SB 1196 Relating to Community Associations - PASSED
SB 1196 by Fasano and Ring and HB 561 by Bogdanoff, Hudson and Sachs, were the two major condominium bills that moved through the process during the 2010 Session. Originally, Senator Fasano, Senator Ring, Representative Bogdanoff and Representative Sachs all had separate bills addressing condominium issues, but early in Session the Senate bills were combined, as were the House bills, and all of the sponsors focused on passing one comprehensive condominium reform bill. On April 28, 2010, SB 1196 passed the House with a vote of 107-4 after being passed unanimously by the Senate. The bill is currently being processed by the Legislature and should be sent to the Governor shortly for final approval.
As you will remember, after the Legislature passed a condominium reform bill in 2009 (SB 714) Governor Crist chose to veto the bill, citing public safety concerns with the bill’s provision that would have allowed condominiums to opt out of retrofitting common areas with sprinkler systems. This year’s condominium reform package has a similar provision. CAN and its Advisory Council Members have diligently worked to meet with and lobby the Executive Office of the Governor, the Office of the Chief Financial Officer (the CFO serves as the state’s Fire Marshall) and various City and County Commissions tp support this vital bill. In our meetings with the Governor and CFO’s staffs, they expressed some lingering public safety concerns regarding the sprinkler retrofit language. However, the bill sponsors are extremely confident that Governor Crist will sign SB 1196 into law. Since SB 1196 passed the Legislature, Governor Crist has left the Republican Party to run as an Independent for the United States Senate. It is not clear how this move could affect the use of his veto pen. We highly encourage our CAN members to continue to use our unique grassroots advocacy system to email and call the Governor’s Office and encourage him to sign SB 1196 into law. Remember, the Fire Marshals and Sprinkler Companies are certainly using this interim period before the bill reaches the Governor's desk to lobby him for a veto.
SB 1196 contains numerous changes to existing condominium law. Among some of the more significant changes that will save condominium associations a great deal of money during the current economic downturn are the following:
• Delaying the date by which a condominium must retrofit its elevators for Phase Two Firefighter Services until July 1, 2013;
• Providing a condominium association the ability to opt out of retrofitting common areas with sprinklers with a majority vote of the voting interests of the condominium;
• Allowing condominiums to collect rent from tenants in delinquent units;
• Clarifying that the candidate certification form must be returned after the election is held not before;
• Removing the ability of a condominium board to buy or "force place" missing owner H0-6 insurance policies and removes the requirement that the association be added as an additional insured and loss payee on those individual owner policies;
• Providing certain protections for "bulk buyers' who purchase more than 7 units in failed or floundering condominium projects
• Protecting certain sensitive information such as email addresses and personnel information from unit owner inspection requests.
Perhaps the most significant benefit conferred by SB 1196 is that it DOUBLES the amount of money banks owe to a condominium association in the case of a foreclosure from 6 months of a unit’s unpaid common expenses and regular periodic assessments or 1% of the original mortgage debt, whichever is lower, to 12 months of a unit’s unpaid common expenses and regular periodic assessments or 1% of the original mortgage debt, whichever is lower. Some CAN members have raised the issue of whether or not the failure to increase the 1% in addition to the 6 months (we tried but the banks wouldn't budge) means a whole lot. Mathematically speaking, an association can never do worse under the new formula. Some associations will do a lot better in terms of the doubling from 6 months to 12 depending on the amount of their assessments and others won't but no association will do worse.
CAN members writing to Governor Crist to urge his passage of SB 1196 should not focus solely on the sprinkler retrofit benefits but should underscore the fact that this bill contains an enormous amount of other provisions that will benefit financially struggling associations. A veto of 1196 not only spells financial disaster to the approximately 6,000 sprinkler- impacted high-rise condominiums and cooperatives in the State but would also impact every single Florida condominium owner as a result of the wide-ranging changes discussed above.
HB 1035 Relating to Elevator Safety - PASSED
HB 1035 by Representative Frishe passed the Legislature on April 29. Of benefit to CAN is a provision in the bill that will, if enacted, provide condominium associations relief from retrofitting for Phase II Firefighter Service by giving them until July 1, 2013 to complete the retrofit. This language that passed as part of HB 1035 also passed as part of the large condominium package, SB 1196.
HB 663 Relating to Building Safety - PASSED
SB 648 by Senator Bennett passed the Legislature on the final day of Session. Of benefit to CAN is a provision in the bill that, if enacted, would allow condominiums until July 1, 2015, or until the elevator is replaced or requires major modification, to retrofit for Phase Two Firefighter Services. Provided that both SB 1196 and HB 663 are enacted into law, the longer retrofit window provided by HB 663 should be the prevailing law.
SB 846 Relating to Residential Fire Sprinkler Requirements - PASSED
SB 846 by Senator Bennett passed the full Legislature on April 29. The bill, if enacted, will prohibit the incorporation into the Florida Building Code of certain mandatory residential fire sprinkler provisions of the International Residential Code, specifically requiring new homes to be outfitted with sprinkler systems.
SB 2044 Relating to Property Insurance - PASSED
SB 2044 by Richter passed the Legislature on the final day of Session. SB 2044 relating to Property Insurance became the 2010 Session’s insurance package and was amended on second reading in the Senate to include a provision that was originally in SB 2264 and HB 1181 that will reduce the amount of time a condominium association has to file a hurricane damage claim from 5 to 3 years.
HB 1181 by Representative Long and SB 2264 by Senator Bennett were the original vehicles for the language that would decrease that amount of time a condominium association has to file a hurricane claim from 5 to 3 years. HB 1181 did not clear its final committee and died as a result. SB 2264 passed the Senate 37-1 and died in messages to the House.
While we were not able to stop the insurance package from passing the Legislature, there is still hope that the Governor will veto SB 2044 due to some of the unfriendly consumer provisions, including reducing the time one has to file a hurricane damage claim from 5 to 3 years. We highly encourage CAN members to urge a veto of SB 2044. Based on conversations that other interested parties have had with the Governor’s Office, the best message to send the Governor in order to ensure a veto would be to concentrate on the bill’s bad provision that allows insurance companies to increase their rates by up to 10% without going through the normal Office of Insurance Regulation process.
SB 1964 Relating to Design Professionals - PASSED
SB 1964 by Sen. Negron passed the Legislature. The bill reinstitutes the economic loss rule (which the Florida Supreme Court had abrogated for engineers and other professionals a while ago) and provides that you cannot sue a design professional for his or her negligence unless there is property damage or personal injury, and the property damage has to be to property other than what is the subject of the contract.
If enacted, the only other exception to suing a design professional would be if the contract requires insurance and he or she does not obtain the insurance or if the design professional limits its contractual liability to less than the insurance they actually do have. If this bill becomes law, associations must carefully word their design contracts for any renovation projects they are contemplating to best protect them in light of these changes. Associations would not be able to protect themselves for any contracts entered into prior to transition. We highly encourage CAN members to urge a veto of SB 1964 as it removes design professionals as an additional source for recovery on construction defect claims.
Bills of Interest that Died
HB 1523 and SB 2270 Relating to Homeowner Relief
These bills would have created the "Homeowner Relief & Housing Recovery Act" which would have provided a new, nonjudicial means of foreclosure. HB 1523 passed two committees before dying in its final council stop due to the Session expiring. SB 2270 was never heard in committee. It is likely that these bills will be re-filed next Session. CAN was opposed to these bills and our members are urged to become educated on the possible harmful effects of the nonjudicial foreclosure process on the association and its members in order to gear up for another fight next year when these bills are refiled.
SB 606 and HB 415 Relating to Termination of a Residential Rental Agreement
These bills would have required the landlord or mortgagor or its agent to tender to the registry of the court or to the foreclosing entity all funds held for advance rent or security deposits at the time of foreclosure and directs that such funds continue to be held for the use and benefit of the tenants of the foreclosed property. The House bill was never heard in committee and the Senate bill passed the full Senate before dying in messages to the House.
HB 115 Relating to Residential Properties
This bill would have required DBPR to enter an order permanently revoking the license of a community association manager under certain circumstances, revised various provisions relating to specified community associations, including disputes, powers, duties, officers, meetings, notices, governance, foreclosure, liens, contracts, etc., provided for publication, updating, & availability of "Florida Condominium Handbook," created the "Distressed Condominium Relief Act" to provide regulatory provisions relating to bulk assignees and bulk buyers, repealed an existing provision for dispute resolution in homeowners associations and created the "Home Court Advantage Dispute Resolution Act" to provide regulatory provisions for mediation & arbitration of disputes in homeowners associations.
The bill was only heard in its first committee of reference before failing to be placed on a subsequent agenda. This bills presumptive companion, SB 398 by Sen. Dockery, was withdrawn from consideration prior to ever being heard.
HB 125 Relating to Rental Property Foreclosure or Short-sale
This bill would have created an unnumbered section of law regarding tenants' rights in foreclosure. The bill required a lender to notify a tenant that a foreclosure case is pending. The form of notice is not specified. If the lender fails to provide this notice, the lender is liable to ther tenant for "closing costs or relocation costs and attorney's fees and related costs." It is unclear how these damages would be calculated. A tenant has 90 days after learning of the foreclosure within which to file an action for damages under this provision.
The bill required a lender to "provide the tenant or lessee with a first right of refusal to purchase the property at fair market value." It is unclear what this means. A "first right of refusal" is the right to match the price offered by a third party, which price may or may not be the fair market value of the property. For a tenant to have this option right, the tenant must show proof of the rental agreement and must have been a tenant for at least one year prior to the exercise of the right. If the tenant exercises the purchase option, the lender must credit the remaining balance in the escrow fund for closing costs. If a tenant does not exercise the option, the lender must use escrow funds to pay the tenants' relocation costs.
The bill died in the House Civil Justice and Courts Policy Committee when it was voted down by a 9 to 2 vote. The companion to this bill, SB 854 by Senator Sobel, was never heard in committee.
SB 156 and HB 335 Relating to Tax on Transient Rentals
The bills would have required that persons who engage in certain business activities related to transient rentals collect the tax. It would have also authorized the Department of Revenue to adopt rules to exclude certain charges from the definition of the terms "total rent" or "total consideration” and required certain persons to report and remit the tax on certain transient rentals. Neither the House nor Senate bill were heard in committee.
SB 164 Relating to Foreclosure of Condominium Units
The bill would have required a first mortgagee to pay a certain portion of unpaid assessments to the condominium association prior to the transfer of title under certain circumstances. The bill had no companion and was never heard in committee.
HB 327 and SB 840 Relating to Community Associations
These bills were a secondary condominium reform package that addressed the bulk buyer issue and included many things that were also part of SB 1196, such as the “Distressed Condominium Relief Act.” The Senate bill unanimously passed the Senate and died in messages to the House. The House bill cleared all of its committees but was never heard on the House floor.
HB 329 Relating to Condominium Foreclosures
This bill would have made several changes regarding condominium foreclosures, including requiring any condominium tenant to pay their landlord’s assessments via giving the condominium association all of or a portion of their rent payment if the landlord is over 30 days past due in paying assessments, denial of use of a condominium if an owner is more than 90 days past due to the condominium association, and increasing the amount of money owed to a condominium association by a bank in the case of a foreclosure. The bill was heard in the Civil Justice and Courts Policy Committee and defeated 9 to 4.
HB 337 Relating to Condominiums
This bill would have provided new requirements for notice of delinquency and prohibited a condominium association from imposing certain penalties such as denying the use of common areas for delinquency for 20 days from the time notice is made or longer if the owner took issue with one of the charges listed on the delinquency notice. The bill cleared two committee stops but ran out of time and died in its final committee. The companion to this bill, SB 968 by Justice, was only heard in one committee before Session closed.
HB 419 Relating to Community Associations
This bill by Rep. Robaina was withdrawn before it was ever considered by a committee. The bill would have made a number of changes regarding various community association issues.
SB 780 and HB 987 Relating to Foreclosure Proceedings/Payment of Fees
These bills would have required a financial institution that institutes a foreclosure proceeding against a residential property to pay all fees associated with or owed by the property which accrue from the date of the initial foreclosure action until the foreclosure is finalized. Neither of the bills were ever heard in committee.
HB 959 relating to Residential Properties
This bill was only heard in its first committee of reference before dying due to Session coming to a close. Many of this bill's provisions were also found in 1196.
SB 1270 Relating to Condominium and Multifamily Dwellings
This bill would have been a stand-alone vehicle to exempt condominiums from having to retrofit common areas with sprinklers. The bill was never heard but provisions similar to what was in the bill were included in SB 1196, which passed the Legislature.
SB 1272 Relating to Condominiums and Homeowner’s Associations
This bill would have provided that a person acquiring title to a condominium by foreclosure or recorded deed is liable for certain additional unpaid expenses and assessments and authorized a homeowners’ association to preserve or maintain the unit in a safe condition under certain circumstances. The bill was never heard in committee.
HB 1317 Relating to Community Associations
This bill contained some portions of what passed as part of the larger condominium package, SB 1196. Specifically the bill contained language that would have created the “Distressed Condominium Relief Act” addressing bulk buyer provisions as well as provisions addressing insurance requirements, fire alarm systems, elevators and emergency operation plans. The bill was never heard in committee.
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