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Alerts and Updates

Florida's New Condominium and Homeowners Association Laws Take Effect

July 1, 2008

Legislative Amendments Affect Chapter 718 (Condominium Act) and Chapter 720 of the Florida Statutes

Florida's legislature has just amended various provisions of state law relating to condominiums and homeowners associations. Effective July 1, 2008, these changes cover issues including director abstention, insurance for condominiums, repair and reconstruction of condominiums, condominium common expenses, estoppel certificates and the renaming of the Division of Florida Land Sales, Condominiums and Mobile Homes.

On June 30, 2008, Governor Charlie Crist signed House Bill 601, which amends, among other things, portions of Chapter 718 (Condominium Act) and Chapter 720 of the Florida Statutes. The following is a brief summary of some of the legislation included in HB 601.

Chapter 718, Florida Statutes (Condominium Act)

  • Director Abstention. This legislation modifies provisions of House Bill 995 and provides that a director who abstains from a vote is presumed to have taken no position with regard to the action.
  • Insurance. Some of the changes made to Section 718.111(11) include:
    • An association is required to obtain and maintain adequate hazard insurance that is based upon the replacement cost of insured property, with the full insurable value to be determined by an independent insurance appraisal made at least once every 36 months.
    • An association may provide hazard insurance coverage for a group of three or more communities provided the pooled policy or program has been approved by the Office of Insurance Regulation.
    • An association that is developer controlled or controlled by unit owners must use "best efforts" to obtain and maintain adequate hazard insurance. The failure to obtain and maintain adequate insurance during any period of developer control of the association is a breach of fiduciary responsibility by the developer-appointed directors unless such members can show that, despite such failure, they have used their best efforts to maintain the required coverage.
    • An association is allowed to obtain and maintain insurance policies with deductibles, but must comply with the statutory guidelines and requirements for deductibles, including a requirement that the amount of deductibles be determined at a board meeting that is properly noticed and open to all unit owners. All hazard insurance deductibles and losses in excess of hazard insurance coverage are common expenses.
    • A hazard insurance policy issued to an association must provide primary coverage for all condominium property as originally installed or replacements of like kind and quality in accordance with original plans and specifications, and all alterations or additions made to condominium or association property, but excluding all personal property within a unit or limited common elements; floor, wall and ceiling coverings; electrical fixtures; appliances; water heaters; water filters; built-in cabinets and countertops; and window treatments. Every hazard insurance policy renewed after January 1, 2009 must provide such coverage.
    • Insurance policies issued to unit owners after January 1, 2009, must contain a provision that the policy is excess coverage over the amount recoverable under any other policy and include special assessment coverage of at least $2,000 per occurrence. The association must be named as an additional insured and loss payee on all casualty insurance policies issued in the condominium. Unit owners are required to provide to the association evidence of hazard and liability insurance upon request (but not more than once per year) and if not provided, the association may purchase a policy of insurance on behalf of, and at the cost of, the unit owner. The association must be named as an additional insured and loss payee on all casualty policies issued to unit owners.
    • Those parts of the condominium that benefit fewer than all of the unit owners are to be insured by unit owners who have the use thereof, or may be insured by the association at the cost of those unit owners who have the use thereof.
    • The legislation provides for an allocation of repair or reconstruction expenses between the association and the unit owners, with unit owners responsible for the cost of reconstruction of any portions of the condominium property for which the unit owner is required to carry insurance, and with unit owners responsible for costs of repair or replacement of condominium property not paid by association insurance proceeds if damage is caused by negligence, intentional acts or failure to comply with the declaration or rules by the unit owner or his or her family members, unit occupants, tenants, guests or invitees. The association, upon majority vote of the total voting interests, may opt out of the statutory allocation of expenses by approval of a majority of all voting interests in the condominium and rely upon the allocation of repair or reconstruction expenses as provided by the declaration of condominium. The association is not obligated to pay for reconstruction or repair expenses due to damage to improvements installed by unit owners or the developer if the improvement benefits only the unit for which it was installed.
    • A multi-condominium may elect, by majority vote of the collective members of the condominiums operated by the association, to operate as a single condominium with respect to insurance matters.
    • An association may amend the declaration of condominium without regard to any requirement for approval of mortgagees to conform the declaration to the insurance coverage requirements of the legislation.
  • Common Expenses. Governmentally mandated improvements, such as fire safety equipment or master water and sewer utility meters, are deemed to be common expenses of the association.
  • Termination. The legislation clarifies Florida Statutes 718.117(17) to state that a purchase money lender's share of termination proceeds shall not exceed the unit owner's (mortgagor's) share of the proceeds.
  • Estoppel Certificates. The legislation provides that the authority to charge a fee for an estoppel certificate must be set forth by a written resolution adopted by the board or provided by a written management, bookkeeping or maintenance contract. The fee is payable upon preparation of the certificate and the amount of the fee must be included on the certificate. If the certificate is requested in connection with a sale or mortgage of a unit in which the closing does not occur, and within 30 days after the closing date for which the certificate was requested, the preparer receives a written request, together with reasonable documentation, that the sale did not occur from a payer that is not the unit owner, then the fee must be refunded within 30 days after receipt of the request. The refunded amount is the responsibility of the unit owner, which the association may collect from the unit owner in the same manner as an assessment.
  • Name and Powers of the Division. The legislation renames the Division of Florida Land Sales, Condominiums and Mobile Homes to be known as the Division of Florida Condominiums, Timeshares and Mobile Homes. The legislation also grants additional powers and rights to the Division for violations and enforcement of the Condominium Act.

Chapter 720, Florida Statutes

  • The bill creates new Section 720.30851 relating to estoppel certificates by homeowners associations. The bill requires a homeowners association to provide an estoppel certificate within 15 days after request by a parcel owner or mortgagee. The association may charge a fee for the certificate, which fee must be stated on the certificate. The authority to charge a fee for the certificate must be set forth by a written resolution adopted by the board or provided by a written management, bookkeeping or maintenance contract. The fee is payable upon preparation of the certificate. If a certificate is requested in connection with the sale or mortgage of a parcel in which the closing does not occur, and within 30 days after the closing date for which the certificate was requested, the preparer receives written notification and reasonable documentation from a payer that is not the parcel owner that the closing did not occur, then the fee must be refunded within 30 days after receipt of the request. The refunded amount is the responsibility of the parcel owner, which the association may collect from the parcel owner in the same manner as an assessment.

For the full text of House Bill 601, see http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_h0601er.xml&DocumentType=Bill&BillNumber=0601&Session=2008.

For Further Information

If you have any questions about this Alert or would like more information, please contact Jeffrey R. Margolis, Susan Pontigas, P.A., any other member of the Real Estate Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.