Florida Senate - 2022 SB 274 By Senator Rodriguez 39-00119B-22 2022274__ 1 A bill to be entitled 2 An act relating to the Condominium Fraud Investigation 3 Pilot Program; creating s. 16.81, F.S.; creating the 4 Condominium Fraud Investigation Pilot Program within 5 the Department of Legal Affairs in the Office of the 6 Attorney General; providing a purpose for the program; 7 authorizing the department to contract with a private 8 entity to achieve the purpose of the program; 9 requiring the department to hire specified personnel; 10 authorizing a person to submit a complaint to the 11 Office of the Condominium Ombudsman; requiring the 12 ombudsman to review complaints and take specified 13 actions; providing powers of and requirements for the 14 department relating to the pilot program; requiring 15 that the pilot program be funded from the Division of 16 Florida Condominiums, Timeshares, and Mobile Homes 17 Trust Fund; providing for future repeal of the program 18 unless reviewed and saved from repeal by the 19 Legislature; amending s. 718.501, F.S.; requiring the 20 Division of Florida Condominiums, Timeshares, and 21 Mobile Homes to forward complaints received alleging 22 fraud or corruption to the office; amending s. 23 718.5012, F.S.; revising the powers of the ombudsman; 24 providing an effective date. 25 26 Be It Enacted by the Legislature of the State of Florida: 27 28 Section 1. Section 16.81, Florida Statutes, is created to 29 read: 30 16.81 The Condominium Fraud Investigation Pilot Program.— 31 (1) The Condominium Fraud Investigation Pilot Program is 32 created within the Department of Legal Affairs in the Office of 33 the Attorney General. The purpose of the program is to 34 investigate condominium-related fraud and corruption in Broward, 35 Miami-Dade, and Monroe Counties. The department may contract 36 with a private entity that employs retired law enforcement 37 officers who have subject matter expertise in financial fraud to 38 achieve the purpose of the program. The department shall hire 39 five law enforcement officers certified under chapter 943 to 40 carry out the purpose of the program. If the department does not 41 contract with a private entity, the department must hire three 42 financial investigators, five investigators with previous law 43 enforcement experience, and three clerical employees to staff 44 the program. 45 (2) A person may submit a complaint to the Office of the 46 Condominium Ombudsman. The ombudsman shall review all complaints 47 submitted to the office and determine which complaints to 48 forward to the department for additional analysis and 49 investigation under the program. If a complaint submitted to the 50 office does not contain allegations of fraud or corruption, the 51 ombudsman must forward the complaint to the Division of Florida 52 Condominiums, Timeshares, and Mobile Homes. 53 (3) The department has the power to subpoena, audit, and 54 investigate for the purposes of the program. The department may 55 administer oaths, subpoena witnesses, and compel the production 56 of books, papers, or other records relevant to investigations it 57 conducts. If, after reviewing a complaint under the program, the 58 department finds sufficient evidence for criminal prosecution, 59 it must refer the case to the appropriate state attorney for 60 prosecution. 61 (4) The program must be funded annually from the Division 62 of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund 63 with funds specifically appropriated in the General 64 Appropriations Act. 65 (5) This section is repealed October 2, 2027, unless 66 reviewed and saved from repeal through reenactment by the 67 Legislature. 68 Section 2. Subsection (1) of section 718.501, Florida 69 Statutes, is amended to read: 70 718.501 Authority, responsibility, and duties of Division 71 of Florida Condominiums, Timeshares, and Mobile Homes.— 72 (1) The division may enforce and ensure compliance with 73 this chapter and rules relating to the development, 74 construction, sale, lease, ownership, operation, and management 75 of residential condominium units. In performing its duties, the 76 division has complete jurisdiction to investigate complaints and 77 enforce compliance with respect to associations that are still 78 under developer control or the control of a bulk assignee or 79 bulk buyer pursuant to part VII of this chapter and complaints 80 against developers, bulk assignees, or bulk buyers involving 81 improper turnover or failure to turnover, pursuant to s. 82 718.301. However, after turnover has occurred, the division has 83 jurisdiction to investigate complaints related only to financial 84 issues, elections, and the maintenance of and unit owner access 85 to association records under s. 718.111(12). If the division 86 receives a complaint alleging fraud or corruption, the division 87 must forward the complaint to the Office of the Condominium 88 Ombudsman. 89 (a)1. The division may make necessary public or private 90 investigations within or outside this state to determine whether 91 any person has violated this chapter or any rule or order 92 hereunder, to aid in the enforcement of this chapter, or to aid 93 in the adoption of rules or forms. 94 2. The division may submit any official written report, 95 worksheet, or other related paper, or a duly certified copy 96 thereof, compiled, prepared, drafted, or otherwise made by and 97 duly authenticated by a financial examiner or analyst to be 98 admitted as competent evidence in any hearing in which the 99 financial examiner or analyst is available for cross-examination 100 and attests under oath that such documents were prepared as a 101 result of an examination or inspection conducted pursuant to 102 this chapter. 103 (b) The division may require or permit any person to file a 104 statement in writing, under oath or otherwise, as the division 105 determines, as to the facts and circumstances concerning a 106 matter to be investigated. 107 (c) For the purpose of any investigation under this 108 chapter, the division director or any officer or employee 109 designated by the division director may administer oaths or 110 affirmations, subpoena witnesses and compel their attendance, 111 take evidence, and require the production of any matter which is 112 relevant to the investigation, including the existence, 113 description, nature, custody, condition, and location of any 114 books, documents, or other tangible things and the identity and 115 location of persons having knowledge of relevant facts or any 116 other matter reasonably calculated to lead to the discovery of 117 material evidence. Upon the failure by a person to obey a 118 subpoena or to answer questions propounded by the investigating 119 officer and upon reasonable notice to all affected persons, the 120 division may apply to the circuit court for an order compelling 121 compliance. 122 (d) Notwithstanding any remedies available to unit owners 123 and associations, if the division has reasonable cause to 124 believe that a violation of any provision of this chapter or 125 related rule has occurred, the division may institute 126 enforcement proceedings in its own name against any developer, 127 bulk assignee, bulk buyer, association, officer, or member of 128 the board of administration, or its assignees or agents, as 129 follows: 130 1. The division may permit a person whose conduct or 131 actions may be under investigation to waive formal proceedings 132 and enter into a consent proceeding whereby orders, rules, or 133 letters of censure or warning, whether formal or informal, may 134 be entered against the person. 135 2. The division may issue an order requiring the developer, 136 bulk assignee, bulk buyer, association, developer-designated 137 officer, or developer-designated member of the board of 138 administration, developer-designated assignees or agents, bulk 139 assignee-designated assignees or agents, bulk buyer-designated 140 assignees or agents, community association manager, or community 141 association management firm to cease and desist from the 142 unlawful practice and take such affirmative action as in the 143 judgment of the division carry out the purposes of this chapter. 144 If the division finds that a developer, bulk assignee, bulk 145 buyer, association, officer, or member of the board of 146 administration, or its assignees or agents, is violating or is 147 about to violate any provision of this chapter, any rule adopted 148 or order issued by the division, or any written agreement 149 entered into with the division, and presents an immediate danger 150 to the public requiring an immediate final order, it may issue 151 an emergency cease and desist order reciting with particularity 152 the facts underlying such findings. The emergency cease and 153 desist order is effective for 90 days. If the division begins 154 nonemergency cease and desist proceedings, the emergency cease 155 and desist order remains effective until the conclusion of the 156 proceedings under ss. 120.569 and 120.57. 157 3. If a developer, bulk assignee, or bulk buyer fails to 158 pay any restitution determined by the division to be owed, plus 159 any accrued interest at the highest rate permitted by law, 160 within 30 days after expiration of any appellate time period of 161 a final order requiring payment of restitution or the conclusion 162 of any appeal thereof, whichever is later, the division must 163 bring an action in circuit or county court on behalf of any 164 association, class of unit owners, lessees, or purchasers for 165 restitution, declaratory relief, injunctive relief, or any other 166 available remedy. The division may also temporarily revoke its 167 acceptance of the filing for the developer to which the 168 restitution relates until payment of restitution is made. 169 4. The division may petition the court for appointment of a 170 receiver or conservator. If appointed, the receiver or 171 conservator may take action to implement the court order to 172 ensure the performance of the order and to remedy any breach 173 thereof. In addition to all other means provided by law for the 174 enforcement of an injunction or temporary restraining order, the 175 circuit court may impound or sequester the property of a party 176 defendant, including books, papers, documents, and related 177 records, and allow the examination and use of the property by 178 the division and a court-appointed receiver or conservator. 179 5. The division may apply to the circuit court for an order 180 of restitution whereby the defendant in an action brought under 181 subparagraph 4. is ordered to make restitution of those sums 182 shown by the division to have been obtained by the defendant in 183 violation of this chapter. At the option of the court, such 184 restitution is payable to the conservator or receiver appointed 185 under subparagraph 4. or directly to the persons whose funds or 186 assets were obtained in violation of this chapter. 187 6. The division may impose a civil penalty against a 188 developer, bulk assignee, or bulk buyer, or association, or its 189 assignee or agent, for any violation of this chapter or related 190 rule. The division may impose a civil penalty individually 191 against an officer or board member who willfully and knowingly 192 violates this chapter, an adopted rule, or a final order of the 193 division; may order the removal of such individual as an officer 194 or from the board of administration or as an officer of the 195 association; and may prohibit such individual from serving as an 196 officer or on the board of a community association for a period 197 of time. The term “willfully and knowingly” means that the 198 division informed the officer or board member that his or her 199 action or intended action violates this chapter, a rule adopted 200 under this chapter, or a final order of the division and that 201 the officer or board member refused to comply with the 202 requirements of this chapter, a rule adopted under this chapter, 203 or a final order of the division. The division, before 204 initiating formal agency action under chapter 120, must afford 205 the officer or board member an opportunity to voluntarily 206 comply, and an officer or board member who complies within 10 207 days is not subject to a civil penalty. A penalty may be imposed 208 on the basis of each day of continuing violation, but the 209 penalty for any offense may not exceed $5,000. The division 210 shall adopt, by rule, penalty guidelines applicable to possible 211 violations or to categories of violations of this chapter or 212 rules adopted by the division. The guidelines must specify a 213 meaningful range of civil penalties for each such violation of 214 the statute and rules and must be based upon the harm caused by 215 the violation, the repetition of the violation, and upon such 216 other factors deemed relevant by the division. For example, the 217 division may consider whether the violations were committed by a 218 developer, bulk assignee, or bulk buyer, or owner-controlled 219 association, the size of the association, and other factors. The 220 guidelines must designate the possible mitigating or aggravating 221 circumstances that justify a departure from the range of 222 penalties provided by the rules. It is the legislative intent 223 that minor violations be distinguished from those which endanger 224 the health, safety, or welfare of the condominium residents or 225 other persons and that such guidelines provide reasonable and 226 meaningful notice to the public of likely penalties that may be 227 imposed for proscribed conduct. This subsection does not limit 228 the ability of the division to informally dispose of 229 administrative actions or complaints by stipulation, agreed 230 settlement, or consent order. All amounts collected shall be 231 deposited with the Chief Financial Officer to the credit of the 232 Division of Florida Condominiums, Timeshares, and Mobile Homes 233 Trust Fund. If a developer, bulk assignee, or bulk buyer fails 234 to pay the civil penalty and the amount deemed to be owed to the 235 association, the division shall issue an order directing that 236 such developer, bulk assignee, or bulk buyer cease and desist 237 from further operation until such time as the civil penalty is 238 paid or may pursue enforcement of the penalty in a court of 239 competent jurisdiction. If an association fails to pay the civil 240 penalty, the division shall pursue enforcement in a court of 241 competent jurisdiction, and the order imposing the civil penalty 242 or the cease and desist order is not effective until 20 days 243 after the date of such order. Any action commenced by the 244 division shall be brought in the county in which the division 245 has its executive offices or in the county where the violation 246 occurred. 247 7. If a unit owner presents the division with proof that 248 the unit owner has requested access to official records in 249 writing by certified mail, and that after 10 days the unit owner 250 again made the same request for access to official records in 251 writing by certified mail, and that more than 10 days has 252 elapsed since the second request and the association has still 253 failed or refused to provide access to official records as 254 required by this chapter, the division shall issue a subpoena 255 requiring production of the requested records where the records 256 are kept pursuant to s. 718.112. 257 8. In addition to subparagraph 6., the division may seek 258 the imposition of a civil penalty through the circuit court for 259 any violation for which the division may issue a notice to show 260 cause under paragraph (r). The civil penalty shall be at least 261 $500 but no more than $5,000 for each violation. The court may 262 also award to the prevailing party court costs and reasonable 263 attorney fees and, if the division prevails, may also award 264 reasonable costs of investigation. 265 (e) The division may prepare and disseminate a prospectus 266 and other information to assist prospective owners, purchasers, 267 lessees, and developers of residential condominiums in assessing 268 the rights, privileges, and duties pertaining thereto. 269 (f) The division may adopt rules to administer and enforce 270 this chapter. 271 (g) The division shall establish procedures for providing 272 notice to an association and the developer, bulk assignee, or 273 bulk buyer during the period in which the developer, bulk 274 assignee, or bulk buyer controls the association if the division 275 is considering the issuance of a declaratory statement with 276 respect to the declaration of condominium or any related 277 document governing such condominium community. 278 (h) The division shall furnish each association that pays 279 the fees required by paragraph (2)(a) a copy of this chapter, as 280 amended, and the rules adopted thereto on an annual basis. 281 (i) The division shall annually provide each association 282 with a summary of declaratory statements and formal legal 283 opinions relating to the operations of condominiums which were 284 rendered by the division during the previous year. 285 (j) The division shall provide training and educational 286 programs for condominium association board members and unit 287 owners. The training may, in the division’s discretion, include 288 web-based electronic media, and live training and seminars in 289 various locations throughout the state. The division may review 290 and approve education and training programs for board members 291 and unit owners offered by providers and shall maintain a 292 current list of approved programs and providers and make such 293 list available to board members and unit owners in a reasonable 294 and cost-effective manner. 295 (k) The division shall maintain a toll-free telephone 296 number accessible to condominium unit owners. 297 (l) The division shall develop a program to certify both 298 volunteer and paid mediators to provide mediation of condominium 299 disputes. The division shall provide, upon request, a list of 300 such mediators to any association, unit owner, or other 301 participant in alternative dispute resolution proceedings under 302 s. 718.1255 requesting a copy of the list. The division shall 303 include on the list of volunteer mediators only the names of 304 persons who have received at least 20 hours of training in 305 mediation techniques or who have mediated at least 20 disputes. 306 In order to become initially certified by the division, paid 307 mediators must be certified by the Supreme Court to mediate 308 court cases in county or circuit courts. However, the division 309 may adopt, by rule, additional factors for the certification of 310 paid mediators, which must be related to experience, education, 311 or background. Any person initially certified as a paid mediator 312 by the division must, in order to continue to be certified, 313 comply with the factors or requirements adopted by rule. 314 (m) If a complaint is made, the division must conduct its 315 inquiry with due regard for the interests of the affected 316 parties. Within 30 days after receipt of a complaint, the 317 division shall acknowledge the complaint in writing and notify 318 the complainant whether the complaint is within the jurisdiction 319 of the division and whether additional information is needed by 320 the division from the complainant. The division shall conduct 321 its investigation and, within 90 days after receipt of the 322 original complaint or of timely requested additional 323 information, take action upon the complaint. However, the 324 failure to complete the investigation within 90 days does not 325 prevent the division from continuing the investigation, 326 accepting or considering evidence obtained or received after 90 327 days, or taking administrative action if reasonable cause exists 328 to believe that a violation of this chapter or a rule has 329 occurred. If an investigation is not completed within the time 330 limits established in this paragraph, the division shall, on a 331 monthly basis, notify the complainant in writing of the status 332 of the investigation. When reporting its action to the 333 complainant, the division shall inform the complainant of any 334 right to a hearing under ss. 120.569 and 120.57. The division 335 may adopt rules regarding the submission of a complaint against 336 an association. 337 (n) Condominium association directors, officers, and 338 employees; condominium developers; bulk assignees, bulk buyers, 339 and community association managers; and community association 340 management firms have an ongoing duty to reasonably cooperate 341 with the division in any investigation under this section. The 342 division shall refer to local law enforcement authorities any 343 person whom the division believes has altered, destroyed, 344 concealed, or removed any record, document, or thing required to 345 be kept or maintained by this chapter with the purpose to impair 346 its verity or availability in the department’s investigation. 347 (o) The division may: 348 1. Contract with agencies in this state or other 349 jurisdictions to perform investigative functions; or 350 2. Accept grants-in-aid from any source. 351 (p) The division shall cooperate with similar agencies in 352 other jurisdictions to establish uniform filing procedures and 353 forms, public offering statements, advertising standards, and 354 rules and common administrative practices. 355 (q) The division shall consider notice to a developer, bulk 356 assignee, or bulk buyer to be complete when it is delivered to 357 the address of the developer, bulk assignee, or bulk buyer 358 currently on file with the division. 359 (r) In addition to its enforcement authority, the division 360 may issue a notice to show cause, which must provide for a 361 hearing, upon written request, in accordance with chapter 120. 362 (s) The division shall submit to the Governor, the 363 President of the Senate, the Speaker of the House of 364 Representatives, and the chairs of the legislative 365 appropriations committees an annual report that includes, but 366 need not be limited to, the number of training programs provided 367 for condominium association board members and unit owners, the 368 number of complaints received by type, the number and percent of 369 complaints acknowledged in writing within 30 days and the number 370 and percent of investigations acted upon within 90 days in 371 accordance with paragraph (m), and the number of investigations 372 exceeding the 90-day requirement. The annual report must also 373 include an evaluation of the division’s core business processes 374 and make recommendations for improvements, including statutory 375 changes. The report shall be submitted by September 30 following 376 the end of the fiscal year. 377 Section 3. Subsections (11), (12), and (13) are added to 378 section 718.5012, Florida Statutes, to read: 379 718.5012 Ombudsman; powers and duties.—The ombudsman shall 380 have the powers that are necessary to carry out the duties of 381 his or her office, including the following specific powers: 382 (11) To void an election if the ombudsman determines that a 383 violation of this chapter has occurred relating to a condominium 384 association election. 385 (12) To petition the court to appoint a receiver if the 386 appointment of a receiver is in the best interests of the 387 association or unit owners. 388 (13) To subpoena, audit, and investigate for the purposes 389 of the Condominium Fraud Investigation Pilot Program under s. 390 16.81. 391 Section 4. This act shall take effect October 1, 2022.