Florida Senate - 2017                                     SB 294
       
       
        
       By Senator Bracy
       
       11-00364-17                                            2017294__
    1                        A bill to be entitled                      
    2         An act relating to condominium, cooperative, and
    3         homeowners’ associations; amending ss. 718.111,
    4         719.104, and 720.303, F.S.; requiring associations to
    5         meet specified financial reporting requirements if
    6         they fail to provide unit owners or members with
    7         requested financial information; providing that
    8         associations that fail to provide such information may
    9         not exercise a specified reporting option for a
   10         specified period; deleting exemptions for certain
   11         associations from specified reporting requirements;
   12         providing an effective date.
   13          
   14  Be It Enacted by the Legislature of the State of Florida:
   15  
   16         Section 1. Subsection (13) of section 718.111, Florida
   17  Statutes, is amended to read:
   18         718.111 The association.—
   19         (13) FINANCIAL REPORTING.—Within 90 days after the end of
   20  the fiscal year, or annually on a date provided in the bylaws,
   21  the association shall prepare and complete, or contract for the
   22  preparation and completion of, a financial report for the
   23  preceding fiscal year. Within 21 days after the final financial
   24  report is completed by the association or received from the
   25  third party, but not later than 120 days after the end of the
   26  fiscal year or other date as provided in the bylaws, the
   27  association shall mail to each unit owner at the address last
   28  furnished to the association by the unit owner, or hand deliver
   29  to each unit owner, a copy of the financial report or a notice
   30  that a copy of the financial report will be mailed or hand
   31  delivered to the unit owner, without charge, upon receipt of a
   32  written request from the unit owner. If, upon receipt of a
   33  written request, an association does not provide a copy of the
   34  prior year’s financial report to the unit owner, the association
   35  shall provide to the division the financial reporting required
   36  under this section for the next 3 consecutive years and may not
   37  exercise the reporting option authorized in paragraph (d) for
   38  those years. The division shall adopt rules setting forth
   39  uniform accounting principles and standards to be used by all
   40  associations and addressing the financial reporting requirements
   41  for multicondominium associations. The rules must include, but
   42  not be limited to, standards for presenting a summary of
   43  association reserves, including a good faith estimate disclosing
   44  the annual amount of reserve funds that would be necessary for
   45  the association to fully fund reserves for each reserve item
   46  based on the straight-line accounting method. This disclosure is
   47  not applicable to reserves funded via the pooling method. In
   48  adopting such rules, the division shall consider the number of
   49  members and annual revenues of an association. Financial reports
   50  shall be prepared as follows:
   51         (a) An association that meets the criteria of this
   52  paragraph shall prepare a complete set of financial statements
   53  in accordance with generally accepted accounting principles. The
   54  financial statements must be based upon the association’s total
   55  annual revenues, as follows:
   56         1. An association with total annual revenues of $150,000 or
   57  more, but less than $300,000, shall prepare compiled financial
   58  statements.
   59         2. An association with total annual revenues of at least
   60  $300,000, but less than $500,000, shall prepare reviewed
   61  financial statements.
   62         3. An association with total annual revenues of $500,000 or
   63  more shall prepare audited financial statements.
   64         (b)1. An association with total annual revenues of less
   65  than $150,000 shall prepare a report of cash receipts and
   66  expenditures.
   67         2. An association that operates fewer than 50 units,
   68  regardless of the association’s annual revenues, shall prepare a
   69  report of cash receipts and expenditures in lieu of financial
   70  statements required by paragraph (a).
   71         2.3. A report of cash receipts and disbursements must
   72  disclose the amount of receipts by accounts and receipt
   73  classifications and the amount of expenses by accounts and
   74  expense classifications, including, but not limited to, the
   75  following, as applicable: costs for security, professional and
   76  management fees and expenses, taxes, costs for recreation
   77  facilities, expenses for refuse collection and utility services,
   78  expenses for lawn care, costs for building maintenance and
   79  repair, insurance costs, administration and salary expenses, and
   80  reserves accumulated and expended for capital expenditures,
   81  deferred maintenance, and any other category for which the
   82  association maintains reserves.
   83         (c) An association may prepare, without a meeting of or
   84  approval by the unit owners:
   85         1. Compiled, reviewed, or audited financial statements, if
   86  the association is required to prepare a report of cash receipts
   87  and expenditures;
   88         2. Reviewed or audited financial statements, if the
   89  association is required to prepare compiled financial
   90  statements; or
   91         3. Audited financial statements if the association is
   92  required to prepare reviewed financial statements.
   93         (d) If approved by a majority of the voting interests
   94  present at a properly called meeting of the association, an
   95  association may prepare:
   96         1. A report of cash receipts and expenditures in lieu of a
   97  compiled, reviewed, or audited financial statement;
   98         2. A report of cash receipts and expenditures or a compiled
   99  financial statement in lieu of a reviewed or audited financial
  100  statement; or
  101         3. A report of cash receipts and expenditures, a compiled
  102  financial statement, or a reviewed financial statement in lieu
  103  of an audited financial statement.
  104  
  105  Such meeting and approval must occur before the end of the
  106  fiscal year and is effective only for the fiscal year in which
  107  the vote is taken, except that the approval may also be
  108  effective for the following fiscal year. If the developer has
  109  not turned over control of the association, all unit owners,
  110  including the developer, may vote on issues related to the
  111  preparation of the association’s financial reports, from the
  112  date of incorporation of the association through the end of the
  113  second fiscal year after the fiscal year in which the
  114  certificate of a surveyor and mapper is recorded pursuant to s.
  115  718.104(4)(e) or an instrument that transfers title to a unit in
  116  the condominium which is not accompanied by a recorded
  117  assignment of developer rights in favor of the grantee of such
  118  unit is recorded, whichever occurs first. Thereafter, all unit
  119  owners except the developer may vote on such issues until
  120  control is turned over to the association by the developer. Any
  121  audit or review prepared under this section shall be paid for by
  122  the developer if done before turnover of control of the
  123  association. An association may not waive the financial
  124  reporting requirements of this section for more than 3
  125  consecutive years.
  126         Section 2. Paragraphs (a) and (c) of subsection (4) of
  127  section 719.104, Florida Statutes, are amended to read:
  128         719.104 Cooperatives; access to units; records; financial
  129  reports; assessments; purchase of leases.—
  130         (4) FINANCIAL REPORT.—
  131         (a) Within 90 days following the end of the fiscal or
  132  calendar year or annually on such date as provided in the bylaws
  133  of the association, the board of administration shall prepare
  134  and complete, or contract with a third party to prepare and
  135  complete, a financial report covering the preceding fiscal or
  136  calendar year. Within 21 days after the financial report is
  137  completed by the association or received from the third party,
  138  but no later than 120 days after the end of the fiscal year,
  139  calendar year, or other date provided in the bylaws, the
  140  association shall provide each member with a copy of the annual
  141  financial report or a written notice that a copy of the
  142  financial report is available upon request at no charge to the
  143  member. If, upon receipt of a written request, an association
  144  does not provide a copy of the prior year’s financial report to
  145  the member, the association shall provide to the division the
  146  financial reporting required under this section for the next 3
  147  consecutive years and may not exercise the reporting option
  148  authorized in paragraph (e) for those years. The division shall
  149  adopt rules setting forth uniform accounting principles,
  150  standards, and reporting requirements.
  151         (c)1. An association with total annual revenues of less
  152  than $150,000 shall prepare a report of cash receipts and
  153  expenditures.
  154         2. An association in a community of fewer than 50 units,
  155  regardless of the association’s annual revenues, shall prepare a
  156  report of cash receipts and expenditures in lieu of the
  157  financial statements required by paragraph (b), unless the
  158  declaration or other recorded governing documents provide
  159  otherwise.
  160         2.3. A report of cash receipts and expenditures must
  161  disclose the amount of receipts by accounts and receipt
  162  classifications and the amount of expenses by accounts and
  163  expense classifications, including the following, as applicable:
  164  costs for security, professional, and management fees and
  165  expenses; taxes; costs for recreation facilities; expenses for
  166  refuse collection and utility services; expenses for lawn care;
  167  costs for building maintenance and repair; insurance costs;
  168  administration and salary expenses; and reserves, if maintained
  169  by the association.
  170         Section 3. Subsection (7) of section 720.303, Florida
  171  Statutes, is amended to read:
  172         720.303 Association powers and duties; meetings of board;
  173  official records; budgets; financial reporting; association
  174  funds; recalls.—
  175         (7) FINANCIAL REPORTING.—Within 90 days after the end of
  176  the fiscal year, or annually on the date provided in the bylaws,
  177  the association shall prepare and complete, or contract with a
  178  third party for the preparation and completion of, a financial
  179  report for the preceding fiscal year. Within 21 days after the
  180  final financial report is completed by the association or
  181  received from the third party, but not later than 120 days after
  182  the end of the fiscal year or other date as provided in the
  183  bylaws, the association shall, within the time limits set forth
  184  in subsection (5), provide each member with a copy of the annual
  185  financial report or a written notice that a copy of the
  186  financial report is available upon request at no charge to the
  187  member. If, upon receipt of a written request, an association
  188  does not provide a copy of the prior year’s financial report to
  189  the member, the association shall provide to the division the
  190  financial reporting required under this section for the next 3
  191  consecutive years and may not exercise the reporting option
  192  authorized in paragraph (d) for those years. Financial reports
  193  shall be prepared as follows:
  194         (a) An association that meets the criteria of this
  195  paragraph shall prepare or cause to be prepared a complete set
  196  of financial statements in accordance with generally accepted
  197  accounting principles as adopted by the Board of Accountancy.
  198  The financial statements shall be based upon the association’s
  199  total annual revenues, as follows:
  200         1. An association with total annual revenues of $150,000 or
  201  more, but less than $300,000, shall prepare compiled financial
  202  statements.
  203         2. An association with total annual revenues of at least
  204  $300,000, but less than $500,000, shall prepare reviewed
  205  financial statements.
  206         3. An association with total annual revenues of $500,000 or
  207  more shall prepare audited financial statements.
  208         (b)1. An association with total annual revenues of less
  209  than $150,000 shall prepare a report of cash receipts and
  210  expenditures.
  211         2. An association in a community of fewer than 50 parcels,
  212  regardless of the association’s annual revenues, may prepare a
  213  report of cash receipts and expenditures in lieu of financial
  214  statements required by paragraph (a) unless the governing
  215  documents provide otherwise.
  216         2.3. A report of cash receipts and disbursement must
  217  disclose the amount of receipts by accounts and receipt
  218  classifications and the amount of expenses by accounts and
  219  expense classifications, including, but not limited to, the
  220  following, as applicable: costs for security, professional, and
  221  management fees and expenses; taxes; costs for recreation
  222  facilities; expenses for refuse collection and utility services;
  223  expenses for lawn care; costs for building maintenance and
  224  repair; insurance costs; administration and salary expenses; and
  225  reserves if maintained by the association.
  226         (c) If 20 percent of the parcel owners petition the board
  227  for a level of financial reporting higher than that required by
  228  this section, the association shall duly notice and hold a
  229  meeting of members within 30 days of receipt of the petition for
  230  the purpose of voting on raising the level of reporting for that
  231  fiscal year. Upon approval of a majority of the total voting
  232  interests of the parcel owners, the association shall prepare or
  233  cause to be prepared, shall amend the budget or adopt a special
  234  assessment to pay for the financial report regardless of any
  235  provision to the contrary in the governing documents, and shall
  236  provide within 90 days of the meeting or the end of the fiscal
  237  year, whichever occurs later:
  238         1. Compiled, reviewed, or audited financial statements, if
  239  the association is otherwise required to prepare a report of
  240  cash receipts and expenditures;
  241         2. Reviewed or audited financial statements, if the
  242  association is otherwise required to prepare compiled financial
  243  statements; or
  244         3. Audited financial statements if the association is
  245  otherwise required to prepare reviewed financial statements.
  246         (d) If approved by a majority of the voting interests
  247  present at a properly called meeting of the association, an
  248  association may prepare or cause to be prepared:
  249         1. A report of cash receipts and expenditures in lieu of a
  250  compiled, reviewed, or audited financial statement;
  251         2. A report of cash receipts and expenditures or a compiled
  252  financial statement in lieu of a reviewed or audited financial
  253  statement; or
  254         3. A report of cash receipts and expenditures, a compiled
  255  financial statement, or a reviewed financial statement in lieu
  256  of an audited financial statement.
  257         Section 4. This act shall take effect July 1, 2017.