HB 1349

1	A bill to be entitled
2	An act relating to condominium associations; amending s.
3	718.111, F.S.; specifying that requirements relating to
4	acquisition and maintenance of adequate insurance apply to
5	all residential condominiums; revising provisions relating
6	to condominium and condominium owner insurance coverage;
7	authorizing an association or group of associations to
8	provide adequate hazard insurance through a self-insurance
9	fund; requiring associations to exercise best efforts to
10	obtain and maintain certain kinds of insurance; requiring
11	insurance coverage or bonding of certain persons with
12	respect to association funds; providing coverage
13	requirements for policies entered into after a specified
14	date; requiring owners to provide evidence of a currently
15	effective policy of hazard and liability insurance upon
16	request by the association; providing applicability to
17	condominiums operated as a single condominium by a
18	multicondominium association; specifying responsibility
19	for reconstruction work under specified circumstances;
20	specifying common expense responsibilities of the
21	association and owners; amending s. 718.113, F.S.;
22	revising application of provision relating to the material
23	alteration or substantial additions to the common elements
24	or to real property which is association property to apply
25	to certain associations; creating s. 718.1265, F.S.;
26	authorizing a condominium association board to exercise
27	specified emergency powers during an emergency created by
28	declared disaster; providing a limitation; providing an
29	effective date.
30
31	Be It Enacted by the Legislature of the State of Florida:
32
33	Section 1.  Subsection (11) of section 718.111, Florida
34	Statutes, is amended to read:
35	(Substantial rewording of subsection. See
36	s. 718.111(11), F.S., for present text.)
37	718.111  The association.--
38	(11)  INSURANCE.--In order to protect the safety, health,
39	and welfare of the people of this state and to ensure
40	consistency in the provision of insurance coverage to
41	condominiums and their unit owners and in the allocation of
42	casualty repair or reconstruction expenses, this subsection
43	shall be deemed to apply to every residential condominium in the
44	state, regardless of the date of its declaration of condominium.
45	It is the intent of the Legislature to encourage lower or stable
46	insurance premiums for associations described in this
47	subsection.
48	(a)  Adequate insurance.--
49	1.  A unit-owner controlled association operating a
50	residential condominium shall use its best efforts to obtain and
51	maintain adequate insurance to protect the association, the
52	association property, the common elements, and the condominium
53	property required to be insured by the association pursuant to
54	this subsection.
55	2.  If the association is developer controlled, the
56	association shall exercise best efforts to obtain and maintain
57	such insurance. Failure to obtain and maintain adequate
58	insurance during any period of developer control shall
59	constitute a breach of fiduciary responsibility by the
60	developer-appointed members of the board of directors of the
61	association, unless those members can show that despite such
62	failure, they have made their best efforts.
63	3.  Regardless of any requirement in the declaration of
64	condominium for coverage by the association for "full insurable
65	value," "replacement cost," or the like, adequate insurance
66	shall be based upon the replacement cost of the property to be
67	insured as determined by an independent insurance appraisal or
68	update of a prior appraisal. The full insurable value shall be
69	determined not less frequently than every 36 months.
70	4.  An association or group of associations may provide
71	adequate hazard insurance through a self-insurance fund that
72	complies with the applicable provisions of ss. 624.460-624.488.
73	5.  The association may provide adequate hazard insurance
74	coverage individually or for a group of no fewer than three
75	communities created and operating under this chapter, chapter
76	719, chapter 720, or chapter 721, by obtaining and maintaining
77	for the communities insurance coverage sufficient to cover an
78	amount equal to the probable maximum loss for the communities
79	for a 250-year windstorm event; however, such probable maximum
80	loss must be determined through the use of a competent model
81	that has been accepted by the Florida Commission on Hurricane
82	Loss Projection Methodology.
83	6.  In determining the association's adequate hazard
84	insurance coverage, the association may consider deductibles as
85	determined by this subsection. Policies may include deductibles
86	as determined by the board. The deductibles shall be consistent
87	with industry standards and prevailing practice for communities
88	of like size and age and having similar construction and
89	facilities in the locale where the condominium property is
90	situated. The deductibles may be based upon available funds,
91	including reserve accounts, or predetermined assessment
92	authority at the time that the insurance is obtained. The board
93	shall establish the level of deductibles based upon the level of
94	available funds and predetermined assessment authority at a
95	properly noticed meeting of the board. The notice of such
96	meeting shall state the proposed deductible and the available
97	funds and the assessment authority relied upon by the board and
98	shall estimate any potential assessment amount against each
99	unit, if any. The meeting described in this subparagraph may be
100	held in conjunction with a meeting to consider the proposed
101	budget or an amendment to the budget.
102	7.  The association shall obtain and maintain adequate
103	insurance or fidelity bonding of all persons who control or
104	disburse funds of the association. The insurance policy or
105	fidelity bond must cover the maximum funds that will be in the
106	custody of the association or its management agent at any one
107	time. As used in this paragraph, the term "persons who control
108	or disburse funds of the association" includes, but is not
109	limited to, those individuals authorized to sign checks and the
110	president, secretary, and treasurer of the association. The
111	association shall bear the cost of bonding.
112	(b)  Scope of casualty coverage.--
113	1.  Every hazard insurance policy issued or renewed on or
114	after January 1, 2009, to the association to protect the
115	condominium shall provide primary coverage for:
116	a.  All portions of the condominium property as originally
117	installed or property replacement of like kind and quality, in
118	accordance with the original plans and specifications.
119	b.  All alterations or additions made to the condominium
120	property or association property by the association pursuant to
121	s. 718.113(2).
122
123	The coverage shall exclude all personal property of the unit
124	owners wherever situated on the condominium property, including:
125	floor, wall, and ceiling coverings; electrical fixtures;
126	appliances; water heaters; water filters; built-in cabinets and
127	countertops; window treatments, including curtains, drapes,
128	blinds, hardware, and similar window treatment components.
129	Coverage shall also exclude replacements of any of the foregoing
130	items located within the units.
131	2.  Every hazard insurance policy issued or renewed on or
132	after January 1, 2009, to an individual unit owner shall provide
133	coverage for all portions of the condominium property excluded
134	from the association's coverage under this paragraph and all
135	unit owner personal property, provided the coverage afforded by
136	such policy is in excess of the amount recoverable under any
137	other policy covering the same property and shall include
138	special assessment coverage of not less than $2,000 per
139	occurrence. Each insurance policy issued to an individual unit
140	owner providing such coverage shall be without rights of
141	subrogation against the condominium association that operates
142	the condominium in which such unit owner's unit is located.
143	Notwithstanding any provision in this subsection to the
144	contrary, the association shall not be obligated to insure any
145	improvements installed by a current or former owner of the unit
146	or by the developer where the improvement benefits only the unit
147	for which it was installed and is not part of the standard
148	improvements installed by the developer on all units as part of
149	original construction, whether or not such improvement is
150	located within the unit, except to the extent of any insurance
151	recovery specifically for any such improvements. Further, to the
152	extent provided in the declaration as originally recorded or as
153	amended under the amendatory provisions thereof, all other
154	improvements or additions to the condominium property that
155	benefit less than all unit owners shall be insured by the unit
156	owner or owners having the use thereof or may be insured by the
157	association at the cost and expense of the unit owners having
158	the use thereof.
159	3.  The association may require each owner to provide
160	evidence of a currently effective policy of hazard and liability
161	insurance upon request, but not more frequently than annually.
162	Upon the failure of an owner to obtain the required insurance or
163	to provide a certificate of insurance issued by an insurer
164	approved to write such insurance in the state within 30 days of
165	a written request, the association shall be entitled, but shall
166	not be obligated to, purchase a policy of insurance on behalf of
167	an owner, and the cost thereof, together with reconstruction
168	costs undertaken by the association but which are the
169	responsibility of the unit owner may be collected in the manner
170	provided for collection of assessments in s. 718.116.
171	4.  The provisions of subparagraphs 1.-3. are intended to
172	establish the property or casualty insuring responsibilities of
173	the association and those of the individual unit owner and do
174	not serve to broaden or extend the perils of coverage afforded
175	by any insurance contract provided to the individual unit owner.
176	5.  The declaration of condominium as originally recorded,
177	or amended pursuant to procedures provided therein, may require
178	that any condominium property consisting of freestanding
179	buildings where there is no more than one building in or on such
180	unit need not be insured by the association if the declaration
181	requires the unit owner to obtain adequate insurance for the
182	condominium property. An association may also obtain and
183	maintain liability insurance for directors and officers,
184	insurance for the benefit of association employees, and flood
185	insurance for common elements, association property, and units.
186	6.  A multicondominium association may elect, by a majority
187	vote of the collective members of the condominiums operated by
188	the association, to operate such condominiums as a single
189	condominium for purposes of insurance matters, including, but
190	not limited to, the purchase of the hazard insurance required by
191	this section, and the apportionment of deductibles and damages
192	in excess of coverage. The election to aggregate the treatment
193	of insurance premiums, deductibles, and excess damages shall be
194	treated as an amendment to the declaration of all condominiums
195	operated by the association and the costs of insurance shall be
196	stated in the association budget. The amendments shall be
197	recorded as required by s. 718.110.
198	7.  The association has the authority to amend the
199	declaration of condominium, without regard to any requirement
200	for mortgagee approval of amendments affecting insurance
201	requirements, to the coverage requirements of this subsection.
202	(c)  Reconstruction after casualty.--
203	1.   All reconstruction work following a casualty loss
204	shall be undertaken by the association except as otherwise
205	permitted in this paragraph. A unit owner may undertake
206	reconstruction work on portions of the unit which the
207	association is required to insure under paragraph (b) only with
208	the prior written consent of the board of administration, which
209	may be conditioned upon the approval of the repair methods, the
210	qualifications of the proposed contractor, and the contract that
211	is used for that purpose. A unit owner shall obtain all required
212	governmental permits and approvals prior to commencing any
213	reconstruction.
214	2.  Except as otherwise provided in this paragraph, any
215	portion of the condominium property which the association is
216	required to insure against casualty loss pursuant to paragraph
217	(b) that is damaged by casualty shall be reconstructed,
218	repaired, or replaced, as necessary, by the association as a
219	common expense. All hazard insurance deductibles, uninsured
220	losses, and other damages in excess of hazard insurance coverage
221	under the hazard insurance policies maintained by the
222	association shall be a common expense of the condominium,
223	provided, however, that:
224	a.  An association may, upon the approval of a majority of
225	the total voting interests in the association, opt out of the
226	provisions of this paragraph requiring that hazard insurance
227	deductibles, uninsured losses, and other losses in excess of
228	hazard insurance coverage under the hazard insurance policy
229	maintained by the association be treated as common expenses and
230	allocate such repair or reconstruction expenses in the manner
231	provided in the declaration as originally recorded or as amended
232	pursuant to the amendatory provisions thereof. Such vote may be
233	approved by the voting interests of the association without
234	regard to any mortgagee consent requirements.
235	(I)  In a multicondominium association that has not
236	consolidated its financial operations under subsection (6), any
237	condominium operated by the association may opt out of the
238	provisions of this paragraph with the approval of a majority of
239	the total voting interests in that condominium. Such vote may be
240	approved by the voting interests without regard to any mortgagee
241	consent requirements.
242	(II)  Any association or condominium voting to opt out of
243	the guidelines for repair or reconstruction expenses in this
244	paragraph must record a notice verifying that the association
245	has obtained the vote required under this paragraph to opt out,
246	setting forth the date of the opt out vote and the official
247	records book and page at which the declaration is recorded. The
248	opt out shall be effective upon the date of recording of the
249	notice in the public records by the association.
250	(III)  An association that has voted to opt out of the
251	provisions of this paragraph may reverse that decision by the
252	same vote required under sub-sub-subparagraph (I) and notice
253	shall be recorded in the official records, shall comply with all
254	of the requirements of the notice of the opt out vote, and shall
255	reference the official records book and page at which the notice
256	of the opt out vote was recorded. The required notices shall be
257	executed with the formality of a deed and, regardless of the
258	provisions of subsection (12), the record of the opt out vote
259	shall be kept for as long as the opt out remains in effect.
260	b.  A unit owner shall be responsible for the costs of
261	reconstruction, repair, or replacement of any portion of the
262	condominium property not paid for by insurance proceeds when
263	such damage is caused by intentional conduct, negligence, or
264	failure to comply with the terms of the declaration or the rules
265	of the association by a unit owner, the members of his or her
266	family, unit occupants, tenants, guests, or invitees and without
267	compromise of the subrogation rights of any insurer as set forth
268	in paragraph (b).
269	c.  The association shall not be obligated to pay for
270	casualty losses as a common expense where the casualty losses
271	were known or should have been known to a unit owner and were
272	not reported to the association until after the insurance claim
273	of the association for that casualty has been settled and
274	resolved with finality or is considered untimely filed by the
275	insurer and denied on that basis.
276	d.  Any portion of the condominium property that the unit
277	owner is required to insure against casualty loss pursuant to
278	paragraph (b) that is damaged by casualty shall be
279	reconstructed, repaired, or replaced, as necessary, by the unit
280	owner at the unit owner's expense, and any such reconstruction
281	work undertaken by the association shall be chargeable to the
282	unit and enforceable as an assessment pursuant to s. 718.116.
283	The association is hereby designated as an additional named
284	insured and loss payee on all casualty insurance policies issued
285	to unit owners in the condominium operated by the association.
286	3.  To the extent the cost of repair or reconstruction for
287	which the unit owner is responsible under subparagraph 2. is
288	reimbursed to the association by insurance proceeds and to the
289	extent the association has collected the cost of such repair or
290	reconstruction from the unit owner, the association shall
291	reimburse the unit owner without the waiver of any rights of
292	subrogation.
293	4.  The provisions of subparagraph 2. regarding the
294	financial responsibility of a unit owner for the costs of
295	repairing or replacing other portions of the condominium
296	property shall also be applicable to the costs of repair or
297	replacement of personal property of other unit owners or the
298	association, as well as other property, whether real or
299	personal, that the unit owners are required to insure under
300	paragraph (b).
301	Section 2.  Paragraph (a) of subsection (2) of section
302	718.113, Florida Statutes, is amended to read:
303	718.113  Maintenance; limitation upon improvement; display
304	of flag; hurricane shutters.--
305	(2)(a)  Except as otherwise provided in this section, there
306	shall be no material alteration or substantial additions to the
307	common elements or to real property which is association
308	property, except in a manner provided in the declaration as
309	originally recorded or as amended under the procedures provided
310	therein. If the declaration as originally recorded or as amended
311	under the procedures provided therein does not specify the
312	procedure for approval of material alterations or substantial
313	additions, 75 percent of the total voting interests of the
314	association must approve the alterations or additions. This
315	paragraph is intended to clarify existing law and applies to
316	associations existing on the effective date of this act.
317	Section 3.  Section 718.1265, Florida Statutes, is created
318	to read:
319	718.1265  Association emergency powers.--
320	(1)  To the extent allowed by law and unless specifically
321	prohibited by the declaration of condominium, the articles, or
322	the bylaws of an association, and consistent with the provisions
323	of s. 617.0830, the board of administration, in response to
324	damage caused by an event for which a state of emergency is
325	declared pursuant to s. 252.36 in the locale in which the
326	condominium is located, may, but is not required to, exercise
327	the following powers:
328	(a)  Conduct board meetings and membership meetings with
329	notice given as is practicable. Such notice may be given in any
330	practicable manner, including publication, radio, United States
331	mail, the Internet, public service announcements, and
332	conspicuous posting on the condominium property or any other
333	means the board deems reasonable under the circumstances. Notice
334	of board decisions may be communicated as provided in this
335	paragraph.
336	(b)  Cancel and reschedule any association meeting.
337	(c)  Name as assistant officers persons who are not
338	directors, which assistant officers shall have the same
339	authority as the executive officers to whom they are assistants
340	during the state of emergency to accommodate the incapacity or
341	unavailability of any officer of the association.
342	(d)  Relocate the association's principal office or
343	designate alternative principal offices.
344	(e)  Enter into agreements with local counties and
345	municipalities to assist counties and municipalities with debris
346	removal.
347	(f)  Implement a disaster plan before or immediately
348	following the event for which a state of emergency is declared
349	that may include, but is not limited to, shutting down or off
350	elevators; electricity; water, sewer, or security systems; or
351	air conditioners.
352	(g)  Declare any portion of the condominium property
353	unavailable for entry or occupancy by unit owners, family
354	members, tenants, guests, agents, or invitees to protect the
355	health, safety, or welfare of such persons.
356	(h)  Require the evacuation of the condominium property in
357	the event of a mandatory evacuation order in the locale in which
358	the condominium is located. Should any unit owner or other
359	occupant of a condominium fail or refuse to evacuate the
360	condominium property where the board has required evacuation,
361	the association shall be immune from liability or injury to
362	persons or property arising from such failure or refusal.
363	(i)  Determine whether the condominium property can be
364	safely inhabited or occupied. However, such determination is not
365	conclusive as to any determination of habitability pursuant to
366	the declaration.
367	(j)  Mitigate further damage, including taking action to
368	contract for the removal of debris; and prevent or mitigate the
369	spread of fungus, including, but not limited to, mold or mildew,
370	by removing and disposing of wet drywall, insulation, carpet,
371	cabinetry, or other fixtures, on or within the condominium
372	property, even if the unit owner is obligated by the declaration
373	or law to insure or replace those fixtures and to remove
374	personal property from a unit.
375	(k)  Contract, on behalf of any unit owner or owners, for
376	items or services for which the owners are otherwise
377	individually responsible for, but which are necessary to prevent
378	further damage to the condominium property. In such event, the
379	unit owner or owners on whose behalf the board has contracted
380	are responsible for reimbursing the association for the actual
381	costs of the items or services, and the association may use its
382	lien authority provided by s. 718.116 to enforce collection of
383	the charges. Without limitation, such items or services may
384	include the drying of units, the boarding of broken windows or
385	doors, and the replacement of damaged air conditioners or air
386	handlers to provide climate control in the units or other
387	portions of the property.
388	(l)  Regardless of any provision to the contrary and even
389	if such authority does not specifically appear in the
390	declaration of condominium, articles, or bylaws of the
391	association, levy special assessments without a vote of the
392	owners.
393	(m)  Without unit owner approval, borrow money and pledge
394	association assets as collateral to fund emergency repairs and
395	carry out the duties of the association when operating funds are
396	insufficient. This paragraph does not limit the general
397	authority of the association to borrow money, subject to such
398	restrictions as are contained in the declaration of condominium,
399	articles, or bylaws of the association.
400	(2)  The special powers authorized under subsection (1)
401	shall be limited to that time reasonably necessary to protect
402	the health, safety, and welfare of the association, the unit
403	owners, their family members, tenants, guests, agents, or
404	invitees and shall be reasonably necessary to mitigate further
405	damage and make emergency repairs.
406	Section 4.  This act shall take effect July 1, 2008.

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