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.
- 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.
- 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.
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.
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