Florida Senate - 2008 SB 2470

By Senator Deutch

30-03311-08 20082470__

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A bill to be entitled

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An act relating to condominium associations; amending s.

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718.111, F.S.; specifying that requirements relating to

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acquisition and maintenance of adequate insurance apply to

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all residential condominiums; revising provisions relating

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to condominium and condominium owner insurance coverage;

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authorizing an association or group of associations to

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provide adequate hazard insurance through a self-insurance

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fund; requiring associations to exercise best efforts to

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obtain and maintain certain kinds of insurance; requiring

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insurance coverage or bonding of certain persons with

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respect to association funds; providing coverage

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requirements for policies entered into after a specified

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date; requiring owners to provide evidence of a currently

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effective policy of hazard and liability insurance upon

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request by the association; providing applicability to

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condominiums operated as a single condominium by a

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multicondominium association; specifying responsibility

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for reconstruction work under specified circumstances;

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specifying common expense responsibilities of the

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association and owners; amending s. 718.113, F.S.;

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revising application of provision relating to the material

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alteration or substantial additions to the common elements

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or to real property which is association property to apply

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to certain associations; creating s. 718.1265, F.S.;

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authorizing a condominium association board to exercise

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specified emergency powers during an emergency created by

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declared disaster; providing a limitation; providing an

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effective date.

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Be It Enacted by the Legislature of the State of Florida:

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     Section 1.  Subsection (11) of section 718.111, Florida

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Statutes, is amended to read:

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(Substantial rewording of subsection. See

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s. 718.111(11), F.S., for present text.)

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     718.111  The association.--

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     (11) INSURANCE.--In order to protect the safety, health,

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and welfare of the people of this state and to ensure consistency

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in the provision of insurance coverage to condominiums and their

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unit owners and in the allocation of casualty repair or

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reconstruction expenses, this subsection shall be deemed to apply

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to every residential condominium in the state, regardless of the

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date of its declaration of condominium. It is the intent of the

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Legislature to encourage lower or stable insurance premiums for

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associations described in this subsection.

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     (a) Adequate insurance.--

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     1. A unit-owner controlled association operating a

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residential condominium shall use its best efforts to obtain and

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maintain adequate insurance to protect the association, the

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association property, the common elements, and the condominium

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property required to be insured by the association pursuant to

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this subsection.

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     2. If the association is developer controlled, the

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association shall exercise best efforts to obtain and maintain

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such insurance. Failure to obtain and maintain adequate insurance

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during any period of developer control shall constitute a breach

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of fiduciary responsibility by the developer-appointed members of

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the board of directors of the association, unless those members

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can show that despite such failure, they have made their best

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efforts.

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     3. Regardless of any requirement in the declaration of

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condominium for coverage by the association for "full insurable

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value," "replacement cost," or the like, adequate insurance shall

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be based upon the replacement cost of the property to be insured

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as determined by an independent insurance appraisal or update of

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a prior appraisal. The full insurable value shall be determined

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not less frequently than every 36 months.

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     4. An association or group of associations may provide

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adequate hazard insurance through a self-insurance fund that

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complies with the applicable provisions of ss. 624.460-624.488.

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     5. The association may provide adequate hazard insurance

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coverage individually or for a group of no fewer than three

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communities created and operating under this chapter, chapter

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719, chapter 720, or chapter 721, by obtaining and maintaining

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for the communities insurance coverage sufficient to cover an

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amount equal to the probable maximum loss for the communities for

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a 250-year windstorm event; however, such probable maximum loss

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must be determined through the use of a competent model that has

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been accepted by the Florida Commission on Hurricane Loss

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Projection Methodology.

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     6. In determining the association's adequate hazard

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insurance coverage, the association may consider deductibles as

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determined by this subsection. Policies may include deductibles

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as determined by the board. The deductibles shall be consistent

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with industry standards and prevailing practice for communities

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of like size and age and having similar construction and

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facilities in the locale where the condominium property is

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situated. The deductibles may be based upon available funds,

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including reserve accounts, or predetermined assessment authority

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at the time that the insurance is obtained. The board shall

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establish the level of deductibles based upon the level of

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available funds and predetermined assessment authority at a

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properly noticed meeting of the board. The notice of such meeting

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shall state the proposed deductible and the available funds and

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the assessment authority relied upon by the board and shall

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estimate any potential assessment amount against each unit, if

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any. The meeting described in this subparagraph may be held in

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conjunction with a meeting to consider the proposed budget or an

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amendment to the budget.

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     7. The association shall obtain and maintain adequate

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insurance or fidelity bonding of all persons who control or

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disburse funds of the association. The insurance policy or

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fidelity bond must cover the maximum funds that will be in the

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custody of the association or its management agent at any one

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time. As used in this paragraph, the term "persons who control or

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disburse funds of the association" includes, but is not limited

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to, those individuals authorized to sign checks and the

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president, secretary, and treasurer of the association. The

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association shall bear the cost of bonding.

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     (b) Scope of casualty coverage.--

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     1. Every hazard insurance policy issued or renewed on or

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after January 1, 2009, to the association to protect the

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condominium shall provide primary coverage for:

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     a. All portions of the condominium property as originally

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installed or property replacement of like kind and quality, in

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accordance with the original plans and specifications.

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     b. All alterations or additions made to the condominium

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property or association property by the association pursuant to

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s. 718.113(2).

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The coverage shall exclude all personal property of the unit

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owners wherever situated on the condominium property, including:

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floor, wall, and ceiling coverings; electrical fixtures;

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appliances; water heaters; water filters; built-in cabinets and

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countertops; window treatments, including curtains, drapes,

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blinds, hardware, and similar window treatment components.

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Coverage shall also exclude replacements of any of the foregoing

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items located within the units.

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     2. Every hazard insurance policy issued or renewed on or

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after January 1, 2009, to an individual unit owner shall provide

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coverage for all portions of the condominium property excluded

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from the association's coverage under this paragraph and all unit

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owner personal property, provided the coverage afforded by such

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policy is in excess of the amount recoverable under any other

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policy covering the same property and shall include special

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assessment coverage of not less than $2,000 per occurrence. Each

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insurance policy issued to an individual unit owner providing

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such coverage shall be without rights of subrogation against the

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condominium association that operates the condominium in which

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such unit owner's unit is located. Notwithstanding any provision

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in this subsection to the contrary, the association shall not be

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obligated to insure any improvements installed by a current or

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former owner of the unit or by the developer where the

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improvement benefits only the unit for which it was installed and

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is not part of the standard improvements installed by the

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developer on all units as part of original construction, whether

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or not such improvement is located within the unit, except to the

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extent of any insurance recovery specifically for any such

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improvements. Further, to the extent provided in the declaration

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as originally recorded or as amended under the amendatory

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provisions thereof, all other improvements or additions to the

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condominium property that benefit less than all unit owners shall

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be insured by the unit owner or owners having the use thereof or

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may be insured by the association at the cost and expense of the

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unit owners having the use thereof.

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     3. The association may require each owner to provide

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evidence of a currently effective policy of hazard and liability

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insurance upon request, but not more frequently than annually.

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Upon the failure of an owner to obtain the required insurance or

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to provide a certificate of insurance issued by an insurer

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approved to write such insurance in the state within 30 days of a

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written request, the association shall be entitled, but shall not

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be obligated to, purchase a policy of insurance on behalf of an

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owner, and the cost thereof, together with reconstruction costs

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undertaken by the association but which are the responsibility of

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the unit owner may be collected in the manner provided for

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collection of assessments in s. 718.116.

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     4. The provisions of subparagraphs 1.-3. are intended to

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establish the property or casualty insuring responsibilities of

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the association and those of the individual unit owner and do not

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serve to broaden or extend the perils of coverage afforded by any

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insurance contract provided to the individual unit owner.

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     5. The declaration of condominium as originally recorded,

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or amended pursuant to procedures provided therein, may require

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that any condominium property consisting of freestanding

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buildings where there is no more than one building in or on such

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unit need not be insured by the association if the declaration

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requires the unit owner to obtain adequate insurance for the

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condominium property. An association may also obtain and maintain

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liability insurance for directors and officers, insurance for the

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benefit of association employees, and flood insurance for common

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elements, association property, and units.

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     6. A multicondominium association may elect, by a majority

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vote of the collective members of the condominiums operated by

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the association, to operate such condominiums as a single

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condominium for purposes of insurance matters, including, but not

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limited to, the purchase of the hazard insurance required by this

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section, and the apportionment of deductibles and damages in

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excess of coverage. The election to aggregate the treatment of

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insurance premiums, deductibles, and excess damages shall be

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treated as an amendment to the declaration of all condominiums

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operated by the association and the costs of insurance shall be

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stated in the association budget. The amendments shall be

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recorded as required by s. 718.110.

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     7. The association has the authority to amend the

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declaration of condominium, without regard to any requirement for

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mortgagee approval of amendments affecting insurance

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requirements, to the coverage requirements of this subsection.

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     (c) Reconstruction after casualty.--

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     1. All reconstruction work following a casualty loss shall

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be undertaken by the association except as otherwise permitted in

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this paragraph. A unit owner may undertake reconstruction work on

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portions of the unit which the association is required to insure

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under paragraph (b) only with the prior written consent of the

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board of administration, which may be conditioned upon the

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approval of the repair methods, the qualifications of the

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proposed contractor, and the contract that is used for that

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purpose. A unit owner shall obtain all required governmental

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permits and approvals prior to commencing any reconstruction.

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     2. Except as otherwise provided in this paragraph, any

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portion of the condominium property which the association is

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required to insure against casualty loss pursuant to paragraph

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(b) that is damaged by casualty shall be reconstructed, repaired,

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or replaced, as necessary, by the association as a common

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expense. All hazard insurance deductibles, uninsured losses, and

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other damages in excess of hazard insurance coverage under the

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hazard insurance policies maintained by the association shall be

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a common expense of the condominium, provided, however, that:

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     a. An association may, upon the approval of a majority of

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the total voting interests in the association, opt out of the

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provisions of this paragraph requiring that hazard insurance

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deductibles, uninsured losses, and other losses in excess of

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hazard insurance coverage under the hazard insurance policy

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maintained by the association be treated as common expenses and

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allocate such repair or reconstruction expenses in the manner

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provided in the declaration as originally recorded or as amended

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pursuant to the amendatory provisions thereof. Such vote may be

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approved by the voting interests of the association without

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regard to any mortgagee consent requirements.

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     (I) In a multicondominium association that has not

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consolidated its financial operations under subsection (6), any

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condominium operated by the association may opt out of the

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provisions of this paragraph with the approval of a majority of

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the total voting interests in that condominium. Such vote may be

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approved by the voting interests without regard to any mortgagee

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consent requirements.

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     (II) Any association or condominium voting to opt out of

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the guidelines for repair or reconstruction expenses in this

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paragraph must record a notice verifying that the association has

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obtained the vote required under this paragraph to opt out,

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setting forth the date of the opt out vote and the official

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records book and page at which the declaration is recorded. The

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opt out shall be effective upon the date of recording of the

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notice in the public records by the association.

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     (III) An association that has voted to opt out of the

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provisions of this paragraph may reverse that decision by the

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same vote required under sub-sub-subparagraph (I) and notice

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shall be recorded in the official records, shall comply with all

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of the requirements of the notice of the opt out vote, and shall

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reference the official records book and page at which the notice

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of the opt out vote was recorded. The required notices shall be

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executed with the formality of a deed and, regardless of the

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provisions of subsection (12), the record of the opt out vote

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shall be kept for as long as the opt out remains in effect.

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     b. A unit owner shall be responsible for the costs of

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reconstruction, repair, or replacement of any portion of the

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condominium property not paid for by insurance proceeds when such

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damage is caused by intentional conduct, negligence, or failure

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to comply with the terms of the declaration or the rules of the

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association by a unit owner, the members of his or her family,

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unit occupants, tenants, guests, or invitees and without

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compromise of the subrogation rights of any insurer as set forth

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in paragraph (b).

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     c. The association shall not be obligated to pay for

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casualty losses as a common expense where the casualty losses

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were known or should have been known to a unit owner and were not

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reported to the association until after the insurance claim of

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the association for that casualty has been settled and resolved

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with finality or is considered untimely filed by the insurer and

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denied on that basis.

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     d. Any portion of the condominium property that the unit

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owner is required to insure against casualty loss pursuant to

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paragraph (b) that is damaged by casualty shall be reconstructed,

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repaired, or replaced, as necessary, by the unit owner at the

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unit owner's expense, and any such reconstruction work undertaken

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by the association shall be chargeable to the unit and

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enforceable as an assessment pursuant to s. 718.116. The

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association is hereby designated as an additional named insured

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and loss payee on all casualty insurance policies issued to unit

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owners in the condominium operated by the association.

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     3. To the extent the cost of repair or reconstruction for

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which the unit owner is responsible under subparagraph 2. is

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reimbursed to the association by insurance proceeds and to the

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extent the association has collected the cost of such repair or

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reconstruction from the unit owner, the association shall

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reimburse the unit owner without the waiver of any rights of

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subrogation.

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     4. The provisions of subparagraph 2. regarding the

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financial responsibility of a unit owner for the costs of

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repairing or replacing other portions of the condominium property

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shall also be applicable to the costs of repair or replacement of

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personal property of other unit owners or the association, as

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well as other property, whether real or personal, that the unit

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owners are required to insure under paragraph (b).

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     Section 2.  Paragraph (a) of subsection (2) of section

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718.113, Florida Statutes, is amended to read:

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     718.113  Maintenance; limitation upon improvement; display

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of flag; hurricane shutters.--

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     (2)(a)  Except as otherwise provided in this section, there

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shall be no material alteration or substantial additions to the

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common elements or to real property which is association

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property, except in a manner provided in the declaration as

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originally recorded or as amended under the procedures provided

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therein. If the declaration as originally recorded or as amended

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under the procedures provided therein does not specify the

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procedure for approval of material alterations or substantial

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additions, 75 percent of the total voting interests of the

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association must approve the alterations or additions. This

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paragraph is intended to clarify existing law and applies to

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associations existing on the effective date of this act.

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     Section 3.  Section 718.1265, Florida Statutes, is created

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to read:

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     718.1265 Association emergency powers.--

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     (1) To the extent allowed by law and unless specifically

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prohibited by the declaration of condominium, the articles, or

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the bylaws of an association, and consistent with the provisions

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of s. 617.0830, the board of administration, in response to

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damage caused by an event for which a state of emergency is

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declared pursuant to s. 252.36 in the locale in which the

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condominium is located, may, but is not required to, exercise the

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following powers:

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     (a) Conduct board meetings and membership meetings with

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notice given as is practicable. Such notice may be given in any

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practicable manner, including publication, radio, United States

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mail, the Internet, public service announcements, and conspicuous

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posting on the condominium property or any other means the board

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deems reasonable under the circumstances. Notice of board

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decisions may be communicated as provided in this paragraph.

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     (b) Cancel and reschedule any association meeting.

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     (c) Name as assistant officers persons who are not

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directors, which assistant officers shall have the same authority

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as the executive officers to whom they are assistants during the

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state of emergency to accommodate the incapacity or

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unavailability of any officer of the association.

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     (d) Relocate the association's principal office or

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designate alternative principal offices.

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     (e) Enter into agreements with local counties and

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municipalities to assist counties and municipalities with debris

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removal.

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     (f) Implement a disaster plan before or immediately

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following the event for which a state of emergency is declared

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that may include, but is not limited to, shutting down or off

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elevators; electricity; water, sewer, or security systems; or air

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conditioners.

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     (g) Declare any portion of the condominium property

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unavailable for entry or occupancy by unit owners, family

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members, tenants, guests, agents, or invitees to protect the

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health, safety, or welfare of such persons.

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     (h) Require the evacuation of the condominium property in

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the event of a mandatory evacuation order in the locale in which

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the condominium is located. Should any unit owner or other

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occupant of a condominium fail or refuse to evacuate the

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condominium property where the board has required evacuation, the

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association shall be immune from liability or injury to persons

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or property arising from such failure or refusal.

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     (i) Determine whether the condominium property can be

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safely inhabited or occupied. However, such determination is not

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conclusive as to any determination of habitability pursuant to

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the declaration.

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     (j) Mitigate further damage, including taking action to

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contract for the removal of debris; and prevent or mitigate the

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spread of fungus, including, but not limited to, mold or mildew,

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by removing and disposing of wet drywall, insulation, carpet,

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cabinetry, or other fixtures, on or within the condominium

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property, even if the unit owner is obligated by the declaration

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or law to insure or replace those fixtures and to remove personal

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property from a unit.

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     (k) Contract, on behalf of any unit owner or owners, for

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items or services for which the owners are otherwise individually

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responsible for, but which are necessary to prevent further

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damage to the condominium property. In such event, the unit owner

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or owners on whose behalf the board has contracted are

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responsible for reimbursing the association for the actual costs

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of the items or services, and the association may use its lien

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authority provided by s. 718.116 to enforce collection of the

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charges. Without limitation, such items or services may include

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the drying of units, the boarding of broken windows or doors, and

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the replacement of damaged air conditioners or air handlers to

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provide climate control in the units or other portions of the

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property.

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     (l) Regardless of any provision to the contrary and even if

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such authority does not specifically appear in the declaration of

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condominium, articles, or bylaws of the association, levy special

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assessments without a vote of the owners.

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     (m) Without unit owner approval, borrow money and pledge

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association assets as collateral to fund emergency repairs and

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carry out the duties of the association when operating funds are

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insufficient. This paragraph does not limit the general authority

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of the association to borrow money, subject to such restrictions

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as are contained in the declaration of condominium, articles, or

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bylaws of the association.

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     (2) The special powers authorized under subsection (1)

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shall be limited to that time reasonably necessary to protect the

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health, safety, and welfare of the association, the unit owners,

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their family members, tenants, guests, agents, or invitees and

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shall be reasonably necessary to mitigate further damage and make

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emergency repairs.

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     Section 4.  This act shall take effect July 1, 2008.

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