Condominiums; provides that each individual owner, not association, must  bring any action for fraud or misrepresentation against developer, sales  agent, or broker; limits portion of assessment that has been made but  not collected which may be used as collateral for financing litigation  or efforts to remedy construction defects; requires prelitigation  disclosure to & approval by owners, etc. Amends  718.111,.116,.203,.303,.503,.506; creates 718.3027. 
EFFECTIVE DATE:  07/01/2001.  03/06/01 SENATE Filed 

   0718.111
   0718.116
   0718.203
   0718.3027
   0718.303
   0718.503
   0718.506

An act relating to condominiums; amending s. 718.111, F.S.; providing that each individual owner, not the association, must bring any action for fraud or misrepresentation against a developer, sales agent, or broker; amending s. 718.116, F.S.; limiting the portion of an assessment that has been made but not collected which may be used as collateral for financing litigation or efforts to remedy construction defects; amending s. 718.203, F.S.; relieving the developer of liability for certain defects if the developer has met prescribed conditions; creating s. 718.3027, F.S.; requiring  prelitigation disclosure to and approval by owners; amending s. 718.303, F.S.; placing limitations on certain legal actions that may be brought by the association or by a unit owner; amending s. 718.503, F.S.; providing requirements for developer disclosure in certain contracts for the sale or lease of a residential unit; amending s. 718.506, F.S.; abrogating the right to a cause of action  against a developer for an oral representation or information that is not in the developer's promotional materials; providing an effective date.

 Be It Enacted by the Legislature of the State of Florida:
Section 1.  Subsection (3) of section 718.111, Florida Statutes, is amended to read:
         718.111  The association.--
         (3)  POWER TO MANAGE CONDOMINIUM PROPERTY AND TO CONTRACT, SUE, AND BE SUED.--The association may contract, sue, or be sued with respect to the exercise or nonexercise of  its powers.  For these purposes, the powers of the association include, but are not limited to, the maintenance, management, and operation of the condominium property.  After control of the association is obtained by unit owners other than the developer, the association may institute, maintain, settle, or appeal actions or hearings in its name on behalf of all unit owners concerning matters of common interest to most or all unit owners, including, but not limited to, the common elements; the roof and structural components of a building or other improvements; mechanical, electrical, and plumbing elements serving an improvement or a building; representations of the developer pertaining to any existing or proposed commonly used facilities; and protesting ad valorem taxes on commonly used facilities and on units; and may defend actions in eminent domain or bring inverse condemnation actions. However, the association may not bring an action of fraud or misrepresentation against a developer, sales agent, or broker on behalf of individual owners. Each owner must bring his or her own action for fraud or misrepresentation against a developer, sales agent, or broker. If the association has the authority to maintain a class action, the association may be joined in an action as representative of that class with reference to litigation and disputes involving the matters for which the association could bring a class action. Nothing herein limits any statutory or common-law right of any individual unit owner or class of unit owners to bring any action without participation by the association which may otherwise be available.

Section 2.  Subsection (11) is added to section 718.116, Florida Statutes, to read:
         718.116  Assessments; liability; lien and priority; interest; collection.--
 (11)  No more than 50 percent of any assessment made but not yet collected by the association may be used as collateral by the association to secure financing of the association's efforts to pursue litigation or remedy construction defects.

Section 3.  Subsections (8), (9), and (10) are added to section 718.203, Florida Statutes, to read:
         718.203  Warranties.--
 (8)  The developer has no liability, under the Condominium Act or otherwise at law or in equity, to the association or to the purchaser of each unit for any construction defects or deficiencies that are within the scope of the developer's contract with the contractor and all subcontractors and suppliers, if the developer has obtained from the contractor a construction payment and performance bond in the amount of the contract with the contractor which was issued by a surety licensed to do business in this state and has assigned or otherwise made available the bond or the proceeds thereof to the association.
 (9)  The developer has no liability, under the Condominium Act or otherwise at law or in equity, to the association or to the purchaser of each unit for any defects in architectural design or architectural services that are  within the scope of the developer's contract with the architect, if the developer has required the architect to maintain a professional-malpractice policy that has minimum limits of $1 million and was issued by an insurer licensed to do business in this state and has assigned or otherwise made available the policy or the proceeds thereof to the association.
 (10)  The developer has no liability to the association or to the purchaser of each unit, under the Condominium Act or otherwise at law or in equity, for any defects in engineering design or engineering services that are within the scope of the developer's contract with the engineer if the developer has required the engineer to maintain a professional-malpractice policy that has minimum limits of $1 million and was issued by an insurer licensed to do business in this state and has assigned or otherwise made available the policy or the proceeds thereof to the association.

Section 4.  Section 718.3027, Florida Statutes, is created to read:
         718.3027  Prelitigation disclosure to and approval by owners.--
Before commencing any litigation or other adversarial proceeding involving amounts in controversy in excess of $100,000, the association must furnish to each owner a separate document entitled "Litigation Disclosure," which must be in a format approved by the division. This document must, in readable language, inform each owner of the basis for the association's contemplated litigation or adversarial proceeding; the professional qualifications of the person making the allegations supporting the association's claim; the response of the adverse party to the allegations; whether or not the adverse party has refused or offered to perform remedial work; the efforts made to mediate or resolve the claim; the projected attorney's fees, expert fees, and other costs of the proposed litigation or adversarial proceeding; the probability of success of the litigation or adversarial proceeding; the probability of collecting a judgment resulting  from the litigation or adversarial proceeding; and the probability of association liability for attorney's fees and costs associated with the litigation or adversarial proceeding. Such litigation or such an adversarial proceeding may not be commenced unless approved in advance by a majority of the owners or by such greater number of the owners as is required by the declaration of the condominium operated by the association.

Section 5.  Subsection (1) of section 718.303, Florida Statutes, is amended to read:
         718.303  Obligations of owners; waiver; levy of fine against unit by association.--
(1)  Each unit owner, each tenant and other invitee, and each association shall be governed by, and shall comply with the provisions of, this chapter, the declaration, the documents creating the association, and the association bylaws and the provisions thereof shall be deemed expressly incorporated into any lease of a unit. Actions for damages or for injunctive relief, or both, for failure to comply with these provisions may be brought by the association or by a unit owner against:
 (a)  The association.
 (b)  A unit owner.
 (c)  Directors designated by the developer, for actions taken by them prior to the time control of the association is assumed by unit owners other than the developer for actions that result in the misuse or misappropriation of association funds or assets.
(d)  Any director who willfully and knowingly fails to comply with these provisions.
(e)  Any tenant leasing a unit, and any other invitee occupying a unit.
The prevailing party in any such action or in any action in which the purchaser claims a right of voidability based upon contractual provisions as required in s. 718.503(1)(a) is entitled to recover reasonable attorney's fees.  A unit owner prevailing in an action between the association and the unit owner under this section, in addition to recovering his or her reasonable attorney's fees, may recover additional amounts as determined by the court to be necessary to reimburse the unit owner for his or her share of assessments levied by the association to fund its expenses of the litigation. This relief does not exclude other remedies provided by law. 
Section 6.  Paragraph (a) of subsection (1) of section 718.503, Florida Statutes, is amended to read:
         718.503  Developer disclosure prior to sale; nondeveloper unit owner disclosure prior to sale;  voidability.--
 (1)  DEVELOPER DISCLOSURE.--
   (a)  Contents of contracts.--Any contract for the sale of a residential unit or a lease thereof for an unexpired term of more than 5 years shall:
  1.  Contain the following legend in conspicuous type:
THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF EXECUTION OF THIS AGREEMENT BY THE BUYER, AND RECEIPT BY BUYER OF ALL OF THE ITEMS REQUIRED TO BE DELIVERED TO HIM OR HER BY THE DEVELOPER UNDER SECTION 718.503, FLORIDA STATUTES.  THIS AGREEMENT IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER OF ANY AMENDMENT WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS ADVERSE TO THE BUYER.  ANY PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF NO EFFECT. BUYER MAY EXTEND THE TIME FOR CLOSING FOR A PERIOD OF NOT MORE THAN 15 DAYS AFTER THE BUYER HAS RECEIVED ALL OF THE ITEMS REQUIRED.  BUYER'S RIGHT TO VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.
2.  Contain the following caveat in conspicuous type on the first page of the contract: 
ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER.  FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THIS CONTRACT AND THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. A PURCHASER HAS NO CLAIM OR CAUSE OF ACTION AGAINST THE DEVELOPER FOR THE PURCHASER'S RELIANCE ON ORAL REPRESENTATIONS OR INFORMATION NOT CONTAINED IN THIS AGREEMENT.

  3.  If the unit has been occupied by someone other than the buyer, contain a statement that the unit has been occupied.
  4.  If the contract is for the sale or transfer of a unit subject to a lease, include as an exhibit a copy of the executed lease and shall contain within the text in conspicuous type: 
THE UNIT IS SUBJECT TO A LEASE (OR SUBLEASE).
If the contract is for the lease of a unit for a term of 5 years or more, include as an exhibit a copy of the proposed lease.
6.  If the contract is for the sale or lease of a unit that is subject to a lien for rent payable under a lease of a recreational facility or other commonly used facility, contain within the text the following statement in conspicuous type:
THIS CONTRACT IS FOR THE TRANSFER OF A UNIT THAT IS SUBJECT TO A LIEN FOR RENT PAYABLE UNDER A LEASE OF COMMONLY USED FACILITIES. FAILURE TO PAY RENT MAY RESULT IN FORECLOSURE OF THE LIEN.
7.  State the name and address of the escrow agent required by s. 718.202 and state that the purchaser may obtain a receipt for his or her deposit from the escrow agent upon request.
8.  If the contract is for the sale or transfer of a unit in a condominium in which timeshare estates have been or may be created, contain within the text in conspicuous type: 
UNITS IN THIS CONDOMINIUM ARE SUBJECT TO TIMESHARE ESTATES.
The contract for the sale of a fee interest in a timeshare estate shall also contain, in conspicuous type, the following:
FOR THE PURPOSE OF AD VALOREM TAXES OR SPECIAL ASSESSMENTS LEVIED BY TAXING AUTHORITIES AGAINST A FEE INTEREST IN A TIMESHARE ESTATE, THE MANAGING ENTITY IS GENERALLY CONSIDERED THE TAXPAYER UNDER FLORIDA LAW.  YOU HAVE THE RIGHT TO CHALLENGE AN ASSESSMENT BY A TAXING AUTHORITY RELATING TO YOUR TIMESHARE ESTATE PURSUANT TO THE PROVISIONS OF CHAPTER 194, FLORIDA STATUTES.

Section 7.  Subsection (3) is added to section 718.506, Florida Statutes, to read:
         718.506  Publication of false and misleading information.--
  (3)  A person has no cause of action against a developer for any oral representation or information that is not contained in the developer's advertising and promotional materials, including, but not limited to, a prospectus, the items required as exhibits to a prospectus, brochures, and newspaper advertising.

                                   Section 8.  This act shall take effect July 1, 2001.

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                                                           SENATE SUMMARY

Amends provisions relating to condominiums. Provides that each individual owner, not the association, must bring any action for fraud or misrepresentation against a developer, sales agent, or broker. Limits to 50 percent the portion of an assessment that has been made but not collected which may be used as collateral for financing litigation or efforts to remedy construction defects.
Relieves the developer of liability for certain construction defects, defects in architectural design or architectural services, and defects in engineering design or engineering services, if the developer has met prescribed conditions. Requires prelitigation disclosure to and approval by owners. Places limitations on certain legal actions that may be brought by the association or by a unit owner. Provides requirements for developer disclosure in certain contracts for the sale or lease of a residential unit. Abrogates the right to a cause of action against a developer for an oral representation or information that is not in the developer's promotional materials.