| 1 |
A bill to be entitled |
| 2 |
An act relating to community
associations; creating s. |
| 3 |
712.11, F.S.; providing for the revival
of certain |
| 4 |
covenants that have lapsed; amending s.
718.106, F.S.; |
| 5 |
prohibiting local governments from
limiting the access of |
| 6 |
certain persons to beaches adjacent to
or adjoining |
| 7 |
condominium property; amending s.
718.110, F.S.; revising |
| 8 |
provisions relating to the amendment of
declarations; |
| 9 |
providing legislative findings and a
finding of compelling |
| 10 |
state interest; providing criteria for
consent to an |
| 11 |
amendment; requiring notice regarding
proposed amendments |
| 12 |
to mortgagees; providing criteria for
notification; |
| 13 |
providing for voiding certain
amendments; amending s. |
| 14 |
718.112, F.S.; revising the
implementation date for |
| 15 |
retrofitting of common areas with a
sprinkler system; |
| 16 |
amending s. 718.114, F.S.; providing
that certain |
| 17 |
leaseholds, memberships, or other
possessory or use |
| 18 |
interests shall be considered a
material alteration or |
| 19 |
substantial addition to certain real
property; amending s. |
| 20 |
718.404, F.S.; providing retroactive
application of |
| 21 |
provisions relating to mixed-use
condominiums; amending s. |
| 22 |
719.103, F.S.; providing a definition;
amending s. |
| 23 |
719.507, F.S.; prohibiting laws,
ordinances, or |
| 24 |
regulations that apply only to
improvements that are or |
| 25 |
may be subjected to an equity club form
of ownership; |
| 26 |
amending s. 720.302, F.S.; revising
governing provisions |
| 27 |
relating to corporations that operate
residential |
| 28 |
homeowners' associations; amending s.
720.303, F.S.; |
| 29 |
revising application to include certain
meetings; |
| 30 |
requiring the association to provide
certain information |
| 31 |
to prospective purchasers or
lienholders; authorizing the |
| 32 |
association to charge a reasonable fee
for providing |
| 33 |
certain information; requiring the
budget to provide for |
| 34 |
annual operating expenses; authorizing
the budget to |
| 35 |
include reserve accounts for capital
expenditures and |
| 36 |
deferred maintenance; providing a
formula for calculating |
| 37 |
the amount to be reserved; authorizing
the association to |
| 38 |
adjust replacement reserve assessments
annually; |
| 39 |
authorizing the developer to vote to
waive the reserves or |
| 40 |
reduce the funding of reserves for a
certain period; |
| 41 |
revising provisions relating to
financial reporting; |
| 42 |
revising time periods in which the
association must |
| 43 |
complete its reporting; repealing s.
720.303(2), F.S., as |
| 44 |
amended, relating to board meetings, to
remove conflicting |
| 45 |
versions of that subsection; creating
s. 720.3035, F.S.; |
| 46 |
providing for architectural control
covenants and parcel |
| 47 |
owner improvements; authorizing the
review and approval of |
| 48 |
plans and specifications; providing
limitations; providing |
| 49 |
rights and privileges for parcel owners
as set forth in |
| 50 |
the declaration of covenants; amending
s. 720.305, F.S.; |
| 51 |
providing that, where a member is
entitled to collect |
| 52 |
attorney's fees against the
association, the member may |
| 53 |
also recover additional amounts as
determined by the |
| 54 |
court; amending s. 720.306, F.S.;
providing that certain |
| 55 |
mergers or consolidations of an
association shall not be |
| 56 |
considered a material or adverse
alteration of the |
| 57 |
proportionate voting interest
appurtenant to a parcel; |
| 58 |
amending s. 720.307, F.S.; requiring
developers to deliver |
| 59 |
financial records to the board in any
transition of |
| 60 |
association control to members;
requiring certain |
| 61 |
information to be included in the
records and for the |
| 62 |
records to be prepared in a specified
manner; amending s. |
| 63 |
720.308, F.S.; providing circumstances
under which a |
| 64 |
guarantee of common expenses shall be
effective; providing |
| 65 |
for approval of the guarantee by
association members; |
| 66 |
providing for a guarantee period and
extension thereof; |
| 67 |
requiring the stated dollar amount of
the guarantee to be |
| 68 |
an exact dollar amount for each parcel
identified in the |
| 69 |
declaration; providing payments
required from the |
| 70 |
guarantor to be determined in a certain
manner; providing |
| 71 |
a formula to determine the guarantor's
total financial |
| 72 |
obligation to the association;
providing that certain |
| 73 |
expenses incurred in the production of
certain revenues |
| 74 |
shall not be included in the operating
expenses; amending |
| 75 |
s. 720.311, F.S.; revising provisions
relating to dispute |
| 76 |
resolution; providing that the filing
of any petition for |
| 77 |
arbitration or the serving of an offer
for presuit |
| 78 |
mediation shall toll the applicable
statute of |
| 79 |
limitations; providing that certain
disputes between an |
| 80 |
association and a parcel owner shall be
subject to presuit |
| 81 |
mediation; revising provisions to
conform; providing that |
| 82 |
temporary injunctive relief may be
sought in certain |
| 83 |
disputes subject to presuit mediation;
authorizing the |
| 84 |
court to refer the parties to mediation
under certain |
| 85 |
circumstances; requiring the aggrieved
party to serve on |
| 86 |
the responding party a written offer to
participate in |
| 87 |
presuit mediation; providing a form for
such offer; |
| 88 |
providing that service of the offer is
effected by the |
| 89 |
sending of such an offer in a certain
manner; providing |
| 90 |
that the prevailing party in any
subsequent arbitration or |
| 91 |
litigation proceedings is entitled to
seek recovery of all |
| 92 |
costs and attorney's fees incurred in
the presuit |
| 93 |
mediation process; requiring the
mediator or arbitrator to |
| 94 |
meet certain certification
requirements; removing a |
| 95 |
requirement relating to development of
an education |
| 96 |
program to increase awareness of the
operation of |
| 97 |
homeowners' associations and the use of
alternative |
| 98 |
dispute resolution techniques;
providing effective dates. |
| 99 |
|
| 100 |
Be It Enacted by the Legislature of the
State of Florida: |
| 101 |
|
| 102 |
Section
1. Section 712.11, Florida Statutes, is created to |
| 103 |
read: |
| 104 |
712.11 Covenant
revitalization.--A homeowners' association |
| 105 |
not otherwise
subject to chapter 720 may use the procedures set |
| 106 |
forth in ss.
720.403-720.407 to revive covenants that have |
| 107 |
lapsed under the
terms of this chapter. |
| 108 |
Section
2. Subsection (5) is added to section 718.106, |
| 109 |
Florida Statutes, to read: |
| 110 |
718.106 Condominium
parcels; appurtenances; possession and |
| 111 |
enjoyment.-- |
| 112 |
(5) A
local government may not prohibit condominium unit |
| 113 |
owners or an
association from permitting guests, licensees, or |
| 114 |
invitees access to a
public beach adjacent to or adjoining the |
| 115 |
condominium
property. |
| 116 |
Section
3. Effective October 1, 2006, subsection (11) of |
| 117 |
section 718.110, Florida Statutes, is
amended to read: |
| 118 |
718.110 Amendment
of declaration; correction of error or |
| 119 |
omission in declaration by circuit
court.-- |
| 120 |
(11) The
Legislature finds that the procurement of |
| 121 |
mortgagee consent to
amendments that do not affect the rights or |
| 122 |
interests of
mortgagees is an unreasonable and substantial |
| 123 |
logistical and
financial burden on the unit owners and that |
| 124 |
there is a
compelling state interest in enabling the members of |
| 125 |
a condominium
association to approve amendments to the |
| 126 |
condominium
documents through legal means. Accordingly, and |
| 127 |
notwithstanding any provision to the
contrary contained in this |
| 128 |
section: |
| 129 |
(a) As
to any mortgage recorded on or after October 1, |
| 130 |
2006,
any provision in the declaration,
articles of |
| 131 |
incorporation,
or bylaws that requires recorded
after April 1, |
| 132 |
1992, may not
require the consent or joinder of some or all |
| 133 |
mortgagees of units or
any other portion of the condominium |
| 134 |
property
to or in amendments to the declaration, articles
of |
| 135 |
incorporation, or
bylaws or for any other matter shall be |
| 136 |
enforceable
only as to the following matters: unless
the |
| 137 |
requirement is
limited to amendments materially affecting the |
| 138 |
rights or interests
of the mortgagees, or as otherwise required |
| 139 |
by the Federal
National Mortgage Association or the Federal Home |
| 140 |
Loan Mortgage
Corporation, and unless the requirement provides |
| 141 |
that such consent
may not be unreasonably withheld. It shall be |
| 142 |
presumed that,
except as to |
| 143 |
1. Those
matters described in subsections (4) and (8)., |
| 144 |
2. Amendments
to the declaration, articles of |
| 145 |
incorporation, or
bylaws that adversely affect the priority of |
| 146 |
the mortgagee's lien
or the mortgagee's rights to foreclose its |
| 147 |
lien or that
otherwise materially affect the rights and |
| 148 |
interests of the
mortgagees. |
| 149 |
(b) As
to mortgages recorded before October 1, 2006, any |
| 150 |
existing provisions
in the declaration, articles of |
| 151 |
incorporation, or
bylaws requiring mortgagee consent shall be |
| 152 |
enforceable. |
| 153 |
(c) In
securing consent or joinder, the association shall |
| 154 |
be entitled to rely
upon the public records to identify the |
| 155 |
holders of
outstanding mortgages. The association may use the |
| 156 |
address provided in
the original recorded mortgage document, |
| 157 |
unless there is a
different address for the holder of the |
| 158 |
mortgage in a
recorded assignment or modification of the |
| 159 |
mortgage, which
recorded assignment or modification must |
| 160 |
reference the
official records book and page on which the |
| 161 |
original mortgage
was recorded. Once the association has |
| 162 |
identified the
recorded mortgages of record, the association |
| 163 |
shall, in writing,
request of each unit owner whose unit is |
| 164 |
encumbered by a
mortgage of record any information the owner has |
| 165 |
in his or her
possession regarding the name and address of the |
| 166 |
person to whom
mortgage payments are currently being made. |
| 167 |
Notice shall be sent
to such person if the address provided in |
| 168 |
the original
recorded mortgage document is different from the |
| 169 |
name and address of
the mortgagee or assignee of the mortgage as |
| 170 |
shown by the public
record. The association shall be deemed to |
| 171 |
have complied with
this requirement by making the written |
| 172 |
request of the unit
owners required under this paragraph. Any |
| 173 |
notices required to
be sent to the mortgagees under this |
| 174 |
paragraph shall be
sent to all available addresses provided to |
| 175 |
the association. |
| 176 |
(d) Any
notice to the mortgagees required under paragraph |
| 177 |
(c) may be sent by a
method that establishes proof of delivery, |
| 178 |
and any mortgagee
who fails to respond within 60 days after the |
| 179 |
date of mailing
shall be deemed to have consented to the |
| 180 |
amendment. |
| 181 |
(e) For
those amendments requiring mortgagee consent on or |
| 182 |
after October
1, 2006, do not materially affect
the rights or |
| 183 |
interests of
mortgagees. in the event mortgagee consent is |
| 184 |
provided other than by properly
recorded joinder, such consent |
| 185 |
shall be evidenced by affidavit of the
association recorded in |
| 186 |
the public records of the county where
the declaration is |
| 187 |
recorded. Any
amendment adopted without the required consent of |
| 188 |
a mortgagee shall be
voidable only by a mortgagee who was |
| 189 |
entitled to notice
and an opportunity to consent. An action to |
| 190 |
void an amendment
shall be subject to the statute of limitations |
| 191 |
beginning 5 years
from the date of discovery as to the |
| 192 |
amendments described
in subparagraphs (a)1. and 2. and 5 years |
| 193 |
from the date of
recordation of the certificate of amendment for |
| 194 |
all other
amendments. This provision shall apply to all |
| 195 |
mortgages,
regardless of the date of recordation of the |
| 196 |
mortgage. |
| 197 |
Section
4. Paragraph (l) of subsection (2) of section |
| 198 |
718.112, Florida Statutes, is amended
to read: |
| 199 |
718.112 Bylaws.-- |
| 200 |
(2) REQUIRED
PROVISIONS.--The bylaws shall provide for the |
| 201 |
following and, if they do not do so,
shall be deemed to include |
| 202 |
the following: |
| 203 |
(l) Certificate
of compliance.--There shall be a provision |
| 204 |
that a certificate of compliance from a
licensed electrical |
| 205 |
contractor or electrician may be
accepted by the association's |
| 206 |
board as evidence of compliance of the
condominium units with |
| 207 |
the applicable fire and life safety
code. Notwithstanding the |
| 208 |
provisions of chapter 633 or of any
other code, statute, |
| 209 |
ordinance, administrative rule, or
regulation, or any |
| 210 |
interpretation of the foregoing, an
association, condominium, or |
| 211 |
unit owner is not obligated to retrofit
the common elements or |
| 212 |
units of a residential condominium with
a fire sprinkler system |
| 213 |
or other engineered lifesafety system
in a building that has |
| 214 |
been certified for occupancy by the
applicable governmental |
| 215 |
entity, if the unit owners have voted
to forego such |
| 216 |
retrofitting and engineered lifesafety
system by the affirmative |
| 217 |
vote of two-thirds of all voting
interests in the affected |
| 218 |
condominium. However, a condominium
association may not vote to |
| 219 |
forego the retrofitting with a fire
sprinkler system of common |
| 220 |
areas in a high-rise building. For
purposes of this subsection, |
| 221 |
the term "high-rise building"
means a building that is greater |
| 222 |
than 75 feet in height where the
building height is measured |
| 223 |
from the lowest level of fire
department access to the floor of |
| 224 |
the highest occupiable story. For
purposes of this subsection, |
| 225 |
the term "common areas" means
any enclosed hallway, corridor, |
| 226 |
lobby, stairwell, or entryway. In no
event shall the local |
| 227 |
authority having jurisdiction require
completion of retrofitting |
| 228 |
of common areas with a sprinkler system
before the end of 2025 |
| 229 |
2014. |
| 230 |
1. A
vote to forego retrofitting may be obtained by |
| 231 |
limited proxy or by a ballot personally
cast at a duly called |
| 232 |
membership meeting, or by execution of
a written consent by the |
| 233 |
member, and shall be effective upon the
recording of a |
| 234 |
certificate attesting to such vote in
the public records of the |
| 235 |
county where the condominium is
located. The association shall |
| 236 |
mail, hand deliver, or electronically
transmit to each unit |
| 237 |
owner written notice at least 14 days
prior to such membership |
| 238 |
meeting in which the vote to forego
retrofitting of the required |
| 239 |
fire sprinkler system is to take place.
Within 30 days after the |
| 240 |
association's opt-out vote, notice of
the results of the opt-out |
| 241 |
vote shall be mailed, hand delivered,
or electronically |
| 242 |
transmitted to all unit owners.
Evidence of compliance with this |
| 243 |
30-day notice shall be made by an
affidavit executed by the |
| 244 |
person providing the notice and filed
among the official records |
| 245 |
of the association. After such notice
is provided to each owner, |
| 246 |
a copy of such notice shall be provided
by the current owner to |
| 247 |
a new owner prior to closing and shall
be provided by a unit |
| 248 |
owner to a renter prior to signing a
lease. |
| 249 |
2. As
part of the information collected annually from |
| 250 |
condominiums, the division shall
require condominium |
| 251 |
associations to report the membership
vote and recording of a |
| 252 |
certificate under this subsection and,
if retrofitting has been |
| 253 |
undertaken, the per-unit cost of such
work. The division shall |
| 254 |
annually report to the Division of
State Fire Marshal of the |
| 255 |
Department of Financial Services the
number of condominiums that |
| 256 |
have elected to forego retrofitting. |
| 257 |
Section
5. Section 718.114, Florida Statutes, is amended |
| 258 |
to read: |
| 259 |
718.114 Association
powers.--An association has the power |
| 260 |
to enter into agreements, to acquire
leaseholds, memberships, |
| 261 |
and other possessory or use interests
in lands or facilities |
| 262 |
such as country clubs, golf courses,
marinas, and other |
| 263 |
recreational facilities. It has this
power whether or not the |
| 264 |
lands or facilities are contiguous to
the lands of the |
| 265 |
condominium, if they are intended to
provide enjoyment, |
| 266 |
recreation, or other use or benefit to
the unit owners. All of |
| 267 |
these leaseholds, memberships, and
other possessory or use |
| 268 |
interests existing or created at the
time of recording the |
| 269 |
declaration must be stated and fully
described in the |
| 270 |
declaration. Subsequent to the
recording of the declaration, |
| 271 |
agreements acquiring
these leaseholds, memberships, or other |
| 272 |
possessory or use
interests not entered into within 12 months |
| 273 |
following the
recording of the declaration shall be considered a |
| 274 |
material alteration
or substantial addition to the real property |
| 275 |
that is
association property, and the association may not |
| 276 |
acquire or enter into agreements
acquiring these leaseholds, |
| 277 |
memberships, or other possessory or use
interests except as |
| 278 |
authorized by the declaration as
provided in s. 718.113. The |
| 279 |
declaration may provide that the
rental, membership fees, |
| 280 |
operations, replacements, and other
expenses are common expenses |
| 281 |
and may impose covenants and
restrictions concerning their use |
| 282 |
and may contain other provisions not
inconsistent with this |
| 283 |
chapter. A condominium association may
conduct bingo games as |
| 284 |
provided in s. 849.0931. |
| 285 |
Section
6. Subsections (1) and (2) of section 718.404, |
| 286 |
Florida Statutes, are amended to read: |
| 287 |
718.404 Mixed-use
condominiums.--When a condominium |
| 288 |
consists of both residential and
commercial units, the following |
| 289 |
provisions shall apply: |
| 290 |
(1) The
condominium documents shall not provide that the |
| 291 |
owner of any commercial unit shall have
the authority to veto |
| 292 |
amendments to the declaration, articles
of incorporation, |
| 293 |
bylaws, or rules or regulations of the
association. This |
| 294 |
subsection shall
apply retroactively as a remedial measure. |
| 295 |
(2) Subject
to s. 718.301, where the number of residential |
| 296 |
units in the condominium equals or
exceeds 50 percent of the |
| 297 |
total units operated by the
association, owners of the |
| 298 |
residential units shall be entitled to
vote for a majority of |
| 299 |
the seats on the board of
administration. This subsection shall |
| 300 |
apply retroactively
as a remedial measure. |
| 301 |
Section
7. Subsections (18) through (27) of section |
| 302 |
719.103, Florida Statutes, are
renumbered as subsections (19) |
| 303 |
through (28), respectively, and a new
subsection (18) is added |
| 304 |
to that section to read: |
| 305 |
719.103 Definitions.--As
used in this chapter: |
| 306 |
(18) "Equity
facilities club" means a club comprised of |
| 307 |
recreational
facilities in which proprietary membership |
| 308 |
interests are sold
to individuals, which membership interests |
| 309 |
entitle the
individuals to use certain physical facilities owned |
| 310 |
by the equity club.
Such physical facilities do not include a |
| 311 |
residential unit or
accommodation. For purposes of this |
| 312 |
definition, the term
"accommodation" shall include, but is not |
| 313 |
limited to, any
apartment, residential cooperative unit, |
| 314 |
residential
condominium unit, cabin, lodge, hotel or motel room, |
| 315 |
or any other
accommodation designed for overnight occupancy for |
| 316 |
one or more
individuals. |
| 317 |
Section
8. Section 719.507, Florida Statutes, is amended |
| 318 |
to read: |
| 319 |
719.507 Zoning
and building laws, ordinances, and |
| 320 |
regulations.--All laws, ordinances, and
regulations concerning |
| 321 |
buildings or zoning shall be construed
and applied with |
| 322 |
reference to the nature and use of such
property, without regard |
| 323 |
to the form of ownership. No law,
ordinance, or regulation shall |
| 324 |
establish any requirement concerning
the use, location, |
| 325 |
placement, or construction of buildings
or other improvements |
| 326 |
which are, or may thereafter be,
subjected to the cooperative or |
| 327 |
equity
facilities club form of ownership, unless such |
| 328 |
requirement shall be equally applicable
to all buildings and |
| 329 |
improvements of the same kind not then,
or thereafter to be, |
| 330 |
subjected to the cooperative or
equity facilities club form of |
| 331 |
ownership. This section does not apply
if the owner in fee of |
| 332 |
any land enters into and records a
covenant that existing |
| 333 |
improvements or improvements to be
constructed shall not be |
| 334 |
converted to the cooperative form of
residential ownership prior |
| 335 |
to 5 years after the later of the date
of the covenant or |
| 336 |
completion date of the improvements.
Such covenant shall be |
| 337 |
entered into with the governing body of
the municipality in |
| 338 |
which the land is located or, if the
land is not located in a |
| 339 |
municipality, with the governing body
of the county in which the |
| 340 |
land is located. |
| 341 |
Section
9. Subsections (4) and (5) of section 720.302, |
| 342 |
Florida Statutes, are amended to read: |
| 343 |
720.302 Purposes,
scope, and application.-- |
| 344 |
(4) This
chapter does not apply to any association that is |
| 345 |
subject to regulation under chapter
718, chapter 719, or chapter |
| 346 |
721; or to any nonmandatory
association formed under chapter |
| 347 |
723, except to
the extent that a provision of chapter 718, |
| 348 |
chapter 719, or
chapter 721 is expressly incorporated into this |
| 349 |
chapter for the
purpose of regulating homeowners' associations. |
| 350 |
(5) Unless
expressly stated to the contrary, corporations |
| 351 |
not for profit
that operate residential homeowners' associations |
| 352 |
in this state shall be governed by and
subject to chapter 607, |
| 353 |
if the association
was incorporated under that chapter, or to |
| 354 |
chapter 617,
if the association was incorporated under that |
| 355 |
chapter, and
this chapter. This subsection is intended to |
| 356 |
clarify existing law. |
| 357 |
Section
10. Paragraph (a) of subsection (2), subsection |
| 358 |
(6), and subsection (7) of section
720.303, Florida Statutes, as |
| 359 |
amended by section 18 of chapter
2004-345 and section 135 of |
| 360 |
chapter 2005-2, Laws of Florida, are
amended, and paragraph (d) |
| 361 |
is added to subsection (5) of that
section, to read: |
| 362 |
720.303 Association
powers and duties; meetings of board; |
| 363 |
official records; budgets; financial
reporting; association |
| 364 |
funds; recalls.-- |
| 365 |
(2) BOARD
MEETINGS.-- |
| 366 |
(a) A
meeting of the board of directors of an association |
| 367 |
occurs whenever a quorum of the board
gathers to conduct |
| 368 |
association business. All meetings of
the board must be open to |
| 369 |
all members except for meetings between
the board and its |
| 370 |
attorney with respect to proposed or
pending litigation where |
| 371 |
the contents of the discussion would
otherwise be governed by |
| 372 |
the attorney-client privilege. The
provisions of this subsection |
| 373 |
shall also apply to
the meetings of any committee or other |
| 374 |
similar body when a
final decision will be made regarding the |
| 375 |
expenditure of
association funds and to meetings of any body |
| 376 |
vested with the
power to approve or disapprove architectural |
| 377 |
decisions with
respect to a specific parcel of residential |
| 378 |
property owned by a
member of the community. |
| 379 |
(5) INSPECTION
AND COPYING OF RECORDS.--The official |
| 380 |
records shall be maintained within the
state and must be open to |
| 381 |
inspection and available for
photocopying by members or their |
| 382 |
authorized agents at reasonable times
and places within 10 |
| 383 |
business days after receipt of a
written request for access. |
| 384 |
This subsection may be complied with by
having a copy of the |
| 385 |
official records available for
inspection or copying in the |
| 386 |
community. If the association has a
photocopy machine available |
| 387 |
where the records are maintained, it
must provide parcel owners |
| 388 |
with copies on request during the
inspection if the entire |
| 389 |
request is limited to no more than 25
pages. |
| 390 |
(d) The
association or its authorized agent is not |
| 391 |
required to provide
a prospective purchaser or lienholder with |
| 392 |
information about
the residential subdivision or the association |
| 393 |
other than
information or documents required by this chapter to |
| 394 |
be made available or
disclosed. The association or its |
| 395 |
authorized agent may
charge a reasonable fee to the prospective |
| 396 |
purchaser or
lienholder or the current parcel owner or member |
| 397 |
for providing good
faith responses to requests for information |
| 398 |
by or on behalf of a
prospective purchaser or lienholder, other |
| 399 |
than that required
by law, if the fee does not exceed $150 plus |
| 400 |
the reasonable cost
of photocopying and any attorney's fees |
| 401 |
incurred by the
association in connection with the response. |
| 402 |
(6) BUDGETS.-- |
| 403 |
(a) The
association shall prepare an annual budget that |
| 404 |
sets out the
annual operating expenses. The budget must reflect |
| 405 |
the estimated revenues and expenses for
that year and the |
| 406 |
estimated surplus or deficit as of the
end of the current year. |
| 407 |
The budget must set out separately all
fees or charges paid for |
| 408 |
by the
association for recreational amenities, whether owned by |
| 409 |
the association, the developer, or
another person. The |
| 410 |
association shall provide each member
with a copy of the annual |
| 411 |
budget or a written notice that a copy
of the budget is |
| 412 |
available upon request at no charge to
the member. The copy must |
| 413 |
be provided to the member within the
time limits set forth in |
| 414 |
subsection (5). |
| 415 |
(b) In
addition to annual operating expenses, the budget |
| 416 |
may include reserve
accounts for capital expenditures and |
| 417 |
deferred maintenance
for which the association is responsible to |
| 418 |
the extent that the
governing documents do not limit increases |
| 419 |
in assessments,
including reserves. If the budget of the |
| 420 |
association includes
reserve accounts, such reserves shall be |
| 421 |
determined,
maintained, and waived in the manner provided in |
| 422 |
this subsection.
Once an association provides for reserve |
| 423 |
accounts in the
budget, the association shall thereafter |
| 424 |
determine, maintain,
and waive reserves in compliance with the |
| 425 |
provisions of this
subsection. |
| 426 |
(c) If
the budget of the association does not provide for |
| 427 |
reserve accounts
governed by this subsection and the association |
| 428 |
is responsible for
the repair and maintenance of capital |
| 429 |
improvements that
may result in a special assessment if reserves |
| 430 |
are not provided,
each financial report for the preceding fiscal |
| 431 |
year required by
subsection (7) shall contain the following |
| 432 |
statement in
conspicuous type: THE BUDGET OF THE ASSOCIATION |
| 433 |
DOES NOT PROVIDE FOR
RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES |
| 434 |
AND DEFERRED
MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS. |
| 435 |
OWNERS MAY ELECT TO
PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO THE |
| 436 |
PROVISIONS OF
SECTION 720.303(6), FLORIDA STATUTES, UPON THE |
| 437 |
APPROVAL OF NOT LESS
THAN A MAJORITY OF THE TOTAL VOTING |
| 438 |
INTERESTS OF THE
ASSOCIATION. |
| 439 |
(d) An
association shall be deemed to have provided for |
| 440 |
reserve accounts
when reserve accounts have been initially |
| 441 |
established by the
developer or when the membership of the |
| 442 |
association
affirmatively elects to provide for reserves. If |
| 443 |
reserve accounts are
not initially provided for by the |
| 444 |
developer, the
membership of the association may elect to do so |
| 445 |
upon the affirmative
approval of not less than a majority of the |
| 446 |
total voting
interests of the association. Such approval may be |
| 447 |
attained by vote of
the members at a duly called meeting of the |
| 448 |
membership or upon a
written consent executed by not less than a |
| 449 |
majority of the
total voting interests in the community. The |
| 450 |
approval action of
the membership shall state that reserve |
| 451 |
accounts shall be
provided for in the budget and designate the |
| 452 |
components for which
the reserve accounts are to be established. |
| 453 |
Upon approval by the
membership, the board of directors shall |
| 454 |
provide for the
required reserve accounts for inclusion in the |
| 455 |
budget in the next
fiscal year following the approval and in |
| 456 |
each year
thereafter. Once established as provided in this |
| 457 |
subsection, the
reserve accounts shall be funded or maintained |
| 458 |
or shall have their
funding waived in the manner provided in |
| 459 |
paragraph (f). |
| 460 |
(e) The
amount to be reserved in any account established |
| 461 |
shall be computed by
means of a formula that is based upon |
| 462 |
estimated remaining
useful life and estimated replacement cost |
| 463 |
or deferred
maintenance expense of each reserve item. The |
| 464 |
association may
adjust replacement reserve assessments annually |
| 465 |
to take into account
any changes in estimates of cost or useful |
| 466 |
life of a reserve
item. |
| 467 |
(f) Once
a reserve account or reserve accounts are |
| 468 |
established, the
membership of the association, upon a majority |
| 469 |
vote at a meeting at
which a quorum is present, may provide for |
| 470 |
no reserves or less
reserves than required by this section. If a |
| 471 |
meeting of the unit
owners has been called to determine whether |
| 472 |
to waive or reduce
the funding of reserves and no such result is |
| 473 |
achieved or a quorum
is not present, the reserves as included in |
| 474 |
the budget shall go
into effect. After the turnover, the |
| 475 |
developer may vote
its voting interest to waive or reduce the |
| 476 |
funding of reserves.
Any vote taken pursuant to this subsection |
| 477 |
to waive or reduce
reserves shall be applicable only to one |
| 478 |
budget year. |
| 479 |
(g) Funding
formulas for reserves authorized by this |
| 480 |
section shall be
based on either a separate analysis of each of |
| 481 |
the required assets
or a pooled analysis of two or more of the |
| 482 |
required assets. |
| 483 |
1. If
the association maintains separate reserve accounts |
| 484 |
for each of the
required assets, the amount of the contribution |
| 485 |
to each reserve
account shall be the sum of the following two |
| 486 |
calculations: |
| 487 |
a. The
total amount necessary, if any, to bring a negative |
| 488 |
component balance to
zero. |
| 489 |
b. The
total estimated deferred maintenance expense or |
| 490 |
estimated
replacement cost of the reserve component less the |
| 491 |
estimated balance of
the reserve component as of the beginning |
| 492 |
of the period for
which the budget will be in effect. The |
| 493 |
remainder, if
greater than zero, shall be divided by the |
| 494 |
estimated remaining
useful life of the component. |
| 495 |
|
| 496 |
The formula may be
adjusted each year for changes in estimates |
| 497 |
and deferred
maintenance performed during the year and may |
| 498 |
include factors such
as inflation and earnings on invested |
| 499 |
funds. |
| 500 |
2. If
the association maintains a pooled account of two or |
| 501 |
more of the required
reserve assets, the amount of the |
| 502 |
contribution to the
pooled reserve account as disclosed on the |
| 503 |
proposed budget
shall not be less than that required to ensure |
| 504 |
that the balance on
hand at the beginning of the period for |
| 505 |
which the budget
will go into effect plus the projected annual |
| 506 |
cash inflows over
the remaining estimated useful life of all of |
| 507 |
the assets that make
up the reserve pool are equal to or greater |
| 508 |
than the projected
annual cash outflows over the remaining |
| 509 |
estimated useful
lives of all of the assets that make up the |
| 510 |
reserve pool, based
on the current reserve analysis. The |
| 511 |
projected annual
cash inflows may include estimated earnings |
| 512 |
from investment of
principal. The reserve funding formula shall |
| 513 |
not include any type
of balloon payments. |
| 514 |
(h) Reserve
funds and any interest accruing thereon shall |
| 515 |
remain in the
reserve account or accounts and shall be used only |
| 516 |
for authorized
reserve expenditures unless their use for other |
| 517 |
purposes is approved
in advance by a majority vote at a meeting |
| 518 |
at which a quorum is
present. Prior to turnover of control of an |
| 519 |
association by a
developer to parcel owners, the developer- |
| 520 |
controlled
association shall not vote to use reserves for |
| 521 |
purposes other than
those for which they were intended without |
| 522 |
the approval of a
majority of all nondeveloper voting interests |
| 523 |
voting in person or
by limited proxy at a duly called meeting of |
| 524 |
the association. |
| 525 |
(7) FINANCIAL
REPORTING.--Within 90 days after the end of |
| 526 |
the fiscal year, or
annually on the date provided in the bylaws, |
| 527 |
the association
shall prepare and complete, or contract with a |
| 528 |
third party for the
preparation and completion of, a financial |
| 529 |
report for the
preceding fiscal year. Within 21 days after the |
| 530 |
final financial
report is completed by the association or |
| 531 |
received from the
third party, but not later than 120 days after |
| 532 |
the end of the
fiscal year or other date as provided in the |
| 533 |
bylaws, the
association shall prepare an annual financial
report |
| 534 |