Bill Looks to change Rules for Condo`s..

On March 7, the Florida Legislature convened for its regular, annual 60-day session. In what has become an annual tradition, a dozen or so bills, amendments and proposals affecting the operation of community associations are floating around the legislative hopper. In the next several editions of this column, we will review some of the more significant proposals being debated. One piece of proposed legislation sure to generate heated debate is House Bill 1227/Senate Bill 2570. This bill, 48 pages in length, is primarily aimed at condominium associations, and would impose some fairly fundamental changes in the status quo. Here's a look at some of the highlights of HB 1227/SB 2570: • Certified Mail Notice of Proposed Amendments: Section 718.110(1)(d) would be added to the Florida Condominium Act to provide that notice of proposed amendments to the declaration of condominium must be sent to unit owners by certified mail. Setting aside cost factors, the apparent intent is to make sure that every unit owner receives notice of proposed amendments, a laudable goal. In reality, requiring associations to use certified mail as a means of notice will likely result in less people actually receiving notice than under the current method, regular U.S. mail or hand-delivery with written receipt. The postal service will not forward certified mail, even if a forwarding address is on file. Further, people who are not at home during regular business hours, such as those who work during the day, have a decidedly difficult time in receiving certified mail, since it usually requires a trip to the post office to pick it up, and the post office is only open while they work. • Financial Reporting Waiver: Section 718.111(13)(d) of the Condominium Act would be amended to provide that under no circumstances may an association or board waive the financial reporting requirements of the law for more than two consecutive years. Since the law does not empower the board to waive these requirements anyway, it is unclear why this provision is in the proposed new law. Prohibiting unit owners from voting to waive financial reports, such as audits, will likely increase operational costs for many associations, which may be a bitter pill for some to swallow during a time of runaway insurance costs. The current law provides every condominium association with self-determination, where a majority of the owners must decide whether to waive the financial reporting requirements. • Reconstruction After Casualty: A new Section 718.115(a) would be added to the law by this proposal, which is an apparent reaction to the 2004 and 2005 hurricanes. While there is a definite need to address post-catastrophe issues for condominiums, this proposal appears to incorporate outdated requirements from boilerplate condominium documents used 20 years ago, which are no longer in favor. For example, the proposal would require the association to generate repair specifications and obtain rebuilding bids within 60 days of the casualty. While this sounds nice in theory, many remember the dark days of the summer of 2004, when many devastated properties had not even seen their first insurance adjuster after 60 days. The proposed change to the law would require termination of a condominium with more than 50 percent damage, unless 75 percent of the owners agree to reconstruction within 90 days of the casualty. Unfortunately, there is absolutely no way a condominium which has suffered major catastrophic damage will have any idea within 90 days of the casualty whether the loss exceeds 50 percent of value. The change to the law would also require the engagement of an architect or post-disaster consulting, which may be appropriate in some cases, although a structural engineer is often more in need. • Certified Mail Inquiries From Unit Owners: HB 1227/SB 2570 would significantly amend Section 718.112(2)(a)2 of the condominium statute. Under current law, if a unit owner files an "inquiry" with the board by certified mail, the board must give a "substantive response" within 30 days (the deadline can be extended to 60 days under certain circumstances). To prevent harassment of boards, and the undue consumption of association resources for the benefit of one owner, the current law permits boards to adopt a rule limiting such inquiries to one per 30-day period. This proposal would eliminate the board's right to limit the number of a unit owner's "inquiries," meaning that an owner could file one virtually every day. • Board Meetings: Section 718.112(2)(c) of the Florida Condominium Act would be amended in two significant ways. First, the new law would provide that "no action [of the association] shall be taken" without an open meeting of the board. It is unclear how this would apply to the execution of the numerous day-to-day routine actions of an association, which in all other corporations are administered by the officers of the corporation and/or their duly appointed agents, such as the community association manager. The second proposed change to this segment of the law would require the board to address agenda items proposed by a petition of 20 percent of the unit owners, which is currently the law for homeowners' associations. Next week, we will continue with a review of HB 1227/SB 2570, including a review of proposals for term limits, expanded powers for the ombudsman, and other items of interest.