Trio of bills propose regulation of Florida HOAs

By Deborah Goonan, Independent American Communities

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Florida has more Association governed communities than any other state in the U.S. (California is a close second.) And it seems every year there are attempts to make HOAs work better. This year is no exception.

Florida happens to govern different types of Associations under different statutes. Condominiums and cooperative associations are somewhat more regulated than single family planned communities, which are governed by a separate Homeowners Association Act.

For example, Florida statute requires condo and co-op associations to conduct voting and elections by secret ballot with advance notice of candidates for the board. Proxy voting is not permitted. Also, the Department of Business and Professional Regulation (DBPR) investigates and provides alternative dispute resolution for certain types of disputes involving condo and co-op association members.

For the past several years, there have been efforts to provide owners of HOA properties the same level of limited accountability under the Homeowners Association Act.

To that end, here are three bills that have been filed for the current Legislative session.

HB 295 once again attempts to bring HOAs under the jurisdiction of DBPR.

Filed by House Rep. Charlie Stone (R), the bill proposes:

Authority of department.—The Department of Business and Professional Regulation may enforce and ensure compliance with this chapter and rules relating to records access, financial management, and elections of homeowners’  associations and may investigate any complaint made to the department against a homeowners’ association.

Note the proposal that DBPR investigate (though not enforce) any complaint. Currently, DBPR only offers arbitration related to election and recall disputes for HOAs. DBPR limits its jurisdiction to enforcing limited disputes involving elections, access to records, and financial management for condominium and cooperative associations.

Additional regulatory proposals of HB 295:

Proposes to fine an Association $500 per day, for up to 30 days, if a member is denied access to official records. Current statute sets the fine at $50 per day for up to 10 days. If the HOA delegates duties to community manager, who denies records access to a member, then the fine would apply to the manager, and the HOA would not be permitted to reimburse the management company for any legal penalty imposed through DBPR.

Clarifies that NO fine, regardless of the amount, may become a lien against private property. Current statute specifies that “a fine of less than $1000 may not become a lien against a parcel.”

Provides requirements to turn over majority control of the HOA to owners, when certain milestones of construction and sale of property are reached.

Would allow election disputes and recall disputes to be eligible for presuit mediation, and not limited to binding arbitration.

Would require DBPR to provide binding arbitration at the request of a parcel owner or homeowners’ association, for

…disputes involving covenants, restrictions, rule enforcement, and duties to maintain and make safe pursuant to the declaration of covenants, rules and regulations, and other governing documents; disputes involving assessments; and disputes involving the official records of the homeowners’ association.

 

Clarifies disclosure documents that a seller must provide to a home buyer.

Clarifies developer’s legal obligations to honor sales contracts and CC&Rs.

 

HB 135 and HB 137 filed by FL Rep. John Cortes (D), propose to make HOA elections more fair and to provide alternative dispute resolution for certain HOA disputes.

HB 135 creates an election process that would apply to HOAs of at least 7500 parcels. Key requirements would include: advance notice of upcoming election and candidates running; allowing for self-nomination as a board candidate; elimination of quorum requirement in lieu of 20% participation in the election either by ballot or limited proxy; requiring an election to be held on the date of the annual meeting.

HB 137 would give HOA owners additional options for resolution of certain types of disputes.

…an association may submit any dispute relating to amendments to the association documents, meetings of the board and committees appointed by the board, and membership meetings not including election meetings to mandatory nonbinding arbitration, in lieu of presuit mediation, with the division.

 

How consumer friendly are these Florida bills?

As currently written, all three bills would theoretically require increased accountability of associations, management companies, and developers. The question is, would DBPR effectively enforce the law, or merely dismiss the majority of complaints on technicalities?

I do find it puzzling that HB 135 would only apply to very large association of at least 7500 parcels. After all, the election procedures proposed would work just as well for much smaller Associations. Note that, unlike condominium elections, owners in HOAs would still be permitted to vote by limited proxy. (A limited proxy requires the member to cast a direct vote for at least one candidate, whereas a general proxy allows the member to defer the vote to another member’s own discretion.)

Owners and residents of homeowners associations could benefit from having more than one option to resolve disputes, depending on the nature of the complaint. But note that none of these bills address fundamental inequities that exist in Covenants, Conditions, and Restrictions, as well as statutes that tend to favor the rights of HOAs over the rights of individual property owners or shareholders.

Of course, you can expect lobby groups for developers and Community Associations Institute to object to granting DBPR broad authority to investigate complaints.

The Association of Poinciana Villages, a developer controlled HOA consisting of 26,000 homes, has already gone on record against HB 135, citing the increased cost of conducting elections. 

 

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