LOWLIGHTS OF CONDO/HOA BILL H 319

An Opinion By Jan Bergemann
President, Cyber Citizens For Justice, Inc.

Published March 6, 2012

Last week the Florida House of Representatives passed Version C3 of House Bill 319 -- sponsored by Rep. George Moraitis.

I headlined this summary of the bill "LOWLIGHTS" -- because there is absolutely nothing in the bill that would help associations or the still paying owners of properties located in community associations in any way. The initially filed version of the bill still contained some provisions that could have turned into some helpful tools for associations -- with just a few changes of the wording.

But after bill sponsor George Moraitis butchered his bill with outrageous amendments, it clearly turned into a bill with provisions that are devastating for associations and their members.

The facts plainly speak for themselves. The final House version of the bill was favored by the lobbyists for Bank of America and the lobbyists for the lawyer-driven lobbying groups of CAN (Community Advocacy Network) and CALL (Community Association Leadership Lobby), but strongly opposed by community advocacy groups, grassroots organizations and owner-friendly attorneys. With CAN, CALL and BANK OF AMERICA great allies joined in the fight for the money of the owners!

There is absolutely nothing left in this bill that could make association members and their boards look favorably at this bill. Provisions in the bill will only create higher costs for the families living in these communities and the added so-called "SAFE HARBOR AMENDMENTS" will strengthen the protection for banks and mortgage lenders against liabilities created by these entities in the first place -- to the detriment of the still paying owners.

Actually, there is a provision in the bill that may look -- on the surface -- as an opportunity to save some money. This provision exempts certain elevators from specific code update requirements. But can it be considered a money-saver if it comes at the expense of risking the safety of the people living in these communities? It reminds me of the provision that passed two years ago, which allowed associations to postpone the retrofitting of buildings with sprinkler systems, risking the lives of the inhabitants in case of a fire -- many of them elderly!

Most likely the most devastating provisions for associations in this bill are the so-called "Safe Harbor amendments." The added language confirms, in an even stronger language than before, that banks and mortgage lenders are exempt from paying any collection cost or legal fees to the associations -- leaving the still paying owners in these communities to hold the bag -- paying the cost for problems created by banks and mortgage lenders.

And the excuse used by CAN and CALL that they support these amendments to protect associations against lawsuits? Give me a break -- this coming from the same lawyers that file lawsuits for a living and they like nothing better than defending lawsuits filed against associations? Are these lawyers really serious or do they actually think all property owners living in community associations fell off the turnip truck?

Here are the HIGHLIGHTS of the LOWLIGHTS:

Strengthening Safe Harbor Amendments For Banks:

FS 718.116 Lines 595 – 654

FS 720.3085 Lines 2041 – 2104

(c)1. ~~Notwithstanding anything to the contrary contained in this section~~, The liability of a first mortgagee, or its successors ~~successor~~ or assignees ~~assignee~~ ~~as a subsequent holder of the first mortgage~~ who acquire ~~acquires~~ title to a parcel by foreclosure or by deed in lieu of foreclosure for the unpaid assessments, interest, administrative late fees, reasonable costs and attorney fees, and any other fee, cost, or expense incurred in the collection process is limited to the lesser of:
a. Only the parcel's unpaid common expenses and regular periodic or special assessments that accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or
b. One percent of the original mortgage debt.

And since House Bill 213 "lost" the language that may have helped associations to force banks to speed up foreclosure, the above provisions give banks now even less incentive to speed up foreclosures. With other words -- the strengthened language will force neighbors to pay for the maintenance of the banks' collateral even longer.

In case you listened to the meeting of the House Judiciary Committee, you heard some committee members -- especially chairman William Snyder -- using some harsh words against the language contained in the bill, even threatening to vote NO on H319 on the HOUSE floor if the bill wouldn't undergo serious changes. No changes to the anti-consumer language were made, but all these representatives, who spoke out against the language contained, voted YES on the bill. It turned out that all they intended to do was blow smoke to impress the audience. You know: All talk -- no action!

Language Covering Up Election Fraud:

FS 718.112 Lines 324-325

FS 719.106 Lines 1171-1173

FS 720.306(9)(a) Lines 1974 -- 1976

324 c. Any challenge to the election process must be commenced
325 within 60 days after the election results are announced.

This language will cause nothing but problems and confusion. What does the word "challenge" really mean? An owner standing up at a board meeting announcing that he/she will challenge the outcome of the election? Or does it mean that the challenger has to officially file for arbitration, as required by the statutes? If the latter is the case, it makes a challenge nearly impossible. Don't forget, election arbitration can get very costly, because "the looser pays all" requirement. A "challenger" needs to have all ducks in a row before filing the papers. If the board is unwilling to hand over the election documents within 60 days, there is no tool available that the "challenger" could use to obtain these documents in a timely manner -- short of armed robbery! The newly seated -- not necessarily elected -- board could hand over the election documents on day 61 -- and even if the documents clearly prove election fraud, there is nothing anybody could do about it!

That's how badly thought-out this provision really is!

Suspending Voting Rights

FS 718.303(5) Lines 676 -- 678

FS 719.303(5) Lines 1587 – 1589

FS 720.305(4) Lines 1868 -- 1870

(5) An association may suspend the voting rights of a unit 676 or member due to nonpayment of any monetary obligation due to 677 the association which is more than 90 days delinquent.

The word MAY should have been replaced with the word SHALL: It shouldn’t be up to the discretion of the board members whose voting rights they want to suspend. That can easily end up in dictatorial board members suspending the voting rights of their foes in upcoming elections, but leave the voting rights of their friends intact -- even if these "friends" are far behind in paying dues/assessments as well. You want to challenge this "selective enforcement? Consider yourself lucky if you get a final ruling before the next election -- and a new election renders any challenge moot!

You think that's bad? Look at this change of wording that makes no sense whatsoever:

Removal of language reducing number of suspended

voting rights from number of total voting interest

FS 718.303(5) Lines 678 -- 689

FS 719.303(5) Lines 1589 – 1601

FS 720.305(4) Lines 1870 -- 1882

Example Line 1870 A voting interest or consent right allocated to a parcel or member which has been suspended by the association may not be counted towards the total number of voting interests for any purpose, including, but not limited to, the number of voting interests necessary to constitute a quorum, the number of voting interests required to conduct an election, or the number of voting interests required to approve an action under this chapter or pursuant to the governing documents.

Removes the requirement of deducting the number of suspended voting rights from the number of total voting interest. In communities hard hit by unpaid dues and foreclosures, with many voting rights suspended, it will be next to impossible to hold annual meetings, to amend the governing documents or even recall members of the board of directors. Then what?

There are many pages in this bill that create no changes at all, just a word or two are changed for cosmetic purposes.

This so-called "Clarification Bill" does nothing to clarify anything. The vague wording used in some provisions of this bill will only create more havoc -- and more lawsuits. But since the sponsor was at the very beginning of the legislative session informed about the downsides of some of the wording in his bill -- and was unwilling to make the necessary changes to remedy these serious issues -- it has to be assumed that the driving forces behind this bill were actually looking to increase the billing hours for association attorneys -- because many of the new provisions in this bill totally defy common sense.

Here is the summary of the bill -- in layman's terms:

SUMMARY OF HOUSE BILL 319 C3

CONDOMINIUM

Date for updates to the Safety Code for Existing Elevators and Escalators postponed
DBPR may no longer publish a licensee's personal home address unless it is for the purpose of satisfying a public record request.
Challenges to the election process must be commenced within 60 days after the election results are announced.
Changes to Recall procedures.
Removal of language reducing number of suspended voting rights from number of total voting interest.
Changes to hurricane protection and expense; responsibility of association to maintain and operate hurricane protection.
Purchaser of unit will be liable for all unpaid assessments, late fees, interest, costs, and reasonable attorney's fees.
Strengthens the financial protection of banks by added language to Safe Harbor provisions.
Changes to Phase Condominiums -- time restrictions
New Provision added: Condominiums created within condominium parcels

COOPERATIVES

Hiding more records from public record requests.
Amendment of cooperative documents; alteration and acquisition of property
Challenges to the election process must be commenced within 60 days after the election results are announced.
Changes to Recall procedures.
Removal of language reducing number of suspended voting rights from number of total voting interest.
Clarification of "Personnel Records"
Changes to Recall procedures.

HOMEOWNERS' ASSOCIATIONS

Clarification of "Suspension of Use Rights" of Common Areas
Changes to Recall procedures.
Removal of language reducing number of suspended voting rights from number of total voting interest.
Removal of requirement of mortgagee consent to amendments.
Challenges to the election process must be commenced within 60 days after the election results are announced.
Purchaser of unit will be liable for all unpaid assessments, late fees, interest, costs, and reasonable attorney's fees.
Strengthens the financial protection of banks by added language to Safe Harbor provisions.

Let's be honest: This bill is a total disaster for community associations and the approximately 4.5 million members of these associations. Some of the provisions will add higher costs for the communities and definitely increase the amount of legal fees due to ill-advised and/or vague language contained in the bill.

The contents of this bill totally fail to create the much-needed reforms that would help associations/members deal with the serious financial problems caused by serious budget shortfalls from unpaid dues and/or foreclosures and the absolute lack of consumer protection.