Sweeping New Association Law Takes Effect in Florida
A far-reaching new piece of legislation targeting community associations took effect in Florida on July 1, 2021. “It’s a mixed bag,” says Donna DiMaggio Berger, a shareholder in the Ft. Lauderdale, Fla., office of Becker & Poliakoff. “There’s some good stuff and some not so good stuff.” Good or bad, though, Berger says “there are operational changes boards and managers need to know about.” Here’s an overview of some of the provisions in Senate Bill (S.B.) 630—provisions that could start, or reflect, a trend for other states’ association laws.
“We’ve always had emergency provisions, but they were geared toward hurricanes,” says Jennifer Horan, a shareholder in the Naples, Fla., office of Becker & Poliakoff. S.B. 630 makes clear that they apply to emergencies caused by contagion, too, and not just after damage has occurred but also to prevent it. The clarification extends to HOAs, condo associations, and co-ops. “One thing that’s striking is that emergency powers can’t be used to prohibit owners, tenants, guests, agents, or invitees of a unit owner from accessing the unit, common elements, or limited common elements when necessary for the sale, lease, or transfer of a unit,” Horan says. “Many associations had bans on showing properties for sale during the pandemic.” Berger finds this provision “befuddling and disappointing.” “Even if you have to shut things down to your owners,” she says, “you still have to open them up to these other people.”
HOA Rental Restrictions
S.B. 630 limits the reach of rental restrictions adopted by an HOA after July 1, 2021. “Essentially, you can’t amend your documents to limit an owner’s rental rights unless the owner consents through voting or takes title after the effective date,” Horan says. “When an association has an amendment vote for rental restrictions, my advice for the manager is to keep a tally of who voted for it because those are the owners subject to the rule.” Horan notes that this change largely brings Florida’s HOA act into line with its condo act when it comes to rental restrictions. “But the HOA law is broader,” she says, “because it also says that an association can amend to prohibit or regulate rentals for less than six months and more than three times in a calendar year.” In other words, all HOA owners can be subjected to short-term rental restrictions regardless of consent.
Condo Transfer Fees
“The fee has been woefully out of step with background check costs,” Berger says. “And a lot of communities have been violating that $100 cap over the years because it just wasn’t realistic. That made them vulnerable to a class action.” Under S.B. 630, condo associations now can charge $150 per applicant, up from $100. The Florida Department of Business and Professional Regulation may increase the limit every five years based on the Consumer Price Index. Berger advises condo associations against stating the $150 amount in their governing documents, though. “It’s better to say ‘the maximum amount allowed by law’ instead of an exact amount because they’ll have to amend every time the amount goes up.”
The new law includes several provisions affecting record inspections. For example, condo associations and co-ops can’t require owners to give reasons for record inspection requests. And condo tenants have gained greater access to records. Specifically, they now can inspect and copy the declaration, in addition to the bylaws and regulations. S.B. 630 also addresses the requirement that any condo association with more than 150 units have a website with its official records. “The new law says you can do that with an app,” Horan says. Berger is skeptical about apps becoming widespread: “I think the app provision is highly aspirational.” But she’s in favor of digitizing records. “I encourage even the smaller associations to get out of the document inspection business and digitize everything. Upload it, and put the sensitive stuff behind a password-protected page. That way, no one can ‘play gotcha’ with you, saying you didn’t give the documents on time or in the right way.”
HOAs and condo associations can adopt rules for posting notices on websites and in mobile apps, as long as the notices are emailed to members who have consented to receive electronic notice. Notices also must be posted on the property and, when required, mailed, emailed, or personally delivered. Written notice of condo meetings must include an agenda. If bylaws don’t specify when written notice is required for meetings other than annual meetings must be provided, notice must be sent and posted at least 14 continuous days before the meeting
Discriminatory Restriction Removal
A surprising number of community associations’ deed covenants still contain racial restrictions. Removing them by amendment, though, can be cumbersome and expensive. “S.B. 630 gives a way to take provisions out easily,” Berger says. HOAs, condo associations and co-ops can remove discriminatory language — racial or otherwise — that restricts ownership, occupancy, or use by approval of a majority of the board.
Expanded Avenues for Relief
Recalled HOA, condo, and co-op board members may now challenge their recall by filing a lawsuit. They’re not limited to arbitration. S.B. 630 also adds pre-suit mediation to arbitration as an option for the mandatory alternative dispute resolution required before a condo association owner or board can file a lawsuit (except for election or recall disputes). “This a good change for condos,” Horan says. “We tend to see some inconsistent results with arbitration so this option is going to be very helpful. “What’s attractive about mediation is that it’s generally done in a day,” she adds. “You either settle or you don’t, and, if you do, you can fashion the agreement to your liking.”
Conflicts of Interest
S.B. 639 eliminates the prohibition against condo associations contracting with companies owned by board members or their relatives, but that’s not as dramatic of a shift as it may seem. “There are still provisions about conflicts that apply so this isn’t a ‘get-out-of-jail-free’ card for board members with conflicts,” Berger says. “From an optics perspective, though, these contracts don’t look great. There’s always a certain percentage of people who aren’t happy with almost anything, and they’ll be watching and commenting.”