Florida Senate - 2008 SB 2470

By Senator Deutch

30-03311-08 20082470__

A bill to be entitled

An act relating to condominium associations; amending s.

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

acquisition and maintenance of adequate insurance apply to

all residential condominiums; revising provisions relating

to condominium and condominium owner insurance coverage;

authorizing an association or group of associations to

provide adequate hazard insurance through a self-insurance

fund; requiring associations to exercise best efforts to

obtain and maintain certain kinds of insurance; requiring

insurance coverage or bonding of certain persons with

respect to association funds; providing coverage

requirements for policies entered into after a specified

date; requiring owners to provide evidence of a currently

effective policy of hazard and liability insurance upon

request by the association; providing applicability to

condominiums operated as a single condominium by a

multicondominium association; specifying responsibility

for reconstruction work under specified circumstances;

specifying common expense responsibilities of the

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

revising application of provision relating to the material

alteration or substantial additions to the common elements

or to real property which is association property to apply

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

authorizing a condominium association board to exercise

specified emergency powers during an emergency created by

declared disaster; providing a limitation; providing an

effective date.

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

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

Statutes, is amended to read:

(Substantial rewording of subsection. See

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

718.111 The association.--

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

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

in the provision of insurance coverage to condominiums and their

unit owners and in the allocation of casualty repair or

reconstruction expenses, this subsection shall be deemed to apply

to every residential condominium in the state, regardless of the

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

Legislature to encourage lower or stable insurance premiums for

associations described in this subsection.

(a) Adequate insurance.--

1. A unit-owner controlled association operating a

residential condominium shall use its best efforts to obtain and

maintain adequate insurance to protect the association, the

association property, the common elements, and the condominium

property required to be insured by the association pursuant to

this subsection.

2. If the association is developer controlled, the

association shall exercise best efforts to obtain and maintain

such insurance. Failure to obtain and maintain adequate insurance

during any period of developer control shall constitute a breach

of fiduciary responsibility by the developer-appointed members of

the board of directors of the association, unless those members

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

efforts.

3. Regardless of any requirement in the declaration of

condominium for coverage by the association for "full insurable

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

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

as determined by an independent insurance appraisal or update of

a prior appraisal. The full insurable value shall be determined

not less frequently than every 36 months.

4. An association or group of associations may provide

adequate hazard insurance through a self-insurance fund that

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

5. The association may provide adequate hazard insurance

coverage individually or for a group of no fewer than three

communities created and operating under this chapter, chapter

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

for the communities insurance coverage sufficient to cover an

amount equal to the probable maximum loss for the communities for

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

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

been accepted by the Florida Commission on Hurricane Loss

Projection Methodology.

6. In determining the association's adequate hazard

insurance coverage, the association may consider deductibles as

determined by this subsection. Policies may include deductibles

as determined by the board. The deductibles shall be consistent

with industry standards and prevailing practice for communities

of like size and age and having similar construction and

facilities in the locale where the condominium property is

situated. The deductibles may be based upon available funds,

including reserve accounts, or predetermined assessment authority

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

establish the level of deductibles based upon the level of

available funds and predetermined assessment authority at a

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

shall state the proposed deductible and the available funds and

the assessment authority relied upon by the board and shall

estimate any potential assessment amount against each unit, if

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

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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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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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.