a result of the investment; such expense shall not
794be charged to the guarantor; and the net investment income shall
795be retained by the association. Each such nonassessment-revenue-
796generating activity shall be considered separately. Any portion
797of the parcel assessment that is budgeted for designated capital
798contributions of the association shall not be used to pay
799operating expenses.
800     Section 16.  Section 720.311, Florida Statutes, is amended
801to read:
802     720.311  Dispute resolution.--
803     (1)  The Legislature finds that alternative dispute
804resolution has made progress in reducing court dockets and
805trials and in offering a more efficient, cost-effective option
806to litigation. The filing of any petition for mediation or
807arbitration or the serving of an offer for presuit mediation as
808provided for in this section shall toll the applicable statute
809of limitations. Any recall dispute filed with the department
810pursuant to s. 720.303(10) shall be conducted by the department
811in accordance with the provisions of ss. 718.112(2)(j) and
812718.1255 and the rules adopted by the division. In addition, the
813department shall conduct mandatory binding arbitration of
814election disputes between a member and an association pursuant
815to s. 718.1255 and rules adopted by the division. Neither
816election disputes nor recall disputes are eligible for presuit
817mediation; these disputes shall be arbitrated by the department.
818At the conclusion of the proceeding, the department shall charge
819the parties a fee in an amount adequate to cover all costs and
820expenses incurred by the department in conducting the
821proceeding. Initially, the petitioner shall remit a filing fee
822of at least $200 to the department. The fees paid to the
823department shall become a recoverable cost in the arbitration
824proceeding, and the prevailing party in an arbitration
825proceeding shall recover its reasonable costs and attorney's
826fees in an amount found reasonable by the arbitrator. The
827department shall adopt rules to effectuate the purposes of this
829     (2)(a)  Disputes between an association and a parcel owner
830regarding use of or changes to the parcel or the common areas
831and other covenant enforcement disputes, disputes regarding
832amendments to the association documents, disputes regarding
833meetings of the board and committees appointed by the board,
834membership meetings not including election meetings, and access
835to the official records of the association shall be the subject
836of an offer filed with the department for presuit mandatory
837mediation served by an aggrieved party before the dispute is
838filed in court. Presuit mediation proceedings must be conducted
839in accordance with the applicable Florida Rules of Civil
840Procedure, and these proceedings are privileged and confidential
841to the same extent as court-ordered mediation. Disputes subject
842to presuit mediation under this section shall not include the
843collection of any assessment, fine, or other financial
844obligation, including attorney's fees and costs, claimed to be
845due or any action to enforce a prior mediation settlement
846agreement between the parties. Also, in any dispute subject to
847presuit mediation under this section where emergency relief is
848required, a motion for temporary injunctive relief may be filed
849with the court without first complying with the presuit
850mediation requirements of this section. After any issues
851regarding emergency or temporary relief are resolved, the court
852may either refer the parties to a mediation program administered
853by the courts or require mediation under this section. An
854arbitrator or judge may not consider any information or evidence
855arising from the presuit mediation proceeding except in a
856proceeding to impose sanctions for failure to attend a presuit
857mediation session or with the parties' agreement in a proceeding
858seeking to enforce the agreement. Persons who are not parties to
859the dispute may not attend the presuit mediation conference
860without the consent of all parties, except for counsel for the
861parties and a corporate representative designated by the
862association. When mediation is attended by a quorum of the
863board, such mediation is not a board meeting for purposes of
864notice and participation set forth in s. 720.303. An aggrieved
865party shall serve on the responding party a written offer to
866participate in presuit mediation in substantially the following
871The alleged aggrieved party,__________________, hereby
872offers to _________________, as the responding party,
873to enter into presuit mediation in connection with the
874following dispute, which by statute is of a type that
875is subject to presuit mediation:
877(List specific nature of the dispute or disputes to be
878mediated and the authority supporting a finding of a
879violation as to each dispute.)
881Pursuant to section 720.311, Florida Statutes, this
882offer to resolve the dispute through presuit mediation
883is required before a lawsuit can be filed concerning
884the dispute. Pursuant to the statute, the aggrieved
885party is hereby offering to engage in presuit
886mediation with a neutral third-party mediator in order
887to attempt to resolve this dispute without court
888action, and the aggrieved party demands that you
889likewise agree to this process. If you fail to agree
890to presuit mediation, or if you agree and later fail
891to follow through with your agreement to mediate, suit
892may be brought against you without further warning.
894The process of mediation involves a supervised
895negotiation process in which a trained, neutral third-
896party mediator meets with both parties and assists
897them in exploring possible opportunities for resolving
898part or all of the dispute. The mediation process is a
899voluntary one. By agreeing to participate in presuit
900mediation, you are not bound in any way to change your
901position or to enter into any type of agreement.
902Furthermore, the mediator has no authority to make any
903decisions in this matter or to determine who is right
904or wrong and merely acts as a facilitator to ensure
905that each party understands the position of the other
906party and that all reasonable settlement options are
907fully explored. All mediation communications are
908confidential under the Mediation Confidentiality and
909Privilege Act pursuant to sections 44.401-44.406,
910Florida Statutes, and a mediation participant may not
911disclose a mediation communication to a person other
912than a mediation participant or a participant's
915If an agreement is reached, it shall be reduced to
916writing and becomes a binding and enforceable
917commitment of the parties. A resolution of one or more
918disputes in this fashion avoids the need to litigate
919these issues in court. The failure to reach an
920agreement, or the failure of a party to participate in
921the process, results in the mediator's declaring an
922impasse in the mediation, after which the aggrieved
923party may proceed to court on all outstanding,
924unsettled disputes.
926The aggrieved party has selected and hereby lists
927three certified mediators who we believe to be neutral
928and qualified to mediate the dispute. You have the
929right to select any one of these mediators. The fact
930that one party may be familiar with one or more of the
931listed mediators does not mean that the mediator
932cannot act as a neutral and impartial facilitator. Any
933mediator who cannot act in this capacity ethically
934must decline to accept engagement. The mediators that
935we suggest, and their current hourly rates, are as
938(List the names, addresses, telephone numbers, and
939hourly rates of the mediators. Other pertinent
940information about the background of the mediators may
941be included as an attachment.)
943You may contact the offices of these mediators to
944confirm that the listed mediators will be neutral and
945will not show any favoritism toward either party. The
946names of certified mediators may be found through the
947office of the clerk of the circuit court for this
950If you agree to participate in the presuit mediation
951process, the statute requires that each party is to
952pay one-half of the costs and fees involved in the
953presuit mediation process unless otherwise agreed by
954all parties. An average mediation may require 3 to 4
955hours of the mediator's time, including some
956preparation time, and each party would need to pay
957one-half of the mediator's fees as well as his or her
958own attorney's fees if he or she chooses to employ an
959attorney in connection with the mediation. However,
960use of an attorney is not required and is at the
961option of each party. The mediator may require the
962advance payment of some or all of the anticipated
963fees. The aggrieved party hereby agrees to pay or
964prepay one-half of the mediator's estimated fees and
965to forward this amount or such other reasonable
966advance deposits as the mediator may require for this
967purpose. Any funds deposited will be returned to you
968if these are in excess of your share of the fees
971If you agree to participate in presuit mediation in
972order to attempt to resolve the dispute and thereby
973avoid further legal action, please sign below and
974clearly indicate which mediator is acceptable to you.
975We will then ask the mediator to schedule a mutually
976convenient time and place for the mediation conference
977to be held. The mediation conference must be held
978within 90 days after the date of this letter unless
979extended by mutual written agreement. In the event
980that you fail to respond within 20 days after the date
981of this letter, or if you fail to agree to at least
982one of the mediators that we have suggested and to pay
983or prepay to the mediator one-half of the costs
984involved, the aggrieved party will be authorized to
985proceed with the filing of a lawsuit against you
986without further notice and may seek an award of
987attorney's fees or costs incurred in attempting to
988obtain mediation.
990Should you wish, you may also elect to waive presuit
991mediation so that this matter may proceed directly to
994Therefore, please give this matter your immediate
995attention. By law, your response must be mailed by
996certified mail, return receipt requested, with an
997additional copy being sent by regular first-class mail
998to the address shown on this offer.
1009The undersigned hereby agrees to participate in
1010presuit mediation and agrees to the following mediator
1011or mediators as acceptable to mediate this dispute:
1013(List acceptable mediator or mediators.)
1015I/we further agree to pay or prepay one-half of the
1016mediator's fees and to forward such advance deposits
1017as the mediator may require for this purpose.
1020Signature of responding party #1
1023Signature of responding party #2 (if applicable)(if
1024property is owned by more than one person, all owners
1025must sign)
1029The undersigned hereby waives the right to participate
1030in presuit mediation of the dispute listed above and
1031agrees to allow the aggrieved party to proceed in
1032court on such matters.
1035Signature of responding party #1
1038Signature of responding party #2 (if applicable)(if
1039property is owned by more than one person, all owners
1040must sign)
1042     (b)  Service of the statutory offer to participate in
1043presuit mediation shall be effected by sending a letter in
1044substantial conformity with the above form by certified mail,
1045return receipt requested, with an additional copy being sent by
1046regular first-class mail, to the address of the responding party
1047as it last appears on the books and records of the association.
1048The responding party shall have 20 days from the date of the
1049mailing of the statutory offer to serve a response to the
1050aggrieved party in writing. The response shall be served by
1051certified mail, return receipt requested, with an additional
1052copy being sent by regular first-class mail, to the address
1053shown on the statutory offer. In the alternative, the responding
1054party may waive mediation in writing. Notwithstanding the
1055foregoing, once the parties have agreed on a mediator, the
1056mediator may reschedule the mediation for a date and time
1057mutually convenient to the parties. The department shall conduct
1058the proceedings through the use of department mediators or refer
1059the disputes to private mediators who have been duly certified
1060by the department as provided in paragraph (c). The parties
1061shall share the costs of presuit mediation equally, including
1062the fee charged by the mediator, if any, unless the parties
1063agree otherwise, and the mediator may require advance payment of
1064its reasonable fees and costs. The failure of any party to
1065respond to a demand or response, to agree upon a mediator, to
1066make payment of fees and costs within the time established by
1067the mediator, or to appear for a scheduled mediation session
1068shall operate as an impasse in the presuit mediation by such
1069party, entitling the other party to proceed in court and to seek
1070an award of the costs and fees associated with the mediation.
1071Additionally, if any presuit mediation session cannot be
1072scheduled and conducted within 90 days after the offer to
1073participate in mediation was filed, an impasse shall be deemed
1074to have occurred unless both parties agree to extend this
1075deadline. If a department mediator is used, the department may
1076charge such fee as is necessary to pay expenses of the
1077mediation, including, but not limited to, the salary and
1078benefits of the mediator and any travel expenses incurred. The
1079petitioner shall initially file with the department upon filing
1080the disputes, a filing fee of $200, which shall be used to
1081defray the costs of the mediation. At the conclusion of the
1082mediation, the department shall charge to the parties, to be
1083shared equally unless otherwise agreed by the parties, such
1084further fees as are necessary to fully reimburse the department
1085for all expenses incurred in the mediation.
1086     (c)(b)  If presuit mediation as described in paragraph (a)
1087is not successful in resolving all issues between the parties,
1088the parties may file the unresolved dispute in a court of
1089competent jurisdiction or elect to enter into binding or
1090nonbinding arbitration pursuant to the procedures set forth in
1091s. 718.1255 and rules adopted by the division, with the
1092arbitration proceeding to be conducted by a department
1093arbitrator or by a private arbitrator certified by the
1094department. If all parties do not agree to arbitration
1095proceedings following an unsuccessful presuit mediation, any
1096party may file the dispute in court. A final order resulting
1097from nonbinding arbitration is final and enforceable in the
1098courts if a complaint for trial de novo is not filed in a court
1099of competent jurisdiction within 30 days after entry of the
1100order. As to any issue or dispute that is not resolved at
1101presuit mediation, and as to any issue that is settled at
1102presuit mediation but is thereafter subject to an action seeking
1103enforcement of the mediation settlement, the prevailing party in
1104any subsequent arbitration or litigation proceeding shall be
1105entitled to seek recovery of all costs and attorney's fees
1106incurred in the presuit mediation process.
1107     (d)(c)  The department shall develop a certification and
1108training program for private mediators and private arbitrators
1109which shall emphasize experience and expertise in the area of
1110the operation of community associations. A mediator or
1111arbitrator shall be certified to conduct mediation or
1112arbitration under this section by the department only if he or
1113she has been certified as a circuit court civil mediator or
1114arbitrator, respectively, pursuant to the requirements
1115established attended at least 20 hours of training in mediation
1116or arbitration, as appropriate, and only if the applicant has
1117mediated or arbitrated at least 10 disputes involving community
1118associations within 5 years prior to the date of the
1119application, or has mediated or arbitrated 10 disputes in any
1120area within 5 years prior to the date of application and has
1121completed 20 hours of training in community association
1122disputes. In order to be certified by the department, any
1123mediator must also be certified by the Florida Supreme Court.
1124The department may conduct the training and certification
1125program within the department or may contract with an outside
1126vendor to perform the training or certification. The expenses of
1127operating the training and certification and training program
1128shall be paid by the moneys and filing fees generated by the
1129arbitration of recall and election disputes and by the mediation
1130of those disputes referred to in this subsection and by the
1131training fees.
1132     (e)(d)  The presuit mediation procedures provided by this
1133subsection may be used by a Florida corporation responsible for
1134the operation of a community in which the voting members are
1135parcel owners or their representatives, in which membership in
1136the corporation is not a mandatory condition of parcel
1137ownership, or which is not authorized to impose an assessment
1138that may become a lien on the parcel.
1139     (3)  The department shall develop an education program to
1140assist homeowners, associations, board members, and managers in
1141understanding and increasing awareness of the operation of
1142homeowners' associations pursuant to this chapter and in
1143understanding the use of alternative dispute resolution
1144techniques in resolving disputes between parcel owners and
1145associations or between owners. Such education program may
1146include the development of pamphlets and other written
1147instructional guides, the holding of classes and meetings by
1148department employees or outside vendors, as the department
1149determines, and the creation and maintenance of a website
1150containing instructional materials. The expenses of operating
1151the education program shall be initially paid by the moneys and
1152filing fees generated by the arbitration of recall and election
1153disputes and by the mediation of those disputes referred to in
1154this subsection.
1155     Section 17.  Except as otherwise expressly provided in this
1156act, this act shall take effect July 1, 2007.

CODING: Words stricken are deletions; words underlined are additions.