Department of Business and Professional Regulations
by Joseph E. Adams, Esq.

In 2003, Governor Bush asked the Department of Business and Professional Regulation Secretary, Dianne Carr, to appoint a task force with the following mission statement:

The Homeowners' Association Talk Force, a cross-section of representatives involved with homeowners' associations, was created at the Governor's request to harmonize and improve relations between homeowners, homeowners' associations and other related entities.  The members will provide input and make recommendations for legislative change consistent with his vision for government and regulation.

Secretary Carr appointed a 15  member talk force which held six meetings throughout the State of Florida in the latter part of 2003 through January of 2004.

Only some of the Task Force's recommendations were ultimately implemented, while others were rejected.  The myriad of changes to Chapter 720 that were adopted during the 2004 Legislative Session were contained in two community association bills - SB 1184 and SB 2984 (Chapters 2004- 345 and 2004-353, Laws of Florida, respectively.)  The following amendments to Chapter 720 can be found in both of these bills.

Petition Rights, F.S. 720.301(2)(b), F.S. 720.301(d):
This reform in the law is intended to provide members of homeowners' associations (HOA) with the right to be heard on issues of concern.  The law provides that if twenty percent of the total voting interests (there is usually one voting interest per lot or parcel) petition the board to address an item of business, the board must take the item up at a meeting of the board.  The board is not obligated to act favorably on the item, only consider it.  For example, if twenty percent of the members consider hiring a management company, a decision typically within the prerogative of the board's discretion, the board would be obligated to call a meeting to at least debate the topic.  The board is obligated to consider properly presented petitions either at its next regular board meeting, or at a special board meeting, but no later than 60 days after receipt of the petition.  The law further requires the board to give all parcel owners notice of the meeting, by mail or delivery, fourteen days in advance.  The notice must also be posted in the manner prescribed by law.  Each member of the allocation is granted the right to speak for at least three minutes on any matter placed on the agenda by this petition process.  As noted above, The Task Force recommended that parcel owners be permitted to speak to any agenda item (whether placed on the agenda by petition or not), but the law as adopted limits a parcel owner's right to address the board to items brought to the board by the petition process.  This is in contrast to the condominium law, where unit owners are entitled to speak at any board meeting with respect to any designated agenda item.  The new HOA law also provides that the board may require those desiring to speak to sign a sign-up sheet prior to the meeting.

Notice of Board Intention to Adopt Special Assessments or Enact Rules Regarding Parcel Use, F.L. 720-303(c)2:
The new law requires fourteen days notice be given to all parcel owners before the board considers the adoption of a special assessment, or rules regarding parcel use (Parcels are the individually-owned  property, such as lots). Of course, the authority for these actions must be granted in the governing documents, and the new law is procedural in nature.  This procedure does not apply to the adoption of rules regarding use of common areas.  The notice which must be given to each parcel owner is a fourteen day, mailed, delivered, or electronically transmitted notice to members, which must also be posted conspicuously on the property by posting or closed circuit cable television fourteen days in advance.  The right to use electronic transmission of notice to members and closed-circuit cable television in connection with association notices is based upon 2003 amendments to the Florida laws,  which should also be reviewed in connection with use of those procedures.

Official Records, F.S. 720.303(4) and (5):
Under prior law, "official records" in homeowners' associations were limited to those records specifically mentioned in the statute.  Similarly to the condominium law, the HOA statute now states that all written records of the association not specifically exempted are part of the official records.  Therefore, items such as correspondence from a parcel owner to the board, not considered an "official record" under prior law, would now be considered an official record.  The law exempts certain potentially sensitive documents from the definition of "official records," including: attorney-client and work-product privileged documents; information obtained by the association in connection with the approval of unit leases or transfers; disciplinary, health, insurance, and personnel records of association employees; and medical records of parcel owners or community residents.  The law also requires that the association make photocopies for members who inspect the records if the association has a photocopy machine available, and if the member's request is less than twenty- five pages.  'The association may charge up to fifty cents per page.  For more voluminous requests,  the association may charge up to fifty cents per page.  For more voluminous requests, the association is entitled to send the project out for copying, and the owner is required to reimburse actual copying costs.  The law permits the board to adopt reasonable written rules governing records inspection, provided that an association cannot limit a parcel owner's rights to inspect records to less than one eight hour business day per month.

Year-End Financial Reporting Requirements, F.S. 720.303(c):
The law has been changed to state that association funds may not be used by a developer to defend legal proceedings filed against the developer, or directors appointed to the board by the developer, even when the subject of action or proceedings concerns the operation of a developer-controlled association.

Recall, F.S. 720.303(10):
The new regulations for recall (removal) of directors in homeowners' associations largely mirrors the provisions found in the Condominium act.  The law clarifies that HOA directors may be removed, with or without cause, by a majority of the entire voting interests.  Unlike the condominium counterpart, which provides equal deference to both procedures, the HOA law seems to favor recalls by written agreement over the petition/meeting process.  However, the HOA law does permit the use of petition by ten percent of the members for the call of a recall meeting, however, authority for this procedure must be contained in the governing documents.  Recall by written agreement is permitted regardless of enabling authority in the governing document.  Like the condominium law, there is a requirement that when more than one director is being subject to recall, separate votes be taken for each.  There is also a procedure for service of recall agreement on the board by certified mail or formal service of process.  As in condominiums, the board has five full business days after receipt of recall papers to call a board meeting to certify the recall.  Recall contests are handled through arbitration proceedings.  Unlike the condominium stature (although, now subject of a proposed ]rule for condos), written recall agreements or ballots used in one recall effort may be reused in a second recall effort,  if the first recall effort is stricken for any reason.  However, in no event is a written agreements or ballot for recall valid for more than 120 days after it has been signed by the member.  Consistent with condominium regulations, rescission or revocation of a written recall ballot or agreement must be in writing and must be delivered to the association before the association is served with recall ballot or agreement must be in writing and must by delivered to the association before the association is served with recall papers.  When more than a majority of the board is being subjected to recall, the recall or ballot must list at least as many possible replacement candidates as there are directors subject to recall.  If less than a majority of the board is recalled, the directors can fill vacancies created by the recall.

Flags, F.S. 720.104(2):
The right to fly the American flag in HOA-operated communities has been expanded to mirror the condominium statute which permits the flying of various armed services flags on certain enumerated holidays.  The new HOA law also permits a homeowner to display one portable, removable official flag of the State of Florida, a right not conferred by the condominium law.

Securing HOA Fines by Liens, F.S. 720.305(2):
The statute has been changed to specifically state that a fine may not become a lien against a parcel, which is the law for condominiums, but which has not been the law for HOAs (where appellate court cases have recognized the right to secure fines by liens if authorized by the governing documents).  It is debatable whether the new statute can be retroactively applied to existing associations whose governing documents permit the securing of fines by liens, based upon constitutional considerations.  The new law also provides that in any action to recover a fine, the prevailing party is entitled to collect its reasonable attorney's fees and costs from the non-prevailing party, as determined by the court.

Competitive Bidding, F.S. 720.305(5):
This change is also very similar to  the law for condominiums.  However, the threshold where competitive bidding is triggered is ten percent of the association's total annual budget (including reserves), as compared to the five percent threshold in condominiums.  The bidding requirements apply to any contract that cannot be performed within one year for the purchase, lease, or renting of materials or equipment to be used by an association and all contracts for services.  These contracts must also be in writing.  Like condominiums, the association is not required to accept the lowest bid.  Further, contracts with employees of the association, attorneys, accountants, architects, community association managers, engineers, and landscape architects are not subject to competitive bidding.  Certain existing contracts are also exempt from bedding, as are contracts procured on an emergency basis or from a sole supplier of the goods or services involved.

Notice of Membership Meetings, F.S. 720.306(5):
The bylaws of the homeowners' association shall provide, and if they do not so provide, are deemed to provide certain requirements regarding notice of membership meetings.  An association must give all parcel owners actual notice of all membership meetings, which shall be mailed, delivered, or electronically transmitted to members not less than fourteen days prior to the meeting.  This notice must also be posted or broadcast on closed circuit cable television fourteen days in advance.  When electronic transmission is used as an alternative for mail or delivery of notice, or where broadcast television is used as an alternative for physical posting, the authority for these alternatives should by contained in the bylaws.  The new law applies not only to annual meeting of the homeowner's association, but special meetings as well.  Proof of compliance is required to be given through affidavit.

Right of Members to Speak at HOA Meetings, F.S. 720.306(6):
As distinguished from meetings of the homeowner's association board, where the right to speak is limited to "petition" meetings, parcel owners are given an unfettered right to speak at all membership meetings with reference to all items "open for discussion or included on the agenda."  The reference to items "open for discussion" appears to be a bit broad, and it is not clear whether a parcel owner has an individual right to "open an item for discussion." The board may adopt rules regulating member statements, provided that each parcel owner has the right to speak for at least three minutes "on any item."  However, the member must submit a written request to speak prior to the meeting, and the association may adopt additional rules regulating owner statements at membership meetings.

Mandatory Binding Arbitration of Election Recall Disputes, F.S. 720.306(9):
The Division of Florida Land Sales, Condominiums, and Mobile Home ("Division") has been empowered to intervene in certain controversies within homeowners' association, including election and recall disputes.  The new law requires all disputes involving election challenges or recalls to be submitted to binding arbitration with the Division. 

"SLAPP" Suits, F.S. 720.304(4):
This change to the law, which is likely to have little effect on the operation of homeowners' associations in the real-world, prohibits so-called "SLAPP" suits, which is an acronym for Strategic Loss Against Public Participation.  The new law would prohibit a homeowner's association from suing a parcel owner solely because the parcel owner sought redress of his grievances before a governmental agency.  The law provides various penalties, including triple damages.

Alternative Dispute Resolution, F.S. 720.311(1):
Typical disputes between homeowners' association and parcel owners must now be submitted to mediation prior to the dispute being filed in court.  Included within the definition of controversies requiring pre-suit mediation are:

• Disputes between an association and a parcel owner regarding use or changes to the parcel or common areas;

• Disputes regarding amendments to association documents;

• Disputes regarding meetings of the board and committees appointed by the board;

• Disputes regarding membership meetings, not including election meetings; and

• Disputes regarding access to official records.

The law also requires "other covenant enforcement disputes" to be submitted, to pre-suit mediation, which would presumably address typical controversies in associations such as pets, vehicle parking, and similar matters.  Some have speculated whether the reference to "covenant enforcement" is so broad as to encompass assessment collection disputes, although this was not the focus of any Task Force debate, and presumably not the intent of the Legislature.  The cost of mediation is to be shared equally by the parties.  Mediators may either be employed by the Division or be private mediators.  Mediation conferences attended by a quorum of the board are not "meetings"" of the board and are not subject to the "sunshine" requirements of the law.  If mediation is not successful in resolving all the disputes, the parties are free to file suit in a court of competent jurisdiction or avail themselves of either binding or non-binding arbitration with the Division.  Unless the parties mutually agree to Division arbitration, Unsuccessful mediations must be resolved in court.  The Division is obligated to develop a certification and training program for private mediators and private arbitrators.  The Division may only certify those mediators previously certified by the Florida Supreme court.  Pre-suit mediation is also available for non-mandatory associations with the right to enforce restrictive covenants, although mediation for non-mandatory associations is optional.

Remedies for False and Misleading Information by a Developer, F.S. 720.602:
The law now provides remedies to purchasers in HOA communities similar to those granted to condominium purchasers who are victims or false or misleading statements or information published by, or under the authority of, a developer.  If false or misleading information is published in promotional materials, including but not limited to contracts, governing documents, contracts, governing documents, brochures or newspaper advertising, a purchaser may rescind his contract or collect damages prior to closing.  After closing, the purchaser has the right to collect damages for a period of one year after the later of several triggering event, the most common of which will be the closing date.  Like its condominium counterpart, this law entitles the prevailing partly to recover his attorney's fees from the non-prevailing party.

Jurisdiction of County courts, F.S. 34.01(1)(d):  Although not an amendment to Chapter 720, this change addresses the jurisdiction of the county and circuit courts.  The new law provides a county court with jurisdiction in homeowners' disputes, which is concurrent with the jurisdiction of the circuit court.  This would permit a plaintiff in the typical HOA dispute to choose county court as the desired forum for resolution, even when only injunctive relief is being sought.

Finally, several amendments to Chapter 720 were the product of efforts of parties other than the Talk Force.  These amendments include the following:

Definition of "Member" in Homeowners; Associations, F.S. 720.301(10):  The new law adds any person or entity obligated to pay an assessment or amenity fee as a "member" of a homeowner' associations on people (or associations) who are obligated  by covenant to pay a homeowners' association for services, but are not members of the association due to charter restrictions or the jurisdictional boundaries of the homeowner's association.

Limitation on Enforcement of Amendments to Governing Documents for Association of Fifteen or Fewer Units, F.S. 720.103(1):
This clause provides that an association of fifteen or fewer parcel owners may enforce only the requirements of the original "deed restrictions" established prior to the purchase of each parcel,.  The intent of the law appears to limit an HOA consisting of 15 or fewer parcels from enforcing amendments to a declaration of covenants as to those who purchased prior to the amendment.  Setting aside the absence of demonstrable public policy for this change, the law also appears to suffer significant constitutional infirmities as both a retroactive impairment of contract rights (for associations whose governing documents permit enforcement of future amendments) as well as the creation of a legislative rule of standing in contravention of the authority of the Florida Supreme Court.

Ramps for the Disabled, F.S. 720.304(5)(a):
The statute applicable to homeowners' associations now provides that any parcel owner may construct an "access ramp" if a resident or occupant of the parcel has a medical necessity or disability that requires a ramp for ingress and egress.  The law does not state whether the right to construct the ramp is limited to the parcel or extends to common  areas, certainly a drafting flaw.  The law requires that the ramp be "unobtrusive as possible" and that it also "blend in aesthetically as practicable."  It must also be "reasonable sized to fit the intended use."  While the law appears to confer an absolute right to build a ramp, there is a procedure requiring submission of plans to the association before construction.  Although the association apparently cannot deny approval, it can make "reasonable requests to modify the design to achieve architectural consistency with surrounding structures" It is unclear  how this law will interact with state and federal fair housing laws which generally permit reasonable modifications of premises for the benefit of disabled individuals.  Prior to construction of a ramp, the owner must submit a physician's affidavit.

Security Signs, F.S. 720.103(6):
Any parcel owner may now display a sign of "reasonable size" provided by a contractor for security services, within ten feet of any entrance to the home.

Pre-sale Disclosure, F.S. 720.601:
This change in the law basically removes the existing pre-sale disclosure law from Section 689.26, Florida Statutes, and places it in Chapter 720, implying that the disclosure law does not apply in non-mandatory association settings, even if deed restrictions apply.  The remaining changes to current law are largely grammatical.  There is a new provision which states that if the required disclosure summary is not provided to a prospective purchaser "before" the purchaser executes a contract, there is a right rescission for up to three days after receiving the disclosure summary.  As a practical matter, if the prospective purchaser signs the disclosure summary minutes or even seconds before signing the purchase contract, there will be no right of rescission.

Marketable Record Title Act, Revival of Covenants, F.S. 720.401 - 405:
Although presented as an amendment to Chapter 720, this change deals with revival of restrictive covenants extinguished by the Marketable Records Title Act (MRTA). (For more on MRTA, See Page 8)

This article is a copy of the documents and should not be substituted for thorough review and familiarization with the new laws.

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