Courtesy of The Daily Business Review
Published May 20, 2017
The Florida legislature appears to have moved on calls
from a grand jury to criminalize unethical behavior of condo board members
and give unit owners greater access to association financial records.
The effort drew bipartisan support, and the House and Senate passed a bill
originating out of South Florida by sponsors Rep. Jose Felix Diaz, R-Miami;
Sen. Rene Garcia, R-Hialeah; and Sen. Jose Javier Rodriguez, D-Miami.
The proposed law heads to Gov. Rick Scott and would take effect July 1 if
approved. It would impose criminal penalties for kickbacks to condo board
members, voting fraud, theft of association funds and destruction or
withholding of official records. The law would also require associations to
remove any officers charged with a crime, deny those members access to
financial records, but reinstate them if they're found not guilty.
It provides the groundwork for prosecutors to pursue credit card fraud
charges against members who misuse association debit cards, prevents board
members or representatives of management companies to purchase units
foreclosed for unpaid assessments, prohibits contracts with service
providers that create a conflict of interest, bars associations from hiring
attorneys that also represent their properties' management companies and
requires boards to keep official records open for member inspection, among
The proposed law would also bring changes for the state's Division of
Condominiums. Among other changes it would authorize, rather than require,
the division to hire full-time attorneys to conduct arbitration hearings and
change the rules about its contracting with arbitrators.
But the pending legislation raised alarms for some, like Gelfand & Arpe
senior partner Michael Gelfand, a homeowners' association mediator who
chaired the Florida Bar's Real Property, Probate and Trust Law section.
"Go to jail! Do not pass go!" Gelfand wrote in a newsletter dispatch about
the bill. "Unbelievable, but still true. The legislature, exceeding all
expectations as to how to discourage good individuals from serving as
directors and making it more difficult to attract volunteer directors,
adopted House Bill 1237 to expand the criminal code to include many more
areas of the Condominium Act."
Gelfand fears the push toward criminalization would make it difficult for
the nonprofits to attract unit owners willing to take on the unpaid job of
helming association business to pay taxes, collect member dues, handle
common area maintenance and perform other duties.
Noting the proposal's "new and many surprising requirements," Gelfand
predicted it was a precursor to more changes.
"While this bill only impacts condominium associations governed by Florida
Statutes Chapter 718, beware that the Cooperative Act and the Homeowners'
Association Act frequently are amended after a year to duplicate Condominium
Act amendments," he wrote.
Other attorneys joined criticism of the grand jury report that preceded the
legislative push, arguing the jury extrapolated about an entire industry
based on egregious behavior at fewer than five associations.
"The report recommends changing the law only with respect to condo
associations," Pathman Lewis partner and head of litigation John A. Moore
wrote in a commentary published March 22 in the Daily Business Review.
"Inherent in their reasoning is that board members always have devious