1 | A bill to be entitled |
2 | An act relating to community associations; amending s. |
3 | 718.111, F.S.; revising and providing provisions relating |
4 | to condominium and condominium owner insurance coverage; |
5 | authorizing an association or group of associations to |
6 | provide adequate hazard insurance through a self-insurance |
7 | fund; requiring associations to exercise best efforts to |
8 | obtain and maintain certain kinds of insurance; providing |
9 | that policies may include deductibles as determined by the |
10 | board; providing requirements for deductibles; providing |
11 | coverage requirements for policies entered into after a |
12 | specified date; providing requirements for hazard |
13 | insurance policies; requiring owners to provide evidence |
14 | of a currently effective policy of hazard and liability |
15 | insurance upon request by the association; authorizing |
16 | operation of multiple condominiums as a single condominium |
17 | for insurance purposes under certain circumstances; |
18 | requiring an association to obtain and maintain adequate |
19 | insurance or fidelity bonding of all persons who control |
20 | or disburse funds of the association; specifying |
21 | responsibility for repair or reconstruction work under |
22 | specified circumstances; amending s. 718.115, F.S.; |
23 | specifying common expense responsibilities of the |
24 | association and unit owners; amending s. 718.116, F.S.; |
25 | providing persons that may request a certificate signed by |
26 | an officer or agent of the association stating all |
27 | assessments and other moneys owed to the association; |
28 | providing requirements for the charging of certain fees by |
29 | the board; amending s. 718.117, F.S.; revising priority |
30 | standards for the distribution of certain proceeds from |
31 | any sale of condominium properties and assets; creating s. |
32 | 720.3087, F.S.; providing requirements for the request and |
33 | provision of estoppel certificates; providing an effective |
34 | date. |
35 |
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36 | Be It Enacted by the Legislature of the State of Florida: |
37 |
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38 | Section 1. Subsection (11) of section 718.111, Florida |
39 | Statutes, is amended to read: |
40 | 718.111 The association.-- |
41 | (Substantial rewording of subsection. See |
42 | s. 718.111(11), F.S., for current text.) |
43 | (11) INSURANCE.--In order to protect the health, safety, |
44 | and welfare of the people of this state and to ensure |
45 | consistency in the provision of insurance coverage to |
46 | condominiums and their unit owners, this subsection shall be |
47 | deemed to apply to every residential condominium in the state, |
48 | regardless of the date of its declaration of condominium. It is |
49 | the intent of the Legislature to encourage lower or stable |
50 | insurance premiums for associations described in this |
51 | subsection. |
52 | (a) Adequate hazard insurance, regardless of any |
53 | requirement in the declaration of condominium for coverage by |
54 | the association for full insurable value, replacement cost, or |
55 | similar coverages, shall be based upon the replacement cost of |
56 | the property to be insured as determined by an independent |
57 | insurance appraisal or update of a prior appraisal. The full |
58 | insurable value shall be determined not less frequently than |
59 | every 36 months. |
60 | 1. An association or group of associations may provide |
61 | adequate hazard insurance through a self-insurance fund that |
62 | complies with the requirements of ss. 624.460-624.488. |
63 | 2. An association may also provide adequate hazard |
64 | insurance, individually or for a group of no fewer than three |
65 | communities created and operating under this chapter, chapter |
66 | 719, chapter 720, or chapter 721, by obtaining and maintaining |
67 | for the communities insurance coverage sufficient to cover an |
68 | amount equal to the probable maximum loss for the communities |
69 | for a 250-year windstorm event, provided such probable maximum |
70 | loss must be determined through the use of a competent model |
71 | that has been accepted by the Florida Commission on Hurricane |
72 | Loss Projection Methodology. Any policy providing such coverage |
73 | issued after July 1, 2008, must be approved by the Office of |
74 | Insurance Regulation before the coverage is deemed adequate. |
75 | 3. In determining the adequate hazard insurance, an |
76 | association may consider deductibles as determined by this |
77 | subsection. |
78 | (b) If an association is controlled by a developer, the |
79 | association shall exercise best efforts to obtain and maintain |
80 | adequate hazard insurance. Failure to obtain and maintain |
81 | adequate hazard insurance during any period of control by a |
82 | developer constitutes a breach of fiduciary responsibility by |
83 | the members of the board of directors of the association |
84 | appointed by the developer unless such members can show that |
85 | despite such failure they have made their best efforts to obtain |
86 | and maintain such insurance. |
87 | (c) Policies may include deductibles as determined by the |
88 | board. |
89 | 1. The deductibles shall be consistent with industry |
90 | standards and prevailing practice for communities of like size |
91 | and age and having similar construction as facilities in the |
92 | locale where the condominium property is situated. |
93 | 2. The deductibles may be based upon available funds, |
94 | including reserve accounts, or predetermined assessment |
95 | authority at the time the insurance is obtained. |
96 | 3. At a meeting of the board, which shall be open to all |
97 | unit owners in the manner set forth in s. 718.112(2)(e), the |
98 | board shall establish the level of deductibles based upon the |
99 | level of available funds and predetermined assessment authority. |
100 | The notice of such meeting shall state the proposed deductibles, |
101 | the available funds, and the assessment authority relied upon by |
102 | the board and shall estimate any potential assessment amount |
103 | against each unit, if any. The meeting described in this |
104 | subparagraph may be held in conjunction with a meeting to |
105 | consider the proposed budget or an amendment to the proposed |
106 | budget. |
107 | (d) An association controlled by unit owners and operating |
108 | a residential condominium shall use its best efforts to obtain |
109 | and maintain adequate insurance to protect the association, the |
110 | association property, the common elements, and the condominium |
111 | property required to be insured by the association pursuant to |
112 | this subsection. |
113 | (e) The declaration of condominium as originally recorded, |
114 | or as amended pursuant to procedures provided in the |
115 | declaration, may require that condominium property consisting of |
116 | freestanding buildings where there is no more than one building |
117 | in or on such unit need not be insured by the association if the |
118 | declaration requires the unit owner to obtain adequate insurance |
119 | for the condominium property. An association may also obtain and |
120 | maintain liability insurance for directors and officers, |
121 | insurance for the benefit of association employees, and flood |
122 | insurance for common elements, association property, and units. |
123 | (f)1. Every hazard insurance policy issued or renewed on |
124 | or after January 1, 2009, to protect the condominium shall |
125 | provide primary coverage for: |
126 | a. All portions of the condominium property as originally |
127 | installed or any replacement of like kind and quality, in |
128 | accordance with the original plans and specifications. |
129 | b. All alterations or additions made to the condominium |
130 | property or association property pursuant to s. 718.113(2). |
131 | 2. The coverage shall exclude all personal property within |
132 | the unit or limited common elements, and floor, wall, and |
133 | ceiling coverings, electrical fixtures, appliances, water |
134 | heaters, water filters, built-in cabinets and countertops, and |
135 | window treatments, including curtains, drapes, blinds, hardware, |
136 | and similar window treatment components, or replacements of any |
137 | such items. |
138 | 3. This paragraph is intended to establish the property or |
139 | casualty insuring responsibilities of the association and the |
140 | individual unit owner and does not serve to broaden or extend |
141 | the perils of coverage afforded by any insurance contract |
142 | provided to the individual unit owner. |
143 | (g) Every hazard insurance policy issued or renewed on or |
144 | after January 1, 2009, to an individual unit owner shall provide |
145 | that the coverage afforded by such policy is in excess of the |
146 | amount recoverable under any other policy covering the same |
147 | property and shall include special assessment coverage of not |
148 | less than $2,000 per occurrence. Each insurance policy issued to |
149 | an individual unit owner providing such coverage shall be |
150 | without rights of subrogation against the condominium |
151 | association that operates the condominium in which such unit |
152 | owner's unit is located. |
153 | 1. All improvements or additions to the condominium |
154 | property that benefit less than all unit owners shall be insured |
155 | by any unit owners having the use of such property or may be |
156 | insured by the association at the cost and expense of the unit |
157 | owners having the use of such property. |
158 | 2. The association shall require each unit owner to |
159 | provide evidence of a currently effective policy of hazard and |
160 | liability insurance upon request but not more frequently than |
161 | annually. Upon the failure of a unit owner to provide a |
162 | certificate of insurance issued by an insurer approved to write |
163 | such insurance in this state within 30 days after a written |
164 | request, the association is entitled but is not obligated to |
165 | purchase a policy of insurance on behalf of an owner and the |
166 | cost of such policy, together with reconstruction costs |
167 | undertaken by the association but which are the responsibility |
168 | of the unit owner, may be collected in the manner provided for |
169 | collection of assessments in s. 718.116. |
170 | 3. All reconstruction work after a casualty loss shall be |
171 | undertaken by the association except as otherwise permitted in |
172 | this subparagraph. A unit owner may undertake reconstruction |
173 | work on portions of the unit with the prior written consent of |
174 | the board of administration, which may be conditioned upon the |
175 | approval of the repair methods, the qualifications of the |
176 | proposed contractor, and the contract that is used for that |
177 | purpose. A unit owner shall obtain all required governmental |
178 | permits and approvals prior to commencing reconstruction. |
179 | 4. Unit owners shall be responsible for the cost of |
180 | reconstruction of any portion of the condominium property for |
181 | which the unit owner is required to carry casualty insurance and |
182 | any such reconstruction work undertaken by the association shall |
183 | be chargeable to the unit and enforceable as an assessment |
184 | pursuant to s. 718.116. The association is designated as an |
185 | additional named insured and loss payee on all casualty |
186 | insurance policies issued to unit owners in the condominium |
187 | operated by the association. |
188 | 5. A multicondominium association may elect by a majority |
189 | vote of the collective members of the condominiums operated by |
190 | the association to operate such condominiums as a single |
191 | condominium for purposes of insurance matters, including, but |
192 | not limited to, the purchase of the hazard insurance required by |
193 | this section and the apportionment of deductibles and damages in |
194 | excess of coverage. The election to aggregate the treatment of |
195 | insurance premiums, deductibles, and excess damages shall be |
196 | treated as an amendment to the declaration of all condominiums |
197 | operated by the association and the costs of insurance shall be |
198 | stated in the association budget. The amendments shall be |
199 | recorded as required by s. 718.110. |
200 | (h) The association shall obtain and maintain adequate |
201 | insurance or fidelity bonding of all persons who control or |
202 | disburse funds of the association. The insurance policy or |
203 | fidelity bond must cover the maximum funds that will be in the |
204 | custody of the association or its management agent at any one |
205 | time. As used in this paragraph, the term "persons who control |
206 | or disburse funds of the association" includes, but is not |
207 | limited to, those individuals authorized to sign checks and the |
208 | president, secretary, and treasurer of the association. The |
209 | association shall bear the cost of bonding. |
210 | (i) An association may amend the declaration of |
211 | condominium, without regard to any requirement for mortgagee |
212 | approval of amendments affecting insurance requirements, to |
213 | conform the declaration of condominium to the coverage |
214 | requirements of this subsection. |
215 | (j) Any portion of the condominium property the |
216 | association is required to insure against casualty loss pursuant |
217 | to paragraph (f) that is damaged by a casualty shall be |
218 | reconstructed, repaired, or replaced as necessary by the |
219 | association as a common expense. All hazard insurance |
220 | deductibles, uninsured losses, and other damages in excess of |
221 | hazard insurance coverage under the hazard insurance policies |
222 | maintained by the association shall be a common expense of the |
223 | condominium, provided: |
224 | 1. A unit owner shall be responsible for the costs of |
225 | repair or replacement of any portion of the condominium property |
226 | not paid for by insurance proceeds when such damage is caused by |
227 | intentional conduct, negligence, or failure to comply with the |
228 | terms of the declaration or the rules of the association by a |
229 | unit owner, the members of his or her family, or unit occupants, |
230 | tenants, guests, or invitees and without compromise of the |
231 | subrogation rights of any insurer as set forth in paragraph (g). |
232 | 2. The provisions of subparagraph 1. relating to the |
233 | financial responsibility of a unit owner for the costs of |
234 | repairing or replacing other portions of the condominium |
235 | property also apply to the costs of repairing or replacing |
236 | personal property of other unit owners or the association as |
237 | well as other property, whether real or personal, the unit |
238 | owners are required to insure under paragraph (g). |
239 | 3. To the extent the cost of repair or reconstruction for |
240 | which the unit owner is responsible under this paragraph is |
241 | reimbursed to the association by insurance proceeds and to the |
242 | extent the association has collected the cost of such repair or |
243 | reconstruction from the unit owner, the association shall |
244 | reimburse the unit owner without the waiver of any rights of |
245 | subrogation. |
246 | 4. The association is not obligated to pay for repair or |
247 | reconstruction or repairs of casualty losses as a common expense |
248 | when the casualty losses were known or should have been known to |
249 | a unit owner and were not reported to the association until |
250 | after the insurance claim of the association for that casualty |
251 | loss has been settled and resolved with finality or is |
252 | considered untimely filed by the insurer and denied on that |
253 | basis. |
254 | (k) An association may, upon the approval of a majority of |
255 | the total voting interests in the association, opt out of the |
256 | provisions of paragraph (j) for the allocation of repair or |
257 | reconstruction expenses and allocate repair or reconstruction |
258 | expenses in the manner provided in the declaration as originally |
259 | recorded or as amended. Such vote may be approved by the voting |
260 | interests of the association without regard to any mortgagee |
261 | consent requirements. |
262 | (l) In a multicondominium association that has not |
263 | consolidated its financial operations under subsection (6), any |
264 | condominium operated by the association may opt out of the |
265 | provisions of paragraph (j) with the approval of a majority of |
266 | the total voting interests in that condominium. Such vote may be |
267 | approved by the voting interests without regard to any mortgagee |
268 | consent requirements. |
269 | (m) Any association or condominium voting to opt out of |
270 | the guidelines for repair or reconstruction expenses in |
271 | paragraph (j) shall record a notice setting forth the date of |
272 | the opt-out vote and the official records book and page at which |
273 | the declaration is recorded. The opt out shall be effective upon |
274 | the date of recording of the notice in the public records by the |
275 | association. An association that has voted to opt out of |
276 | paragraph (j) may reverse that decision by the same vote |
277 | required under paragraphs (k) and (l), and notice of such |
278 | reversal shall be recorded in the official records. |
279 | (n) An association shall not be obligated to pay for any |
280 | reconstruction or repair expenses due to casualty loss to any |
281 | improvements installed by a current or former unit owner or by |
282 | the developer when the improvement benefits only the unit for |
283 | which it was installed and is not part of the standard |
284 | improvements installed by the developer on all units as part of |
285 | original construction, whether or not such improvement is |
286 | located within the unit, except to the extent of any insurance |
287 | recovery specifically for any such improvements. |
288 | Section 2. Paragraph (a) of subsection (1) of section |
289 | 718.115, Florida Statutes, is amended to read: |
290 | 718.115 Common expenses and common surplus.-- |
291 | (1)(a) Common expenses include the expenses of the |
292 | operation, maintenance, repair, replacement, or protection of |
293 | the common elements and association property, costs of carrying |
294 | out the powers and duties of the association, and any other |
295 | expense, whether or not included in the foregoing, designated as |
296 | common expense by this chapter, the declaration, the documents |
297 | creating the association, or the bylaws. Common expenses also |
298 | include reasonable transportation services, insurance for |
299 | directors and officers, road maintenance and operation expenses, |
300 | in-house communications, and security services, which are |
301 | reasonably related to the general benefit of the unit owners |
302 | even if such expenses do not attach to the common elements or |
303 | property of the condominium. However, such common expenses must |
304 | either have been services or items provided on or after the date |
305 | control of the association is transferred from the developer to |
306 | the unit owners or must be services or items provided for in the |
307 | condominium documents or bylaws. Unless the manner of payment or |
308 | allocation of expenses is otherwise addressed in the declaration |
309 | of condominium, the expenses of any items or services required |
310 | by federal, state, or local government or required by any other |
311 | governmental entity to be installed, maintained, or supplied to |
312 | the condominium property by the association, including, but not |
313 | limited to, fire safety equipment, or water and sewer service |
314 | where a master meter serves the condominium, shall be common |
315 | expenses whether or not such items or services are specifically |
316 | identified as common expenses in the declaration of condominium |
317 | or articles of incorporation or bylaws of the association. Such |
318 | statement is intended to clarify existing law. |
319 | Section 3. Subsection (8) of section 718.116, Florida |
320 | Statutes, is amended to read: |
321 | 718.116 Assessments; liability; lien and priority; |
322 | interest; collection.-- |
323 | (8) Within 15 days after receiving a written request |
324 | therefor from a unit owner or a designee of a unit owner |
325 | purchaser, or unit mortgagee or a designee of a unit mortgagee, |
326 | the association shall provide a certificate signed by an officer |
327 | or agent of the association stating all assessments and other |
328 | moneys owed to the association by the unit owner with respect to |
329 | the condominium parcel. |
330 | (a) Any person other than the owner who relies upon such |
331 | certificate shall be protected thereby. |
332 | (b) A summary proceeding pursuant to s. 51.011 may be |
333 | brought to compel compliance with this subsection, and in any |
334 | such action the prevailing party is entitled to recover |
335 | reasonable attorney's fees. |
336 | (c) Notwithstanding any limitation on transfer fees |
337 | contained in s. 718.112(2)(i), the association or its authorized |
338 | agent may charge a reasonable fee for the preparation of the |
339 | certificate, which fee shall be set forth in the certificate. |
340 | (d) The authority to charge a fee under this section shall |
341 | be established by written resolution adopted by the board in |
342 | advance of the charge or provided by written management, |
343 | bookkeeping, or maintenance contract. The fee shall be payable |
344 | upon the preparation of the certificate; and, if the certificate |
345 | is requested in conjunction with the sale or mortgage of the |
346 | unit and the closing does not take place, the fee shall be |
347 | promptly refunded upon written notice from the person requesting |
348 | the certificate stating that the sale or mortgage was not |
349 | effectuated. The fee for a certificate in conjunction with a |
350 | sale or mortgage that is not effectuated and a refund that is |
351 | paid to the party requesting the certificate shall be an |
352 | obligation of the unit owner and shall be collectible in the |
353 | same manner as an assessment provided by this section. |
354 | Section 4. Paragraph (c) of subsection (17) of section |
355 | 718.117, Florida Statutes, is amended to read: |
356 | 718.117 Termination of condominium.-- |
357 | (17) DISTRIBUTION.-- |
358 | (c) The proceeds from any sale of condominium property or |
359 | association property and any remaining condominium property or |
360 | association property, common surplus, and other assets shall be |
361 | distributed in the following priority: |
362 | 1. To pay the reasonable termination trustee's fees and |
363 | costs and accounting fees and costs. |
364 | 2. To lienholders of liens recorded prior to the recording |
365 | of the declaration. |
366 | 3. To purchase-money lienholders on units to the extent |
367 | necessary to satisfy their liens, but in no event shall the |
368 | distribution exceed a unit's share of the proceeds. |
369 | 4. To lienholders of liens of the association which have |
370 | been consented to under s. 718.121(1). |
371 | 5. To creditors of the association, as their interests |
372 | appear. |
373 | 6. To unit owners, the proceeds of any sale of condominium |
374 | property subject to satisfaction of liens on each unit in their |
375 | order of priority, in shares specified in the plan of |
376 | termination, unless objected to by a unit owner or lienor as |
377 | provided in paragraph (b). |
378 | 7. To unit owners, the remaining condominium property, |
379 | subject to satisfaction of liens on each unit in their order of |
380 | priority, in shares specified in the plan of termination, unless |
381 | objected to by a unit owner or a lienor as provided in paragraph |
382 | (b). |
383 | 8. To unit owners, the proceeds of any sale of association |
384 | property, the remaining association property, common surplus, |
385 | and other assets of the association, subject to satisfaction of |
386 | liens on each unit in their order of priority, in shares |
387 | specified in the plan of termination, unless objected to by a |
388 | unit owner or a lienor as provided in paragraph (b). |
389 | Section 5. Section 720.3087, Florida Statutes, is created |
390 | to read: |
391 | 720.3087 Estoppel certificates.--Within 15 days after |
392 | receiving a written request therefor from a parcel owner or the |
393 | designee of a parcel owner, or a parcel mortgagee or the |
394 | designee of a parcel mortgagee, the association shall provide a |
395 | certificate signed by an officer or agent of the association |
396 | stating all assessments and other moneys owed to the association |
397 | by the parcel owner with respect to the parcel. |
398 | (1) Any person other than the parcel owner who relies upon |
399 | such certificate shall be protected thereby. |
400 | (2) A summary procedure pursuant to s. 51.011 may be |
401 | brought to compel compliance with this section, and in any such |
402 | action the prevailing party is entitled to recover reasonable |
403 | attorney's fees. |
404 | (3) The authority to charge a fee under this section shall |
405 | be established by written resolution adopted by the board in |
406 | advance of the charge or provided by written management, |
407 | bookkeeping, or maintenance contract. The fee shall be payable |
408 | upon the preparation of the certificate; and, if the certificate |
409 | is requested in conjunction with the sale or mortgage of the |
410 | parcel and the closing does not take place, the fee shall be |
411 | promptly refunded upon written notice from the person requesting |
412 | the certificate stating that the sale or mortgage was not |
413 | effectuated. The fee for a certificate in conjunction with a |
414 | sale or mortgage that is not effectuated and a refund that is |
415 | paid to the party requesting the certificate shall be an |
416 | obligation of the parcel owner and shall be collectible as an |
417 | assessment provided by this chapter. |
418 | Section 6. This act shall take effect July 1, 2008. |