1     A bill to be entitled
2     An act relating to condominiums; amending s.
3     718.203, F.S.; relieving the developer of
4     liability for certain defects if the developer
5     has met prescribed conditions; creating s.
6     718.3027, F.S.; requiring prelitigation
7     disclosure to and approval by owners; requiring
8     a disclosure; providing that a prelitigation
9     disclosure is not admissible in evidence;
10   amending s. 718.301, F.S.; providing for the
11   effect of actions taken by members of the board
12   of administration of an association; amending
13   s. 718.503, F.S.; providing requirements for
14   developer disclosure in certain contracts for
15   the sale or lease of a residential unit;
16   amending s. 718.506, F.S.; abrogating the right
17   to a cause of action against a developer for an
18   oral representation or information that is not
19   in the developer's promotional materials;
20   providing an effective date.
21
22   Be It Enacted by the Legislature of the State of Florida:
23
24   Section 1. Subsections (8) and (9) are added to
25   section 718.203, Florida Statutes, to read:
26   718.203 Warranties.--
27   (8) If the developer has obtained from the contractor
28   a construction payment and performance bond in the amount of
29   the contract with the contractor which was issued by a surety
30   licensed to do business in this state and has assigned or
31   otherwise made available the bond or the proceeds thereof to
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1     the association for a period equal to or greater than the
2     warranty periods in s. 718.203, the developer has no
3     liability, under the Condominium Act or otherwise at law or in
4     equity, to the association or to the purchaser of each unit
5     for any construction defects or deficiencies that are within
6     the scope of the developer's contract with the contractor and
7     all subcontractors and suppliers.
8     (9) If the developer has required the engineer to
9     maintain a professional malpractice policy that has minimum
10   aggregate policy limits no less than 60 percent of the value
11   of the developer's contract with the general contractor and
12   that was issued by an insurer licensed to do business in this
13   state and has assigned or otherwise made available the policy
14   or the proceeds thereof to the association for a period equal
15   to or greater than the warranty periods in s. 718.213, the
16   developer has no liability to the association or to the
17   purchaser of each unit, under the Condominium Act or otherwise
18   at law or in equity, for any defects in engineering design or
19   engineering services that are within the scope of the
20   developer's contract with the engineer.
21   Section 2. Section 718.3027, Florida Statutes, is
22   created to read:
23   718.3027 Prelitigation disclosure to and approval by
24   owners.--
25   (1) Before commencing any litigation against the
26   developer in the name of the association involving amounts in
27   controversy in excess of $100,000, the association must
28   furnish to each owner other than the developer a separate
29   document entitled "Litigation Disclosure Notice". The
30   division shall, by rule, establish a standard format for a
31   Litigation Disclosure Notice.
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1     (2) A Litigation Disclosure Notice must inform each
2     owner other than the developer of the basis for the
3     association's contemplated litigation or adversarial
4     proceeding; the professional qualifications of the person
5     making the allegations supporting the association's claim; the
6     response of the developer to the allegations and whether the
7     developer has refused or offered to perform remedial work; the
8     efforts made to mediate or resolve the claim; the projected
9     attorney's fees, expert fees, and other costs to the
10   association of the proposed litigation; the association's
11   probability of success in the litigation; the association's
12   probability of collecting a judgment resulting from the
13   litigation; and the probability of association liability for
14   attorney's fees and costs associated with the litigation.
15   (3) Litigation based upon the matter described in the
16   Litigation Disclosure Notice may not be commenced unless
17   approved in advance by a majority of the owners other than the
18   developer, or by such greater number of the owners other than
19   the developer as is required by the declaration of the
20   condominium operated by the association. At any meeting of
21   unit owners regarding the proposed litigation, the developer
22   may be excluded from the meeting, and the developer-owned
23   units do not count against the quorum requirement. At any
24   meeting of the board of administration, a director nominated
25   or appointed by the developer may be excluded from the
26   meeting, and the seat does not count against the quorum
27   requirement.
28   (4) The Litigation Disclosure Notice must carry the
29   following legend, in conspicuous type on the top of the first
30   page: THIS DOCUMENT HAS BEEN PREPARED BY THE ASSOCIATION AND
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1     ITS ATTORNEYS IN ANTICIPATION OF LITIGATION, AND IS A
2     PROTECTED LAWYER-CLIENT COMMUNICATION.
3     (5) A Litigation Disclosure Notice is confidential,
4     exempt from discovery by a developer, and inadmissible in any
5     trial or hearing. A unit owner may not waive the
6     confidentiality of a Litigation Disclosure Notice; only the
7     board of administration of the association may authorize a
8     waiver of confidentiality of a Litigation Disclosure Notice.
9     Section 3. Present subsection (6) of section 718.301,
10   Florida Statutes, is redesignated as subsection (7) of that
11   section, and a new subsection (6) is added to that section, to
12   read:
13   718.301 Transfer of association control.--
14   (6) Actions taken by members of the board of
15   administration designated by the developer are considered
16   actions taken by the developer, and the developer is
17   responsible to the association and its members for all such
18   actions.
19   Section 4. Paragraph (a) of subsection (1) of section
20   718.503, Florida Statutes, is amended to read:
21   718.503 Developer disclosure prior to sale;
22   nondeveloper unit owner disclosure prior to sale;
23   voidability.--
24   (1) DEVELOPER DISCLOSURE.--
25   (a) Contents of contracts.--Any contract for the sale
26   of a residential unit or a lease thereof for an unexpired term
27   of more than 5 years shall:
28   1. Contain the following legend in conspicuous type:
29   THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN
30   NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER
31   THE DATE OF EXECUTION OF THIS AGREEMENT BY THE BUYER, AND
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1     RECEIPT BY BUYER OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED
2     TO HIM OR HER BY THE DEVELOPER UNDER SECTION 718.503, FLORIDA
3     STATUTES. THIS AGREEMENT IS ALSO VOIDABLE BY BUYER BY
4     DELIVERING WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL
5     WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER OF
6     ANY AMENDMENT WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING
7     IN A MANNER THAT IS ADVERSE TO THE BUYER. ANY PURPORTED
8     WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF NO EFFECT.
9     BUYER MAY EXTEND THE TIME FOR CLOSING FOR A PERIOD OF NOT MORE
10   THAN 15 DAYS AFTER THE BUYER HAS RECEIVED ALL OF THE ITEMS
11   REQUIRED. BUYER'S RIGHT TO VOID THIS AGREEMENT SHALL
12   TERMINATE AT CLOSING.
13   2. Contain the following caveat in conspicuous type on
14   the first page of the contract: ORAL REPRESENTATIONS CANNOT
15   BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE
16   DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE
17   MADE TO THIS CONTRACT AND THE DOCUMENTS REQUIRED BY SECTION
18   718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A
19   BUYER OR LESSEE. A PURCHASER HAS NO CLAIM OR CAUSE OF ACTION
20   AGAINST THE DEVELOPER FOR THE PURCHASER'S RELIANCE ON ORAL
21   REPRESENTATIONS OR INFORMATION NOT CONTAINED IN THIS CONTRACT
22   OR IN THE PROSPECTUS. A PURCHASER MAY MAKE A CLAIM OR
23   INSTITUTE A CAUSE OF ACTION AGAINST THE DEVELOPER ONLY FOR THE
24   PURCHASER'S RELIANCE ON THE TERMS OF THIS CONTRACT OR ON
25   MATTERS SET FORTH IN THE PROSPECTUS.
26   3. If the unit has been occupied by someone other than
27   the buyer, contain a statement that the unit has been
28   occupied.
29   4. If the contract is for the sale or transfer of a
30   unit subject to a lease, include as an exhibit a copy of the
31   executed lease and shall contain within the text in
                                                -----------     5     -----------
1     conspicuous type: THE UNIT IS SUBJECT TO A LEASE (OR
2     SUBLEASE).
3     5. If the contract is for the lease of a unit for a
4     term of 5 years or more, include as an exhibit a copy of the
5     proposed lease.
6     6. If the contract is for the sale or lease of a unit
7     that is subject to a lien for rent payable under a lease of a
8     recreational facility or other commonly used facility, contain
9     within the text the following statement in conspicuous type:
10   THIS CONTRACT IS FOR THE TRANSFER OF A UNIT THAT IS SUBJECT TO
11   A LIEN FOR RENT PAYABLE UNDER A LEASE OF COMMONLY USED
12   FACILITIES. FAILURE TO PAY RENT MAY RESULT IN FORECLOSURE OF
13   THE LIEN.
14   7. State the name and address of the escrow agent
15   required by s. 718.202 and state that the purchaser may obtain
16   a receipt for his or her deposit from the escrow agent upon
17   request.
18   8. If the contract is for the sale or transfer of a
19   unit in a condominium in which timeshare estates have been or
20   may be created, contain within the text in conspicuous type:
21   UNITS IN THIS CONDOMINIUM ARE SUBJECT TO TIMESHARE ESTATES.
22   The contract for the sale of a fee interest in a timeshare
23   estate shall also contain, in conspicuous type, the following:
24   FOR THE PURPOSE OF AD VALOREM TAXES OR SPECIAL ASSESSMENTS
25   LEVIED BY TAXING AUTHORITIES AGAINST A FEE INTEREST IN A
26   TIMESHARE ESTATE, THE MANAGING ENTITY IS GENERALLY CONSIDERED
27   THE TAXPAYER UNDER FLORIDA LAW. YOU HAVE THE RIGHT TO
28   CHALLENGE AN ASSESSMENT BY A TAXING AUTHORITY RELATING TO YOUR
29   TIMESHARE ESTATE PURSUANT TO THE PROVISIONS OF CHAPTER 194,
30   FLORIDA STATUTES.
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1     Section 5. Subsection (3) is added to section 718.506,
2     Florida Statutes, to read:
3     718.506 Publication of false and misleading
4     information.--
5     (3) A person has no cause of action against a
6     developer for any oral representation or information that is
7     not contained in the developer's advertising and promotional
8     materials, including, but not limited to, a prospectus, the
9     items required as exhibits to a prospectus, brochures, and
10   newspaper advertising.
11   Section 6. This act shall take effect July 1, 2002.
12
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14   SENATE SUMMARY
15   Relieves a condominium developer of liability for certain defects if the developer has
        met prescribed conditions.
16   Requires prelitigation disclosure to and approval by condominium owners. Requires
        a disclosure. Provides that
17   a prelitigation disclosure is not admissible in evidence. Provides for the effect of
       actions taken by members of
18   the board of administration of an association. Provides requirements for developer
       disclosure in certain
19  contracts for the sale or lease of a residential unit. Abrogates the right to a cause of
       action against a
20  developer for an oral representation or information that is not in the developer's
       promotional materials.
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 CODING: Words stricken are deletions; words underlined are additions.