ANALYSIS:  The following is an analysis of the impact of the Bill’s provisions, if passed as presented:

1. Prohibits any two members of an immediate family from simultaneously serving on a condominium board.  The term “immediate family” is defined to include . . . parent, child, spouse, sibling, grandparent, grandchild, uncle, aunt, niece, nephew, great-uncle, great-aunt, great-nephew, great-niece, first cousin, or second cousin, by blood, marriage or adoption, and includes half and step relatives.  [See F.S. 1125(1)]

 How does one respond to such an archaic concept?  The mere suggestion that independent, free thinking, emancipated adults cannot serve on a board together simply because of a remote family relationship flies in the face of every modern theory of individual freedom, and denies some unit owners equal protection under the law by discriminating against them simply based upon familial relationship.

2. Unit owners who own more than a single unit are prohibited from casting votes for the additional units owned [F.S. 718.104(4)(5)].

 Comment:  The Condominium Act defines the right to vote as an appurtenance of unit ownership.  The proposed amendment seeks to disenfranchise every multiple unit owner, including developers and investors, notwithstanding the fact that each and every one must pay their assessments on every unit owned.  Setting aside the draconian nature of this measure, it is patently unconstitutional.

3. Grandfathering and Modification of Certain Rights.  Any amendment which restricts a unit owner’s right to rent their units, keep pets, or allocate parking spaces shall only apply to unit owners who purchase their unit after the effective date of the amendment.  For the amendment to apply to existing unit owners, it will require a vote of 75% of the voting interests.  [F.S. 718.110(13)(a) & (b)]

 Comment:  The purpose of this amendment is to weaken the impact of the recent Florida Supreme Court decision of Woodside Village Condominium Association, Inc. v. Jahren (806 So.2d 452, Fla. 2002).  The Woodside Court affirmed the right of the members of a condominium, where transient rentals were threatening the residential character of the community, to amend their declaration to restrict rentals.  In doing so, the Court acknowledged that every purchaser buys into a condominium with the knowledge that the condominium documents can be amended, and further recognized . . . “that reasonable restrictions concerning use, occupancy, and transfer of condominium units are necessary for the operation and protection of the owners in the condominium concept.”

4. The vote to waive mandated statutory reserves is changed from a majority of the unit owners present and voting to 2/3rds vote.  It is unclear if the proposed amendment is 2/3rds of a quorum or 2/3rds of the total voting interests.  [F.S. 718.113(2)(f)].

 Comment: This proposal shows the schizophrenic philosophy of this proposed Bill.  As noted below, the requirement for a majority unit owner vote is triggered if any owner can claim financial hardship from a special assessment.  Here, those same owners, who may experience a substantial hardship by way of much higher monthly maintenance fees, are losing their right to let a majority decide the reserve question.  Most authorities would agree that it is wise for condominium owners to establish reserves for capital expenditures and deferred maintenance.  And, the Act does compel the association to include within the annual budget the details of the required reserves.  On the other hand, recognizing the economic hardship, which fully funded reserves have on some unit owners, it also gives unit owners the right to waive funding the reserves, annually, by a vote of a majority of the unit owners voting at a meeting at which there is a quorum.  The increased vote to waive funding reserves will be a very difficult threshold to meet.

5. Restrictions on Who Can Serve on the Board:

• No one may serve on the board unless actually a resident in the condominium for at least three (3) months in the year prior to the annual meeting at which he or she was elected.
• No one may serve on the board … without first being subjected to a criminal background check.  [F.S. 718.1125(1)(b) & (c)].

6. No one can serve more than two (2) years on the board without there first being a two (2) year intervening period.    [F.S. 718.1125(d)]

 Comment:  To ensure continuity on the board, many associations have staggered terms of directors, often three (3) years.  At a time when it is becoming increasingly difficult to find unit owners willing to serve on the board, this provision will only serve to further restrict the pool of candidates.  Even the Florida Legislature, which recently imposed term limits, permits members to serve eight years.  Many of the State’s condominium associations are multi-million dollar operations.  This proposal will require associations to operate without any director with substantial on-the-job training.

7. First mortgagees foreclosing on a unit will be obligated to pay the unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the six (6) months immediately preceding the acquisition of title and for which payment in full has not been received by the association, or, 5% of the original mortgage debt.  [F.S. 718.116(1)(b)(1) & (2)].

 Comment:  The current law provides for the mortgagee to pay either the assessments which came due six (6) months preceding acquisition of title or 1% of the original mortgage debt. Good suggestion, see if the banks will agree to this.

8. Any payment received by an association for assessments must first be applied to the delinquent assessments, then to any interest, administrative late fees, costs and reasonable attorney’s fees.  [F.S. 718 116(3)]

Also · No administrative late fee or interest shall be the sole basis for a lien.

Note: The current law provides that payments made shall first be applied to interest, administrative late fees, costs and reasonable attorney fees, before applying same to the delinquent assessments.  There is a reason why the payment priority is in the Act.  The courts have determined that homestead property cannot be foreclosed to collect interest, costs, administrative late fees and attorney’s fees.  THIS AMENDMENT WILL SIGNIFICANTLY IMPAIR A CONDOMINIUM ASSOCIATION’S ABILITY TO COLLECT DELINQUENT ASSESSMENTS.

9. Any action of the Board, even those characterized as special assessments, that imposes a financial hardship on any or all of the unit owners must be ratified by a majority of the voting interests, at a duly convened meeting of the association to be held within 60 days of such action or such action shall be void.  [F.S. 718.116(11)].

Note: The board, in the exercise of its business judgment and its fiduciary duty to the unit owners, is compelled on a daily basis to make decisions for the betterment of the condominium and to preserve and protect the condominium property.   Any and/or all of a board’s decisions have the potential of imposing a financial hardship on any particular unit owner at any given time, such as repairing the roof, re-painting, and fixing a plumbing leak.  Coupled with the reality that it is almost impossible to convene an association meeting on a regular basis, particularly, when it is necessary to obtain a quorum, this proposed amendment WILL SPELL THE DOOM OF THE CONDOMINIUM CONCEPT IN FLORIDA.

10.  A business entity of which an association’s board member or officer, or his or her immediate family member, is an employee, or in which an association’s board member or officer, or any or all of his or her immediate family members together, hold an ownership interest of 10% or more, may be contracted to provide maintenance or management services to that association if approved by a majority of all unit owners.  A contract in violation of this subsection shall be void.  [F.S. 718.3025(4)].

Note: So what this says is that if the adoptive second cousin of a member of the board, someone perhaps that he/she doesn’t even know, is part of the janitorial staff of a multi-million dollar public company, which contracts to provide maintenance services to the association, the contract is void unless ratified by a majority of the voting interests.  While the intent might be good, the draftsmanship is terrible and, unless significantly improved upon, is unworkable.

11. All contracts for the purchase, lease, or renting of materials or equipment to be used by the association in accomplishing its purpose under the Act, and all contracts for the provision of services, shall be in writing [existing law].

 If the contract requires the payment by an association that exceeds 2.5% [current law 5%] of the total annual budget, in the aggregate, including reserves, the association shall obtain no fewer than three (3) competitive bids.  [F.S. 718.3026(1)].

Note: The current law requires that the association obtain competitive bids when the cost exceeds 5% of the total annual budget, but does not specify the number of bids.  The proposed amendment mandates three (3) bids, but does not provide an option if the association is unable to find three (3) vendors willing to bid, which is often the case, or if the source of supply, for example, when there is a repair or replacement of an existing component, is from a single source.

12. Contracts with attorneys, accountants, architects, community association managers, timeshare management firms, engineering and landscape architects, previously exempt from the competitive bidding provisions of the Act, would now be subject to competitive bidding.  [F.S. 718.3026(2)(a)(1)].

Note: Initially certain professional services, such as those of attorneys and accountants, the costs of which were not susceptible to being calculated definitively, and/or which by operation of the professions’ Canons, which precluded bidding for services, were exempted from the competitive bidding provisions of the Act.  Over the years, additional services were added.  

13. Criminal background checks for potential unit owners and tenants.  Upon receiving notice of a potential unit owner or tenant, the association shall, at the expense of the applicant, conduct a criminal background check of all persons seeking to own or rent a unit.  [F.S. 718.305]

Note: First, a significant number of condominiums do not have the authority to approve or disapprove sales or leases, so what is the purpose of the criminal background check?  Second, assuming that the applicant is found to have a prior arrest record, misdemeanor or felony, what is the association to do with the information and why? This proposal is typical of the approach of this proposal.  An idea which may have some merit is expressed with so little guidance, and nothing in the way of objective standards, so as to ensure frequent litigation over application of the law.  This is another irony of this Bill’s probable effect, as its sponsors consistently tout reducing legal problems in communities as one of its goals.

14. Training shall be mandatory for newly elected board members and members currently serving on a board who have not previously voluntarily attended training.  [F.S. 718.501(1)(j)].

Note: No doubt this amendment, if passed, will spurn a whole new cottage industry.  While amenable in concept, in truth it is not practical.  Who is going to pay for it?  Who is going to define the course curriculum?  Is there going to be testing?  If an individual elected to the board fails the test’s acceptable levels, will he/she still be qualified to serve?

15. There is created an Office of the Condominium Ombudsman, who shall be an attorney admitted to practice law in Florida.  Among the powers and duties of this ombudsman is to act as liaison between the Division and unit owners and to assist any unit owner in the preparation of a complaint to be investigated by the Division.  [F.S. 718.5011 and 718.5012].

Note: Who is going to pay for this?  The apparent intent of the “ombudsman” is to provide dissident unit owners with a state-appointed prosecutor, free-of-charge, to vindicate every perceived wrong.  Does the Select Committee really believe that this will have the effect of reducing tension in condominiums, preventing litigation, or result in lower legal fees?

16. Advisory Council in Condominiums.   [F.S. 718.5015].

Note: Tried, costly, failed.

17. Requires all records, personnel, property and unexpended balances or appropriations which are currently held by the Division of Professions of the Department of Business and Professional Regulations to be transferred to the Division of Florida Land Sales, Condominiums and Mobile Homes of the Department of Business and Professional Regulations.  [F.S. 718.504(17)].

18. Condominium Owner’s Bill of Rights.  Requires the Division to adopt rules to provide for a brochure entitled “Condominium Owner’s Bill of Rights” which explains what rights are afforded to condominium owners and potential purchasers of condominiums.  [F.S. 718.510].

Note: Good Suggestion.