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Official Web Site of the State of Florida
STATE OF FLORIDA WEB SITE
Every year, we send an assortment of well-educated men and women to Florida’s State Capitol to represent us. They speak for us, act on our behalf, educate themselves about importatnt issues, learn how to work together and try to execute productive resolutions. If they like the job, they run for re-election. Sometimes, their reasons for being there differ from those given to their constituents prior to Election Day; their actions become inconsistent with their promises while questions about their legislative intentions are buried in a blizzard of platitudes. When this occurs, its usually a good time to consider “changing the guard”.

Official Seal of the State of Florida
STATE OF FLORIDA
To be effective, politicians must master a spectrum of communication skills. The art of defining an issue and exhorting the need for a piece of palliative legislation in the same breath is known as “spin”. Depending on how its utilized, “spin” can be either a tool or a weapon; it can rally support for a good cause or create just enough confusion to allow a fox into the henhouse.

Statehouse Representative George Moraitis
REP. GEORGE MORAITIS
In order to determine whether or not your representatives still speak for you, you must examine their work product. To properly diagnose or “unspin” an issue, simply read the actual legislation. If you don’t have the time or patience to peruse the dry legislative text, review an authoritative summary. Corresponding with your representatives is another alternative to directly examining legislative content. Every year, legislation affecting Galt Mile residents oozes out of Tallahassee, often unnoticed. The issues surrounding that legislation will be explained in this section. Before next year’s legislative session, the articles will be relegated to the site’s Tallahassee Archives, setting the stage for the new session. Email, write, FAX or telephone your Statehouse Representative and your Senator with the specific obstacles that any issue or legislative effort hold for you. To find all the contact information for the Galt Mile’s political representatives in Tallahassee or elsewhere, go to the Report Card.

Florida Senator Gary Farmer
SENATOR GARY FARMER
Georgetown Historian Carroll Quigley
GEORGETOWN HISTORIAN
CARROLL QUIGLEY
Galt Mile Residents are currently represented by George Moraitis in the Florida Statehouse and Gary Farmer in the Florida Senate. Notwithstanding their official “party” affiliations, their primary responsibility is to YOU. They are obligated to exercise their voting power and influence the outcomes of certain issues based upon the feedback they recieve from their constituents - US. If they don't - as exclaimed by Georgetown University Professor Carroll Quigley while considering the virtues of Democracy - we can “Throw the rascals out.”

Florida Senate Florida House After familiarizing ourselves with the legislative land mines planted during the annual session and unifying behind issues that benefit the entire neighborhood, we can send our political representatives in Tallahassee a clear and unconflicted wish list. Furthering their constituents' agenda will have a far greater impact on their future political ascendency than their party affiliations - or ours. This pro-active formula also shields our community from the paralysis of partisan gridlock that might otherwise belabor efforts to enact favorable legislation. By sending a few strategically timed emails, we can thwart bills conceived to abridge our rights, erode home rule and drain association budgets. Not a bad day's work!

Dolphin Sculpture at Entrance to the State Capitol Complex
DOLPHIN SCULPTURE AT ENTRANCE TO THE STATE CAPITOL COMPLEX

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2013

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2013 Articles

Mercenary Squealers Brigade

Fair Foreclosure Act Back

2013 Omnibus Association Bill

2013 Design Professionals Bill

What Were They Thinking?

The Citizens Circus

Legislature Approves House Bill 73

Landlord & Tenant Bill - HB 77

New CAM Law - HB 7119

Other Issues

New Fire Safety Mandate



Beach Renourishment Project



Cleveland Clinic Emergency Room



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AEDs - Sudden Cardiac Arrest (SCA)



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2013 Legislative Session




Representative Frank Artiles
REPRESENTATIVE
FRANK ARTILES
Representative Mike LaRosa
REPRESENTATIVE
MIKE LAROSA
October 15, 2013 - Since
House Bill 7119 addressed issues that primarily impact Homeowner Associations (HOAs), it sailed through the 2013 legislative session below the radar of most Galt Mile Condo and Co-op residents. Sponsored by Representatives Mike LaRosa (R - St. Cloud), Joe Gibbons (D - Hallandale Beach) and Frank Artiles (R - Miami) with a collateral push from the House Judiciary Committee and the House Business & Professional Regulation Subcommittee, the new law extended regulations that have long protected Condominium (Chapter 718) and Cooperative (Chapter 719) members to also shield parcel owners in Homeowner Associations. Along with mandating criteria for posting notice, levying special assessments, maintaining association records, amending governing documents and a tough anti-kickback provision for managers and directors, the bill established rules for the annual members meeting, election procedures, proxy voting, board member eligibility and addressed the issue of “joint and several liability” for assessment obligations from association-owned parcels. A companion bill in the other house, Senate Bill 580, was filed by Senator Alan Hays (R – The Villages).

Senator Alan Hays
SENATOR ALAN HAYS
To guard against the introduction of eleventh hour amendments that unnecessarily hamper home rule, association advocates carefully monitored the bill throughout the legislative vetting process. The sponsors muted concerns about the State usurping the right of Homeowner Association members to govern themselves by foraging statutory language from comparable provisions in the Condominium and Cooperative Acts (Chapters 718 & 719, F.S.).

Representative Joe Gibbons
REPRESENTATIVE
JOE GIBBONS
Unlike the unilateral association support enjoyed by House Bill 73 (the Omnibus Association Bill filed by Representative George Moraitis), HB 7119 was repeatedly beset by challenges from association officials. Suspicions surrounding the bill crystalized two weeks before Governor Scott signed it into law on June 14, 2013 (Chapter 2013-218). A Legislative Consortium composed of the Alliance of Delray Residential Associations, the Broward Coalition, the Coalition of Boynton West Residential Associations, the Lake Worth Road Coalition and the West Boca Community Council requested that Governor Scott veto HB 7119.

Click Here to Alliance of Delray Residential Associations The new law requires the HOA CAM Manager, management firm or Board (if the association is self-managed) to annually report the association’s name, address, Federal Employee Identification Number (FEIN), number of parcels and the total revenues and expenses featured in the annual budget. The data will be collected by the Department of Business & Professional Regulation (DBPR), which also regulates condominiums and cooperatives, and provided annually to the Governor, the President of the Senate and the Speaker of the House of Representatives.

Click Here to Department of Business and Professional Regulations - DBPR The Statute mandates that DBPR create a website to facilitate collecting the HOA data. HOAs have until November 22, 2013 to either mail in the information or post it online at www.myfloridalicense.com/hoa. After being compiled, the DBPR annually passes the reported data to the Legislature by December 1st until July 1, 2016, when this subsection sunsets. Although concerned that publicly exposing their budgets and expenditures would invite a brutal flood of solicitation, HOA officials primarily feared the prospect of impending overregulation by the State. En route to passage, the huge original 123-page bill was pared to 15 pages as sections that sought to micro-manage HOA operations were divested. Association watchdogs were also leery about one of the Bill’s sponsors.

Former Bradenton Senator Michael Bennett
FORMER SENATOR MICHAEL BENNETT
In 2012, Miami Representative Artiles filed House Bill 1013, an anti-consumer stinkweed vehemently opposed by associations – and virtually every homeowner in the State. For years, Common Law Implied Warranties protected homeowners from defective construction of roadways, retention ponds, underground pipes, and drainage systems throughout a subdivided development. The companion bill for former Bradenton Senator Michael Bennett’s Senate Bill 1196, Artiles’ Statehouse doppelgänger stripped those protections from Florida homeowners.

Defective Road
DEFECTIVE ROAD
The bills - which are now law (Chapter 2012-161) - shield developers from liability for construction defects and code violations for construction elements located outside the walls of a home, including sewer and water systems, drainage systems, development roadways - virtually all of a home’s support systems. Although technically offsite appurtenances, these construction elements are critical to the home’s habitability, and figure prominently in the builder’s marketing campaign for a new development. In fact, developers can’t secure Certificates of Occupancy for new homes without stipulating to the adequacy of access roads and/or sewer systems they built to service those properties. Since this external infrastructure falls outside the purview of Home Inspectors hired to verify the home’s integrity, homebuyers must rely on developer representations when closing on a property.

Until 2012, Implied Warranties kept developers and contractors honest. For decades, Florida courts forced builders to repair access roads that turned into Swiss cheese after six months or drainage systems that regularly backfilled homeowner bathtubs within weeks of closing. When Building Trades Lobbyists told vetting committees that forcing developers to comply with the Florida Building Code was hampering new development (as opposed to the dearth of available financing due to the economic downturn), Governor Scott endorsed the bills. After 2012, homebuyers in a new association who neglect providing for the sufficiency of these elements in their contract with the developer may have to rebuild their new home’s drainage system or water lines. Artiles’ bill also impacts Condominiums. Since the roof of a new condominium development isn’t part and parcel to a purchased unit, the new unit owners are out of luck if it leaks like a sieve.

In addition to being one of the most anti-consumer bills to slither though the legislature (with the assistance of Governor Scott), Artiles and Bennett violated the prohibition against lawmakers filing legislation that provides direct financial benefit to its sponsors, their businesses or family members. Bennett is an electrical contractor. In addition to being a real estate agent and public adjuster, Artiles is a State of Florida licensed general contractor.

Although HB 1013 provided Bennett and Artiles with plump campaign war chests, it tanked Artiles’ consumer credibility. Artiles hoped to wash some of the mud from his reputation by aggressively pursuing a bill that empowered constituent HOA parcel owners – albeit without lining his own pockets. By sticking to an early session script laid out by association advocates for HB 7119, Artiles’ tainted political persona emerged with a new sparkle.

The controversy surrounding HB 7119 blurred one of its less well known objectives. While primarily revising provisions in Chapter 720 (The Homeowners Association Act), the bill created a new subsection (7) to Section 468.436(2) F.S., relating to licensed community association managers. The new provision indicates that disciplinary action may be taken against a manager for violating any provision of Chapters 718, 719 or 720 F.S., while performing community association management services.

Click to Regulatory Council of Community Association Managers web page The Department of Business and Professional Regulation (DBPR), through the Regulatory Council of Community Association Managers, regulates the licensure of community association managers under Chapter 468, Part VIII, Florida Statutes and Chapter 61-20, Florida Administrative Code. In 2008, former Governor Charlie Crist signed into law a licensing requirement for persons receiving compensation for managing an association with more than 10 units, or a budget of at least $100,000.

Shortly after HB 7119 was enacted, the Regulatory Council of Community Associations proposed rules for implementing disciplinary action against CAM Managers for violating the new law’s provisions; rules which the DBPR plans to adopt by November 28, 2013. The newly redefined Standards of Professional Conduct “shall be deemed automatically incorporated, as duties of all licensees, into any written or oral agreement for the rendition of community association management services.” The services include:

  1. Controlling or disbursing funds of a community association;

  2. Preparing budgets or other financial documents for a community association;

  3. Assisting in the noticing or conduct of community association meetings;

  4. Coordinating maintenance for the residential development; and

  5. Other day-to-day services involved with the operation of a community association.

While soaking definitions for “Due Professional care” and “Professional competence” through a tautological carwash, the Council affirms that a licensee shall not: “(a) Make misleading, deceptive, or fraudulent representations in or related to the practice of community association management; or (b) Make deceptive, untrue, or fraudulent representations in or related to the practice of community association management, or employ a trick or scheme in or related to the practice of community association management.”

Licensees can demonstrate “Due Professional care” by “complying with the requirements of the association’s governing documents or by-laws so long as such documents comply with the requirements of law.”

Conversely, the Council explores six violations that constitute Gross Misconduct, beginning with:

  1. Holding hostage association property. Notwithstanding the terms of any agreement between the licensee and the community association, a dismissed manager will return any original books, records, accounts, funds, or other property of a community association when provided with reasonable notice (defined as 10 business days). The manager may retain those records necessary to complete an ending financial statement or report for up to 20 days. However, if an association fails to provide access or retention of the necessary accounting records, it will relieve the manager of any further responsibility or liability for preparation of the statement or report. Other infractions dispositive of Gross Misconduct include:

  2. “Denying access to association records, for the purpose of inspecting or photocopying the same, to a person entitled to such by law, to the extent and under the procedures set forth in the applicable law.”

  3. “Creating false records or alter records of a community association or of the licensee except in such cases where an alteration is permitted by law (e.g., the correction of minutes per direction given at a meeting at which the minutes are submitted for approval).”

  4. “Failing to maintain the records of a community association manager or management firm or records of any applicable community association, in accordance with the laws and documents requiring or governing the records.”

  5. “Using funds received by the community association manager or management firm for any purpose other than for the specific purpose or purposes for which the funds were remitted.”

  6. Under the catchall category “Other Licenses”, the Council asserts:

    1. “A licensee shall not commit acts of gross negligence or gross misconduct in the pursuit of community association management or any other profession for which a state or federal license is required or permitted. It shall be presumed that gross negligence or gross misconduct has been committed where a licensee’s other professional license has been suspended or revoked for reasons other than non-payment of fees or noncompliance with applicable continuing education requirements.”

    2. “A licensee shall not perform, agree to perform or hold himself or itself out as being qualified to perform any services which, under the laws of the State of Florida or of the United States, are to be performed only by a person or entity holding the requisite license for same, unless the licensee also holds such license or registration; provided, however, that no violation hereof shall be deemed to have occurred unless and until the authority administering the license or registration in question makes a final determination that the licensee or registrant has failed to obtain a license or registration in violation of the law requiring same.”

      Click to The Florida Bar web page Whether motivated by greed or megalomania, this statutory nugget prohibits community association managers from performing a litany of legal, fiscal and/or engineering functions for which they are ill equipped. This provision is clouded by an ethically questionable formal advisory opinion issued in 2012 by The Standing Committee on the Unauthorized Practice of Law (UPL) of The Florida Bar.

      Chairman George Meyer of the Real Property, Probate and Trust Law Section of The Florida Bar
      GEORGE MEYER
      In a shameful display of nest feathering, former Chairman George Meyer of the Real Property, Probate and Trust Law Section of The Florida Bar requested an advisory opinion of the UPL Committee on March 28, 2012, determining whether or not each of 14 distinct activities performed by Community Association Managers exemplified the unlicensed practice of law (UPL). Ranging from the obvious - such as statutory or case law analysis to reach a legal conclusion - to the ridiculous - like calculating the number of owners’ votes needed to establish a quorum (which is often benchmarked in an association’s governing documents), the list drew blistering criticism from CAM Managers, association officials and most association attorneys.

      Donna Berger
      DONNA BERGER
      Community Associations Institute CEO Thomas Skiba
      CAI CEO THOMAS SKIBA
      Miffed by the committee’s blatant conflict of interest, Community Associations Institute (CAI) CEO Thomas Skiba cynically inquired “What is the basis for these concerns and could it be perceived as simply related to billable hours and fees?” Also opposed to creating “an arbitrary or petty list of activities or decisions” that must have a legal opinion; Community Advocacy Network (CAN) Executive Director Donna Berger said that some of the attorneys promoting these changes were guilty of “overkill or territorialism.”

      Click to Real Property, Probate and Trust Law Section of The Florida Bar web page Since UPL is a criminal offense in the State of Florida – a misdemeanor of the first degree, which is punishable by up to one year in jail and a fine of up to one thousand dollars for each violation, Meyer’s attempt to squeeze legal fees from the performance of rote activities that would barely challenge a trained seal was also a veiled threat to Board Members. Although they don’t risk a professional license, Board members whose frivolous legal decisions drive up association costs could reasonably be perceived as violating their fiduciary responsibility. As with a manager’s contractual protections, the directors’ and officers’ insurance that fortifies the indemnification provisions in the association’s governing documents may not protect directors found culpable of criminal activity.

      Dr. Anthony B. Spivey, Executive Director for the Regulatory Council of Community Association Managers at the DBPR
      FORMER EXECUTIVE DIRECTOR
      DR. ANTHONY B. SPIVEY - DBPR
      CAM REGULATORY COUNCIL
      The significant training and experience that licensed CAM Managers bring to the table prompted Dr. Anthony B. Spivey, former Executive Director for the Regulatory Council of Community Association Managers at the DBPR, to oppose many of the committee’s decisions.

      The notion that the number of days required for a statutory notice must be counted on an attorney’s fingers was so transparently self-serving that the committee - and the legal community at large - was conflicted over adoption of their recommendations by the high court. By reframing the issue in terms of Professional Competence, HB 7119 eliminated the turf protection stigma that tainted the Florida Bar’s politically skewed Advisory Opinion a year earlier.

    3. “A licensee shall reveal all other licenses or registrations held by him or it under the laws of the State of Florida or the United States, if, as a result of such license or registration, a licensee receives any payment for services or goods from the community association or its board.”

    4. “Violation of any provision of Section 455.227(1), F.S., or of any part of this rule shall subject the licensee to disciplinary measures as set out in Section 468.436, F.S.

When taken together, the new and existing provisions governing Professional Standards for community association managers and management companies mandate the following disciplinary actions for violations of Chapters 718, 719 or 720, Florida Statutes, including:

  1. Denial of an application for licensure.

  2. Revocation or suspension of a license.

  3. Imposition of an administrative fine not to exceed $5,000 for each count or separate offense.

  4. Issuance of a reprimand.

  5. Placement of the community association manager on probation for a period of time and subject to such conditions as the department specifies.

  6. Restriction of the authorized scope of practice by the community association manager

Notwithstanding these regulatory repercussions, criminal culpability includes accommodations in the slammer. Rules recommended by the Council reflect an effort to deter Managers and Management Companies from exploiting their unique position to financially soak the associations they are contracted to manage.

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House Bill 77: Landlords & Tenants

May 24, 2013 - When the sputtering economy chewed up their disposable income, tens of thousands of association members survived by renting out units that long served as vacation homes or retirement properties. Thousands more flamed their toxic mortgages and became tenants. Not surprisingly, the conflicts that historically burden landlord-tenant relationships have commensurately skyrocketed.

The Playing Field

Click Here to Save Our Homes BCPA Web Page In Florida associations, the landlord-tenant playing field is far from level. Tenants who’ve exhausted legal venues for addressing their landlords’ defaulted responsibilities have an armory of weapons at their disposal, especially if the cost of damages they inflicted on the unit already exceeds the value of their security deposit. In addition to withholding rent payments, they can unleash intolerable behavior on their neighbors and ignore association rules with impunity; largely because association documents hold owner-landlords responsible for their tenants’ actions.

Until now, landlords could only address critical tenant breaches by pursuing an expensive, dilatory eviction process perforated by endless “consumer friendly” loopholes. It is not uncommon for inexperienced landlords or property managers to become impatient and take matters into their own hands. Those who are either naïve or arrogant enough to attempt a “vigilante-style” eviction will instead provide their delinquent tenant with free living quarters and a sizable bag of spending money.

In addition to bringing legal actions to recover documented monetary losses (such as the cost of temporary housing, the value of food that spoiled when electricity was cut to the refrigerator, or the cost of an electric heater when the gas was shut off), tenants subjected to lock-outs, intimidation, utility cutoffs and unauthorized seizures can sue for penalties, such as several months’ rent. Without too much difficulty, the tenant will collect and still remain in the premises.

Landlords who try to short-circuit the eviction process also provide delinquent tenants with a host of additional legal charges, including trespass, assault, battery, slander or libel, intentional infliction of emotional distress, and wrongful eviction. The fact that the tenant didn’t pay rent, violated association rules, left the property a mess, verbally abused employees and neighbors, or otherwise radiated outrageous behavior will not be a valid defense. The cost of damages and legal fees will far exceed the sum total of lost rental income.

When the housing market crashed, common interest communities were suddenly burdened with thousands of non-contributing units in various stages of foreclosure. To survive, near bankrupt associations were forced to lease this frozen inventory until the toxic units could be recycled into the market and sold. Thousands of associations became landlords overnight. Thousands more functionally became landlords when a successful 2011 association bill enabled condos and co-ops to intercept rental payments from tenanted units of delinquent owners.

The Legislation

Lake City Representative Elizabeth W. Porter
LAKE CITY REPRESENTATIVE ELIZABETH W. PORTER
The unprecedented numbers of Associations and unit owners drawn into the rental market has altered the 2013 legislative landscape and helped pave the way for House Bill 77 (HB 77). Entitled “Landlords and Tenants”, this controversial bill was filed by Representative Elizabeth W. Porter (R-Lake City) and mirrored in Senate Bill 490 (SB 490) by Senator Kelli Stargel (R-Lakeland). On April 26, HB 77 was substituted for SB 490 in the Senate and approved by a vote of 27 YEAs vs. 10 NAYs. Following a full House vote of 92 YEAs vs. 25 NAYs on the last day of the session, it was enrolled and forwarded to the Governor on May 2, 2013.

While the legislation augments rights and protections for both landlords and tenants, several provisions that equip landlords with fast track eviction protocols provoked opposition by consumer watchdogs. Changes made by HB 77 to the Florida Residential Landlord & Tenant Act are as follows:

The Controversy

Lakeland Senator Kelli Stargel
LAKELAND SENATOR KELLI STARGEL
In her capacity as an investment property manager, court records confirm that bill sponsor Senator Kelli Stargel regularly evicts tenants from properties in her portfolio. Although lawmakers are barred from sponsoring legislation that provides them - or their friends or family members - with a financial benefit, they enjoy wide latitude in assessing their bills’ personal impact, rendering this ethical prohibition an unenforceable bad joke.

Asserting that the legislation is intended to clarify the rights of both tenants and landlords and will not significantly change how they interact, Stargel commented “I think it’s just much more clear and concise what’s expected of both parties.” When asked how she rationalized advancing her business interests through this bill, Stargel actually said “It’s not a conflict of interest because the bill does not just apply to me but to all landlords and tenants.” Lions and tigers and bears, oh my!!!

Click Here to Florida Consumer Action Network (FCAN) Click Here to Florida Apartment Association While supported by trade organizations like the Florida Apartment Association, an umbrella federation that lobbies on behalf of 11 independent local associations whose members manage MDU (multiple dwelling unit) housing, the bill had to slug its way through staunch opposition from tenant groups and consumer advocates.

Executive Director Bill Newton of the Florida Consumer Action Network (FCAN)
FCAN EXECUTIVE DIRECTOR
BILL NEWTON
FCAN Lobbyist Alice Vickers
FCAN LOBBYIST ALICE VICKERS
In a letter that accompanied a May 10, 2013 press release, Executive Director Bill Newton of the Florida Consumer Action Network (FCAN) asked Governor Scott to veto HB 77. Expanding on Newton’s post-session opposition to the measure, spokesperson Alice Vickers characterized the bill as the “largest erosion in protections for residential tenants that Florida has seen in many years.” An FCAN lobbyist and staff attorney for Florida Legal Services, Vickers added “Though there was no doubt before, it is abundantly clear that Florida is a landlord state.”

Deadbeats and Tenant Terrorists

On the other hand, the bill cures two dilemmas that have long plagued association rentals. In most associations, screening procedures for tenants are far less stringent than for prospective owners. For owner-landlords, the tenant screening process – if any – is often limited to a few minutes of casual banter on the telephone. Absent a credible background check, it’s not unusual for a tenant to be approved despite a history of bilking landlords and/or violating community rules.

In units leased directly from the association, tenants who stiff the landlord force their neighbors to subsidize their living expenses to stave off a budgetary shortfall. If the legislation survives the Governor’s veto pen, since it enables the association to effectively evict deadbeats; tenants who plan to sponge off the association budget by arbitrarily withholding rent could be expeditiously replaced.

The second problem addressed by the bill affects properties leased from the association or its unit owners. While most people who rent association apartments become good neighbors and comply with association protocols, some do not. Every association has a few tenants who repeatedly abuse neighbors and building staffers while violating association rules. Whether driven by some innate belligerent sociopathy or the belief that their owner-landlord would be scapegoated for any rules broken during their lease terms (as provided for in the vast majority of association governing documents), the bill provides that tenant terrorists who break the rules twice in 12 months can be dumped by the landlord.

Notwithstanding any ideological controversy, since the legislation provides effective remedies to several longstanding association dilemmas, many association advocates have quietly supported the new bill. Whether or not the bill survives a gubernatorial veto, it is critically important for governing boards to work closely with the association attorney when developing screening criteria, drafting lease agreements or implementing statutory enforcement options. If an association’s actions fail to comply with Florida law, instead of being successfully ousted, sociopathic and deadbeat tenants could become permanent line items in the association’s annual budget.

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Lawmakers Unanimously Approve
Omnibus Association Bill

New Rights and Regs Effective July 1, 2013

Moraitis: 3rd Major Association Bill in 4 Years

Representative George Moraitis on 2013 Legislative Session
REPRESENTATIVE GEORGE MORAITIS
May 9, 2013 - On April 26, 2013, the Omnibus Association Bill -
House Bill 73 sponsored by George Moraitis - cleared its final legislative hurdle and was ordered enrolled in preparation for a trip to the Governor’s desk. Following a Committee Substitute’s unanimous approval by the House Civil Justice Subcommittee in February, another Committee Substitute was passed by the House Business & Professional Regulation Subcommittee on March 7 before the House Judiciary Committee unanimously approved a third Committee Substitute on March 14. When a bill is heavily amended in Committee, to better organize the legislation, a sponsor may draft a Committee Substitute and sort the new provisions into sectional categories. With a full head of steam from a boatload of political support, on April 17, the bill sailed through a Full House vote with virtually no opposition (117 YEAs vs. 0 NAYs - and 2 more YEA votes after Roll Call).

Senator Thad Altman with CAN Officials Donna Berger and Julie Fishman
CAN BOSS DONNA BERGER &
SENATOR THAD ALTMAN
A companion bill in the other house, Senate Bill 436 filed by Senator Thad Altman (R - Melbourne), closely mirrored the roadmap taken by HB 73. After the Senate Committee on Regulated Industries passed a Committee Substitute on February 21, the Senate Judiciary Committee added their thumbs up to another Committee Substitute on March 12. When a third Committee Substitute was approved by the Senate Appropriations Committee on April 18, the bill zipped through every Senate Committee without a single negative vote. On April 25, the bill was replaced by its House counterpart, HB 73, which was approved by the Full Senate on April 26 (38 YEAs and 0 NAYs, 2 missed votes).

Click Here to Community Advocacy Network of Florida - CAN In the three months during which the bills negotiated vetting committees, bill sections were altered, added or deleted to elicit committee approval. Association attorneys from the Community Advocacy Network (CAN) and the Community Association Leadership Lobby (CALL) continuously met with committee members to help tailor proposed amendments. As statewide association advocates for Condos, Coops and HOAs offered prospective input, Moraitis concentrated on bulking up historical deficits in association law, such as the long neglected rights of Cooperative owners.

Click to Community Association Leadership Lobby (CALL) web site
Representative Mike La Rosa - HOA Bill
REP. MIKE LA ROSA HOA BILL
Since a majority of association bills are drafted solely for Condominiums, homeowners in Cooperatives and HOAs are often deprived of comparable statutory protections for election formats, official records maintenance and access, board membership and powers, unit or parcel owner rights, financial and budgetary accountability, and a litany of other inequities. Since another of the 2013 session’s bill’s, House Bill 7119 by Representative Mike LaRosa (R - Saint Cloud), is largely devoted to leveling the playing field for members of Homeowner Associations (HOAs), Moraitis focused on extending many new and existing condominium protocols to Cooperative Associations.

In addition to retaining critical provisions that earmarked the original bill, nearly half the enrolled bill text is new, evolved on the fly. As a result, the final version contains changes that were never explored in earlier bill reviews. Of the bill’s 16 sections, the 3 devoted to HOAs are omitted from this final review, since the GMCA includes only condominiums and cooperatives. Unless splashed by a gubernatorial veto, the following changes in association law will begin impacting Galt Mile unit owners on July 1, 2013:

New Rights & Regs for Condos & Co-ops

Section 1 – Elevator Retrofit (F.S. 399.02 – Condominiums & Cooperatives)

  • Elevator Retrofit - The bill still eliminates the 2015 compliance deadline for retrofitting association elevators with Phase II Firefighter Service. Instead, an association can wait until it modernizes its elevators, at which point the installation costs become negligible.

Section 2 – Association Rights and Responsibilities (F.S. 718.111 – Condominiums)

Four of the five amendments passed in the House Civil Justice Subcommittee are clustered into this newly created Section 2, causing each of the original bill’s subsequent section numbers to be advanced by one.

  • Land/Lease Purchase – It enables a condominium association to purchase land or a recreation lease using approval methodologies applicable to the acquisition of leaseholds set forth in Section 718.114, F.S.

  • Repairs Charged to Owner – If repairs that are the responsibility of the unit owner are performed by the association, the cost can be charged to the unit owner and collected as an assessment pursuant to Section 718.116, F.S.

  • Records Access Alternative – It allows a condominium owner (or an authorized representative) to use a smartphone, tablet or other portable device to scan or take photographs of official association records without incurring a charge - in lieu of the association copying the requested records.

  • Association Directory – It enables a condominium association to print and distribute a social directory containing the name; address (Unit Number) and telephone number of each unit owner unless the owner submits a written request to exclude his or her phone number.

  • Election Challenges – Creates Section 718.112(2)(d)4.c., F.S., providing that condominium election challenges must commence within 60 days after the announced election results.

  • Budgetary Thresholds – It increases the revenue thresholds that determine the type of financial statement needed to satisfy an association’s Financial Reporting requirements. Associations with fewer than 50 units (regardless of annual revenues) or with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures; associations with total annual revenues of $150,000 or more but less than $300,000 shall prepare compiled financial statements; associations with total annual revenues of at least $300,000 but less than $500,000 shall prepare reviewed financial statements; associations with total annual revenues of $500,000 or more shall prepare audited financial statements.

Section 3 – Bylaw Glitch Repairs and Clarifications (F.S. 718.112 – Condominiums)

  • Board Member Terms – Two-year board terms provided for in the Articles of Incorporation or Bylaws needn’t be approved by a majority of the total voting interests nor must they be staggered.

  • Board Eligibility – This newly added provision requires that owners be eligible board candidates at the deadline for submitting a notice of intent to run in order to be listed on the ballot. Owners who are delinquent in the payment of any monetary obligation due to the association are not eligible board candidates and may not be listed on the ballot.

  • Meeting Notice – By inadvertently fumbling the phrases “in lieu of” and “in addition to”, 2011’s Omnibus Association Bill (HB 1195) mandated associations to broadcast notices 4 times every hour notwithstanding notices also physically posted on association property. The bill fixes this “notice overkill” glitch, requiring only one of these two acceptable notice formats.

  • Timeshare Elections – Associations governing timeshare condominiums are exempt from statutory condominium election procedures.

  • Board Member Certification Records – The association Secretary must keep board members’ written certifications or educational certificates for the duration of their uninterrupted tenure or five (5) years (whichever is longer).

  • Election Challenge – Election challenges must commence within 60 days after the election results are announced.

  • Recall Petition – Allows an owner representative to file a petition challenging a board’s failure to duly notice and hold the required board meeting to certify a recall or failure to file the required arbitration petition after being served with a written recall agreement. The petition must be filed within 60 days after the expiration of the applicable 5 full business day period following adjournment of the annual meeting. The DBPR arbitrator is limited to determining if the recall petition was properly served on the board and the facial validity of the written agreement or ballots.

  • Board Member Recall Challenge – Allows a board member to challenge the validity of the recall by filing a petition within 60 days after the recall is deemed certified.

  • Recall Filing Deadlines – This measure would enable recalled board members to challenge the validity of the recall by filing a petition within 60 days following the recall certification.

Section 4 – Hurricane Protection (F.S. 718.113 – Condominiums)

  • Hurricane Protection – This provision adds “impact glass, code-compliant windows or doors and other types of code-compliant hurricane protection” to the storm mitigations that a board can install or require if approved in the Declaration of Condominium or by a majority of the voting interests.

Section 5 – Existing Hurricane Protection (F.S. 718.115 – Condominiums)

  • Hurricane Protection costs – It provides that a unit owner who installs code-compliant hurricane protections must be credited with a pro-rata share of the assessed installation cost of such protections subsequently approved by the association.

Section 6 – Suspension of Rights (F.S. 718.303 – Condominiums)

  • Suspension of Rights Exceptions – When common area and facilities use rights are suspended for unit owners (and/or a unit owner’s tenant, guest or invitee) due to violations of the association’s governing documents (the declaration, bylaws or reasonable rules and regulations of the association) pursuant to Section 718.303(3)(a), F.S., the suspensions don’t include access to limited common elements that uniquely service that unit (i.e. balconies), common elements needed to access the unit (i.e. entry and egress), utility services provided to the unit, parking spaces or elevators.

Section 7 – Phase Condominiums (F.S. 718.403 – Condominiums)

    Click Here to Real Property Probate and Trust Law (RPPTL) Section of the Florida Bar

  • Phase Condominiums – Clarifies how phases in condominiums and condominiums created within condominium parcels are to be handled by developers.

    The Real Property Probate and Trust Law (RPPTL) Section of the Florida Bar drafted this amendment to Section 718.403(1), F.S., a provision which relates to the development of condominium phases. While all phases must be added within seven (7) years of submitting the original declaration for the initial phase, Section 718.110(1)(a)(b)(c)(d), F.S., provides that during the last three (3) years the owners may vote to amend the deadline by indicating the size of any time extension albeit not to exceed a total period of 10 years after the date of recording the original declaration of condominium.

Section 8 – Condominiums within Condominiums (F.S. 718.406 – Condominiums)

  • Condominiums within Condominiums – Frequently referred to as “hotel condominiums” or “condos in a condo”, although Florida Statutes provide for a single commercial structure comprised of a master or “primary” condominium and one or more sub-condominiums or “secondary” condominiums, various legal and operational aspects of these entities were neglected when originally enacted.

    The bill creates Section 718.406, F.S., providing guidance in authorizing owners of the primary condominium to exercise rights on behalf of subdivided unit owners, establishes the relationship between the board representing the primary condominium and its counterpart for the secondary condominiums, provides for the collection of assessments by the primary and secondary associations, provides that the owners of secondary units are subject to the provisions of both the primary and secondary condominium declarations, provides when owner and mortgagee consents are required to create a secondary condominium, establishes that the primary association can dictate specifications for hurricane or other building protections and establishes insurance requirements and obligations of the associations managing and operating both primary and secondary condominiums pursuant to Section 718.111(11), F.S., of the Condominium Act.

Section 9 – Condominium Ombudsman Staff Employment (F.S. 718.5011 – Condominiums)

  • Condominium Ombudsman Staff Employment – Amending Section 718.5011, F.S., it removes a prohibition against “actively engaging in any other business or profession” for full-time Condominium Ombudsman staffers, as long as a secondary position does not directly or indirectly relate to or conflict with their responsibilities in the Condominium Ombudsman’s office.

Section 10 – Official Records (F.S. 719.104 – Cooperatives)

As the legislation evolved, a plethora of new rights and protections were added to Section 719.104, F.S., mirroring counterparts in the Condominium Act.

  • Records Maintenance – Requires that cooperative association official records be maintained for at least 7 years within 45 miles of the cooperative property or within the county in which the cooperative is located.

  • Electronic Records – Permits a cooperative association to optionally make its official records available for inspection electronically via the Internet or by allowing the records to be viewed in an electronic format on a computer screen and printed upon request.

  • Deny, Deface, Destroy Official Records – It provides for recovery of reasonable attorney’s fees from a person in control of official cooperative records who directly or indirectly denies access those records. Personally subjects an individual to civil penalties for knowingly or intentionally defacing or destroying accounting records or failing to create or maintain accounting records that are required to be created or maintained, if done with the intent of causing harm to the association or one or more of its members.

  • Records Access Alternative – Allows a cooperative member (or an authorized representative) to use a smartphone, tablet or other portable device to scan or take photographs of official association records without incurring a charge - in lieu of the association copying the requested records.

  • Privacy Safeguards – Provides cooperative owners with the same personal privacy safeguards that currently protect members of condo and homeowner associations when the association responds to a records request, including any record protected by the lawyer-client privilege as provided in Section 90.502 F.S., electronic security measures used by the association to safeguard data (including passwords) as well as “the software and operating system used by the association which allows manipulation of data.”

  • Personnel Records – It prohibits member access to the personnel records of association or management company employees (including but not limited to, disciplinary, payroll, health, and insurance records). Since they aren’t considered “personnel records,” written employment agreements with an association employee or management company will remain accessible to unit owners, as will budgetary or financial records indicating the compensation paid to an association employee.

  • Personal Information – A records request would exclude any member’s Social Security Number, Driver License Number, credit card numbers, e-mail addresses, telephone numbers, Fax numbers, emergency contact information and any address other than the addresses required for the association’s notice obligations. In short, the only personal identifying information that will be made available is the owner’s name, unit designation, mailing address and property address and any address, e-mail address, or fax number provided to the association to fulfill the association’s notice requirements.

  • Association Directory – It enables a cooperative association to print and distribute a directory containing the name, cooperative address (Unit Number) and telephone number of each unit owner unless the owner submits a written request to exclude his or her phone number.

Section 11 – Lender/Mortgagee Consent Requirements (F.S. 719.1055 – Cooperatives)

  • Lender/Mortgagee Consent Requirements – The bill creates Section 719.1055(7), F.S., duplicating a 2007 provision adopted in the Condominium Act. After July 1, 2013, cooperative association documents would be relieved of requiring a lender’s consent for amendments that don’t affect the lender’s rights or interests. For mortgages entered into prior to this date, the bill proposes clear protocols for boards to obtain lender consent and provides that any lender who fails to respond to an association’s request for approval within 60 days after the date mailed shall be deemed to have consented to the amendment.

Section 12 – Bylaw Glitch Repairs and Clarifications (F.S. 719.106 – Cooperatives)

  • Closed Meetings – Provides that board or committee meetings held for the purpose of discussing personnel matters do not have to be open to the members.

  • Election Challenges – Provides that cooperative election challenges must commence within 60 days after the announced election results.

  • Board Member Certifications – Provides certification requirements (submission within 90 days of the election of written certification of having read the association’s bylaws, articles of incorporation, proprietary lease, and current written policies or submission of an educational certificate) for cooperative board directors which match those currently required of condominium directors. The association Secretary must keep board members’ certification records for the duration of their uninterrupted tenure or five (5) years (whichever is longer).

  • Recall Petition – Allows an owner representative to file a petition pursuant to s. 719.1255 challenging a board's failure to duly notice and hold the required board meeting to certify the recall or failure to file the required arbitration petition after being served with a written recall agreement. The petition must be filed within 60 days after the expiration of the applicable 5 full business day period after adjournment of the annual meeting. The DBPR arbitrator is limited to determining if the recall petition was properly served on the board and the facial validity of the written agreement or ballots.

  • Board Member Recall Challenge – Allows a board member to challenge the validity of the recall by filing a petition within 60 days after the recall is deemed certified.

  • Recall Filing Deadlines – Prohibits the filing of a recall petition if there are 60 or fewer days until the member being recalled is up for reelection; or 60 or fewer days have passed since the board member being recalled has been elected.

Section 13 – Suspension of Rights (F.S. 719.303 – Cooperatives)

  • Suspension of Rights Exceptions – When common area and facilities use rights are suspended for unit owners (and/or a unit owner’s tenant, guest or invitee) who fail to comply with any provision of the Cooperative documents or reasonable rules of the association pursuant to Section 719.303(3)(a), F.S., the suspensions don’t apply to limited common elements that uniquely service that unit (i.e. balconies), common elements needed to access the unit (i.e. entry and egress), utility services provided to the unit, parking spaces or elevators.

  • Board Member Training – The Division shall provide educational programs for cooperative directors and the training may include, at the Division’s discretion, webinars as well as live training and seminars in various locations throughout Florida. The Division shall also approve private sector programs and make such list of approved educators and classes available to cooperative directors.

Section 18 – Effective Date (Condominiums & Cooperatives) – If enacted into law, the provisions in HB 73 will become effective July 1, 2013.

Dodging the "Safe Harbor" Bullet

Moraitis explains HB 73
MORAITIS EXPLAINS HB 73
While successfully shepherding House Bill 73 to fruition - his third major association bill in four years - Moraitis watched another of his less stellar bills fade to black. Wisely segregating his second attempt to stiffen the safe harbor limits for association obligations due from deadbeat lenders, our fourth year Statehouse Representative filed House Bill 1339 more than nine weeks after filing the Omnibus Association Bill. Since the "Safe Harbor" language would insure that courts no longer award associations interest, administrative late fees, collection costs and reasonable attorney fees in lender actions, it proved to be legislative hemlock last year. By distancing the popular Omnibus Association bill from the controversial pro-lender legislation, when it tanked (as expected), it didn't drag down the lawmaker's main event. On May 3, 2013, HB 1339 quietly bought the farm in the Judiciary Committee. Good riddance.

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Con Artist Charles Ponzi
CON ARTIST CHARLES PONZI
Click to Citizens Property Insurance web site April 17, 2013 - On Wednesday, June 13, 2012, the Citizens Property Insurance Board of Directors bounced interim President Tom Grady. A Naples neighbor of the Governor whose snake oil sales rival those of Charles Ponzi, Grady is the same political torpedo who singlehandedly dismantled the state’s Mortgage fraud unit within 3 months of being named Commissioner of the Office of Financial Regulation (OFR) in 2011 by Governor Rick Scott. After neutering the only State agency equipped to combat financial fraud and replacing the Division Director with Naples Chiropractor turned part-time real estate agent Greg Hila (one of Scott’s golfing buddies), the Governor’s one-man wrecking crew was named President of Citizens Property Insurance, where the board dumped him after he ran up a $10,000 travel bill for excursions to Bermuda and Amelia Island within five weeks of his appointment.

Governor Scott and Scammer Tom Grady
GOVERNOR SCOTT AND SCAMMER TOM GRADY
Vice President John Rollins of AIR Worldwide - risk modeling software and consulting services
CITIZENS BOARD MEMBER
JOHN ROLLINS
Grady’s deal with Scott was simple. In exchange for life on the dole, Grady would help two Scott appointees, Citizens Board members John Wortman and John Rollins, eliminate the State’s largest insurer as a viable carrier. Supposedly, with Citizens out of the picture, commercial carriers would return to Florida and establish a competitive market. To render Citizens irrelevant, Grady planned to uncap rates for new customers. Grady explained the Governor’s strategy: If trebling or quadrupling Florida rates incentivized the return of legitimate insurers, market competition is theorized to lower the inflated rates by roughly 20%, leaving fat and happy carriers with a 200% rate gift while permanently saddling Florida homeowners with some of the highest insurance rates in the country.

Citizens Board MemberJohn Wortman
BOARD MEMBER
JOHN WORTMAN
Citizens Board Chair Carlos Lacasa
BOARD CHAIR CARLOS LACASA
Grady was one of five candidates for the permanent job. Having demonstrated the insurance acumen of Homer Simpson, Grady was rejected by Citizens’ presidential search committee. When committee member John Wortman, one of Scott’s finger puppets at Citizens, made a motion to revive Grady’s candidacy, Citizens’ board chairman Carlos Lacasa slammed on the brakes, politely affirming that Grady was not one of the top candidates identified by their search firm.

Click to Lisa Miller & Associates web site
Former Deputy Insurance Commissioner Lisa Miller
FORMER DEPUTY INSURANCE
COMMISSIONER LISA MILLER
Instead, the Board selected a 66-year old former executive at Mattei Insurance Services and Zurich North America. By dumping Grady in favor of Barry Gilway - a 40-year insurance industry veteran from Maryland - the Citizens Board enraged the Governor. Commenting on the Board’s decision to oust Scott’s hit man, CEO Lisa Miller of Lisa Miller & Associates and a former Florida deputy insurance commissioner, said that the Governor “couldn’t argue with the credentials that were required for the job. I think it says volumes about the board that they let the process work, without picking favorites.”

Founder Sean Shaw of Policyholders of Florida
SEAN SHAW OF
POLICYHOLDERS OF FLORIDA
Click to Policyholders of Florida web site Also pleased by Grady’s departure, founder Sean Shaw of Policyholders of Florida expressed guarded approval of Gilway. Since the President of Citizens is traditionally tasked with balancing the agency’s fiscal health against its evolving public policy mandate, an apprehensive Shaw remarked “We are hopeful that Mr. Gilway will work with consumer advocates to implement balanced, responsible policies and shun the political motivations that have threatened both policyholders and our delicate housing recovery.”

Insurance Commissioner Kevin McCarty
INSURANCE COMMISSIONER
KEVIN MCCARTY
Faced with differing rates that vary by county and observing that “Rates are not adequate within Miami-Dade, Broward and Hillsborough counties,” Gilway surmised “If rates were taken to full adequacy in those counties, it has the potential of completely destroying both home building and retail sales.” Still a new kid on the block, consumer watchdogs were unsure if Gilway’s statement expressed an intention to proceed cautiously or whether he viewed “home building and retail sales” as acceptable casualties of his mission to reform Citizens. Outlining a strategy to depopulate Citizens’ 1.4 million-policy client roll, Gilway exhorted “There clearly has to be a mechanism in place to get rates to a much more adequate level. The solution can’t all be assessments; both recouping the Citizens surplus after a major storm or recouping the Florida windfall pool. Yet we have to get rate adequacy.”

Florida CFO Jeffrey Atwater
FLORIDA CFO JEFFREY ATWATER
Originally conceived in 2002 as the State’s “insurer of last resort,” when the fiscally devastating serial hurricanes of 2004 and 2005 triggered an industry-organized exodus of admitted carriers from Florida, Legislative leaders and the Governor were forced to revise Citizens’ mandate. In 2007, faced with a dearth of carriers in a deepening recession, former Senator Jeffrey Atwater and Insurance Commissioner Kevin McCarty negotiated a statutory framework with insurers that enabled Citizens to provide both windstorm and multi-peril coverage to hundreds of thousands of property owners whose former carriers either abandoned the State or went belly-up.

Since then, lawmakers and insurance bureaucrats have been exploring methodologies for rebuilding a competitive Florida insurance market based on justifiable rates. Options ranged from a moderate glide path to rate adequacy to deliberately crippling Citizens overnight and throwing entire counties to the wolves. Industry pundits are divided over whether or not the void created by the latter strategy would be filled by returning legitimate carriers or cut-throat special lines pirates. Adding to the confusion is the fact that legislators with north or central Florida constituencies resent sharing a statutory risk pool with their South Florida neighbors, fueling a geopolitical conflict over Citizens reform.

New Citizens President and CEO Barry Gilway
NEW CITIZENS PRESIDENT AND CEO BARRY GILWAY
Offering his rationale for reconfiguring the State’s largest carrier into a non-competitive safety net for otherwise uninsurable properties, Gilway explained, “No company will come into the marketplace unless they have some level of comfort that they can earn a reasonable return on capital for their investors. It doesn’t relate to just insurance, it relates to any privately owned company. The attraction has to be rates -- getting appropriate rates to a level, frankly, where we can attract private industry.”

Here’s the rub. To accomplish this, Gilway must first demolish an insurance vehicle that has successfully moderated insurance rates since its mandate underwent emergency surgery in 2007. Although an actuarial nightmare when its mission was first expanded, as dumb luck saw Citizens through seven storm-free years, its fiscal foundation solidified, bringing it closer to actuarial adequacy.

After eliminating Citizens as an insurance provider, Gilway proposes to achieve “rate adequacy.” Insurance regulators at every level of government approve rates based on anticipated threat levels (as predictively measured by scientifically objective hurricane modeling programs) and the corporate costs necessary to recover from the effect of those threats (reserves, reinsurance, operational expenses, reasonable profit, etc.). In contrast, Gilway’s vision for achieving rate adequacy in Florida entails increasing rates by an amount that will be too explosively lucrative for name carriers to ignore. A substantial number of Florida policyholders view this as throwing out the baby with the bathwater. They don’t see any advantage to rebuilding a market in which the average property owner cannot afford to participate.

That said, before Gilway can dismantle the company, he must first get the passengers off the bus. As learned by the Governor, lawmakers and the Citizens Board, this becomes horrifically difficult when the passengers like the bus. Gilway said “If we can’t provide a product that is less competitive than the private market, then we have to make decisions to make our product less competitive in other ways,” spin for using any means necessary to pry policyholders from their “seats” and packing them off to alternative carriers, notwithstanding the consequences.

In 2012, Citizens raised rates, reduced coverage, and increased post-storm deductibles as part of a multibillion-dollar effort to shred risk and stigmatize policyholders. To circumvent a state law mandating mitigation discounts for property owners who strengthened their roofs or installed hurricane shutters, the company manipulated a bogus “reinspection program” to strip these discounts from 250,000 policyholders. The average cost to victimized ratepayers was $800, annually pumping an additional $200 million into Citizens’ coffers.

Click to Office of Insurance Regulation (OIR) web site Florida Insurance Commissioner Kevin McCarty was not about to watch from the sidelines. Piercing the 10% statutory rate cap, on October 1, 2012, the Office of Insurance Regulation (OIR) approved a 10.8% increase on homeowners’ policies and an 8.8% increase on dwelling fire rates. Homeowners with sinkhole coverage saw their bills go up 21.4% and those with dwelling fire policies who also bought sinkhole coverage (condos and rental homes) were clobbered with a 44.8% rate hike. Most of these increases took effect on January 1, 2013. Premiums for wind-only policies were raised a month later (February 1).

Senator Garrett Richter
SENATOR GARRETT RICHTER
In 2011, when the legislature enacted Senate Bill 408 by Senator Garrett Richter, R-Naples, to address massive losses on sinkhole claims, Insurance Commissioner McCarty praised the legislation as a vastly preferable alternative to perpetually raising rates. When Florida’s Insurance Consumer Advocate Robin Westcott pointed out that the law had eliminated the need for continued sinkhole rate hikes, OIR claimed that the legislation’s impact was inconclusive, and handed Citizens the colossal double-digit rate increase. Documenting his rationale for marginalizing Westcott’s observation in the OIR Order, McCarty wrote “Due to the ambiguity caused by the filed claims data, the Office is unable to quantify how much SB 408 will reduce the frequency and severity of sinkhole claims.” Hot damn, the dog ate his homework!

Florida’s Insurance Consumer Advocate Robin Westcott
INSURANCE CONSUMER
ADVOCATE ROBIN WESTCOTT
Originally, Citizens applied for an 11.8% increase - the 10% allowed by statute and a 1.8% kicker for mysterious fees and costs. Alas - while reviewing proof of loss documentation submitted to justify the increase, OIR caught the insurer cherry picking the highest of three different estimates and decided to use the middle one, knocking out 1% from the increase. When policies were renewed in January and February, the average homeowner covered by Citizens had to pay an additional $250, and some were hit with hundreds of dollars more under the OIR approved rate increases. All told, OIR added $250 million to Citizens’ bottom line.

Applying a carrot and stick strategy, the state simultaneously dredged up five different private insurers to take over up to 210,000 policies from Citizens, the largest such consumer dump-out in years. After the increased rates were announced, companies in the “takeout” program began sending letters to homeowners offering an alternative to Citizens. Policyholders had until November 6, 2012 (30 days) to opt-out or they were automatically shifted to the private companies. Recipient carriers in the take out program were: Florida Peninsula Insurance Company, Homeowners Choice P&C Insurance Company, Southern Fidelity P&C, Southern Oak Insurance Company and American Integrity Insurance Company of Florida. Maximizing a depopulation dividend of the October rate increase, from October through December 2012, Citizens shed 316,643 policies.

Former Florida Senator Mike Fasano
FORMER SENATOR
MIKE FASANO
State Senator Mike Fasano, R-New Port Richey, condemned the increases. A longtime critic of the Governor’s policy of undermining Citizens and skyrocketing insurance rates as an enticement to carriers outside the State, Fasano said “They just don’t get it in Tallahassee. We’d all like to see Citizens get depopulated, but not at the cost of homeowners having to give up their homes.”

On March 4, 2013, the Senate Banking and Insurance Committee proposed committee bill SPB 7018. Zipping through the committee by a vote of 11 YEAs vs. 1 NAY, on March 8 it was filed as a general bill – Senate Bill 1770. This complicated 100-page migraine would hike Citizens’ rates by 60% (along with private carriers that invariably follow Citizens’ lead). Having already passed the Senate Appropriations Subcommittee on General Government on March 19 and the full Appropriations Committee on April 3, the bill was poised for Senate approval.

Almost every year, Insurance bills suffer defeat at the hands of lawmakers fearful of constituent backlash. To bridge this ordinarily fatal gauntlet, SB 1770 supporters are counting on two strategic advantages. To help stave off rate resentment by angry constituents, sponsors cloaked the bill in NIMBY (Not in My Back Yard), asserting that it would only apply to new Citizens policyholders. By convincing existing ratepayers that the hammer will not fall on them, bill supporters hope to mute the expected consumer blowback. Secondly, since 2012 was an election year for all 160 State lawmakers, the absence of impending elections in 2013 emboldened legislators to risk battering homeowners with stratospheric rate hikes.

Click to Office of Insurance Regulation (OIR) Rates Info Blog Homeowners who believe they dodged a bullet because they are already Citizens policyholders may be in for an unpleasant surprise. The legislation is applicable to homeowners who are dropped by their insurance companies and forced into Citizens, as well as those who are dropped by Citizens and later need to rejoin. Under the legislation, Citizens can oust any policyholder offered coverage by a private carrier that charges up to 15 percent more than Citizens. If the company subsequently pumps up rates at renewal (as commonly occurs with “takeout” insurers), the homeowner can only return to Citizens as a new customer – at three times their original premium. The legislation also empowers a Citizens clearinghouse to expedite policy dumping. Since Citizens has already announced plans to divest itself of virtually every high-risk property, policyholders in their Coastal Account – including Galt Mile associations – are all in the crosshairs.

Given the profusion of highly technical actuarial complexities in SB 1770, until a Committee Substitute was recently vetted by the Senate Appropriations Committee, no one had discussed the actual financial impact of this bill on homeowners. This allowed bill supporters to openly mischaracterize apocalyptic visions of disaster as scientific and/or fiscal fact.

Florida Senator David Simmons
SENATOR DAVID SIMMONS
When Senate Banking and Insurance Committee Chair Senator David Simmons, R-Altamonte Springs, presented the bill to lawmakers on April 3, instead of focusing on massive state-wide rate increases, he rattled off statistics describing the financial impact of a once-in-a-lifetime hurricane on their folks back home. Simmons told his Senate peers “If the hurricane doesn’t even go through your area, your constituents will be assessed upwards of between $2,000 and $5,000 per year.”

In a failed effort to rehabilitate Simmons’ patently false testimony, sympathetic Citizens officials suggested that Simmons might have used inflated 2012 figures that are no longer valid. On April 9, after again commenting “We need rate adequacy in the state,” Citizens President Barry Gilway shed light on the bill’s impact, “There are 11 territories that would see a rate increase of over 60 percent,” admonishing that rates in certain coverage areas need to triple before becoming “actuarially sound.” Gilway identified parts of Broward County where rates would increase for new customers by 65.6%. At an earlier confirmation hearing, in a message to lawmakers that contradicted Simmons’ histrionics, Gilway said “By next hurricane season, Citizens will have reduced assessment potential for Floridians by $3 billion, or 43 percent.”

Citizens is authorized to levy assessments, or “hurricane taxes,” on consumers across the state to cover a resources shortfall. According to Citizens, a 1-in-100-year megastorm would result in a one-time assessment of about $280 for non-Citizens policyholders - not $5000 per year. Simmons also testified that the 1-in-100-year superstorm would cost Floridians an estimated $100 billion in damages. This was another fairy tale meant to distract lawmakers from the bill’s enormous cost to homeowners. According to Gilway, Citizens’ probable maximum loss (PML) from a 1-in-100 year event during the 2013 hurricane season is $20.42 billion (although an awesome amount, not nearly as intimidating as a bogus $100 billion nightmare).

New Citizens President and CEO Barry Gilway
NEW CITIZENS PRESIDENT AND CEO BARRY GILWAY
When asked about the catastrophic financial impacts being peddled by bill proponents, Citizens President Barry Gilway clarified that after 7 hurricane-free years, Citizens had socked away enough money to wholly pay the anticipated damages from a 1-in-50 year storm (like Hurricane Andrew). It would take either 2 such storms in one year or one 1-in-100 year storm to clean out the company and trigger the hurricane tax. By definition, there is a 2% possibility of Florida being hit by a 1-in-50 year storm and a 1% possibility for a 1-in-100 year storm.

Here’s more bad news. The bill provides for the President and CEO of Citizens to be replaced by an Executive Director appointed by the Governor and the state’s chief operating officer. It weakens the Citizens Board and transfers the responsibility for setting rates from the OIR to the Executive Director. Incredibly, Florida’s insurance rates would be set by a political hand puppet, eliminating even the pretense that rates will be remotely related to risk. As a gift to the powerful reinsurance lobby, it would increase the annual 10% rate cap by 30% to pay for expensive private reinsurance. In most territories, rates would be set at no less than the highest average rates among the top 20 private insurers writing in the state. Not just new – but ALL – commercial residential, non-homestead and rental properties with less than an annual lease agreement would see immediate rate increases. All homes with multi-peril policies and an insured value of $300,000 or more would be subject to higher rates.

Florida Senator David Simmons Rants Against South Floridians
SIMMONS RANTS AGAINST SOUTH FLORIDIANS
Among the bill’s few positive changes is a Citizens Clearinghouse to screen out properties that belong in the private market, a new state agency charged with helping private insurers locate cheaper reinsurance, an inspector general within Citizens and a requirement that the state insurer follow the same procurement rules as other state agencies.

Representative John Wood
REPRESENTATIVE JOHN WOOD
Made aware of the inaccurate data and skewed testimony used to propel the bill through vetting committees, most South Florida lawmakers are lobbying their peers to oppose the bill. Although their rates are among the highest in the State, Senator Simmons has repeatedly exhibited personal animosity for South Floridians, stating “The problem is these people are getting a frigging free ride.” While there is no companion bill in the House, House Bill 835 by Representative John Wood, R-Winter Haven, is most similar to SB 1770. However, if time constraints preclude the required coordination of content, the House could adopt the Senate version and forward it to the Governor.

Governor Rick Scott Suddenly Pro-Consumer?
GOVERNOR RICK SCOTT FLIPS THE SCRIPT
While certain lawmakers on both sides of the aisle are hell-bent on doubling and trebling Citizens’ rates, dumping policyholders and turning the State-run insurer into an ever-fattening $multi-billion lockbox with a token clientele, it appears that Scott may be having second thoughts. The Governor is facing re-election in 2014, when many of the gargantuan rate hikes would take effect. In a surprising development, the Governor sent a warning to lawmakers that they had better get their fingers off the rate trigger. Couched in a veto threat, Scott clarified that he wants current customers protected from rate hikes that exceed the statutory 10% cap.

Scott spokesperson John Tupps
SCOTT SPOKESPERSON JOHN TUPPS
Ringing in publicly on April 9, Scott spokesperson John Tupps announced “The governor wants to keep the cost of living low for Florida families while reducing the risk of all home and auto insurance policyholders paying a hurricane tax in the event of a major storm. Any final legislation the governor signs must meet both of these goals.” Scott spent nearly three years respectively alienating consumers, students, law enforcement, families, homeowners and the elderly, before recently watching lawmakers threaten homeowners with unprecedented insurance rates. If sponsoring lawmakers heed Scott’s warning and sufficiently temper their bill, the Governor will be credited with keeping thousands of homeowners afloat. In not, by riding in at the last minute and vetoing the offending legislation, Scott could buy himself “White Knight” status prior to ramping up his gubernatorial campaign. Not too shabby!!! Either way, holding true to form, our Governor will ultimately shoot himself in the foot.

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March 28, 2013 - While closely monitoring a handful of high profile association bills during the legislative session, politically active Common Interest Communities and their advocates tend to overlook scores of bills that, although targeted to other purposes, adversely impact their interests. The following two needles in the 2013 legislative haystack will not only harm unit owners, the underlying rationale for their existence strains credibility. Fueled by political “quid pro quo” and cruising below the media radar, these thinly veiled pork piñatas stand an excellent chance of becoming law – while we sleep! One is an “in your face” patronage bill masquerading as an attempt to shield Homestead Exemptions from abuse. The other is a “pro-bank” wolf dressed in “pro-association” clothing.

Squeezing Tip Money from State Law

Click Here to Save Our Homes BCPA Web Page Whether necessary to help fund a retirement property or to salvage a “vacation home” suddenly made insupportable by a soured economy, renting their association properties is often an indispensable survival strategy for unit owners. If creatively timed and structured, rentals need not cost property owners their Homestead Exemptions, not only to slice $25,000 to $50,000 from the property’s value for tax purposes, but to preserve eligibility for the far more valuable Save Our Homes tax cap.

Click Here to Florida Department of Revenue Homestead Exemption Requirements Under current law, Property Appraisers have enormous discretion in determining whether renting a property constitutes its abandonment as a primary residence. Although there is currently no specific amount of time a homeowner must reside in the property to maintain a homestead exemption, he or she must be able to therein prove permanent residence on January 1 of each year, according to the Florida Department of Revenue.

Section 196.061, Florida Statutes, which guides Property Appraisers in determining how rental of a homesteaded property impacts the exemption, provides that “rental of all or substantially all of a dwelling previously claimed to be a homestead for tax purposes constitutes abandonment of the dwelling as a homestead, and the abandonment shall continue until such dwelling is physically occupied by the owner.” The statute then carves out a loophole “However, such abandonment of such homestead after January 1 of any year does not affect the homestead exemption for tax purposes for that particular year if this provision is not used for 2 consecutive years.” Exempted from this permanent residency criteria are members of the military under transfer orders and their spouses.

St. Augustine Senator John Thrasher
ST. AUGUSTINE SENATOR JOHN THRASHER
A unit owner can theoretically rent a property on January 2 through December 31, 2014 (returning to live in the property by January 1, 2015) without jeopardizing the Homestead Exemption as long as the property is not leased again until after January 1, 2016 (as per the “Two-year Rule”). However, Broward County Property Appraiser Lori Parrish asks prospective homesteaded lessors planning such extended rentals to notify her office and elicit her blessing to avoid a permanent residency challenge to the exemption.

Daytona Beach Representative Charles David 'Dave' Hood, Jr.
DAYTONA REPRESENTATIVE
CHARLES 'DAVE' HOOD
On January 16, 2013, Senator John Thrasher, R-St. Augustine, filed Senate Bill 342 (SB 342), entitled “Rental of Homestead Property.” Two days later, Representative Charles David “Dave” Hood, Jr., R-Daytona Beach, filed identical House Bill 279 (HB 279). The bills propose limiting the period of time that a property can be rented without losing its homestead status to 30 days in a calendar year. While it would remove the “two-year rule” for homes rented fewer than 30 days per year, homes rented more than 30 days per year for two consecutive years could risk losing their exemption, depending on the magnanimity of the local Property Appraiser.

St. Johns County Tax Collector Dennis W. Hollingsworth
ST. JOHNS COUNTY TAX COLLECTOR
DENNIS W. HOLLINGSWORTH
The bill was conceived by St. Johns County Tax Collector Dennis W. Hollingsworth, who claims that the time restriction is a safeguard against abusing the homestead law. He commented “If we don’t put a number of days on it, then we’re opening a real can of worms. There’s no rhyme or reason in the law.” While delimiting rental terms for Homesteaded properties seems a reasonable legislative objective, the 30-day leases approved in the legislation meet the needs of few tenants and fewer landlords. As it turns out, Hollingsworth is less concerned with protecting tax revenues than bartering patronage for some local homeowners.

St. Johns County Property Appraiser Sharon Outland
ST. JOHNS COUNTY PROPERTY
APPRAISER SHARON OUTLAND
Ponte Vedra Beach, south of Jacksonville in St. Johns County, is home to the headquarters of the PGA Tour and hosts The Players Championship. Golf enthusiasts, links groupies and media personnel who annually swarm the renowned TPC Sawgrass Golf Courses during The Players Championship and other PGA events need temporary room and board. Bill sponsor Thrasher said that Hollingsworth asked him to back the legislation because local homeowners who want to annually rent space to PGA golfers or paparazzi covering PGA events feared that St. Johns Property Appraiser Sharon Outland would shred their Homestead Exemptions. Seizing an opportunity to share some local media glow, Hollingsworth and Thrasher cooked up this turkey.

Click Here to The Players Championship While virtually useless for the purposes that most owners (or tenants) lease a property, the 30-day lease terms are perfect for siphoning a few bucks from the golf tournament. While facilitating lucrative month-long rentals for a handful of St. Johns homeowners, enacting this local patronage pork trough would threaten tens of thousands of leases between unit owners and their annual or seasonal tenants in community associations across the State.

Palm Beach County Property Appraiser Gary Nikolits
PALM BEACH PROPERTY
APPRAISER GARY NIKOLITS
Property Appraisers, the natural beneficiaries of exemption restrictions, oppose the bill as geocentric and unenforceable. Pat Poston, director of exemption services for Palm Beach County Property Appraiser Gary Nikolits, said the bill would adversely affect seasonal rentals in Wellington for polo season and disrupt winter rentals throughout the County. Leery of unproductively wasting limited enforcement resources, Poston said “I have cases where I know the person is renting the property, but I can’t get a hold of any leases and an advertisement on a website isn’t enough.” In short, Poston objects to specifically tailoring a statewide exemption to facilitate tip money for a handful of St. Johns homeowners at the expense of homeowners in every other jurisdiction.

Florida Senate President Don Gaetz
FLORIDA SENATE
PRESIDENT DON GAETZ
Realtors and tourism officials are concerned about the legislation’s impact on the housing market. Incrementally stripping tens of thousands of properties from an already overpriced and scant rental market will skyrocket leasing costs for tenants. Since a healthy percentage of the lost rentals currently accommodate seasonal vacationers, visiting tourists may turn to destinations with more reasonable housing options, crimping the State’s economic recovery. Far more damaging is the direct impact it will have on the tens of thousands of association homeowners who purchased their units with the understanding that seasonal rentals could help offset mortgage and association expenses.

Click Here to Rebublican Party of Florida website Since this bill would defunct rental rights of homesteaded unit owners, threaten critical tourist revenues, intensify shortages in the statewide rental market and disrupt annual and seasonal rentals in every Florida community – solely to help a few dozen St. Johns residents sponge off a golf tournament; Thrasher’s collaboration with Hollingsworth is a prime candidate for the legislative “WTF” award. Nevertheless, since Thrasher, a recent Chairman of the Republican Party of Florida, is a close ally of Senate President Don Gaetz, no one should be surprised when the bill is enrolled and sent to the Governor’s desk.


The “Safe Harbor” Bad Penny

Representative George Moraitis on 2012 Legislative Session
REPRESENTATIVE GEORGE MORAITIS
A legislative enigma closer to home ushers from a bill filed by our own District 93 Statehouse Representative George Moraitis - House Bill 1339 (HB 1339). Those of you who followed last year’s Omnibus Association bill through to its ill-fated demise should recall that House Bill 319 enjoyed overwhelming support from community associations across the State – until it mysteriously sprouted a poison provision that sharply limited lender liability for association obligations. In the zero-sum world of association budgets, every expense dodged by the bank must be assessed to unit owners. The pro-bank provision suddenly submerged the bill in a controversy from which it never recovered.

A 13-member Foreclosure Study Commission created by the Legislature in 1992 concluded that mortgage lenders should be partially responsible at foreclosure for unpaid condominium assessments. When lenders grudgingly consented to assume a token financial obligation for association units repossessed in foreclosure, Florida lawmakers rewarded this gesture by capping their statutory exposure. Known as the “Safe Harbor” clause, it described the lender obligation as “the lesser of 6 months’ past due assessments or 1% of the original mortgage debt” for units immersed in foreclosure.

Upon learning that they could legally sidestep this nominal statutory obligation simply by repeatedly postponing the final stage of the foreclosure process – the assumption of title - banks began systematically defaulting on their statutory debts, forcing each association’s members to subsidize the resulting budgetary shortfalls. 18 years after agreeing to an obligation they never fulfilled, a 2010 bill modestly increased that obligation from 6 months’ past due assessments to 12 months - or 1% of the original mortgage debt if it was less costly, a seemingly futile gesture given the industry-wide predisposition to exploit the lender loophole and wholly ignore the debt. When exploding numbers of lender-controlled non-contributing units brought common interest communities to the brink of bankruptcy, they sought relief in Court.

Although most judges cited the Safe Harbor clause when dismissing actions by condominium associations against lender defendants, a growing number of courts upheld an association’s right to collect fees and costs not addressed in the 1992 statutory language, awarding associations interest, administrative late fees, collection costs and reasonable attorney fees incident to collection. Although Moraitis contended that his provision merely echoed existing law, in fact, it specifically precluded associations from recovering these incremental expenses never mentioned in the Statute.

Michael Bender of Kaye Bender Rembaum
MICHAEL BENDER OF
KAYE BENDER REMBAUM
Ben Solomon of Association Law Group
BEN SOLOMON OF
ASSOCIATION LAW GROUP
Offering evidence that Moraitis’ bill was not simply a confirmation of a law that was already on the books, condo lawyer Michael Bender (Kaye Bender Rembaum), a former President of the Southeast Florida Chapter of the Community Associations Institute (CAI) who still serves on its governing board, Ben Solomon (Association Law Group) and other association attorneys pointed out that Moraitis’ bill also sought to financially hamstring Cooperatives, which were never party to the Safe Harbor cap. Despite attempts by conflicted supporters to spin the pro-bank language as somehow beneficial to the unit owners it victimized, associations across the state launched a successful effort to either modify or kill the legislation, sacrificing its many useful provisions to quash the toxic lender protections.

Click Here to Community Advocacy Network of Florida - CAN Click to Community Association Leadership Lobby (CALL) web site Exercising damage control with his disappointed association constituency, Moraitis promised to file the Omnibus Association bill again this year. Having learned from last year’s humiliating debacle, he filed House Bill 73 on December 28, 2012, reviving a majority of the favorable provisions that crashed and burned during the prior session while deliberately excluding the Safe Harbor language.

Click to Community Association Leadership Lobby (CALL) web site
Melbourne Senator Thad Altman
MELBOURNE SENATOR
THAD ALTMAN
Having reacquired the support of thousands of associations statewide, his new association bill was found favorable in the Civil Justice Subcommittee and scheduled for vetting by the House Judiciary Committee. Its companion bill in the other chamber, Senate Bill 436 (SB 436) filed by Senator Thad Altman (R-Melbourne), was also found favorable by the Senate Committee on Regulated Industries and forwarded to the Senate Judiciary Committee for review. With his bill once again being escorted through the committee process by CAN, CALL (Community Association Leadership Lobby – Becker & Poliakoff’s advocacy plumbing), CAI and other association advocates, Moraitis unleashed a surprise that left most of his association supporters stunned. He filed a separate bill on March 4 containing the pro-bank safe harbor language.

To quell suspicions of associations that were both shocked and angered by his inexplicable sponsorship of a thinly veiled anti-association bill, Moraitis added some modestly positive sweeteners for Condominiums, Cooperatives and Homeowner Associations. The bill empowers associations to enter seemingly abandoned units to assess their condition. If deemed necessary, it also authorizes association boards to effect repairs and perform other maintenance measures to limit deterioration in the abandoned unit and adjoining common elements.

Click Here to Community Advocacy Network of Florida - CAN As indicated in the House of Representatives Staff Analysis for HB 1339, “Current law grants a condominium association the irrevocable right of access to each unit during reasonable hours to maintain, repair, or replace any common elements or any portion of a unit to be maintained by the association pursuant to the declaration. The association also may access the unit to prevent damage to the common elements or a unit.” Evidently, associations already enjoy the statutory benefits offered in Moraitis’ bill. The Staff Analysis acknowledges Moraitis’ attempt to duplicate these rights in his bill by diplomatically stating “The bill amends s. 718.111(5), F.S., to strengthen the association’s power to access a unit...” An association would only benefit from Moraitis’ statutory redundancy in the unlikely event that its governing documents prohibited the association from entering a unit under any circumstances - even to protect common elements, limited common elements and/or adjacent units.

Along with stripping away the remaining protections from Condominium Associations ripped off by lenders, HB 1339 would similarly eviscerate the rights of Cooperatives. While attempting to saddle Cooperatives with the meager Safe Harbor liability limits (which currently burden Condominiums and Homeowner Associations), the bill provides that foreclosing lenders are “not liable for any interest, administrative late fee, reasonable cost or attorney fee, or any other fee, cost or expense that came due” to the association. Under current law, Cooperatives can charge lenders for association assessments and any fees, costs or expenses due and unlike Condominiums, subsequent legal actions brought against lenders to remedy non-payment are never blocked by the Safe Harbor liability limitations. If this bill passes, lenders would be beneficiaries of the same subsidies they extort from Condominium budgets.

Representative George Moraitis listens to Chip LaMarca discuss A1A Recovery plans at Beach Community Center
MORAITIS LISTENS TO CHIP LAMARCA DISCUSS
RECOVERY PLANS AT BEACH COMMUNITY CENTER
Moraitis is an enigma. After sponsoring the legislative session’s primary association bill, he waited for two months before springing this hop toad from his backpack. When Sandy shredded A1A and the beach, Moraitis pushed FDOT to fast-track a recovery plan – hours before Mayor Jack Seiler and City Manager Lee Feldman asked for his assistance. To be fair, it’s certainly possible that this legislative schizophrenia is a consequence of the political horse trading that often enables bills to survive hostile vetting committees. It’s also conceivable that sponsoring this gift to lenders was their price for not blocking his other bills. On the bright side, by late March, there was no companion bill in the Senate, which supports the prospect that the legislation was filed to cover a political marker. Whatever his motives, this second legislative frontrunner for “WTF” recognition richly deserves a replay of the fate suffered by last year’s “Safe Harbor” Easter surprise – death on the calendar.

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Palm City Senator Joe Negron
PALM CITY SENATOR JOE NEGRON
March 15, 2013 - Yikes! It’s back. In Tallahassee, it’s not unusual for lawmakers to repeatedly propose snake bit legislation. If an influential minority constituency or a major campaign contributor envisions property rights for Cocker Spaniels or ascribing the death penalty for splashing in a public pool, a beholding lawmaker will dutifully grind out patronizing “courtesy bills” in appreciation for their support. When these over-the-top bills are first read in chamber, everyone within earshot knows they are destined for death on the calendar. However, when dangerously crippling bills are collaboration between powerful lobbies and their pet lawmakers, those who ignore the legislation do so at their own peril.

Orlando Representative Stephen Precourt
ORLANDO REPRESENTATIVE
STEPHEN PRECOURT
On February 12, 2010, when Palm City Senator
Joe Negron filed Senate Bill 1964 - entitled “A Bill Relating to Design Professionals”, Orlando Representative Stephen Precourt filed companion bill HB 701 in the Statehouse. The bills deified Design Professionals, immunizing architects, interior designers, landscape architects, engineers, & surveyors to legal redress. Not surprisingly, Negron is an amateur architect and Precourt is a Civil Engineer (Transportation). Since the bills would obliterate legal exposure for design professionals, lobbyists for trade organizations representing Architects and Engineers cut deals with key members of vetting Committees in both houses, greasing a smooth ride through the legislative gauntlet. However, consumer rights groups, Constitutional watchdogs and association advocates were apoplectic, inveighing loud and hard against the bills. Despite its bartered approval by House and Senate lawmakers, statewide public opposition convinced former Governor Charlie Crist to veto this anti-consumer gremlin.

Sarasota Representative Gregory Steube
SARASOTA REPRESENTATIVE
GREGORY STEUBE
During the 2011 session, Negron reincarnated the legislation as Senate Bill 288 on December 12, 2010, albeit with a new partner in the other chamber. In the Statehouse, first term Sarasota Representative Gregory Steube filed House Bill 605, which died on March 7, 2011 in the House Civil Justice Committee. Rejected by the Senate Committee on Regulated Industries following a March 9, 2011 vote of 4 YEAs and 8 NAYs, Negron’s Senate version was also “laid on the table.” Committee members in both houses were particularly troubled by a poorly veiled Catch-22 provision specifically designed to eliminate both liability and the cost of malpractice insurance for members of these professions.

Construction Law Attorney Lee Weinraub
CONSTRUCTION LAW
ATTORNEY LEE WEINRAUB
The legislation allowed for recovery of economic damages up to the amount of the design professional’s existing liability insurance coverage. Since current Florida law doesn’t actually require this insurance and the bill would otherwise render them judgment-proof, design professionals would have had little incentive to purchase malpractice insurance. In effect, by cancelling their insurance, they would also cancel their only financial exposure. On December 21, 2011, a week and a half after the bill was filed, Construction Law Attorney Lee Weinraub of Becker Poliakoff commented, “This senate bill would allow design professionals to defectively design building components, causing significant monetary damage to their clients, yet limit their liability to some nominal sum and cancel all their professional liability insurance. Don’t take my word for it – read the bill and see for yourself how ludicrous this is.” Unless an association’s engineer, interior designer and/or architect felt morally compelled to pay premiums for a malpractice policy, the association would not be able to recover damage costs for negligence, defective designs and/or other professional foul-ups. If an engineer designs, oversees construction for and signs off on a structurally defective roof that collapses later that day or a landscape architect turns the entire association grounds into crispy brown mulch overnight, the association would not even be legally entitled to an apology.

Representative Gregory Steube Receives CAI Award - declines to Sponsor Negron's Companion Bill
APPLAUDED FOR CAI ADVOCACY - STEUBE NIXES BAD BILL
Early in the current session, Negron again revived his twice-burned Design Professionals Deification package, filing Senate Bill 286 on January 15, 2013. In the two years since the 2011 debacle, Negron’s former Statehouse sponsor Representative Greg Steube had familiarized himself with the regulatory landscape and was staunchly supporting legislation helpful to common interest homeowners and their associations. Selected by the Community Associations Institute (CAI) to receive the annual “Friend of Community Associations and CAI Florida Legislative Alliance” legislative award on October 3, 2012 for his legislative advocacy on behalf of community associations and CAI members, Steube would not be filing a “companion bill” that threatened to victimize more than 2 million Florida association homeowners.

Naples Representative Kathleen Passidomo
NAPLES REPRESENTATIVE KATHLEEN PASSIDOMO
This being his third bite at the apple, Negron knew that a sister bill in the Statehouse would be scrutinized in the Civil Justice Subcommittee, the Business & Professional Regulation Subcommittee and the Judiciary Committee. Scouting a dance partner who brought the required “influence” to the table, he recruited Naples Representative Kathleen Passidomo to file House Bill 575 – the companion legislation in the Statehouse. What a surprise, Passidomo sits on the House Civil Justice Subcommittee and serves as Vice Chair of the House Judiciary Committee.

Somewhat modified from previous versions of the bill, SB 286 enables architects, interior designers, landscape architects, engineers, & surveyors to dispense with liability simply by using specific language that states as much in a contract (in an uppercase font sized at least 5 points larger than the rest of the text). The new bill doesn’t even carry the pretense that a design professional would still have a statutory incentive to avoid committing malpractice, since victims would not be permitted to file against a violator’s malpractice insurance. At the heart of Negron’s argument is a judicially created doctrine called the “Economic Loss Rule.”

Courts created the “Economic Loss Rule” to shield companies from questionable product liability actions. Under the doctrine, economic damages may not be recovered in a negligence action if the damages are not accompanied by physical property damage or bodily injury. In short, this rule “bars a plaintiff from bringing tort claims to recover pure economic damages arising from a breach of contract cause of action absent personal injury or property damages.” As a result, if a plaintiff cannot prove a tort independent of some contractual breach, the economic loss rule bars recovery on any noncontract claims.

However, consistent with nationwide legal precedent, Florida Statutes and the Florida Constitution, Florida courts (including the Florida Supreme Court) have repeatedly (and rightfully) upheld that the Economic Loss Rule is not a defense to professional malpractice and negligence by a licensed professional practitioner (rulings specify architects, lawyers, engineers, doctors, etc.). Notwithstanding contractual agreements that limit liability for the law firms, engineering firms, hospitals and architectural firms through which they do business, individual lawyers, engineers, doctors and architects remain personally liable for malpractice or negligence.

Construction Law Attorney Sanjay Kurian
CONSTRUCTION LAW
ATTORNEY SANJAY KURIAN
Under Florida law, while companies can limit their liability in a contract, licensed professionals cannot contractually mitigate their “duty of care” to the injured party. Commenting on the bills, Construction Law Specialist Sanjay Kurian of Becker Poliakoff said “No other class of professional has ever been so completely financially insulated from damages caused by their negligence, wrongful acts, or misconduct. As doctors, lawyers, and accountants are precluded by statute from limiting exposure for their own negligence,” extending this all-encompassing immunity to engineers, architects and interior designers conjures a universe shaped by the conceptual progeny of Lewis Carroll and Ayn Rand.

CAI Florida Legislative Alliance Chair Robert Taylor
CAI FLA LEGISLATIVE ALLIANCE
CHAIR ROBERT TAYLOR
In associations that ignore the threatened statutory bear trap, engineers, architects and other design professionals hired to design, install and/or oversee critical infrastructure would be virtually unaccountable and silently slip down the rabbit hole if and when their negligence results in a financial holocaust, forcing unit owners to absorb the budgetary impact of their malpractice. In an email alert, Community Association Institute (CAI) Florida Legislative Alliance Chair Robert Taylor framed the bills as “an unfortunate attempt to shift the ultimate negligence liability burden from the design professionals to the consumers.” Serving in the Legislative Alliance with Association Attorney Michael Bender (former President of CAI’s Southeast Florida Chapter) and Chapter delegates from across the state, Taylor’s observation mirrored Charlie Crist’s veto message after quashing the 2010 version of this bill.

Click to Community Association Leadership Lobby (CALL) web site As per the legislation, associations that hire design professionals who commit malpractice will be limited to filing breach of contract claims against the design professional’s “business entity” (defined in the bill as any corporation, limited liability company, partnership, limited partnership, proprietorship, firm, enterprise, franchise, association, self-employed individual, or trust, whether fictitiously named or not, doing business in this state). Although the legislation fully inoculates licensed professionals against liability, it allows an association to require the design professional’s business entity to maintain professional liability insurance. Since current law doesn’t mandate this insurance, it will be incumbent on the association to require its inclusion in any contract in an amount sufficient to mitigate the cost of potential damages.

Community Association Leadership Lobby (CALL) Executive Director Attorney Yeline Goin
CALL EXECUTIVE DIRECTOR
ATTORNEY YELINE GOIN
Click to Community Association Leadership Lobby (CALL) web site In addition to the Constitutional quagmire opened by this bill, as a practical matter, Courts and State lawmakers will not permit licensed professionals to shift their professional liability to the corporate umbrellas under which they practice. As stated by CAI, business entities, including engineering professional associations and other design enterprises, “can easily ‘hide’ assets by placing them in other entities -- thus eliminating any realistic chance of a consumer or community association recovering any amounts when suffering damages as a result of the negligence of a ‘design professional’.” CALL Attorney Yeline Goin also points out that the “bill language is so badly worded that it could also be interpreted to mean that an association could not sue an architect or engineer after turnover for construction defects, even when the association was not a party to the contract.” When CAI lobbyist Travis Moore later met with Negron, he told Moore that his bill wasn’t intended to apply to persons not a party to the contract, but Negron didn’t alter the misleading language.

Clearwater Senator Jack Latvala
CLEARWATER SENATOR
JACK LATVALA
Another real danger buried in this legislation inures to its status as a precedent, as it would create an opportunity for other licensed professionals to “purchase” statutory immunity to liability on the Capitol steps. If the legislation is enacted, by 2014, bills using it as a roadmap will seek similar protections for lawyers and doctors who commit malpractice. In fact, while being vetted in the Senate Judiciary Committee on March 6, Clearwater Senator Jack Latvala amended the bill by adding Geologists to the list of protected “Design Professionals”, prospectively freeing them of any liability for affirming that your land is free of sinkholes – just before your house disappears into the ground.

Negron was not going to allow his bill to be marooned on a committee calendar as occurred in 2011. As an emollient to the vetting process, Negron and Passidomo brokered interchanges between key members of each review committee and a regiment of Design Trades lobbyists who “assist” cooperative politicians, specifically lobbyist David Daniel from the Florida Surveying and Mapping Society, David Roberts from the American Society of Interior Designers, Executive Director Frank Rudd of the Florida Engineering Society, Mike Huey of the Florida Association of the American Institute of Architects, Phil Leary from the Florida Association of Professional Geologists and Jim Horne from the Northeast Florida Home Builders Association.

With the wheels greased, after whizzing through the Senate Committee on Regulated Industries, a Committee Substitute reconfigured to include Latvala’s geologists (CS/SB 286) was approved in the Judiciary Committee, leaving a March 14th hearing by the Senate Community Affairs Committee as the only remaining obstacle in the upper house. Since Negron’s bill was amended and redrafted as a Committee Substitute, so was Passidomo’s HB 575. Having passed the House Civil Justice Subcommittee, CS/HB 575 was sent to the House Business and Professional Regulation Subcommittee, after which it would undergo review by the House Judiciary Committee (where Passidomo is Vice-Chair).

While design trades have pulled out the stops to buy members a free pass for negligence, building trades officials oppose the bill. If licensed professionals become empowered to deliver defective work product without consequence, the liability will flow upstream to contractors, builders and developers as well as the carpenters, plumbers and electricians who took direction from negligent engineers, architects, or other design professionals. Among the building trade organizations that have spoken against the bill’s approval to vetting committees are the Associated Builders & Contractors of Florida; Florida Fire Sprinkler Association; Florida Home Builders Association; Florida’s Associated General Contractors, and the Florida Transportation Builders Association. Also opposing the bill are consumer watchdog groups, association advocates (CAN, CALL, CAI, etc.) and the Real Property Section of the Florida Bar, which characterizes the legislation as creating an inequity without remedy.

District 93 Representative George Moraitis
REP. GEORGE MORAITIS
District 34 Senator Maria Sachs
SENATOR MARIA SACHS
Unless you want the engineer who will manage your next concrete rehabilitation or orchestrate repairs of deteriorating parking deck expansion joints to have responsibility for those projects commensurate with that of your pet goldfish, you might consider contacting Negron, Passidomo, District 93 Statehouse Representative George Moraitis, District 34 Senator Maria Sachs and/or members of the remaining vetting committees and expressing your disapproval of this bill. It might take roughly thirty seconds to send each email.

Ordinarily, common sense would also dictate alerting Governor Scott to your concerns if the bill becomes enrolled. However, in view of the fact that last April he signed a bill into law that eliminates implied warranties (HB 1013), enabling developers to sell properties riddled with illegal construction defects (building code violations) to unsuspecting homebuyers without recourse, he will likely either break out into hysterical laughter or fall asleep, depending on how his meds are balanced.

While evaluating the legislation’s private sector fiscal impacts in the Professional Staff Analysis prepared for House and Senate Committees, staffers framed two observations in a manner suggestive of a fair and balanced net result. They open by pointing out that parties “who experience an economic loss attributable to the professional negligence or professional malpractice of a design professional” will “be barred from claims for negligence” not authorized in the contract. On the bright side, they noted that if Design Professionals have no liability for malpractice, they may realize a savings on their malpractice insurance, which they may or may not pass on to clients. See – no problem. By the way, these pinheads are our future lawmakers!

Donna Berger
DONNA BERGER
Says DO IT NOW!
FYI - On March 15, 2013 - Executive Director Donna Berger of the Community Advocacy Network (CAN) - along with other association advocates - requested that every association homeowner or tenant send an email to the Governor insisting that he veto the legislation. The Governor's staff counts the favorable and unfavorable correspondences received for each enrolled bill, and advises the Governor accordingly. Although Governor Rick Scott's email address is rick.scott@myflorida.com, your interests will be better served by Clicking Here to his public email page, which is more closely scrutinized by office staff weighing public opinion. Terminating this dangerous blueprint for shoddy (and/or illegal) construction will protect us all from leaks, floods, fires, structurally questionable infrastructure and redundant assessments!!! Please take 30 seconds to help yourself and your neighbors by Clicking Here and conveying your opposition to Senate Bill 286.

  • Governor Rick Scott's Contact Information:

    • The Capitol
      400 South Monroe Street
      Tallahassee, Florida 32399

    • Telephone: (850) 488-7146, Fax: (850) 487-0801

    • Email Address: rick.scott@myflorida.com

    • Click Here to Public Email Page

  • Legislative Affairs (counsels the Governor)

    • Telephone: (850) 717-9238, Fax: (850) 921-9077

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Omnibus Association Bills

2013 - One Year Wiser


Perspective – A Brief History

Representative George Moraitis on 2012 Legislative Session
REPRESENTATIVE GEORGE MORAITIS
Senator Thad Altman Explains Senate Bill 436
SEN. THAD ALTMAN EXPLAINS SB 436
February 15, 2013 - The beneficiary of wisdom filched from a legislative catharsis, on December 28, 2012, District 93 Statehouse Representative
George R. Moraitis filed House Bill 73 (HB 73). Building on the momentum of his successful 2011 Omnibus Association Bill (HB 1195), Moraitis and former Senator Ellyn Bogdanoff teamed up last year to file House Bill 319 (HB 319) and its companion legislation, Senate Bill 680 (SB 680). The third of three consecutive bills assembled from the combined wish lists of Condominiums, Cooperatives and Homeowner Associations across the State, the bills whizzed through vetting committees in both houses en route to an anticipated soft landing on the Governor’s desk – when disaster struck.

Donna Berger
DONNA BERGER
Yeline Goin
YELINE GOIN
Much of the legislative content was assembled and crunched by two powerful Florida law firms via corporate appendages they created to cultivate client relations in the flourishing field of “Community Association Law.” A longtime friend to the Galt Mile community, association attorney Donna Berger directs the Community Advocacy Network (CAN) for Katzmann Garfinkel & Berger (KG&B) while former Department of Business and Professional Regulation (DBPR) Senior Attorney Yeline Goin directs the Community Association Leadership Lobby (CALL) for Becker & Poliakoff (B&P). The economic symbiosis that fuels these two organizations offers Florida associations efficient communication networks and viable lobbying vehicles while providing the two legal powerhouses with a client supermarket.

Click Here to Community Advocacy Network of Florida - CAN Click to Community Association Leadership Lobby (CALL) web site An amendment drafted by CALL (Becker Poliakoff's advocacy stepchild) confirming that banks foreclosing on association units are only obligated to pay “the lesser of 12 months’ past due assessments or 1% of the original mortgage debt” was implanted in Moraitis’ 2012 bill. Known as the “Safe Harbor” clause, the language was used by Florida lawmakers in 1992, when lenders grudgingly agreed to assume a token financial obligation for association units repossessed in foreclosure in exchange for a statutory cap on their exposure.

When the economy tanked, the lending industry exploited a loophole to dodge their modest association assessments. Since the statutory obligation is triggered when a foreclosure is consummated, banks perpetually postponed the final step of the process. By never taking title to the defaulted properties and consigning them to legal limbo, lenders forced the association’s other members to subsidize their intentionally frozen units.

Threatened with bankruptcy from exploding numbers of lender-controlled non-contributing units, common interest communities sought relief in Court. While most judges sided with lenders, a growing number of courts upheld an association’s right to collect fees and costs not addressed in the Statute. The CALL amendment would preclude an association from collecting interest, administrative late fees, attorneys’ fees, and other costs resulting from bankers dragging their feet. A majority of the bill’s association supporters were stunned. Why was this pro-bank provision being incorporated into the Omnibus Association bill?

Click to Florida Bankers Association (FBA) web page Attacking the cottage industry of aggressive collection attorneys and agencies pursuing banks on behalf of associations, CALL Executive Director Yeline Goin passionately supported the Becker Poliakoff amendment, complaining that the money won from lenders isn’t going to the associations, but to lawyers and their collection agencies. Her claims were confusing since the collected late fees and interest do go to associations. The B&P-drafted provision would have prevented unit owners from passing collection costs to the bank.

Click to Space Coast Communities Association web page Aware that her arguments were being perceived as slippery rationalizations, Goin changed tactics, and railed against the dangers of not echoing the safe harbor language in HB 319, warning that “the lending industry may decide to curtail borrowing in Florida or make it much more expensive to obtain a loan.” It was the same mantra annually trumpeted by Florida Bankers Association lobbyists to deter lawmakers from plugging the lender loophole, a tactic Goin first witnessed while representing the DBPR. Ignoring a bald-faced conflict of interest, Goin neglected to mention that Becker Poliakoff counts Bank of America and HUD among its most lucrative clients.

Former Senate President Mike Haridopolos
FORMER SENATE PRESIDENT
MIKE HARIDOPOLOS
Before the controversy achieved terminal momentum, HB 319 was adopted in the Statehouse and engrossed on February 29, 2012. Unless former Senator Bogdanoff added the identical text to her companion Senate bill, the legislation could never be enrolled. Leery of the exploding rancor, Bogdanoff delayed including the “Safe Harbor” amendment until March 8 – one day before the session ended, enmeshing her bill in the controversy. Responding to objections from his powerful “Space Coast Communities Association” constituency, then Senate President Mike Haridopolos marooned Bogdanoff's bill on the calendar, where it died when the session closed on March 9, 2012.

Ellyn Bogdanoff and Maria Sachs
ELLYN BOGDANOFF VS. MARIA SACHS
Regretful for having let the fox into the henhouse, Representative Moraitis and Senator Bogdanoff promised to refile the bill in the 2013 session. Since Bogdanoff lost her Senate seat to Maria Sachs, when Moraitis filed HB 73, Senator Thad Altman (R-Melbourne) answered a call by the bill’s association supporters and filed Senate Bill 436 (SB 436), a companion bill in the Senate. Empowering every class of common interest homeowner, HB 73 contains a list of statutory glitch repairs, eliminates a costly elevator retrofit deadline, helps deter foreclosure-related delinquencies, simplifies approval for 2-year board terms, clarifies recall procedures and corrects a longstanding predisposition to ignore cooperatives in association bills. Having learned from last year’s bleed-out, Moraitis excised the Safe Harbor language from HB 73. Association advocacy organizations CAN and CALL are once again escorting the bills through the legislative vetting process.

The following review solely depicts bill sections pertinent to Condominium and Cooperative members of the Galt Mile Community Association, omitting Sections that only impact Homeowner Associations (HOAs). Since the legislation’s companion bill in the Senate, Thad Altman’s Senate Bill 436, is identical to HB 73, the review describes both bills.


The Bills - Round II

Section 1 – Elevator Retrofit (F.S. 399.02 – Condominiums & Cooperatives)

  • Elevator Retrofit - The bill opens with a provision that eliminates the 2015 compliance deadline for retrofitting association elevators with Phase II Firefighter Service (as mandated in ASME A17.1 and A17.3), an adaptation that enables Firefighters to control all of an association’s elevators with a single master key instead of several keys that respectively control each cab. While the retrofit could conceivably save the couple of minutes it might take to sort out the few keys that control the elevators, there has never been a single case in Florida history wherein a death or injury was attributed to non-compliance with this mandate. The bill postpones the retrofit until an association opts to modernize its elevators, at which point the installation costs for Phase II service are negligible.

Section 2 – Bylaw Glitch Repairs and Clarifications (F.S. 718.112 – Condominiums)

  • Board Member Terms – Amends Section 718.112(2)(d)2., F.S., deleting the requirement for an owner vote prior to allowing board members to serve two-year terms (staggered or otherwise) as long as two-year terms are provided for in the articles of incorporation or bylaws.

  • Unit Owner Meetings – Amends Section 718.112(2)(d)3., F.S., By inadvertently fumbling the phrases “in lieu of” and “in addition to”, 2011’s Omnibus Association Bill (HB 1195) mandated associations to broadcast notices 4 times every hour notwithstanding the notices physically posted on association property. The bill fixes this “notice overkill” glitch, requiring only one of these two acceptable notice formats.

  • Elections – Amends Section 718.112(2)(d)4., F.S., exempting timeshare condominium associations from Section 718.112(2)(d)4., F.S., clarifying that a timeshare condominium does not have to follow the condominium “two-notice” system and allows proxy voting for timeshare condominium board elections.

  • Board Member Certification Records – Amends Section 718.112(2)(d)4.b., F.S., providing that an association must keep board members’ certification records for the duration of their uninterrupted tenure or five (5) years (whichever is longer).

  • Election Challenges – Creates Section 718.112(2)(d)4.c., F.S., providing that condominium election challenges must commence within 60 days after the announced election results.

  • Recall of Board Members - Amends Section 718.112(2)(j), F.S., providing that:

    • Recall Arbitration Deadlines – Under this change, the Division would not accept recall arbitration petitions if there are 60 or fewer days until the member being recalled is up for reelection; or 60 or fewer days have passed since the board member being recalled has been elected.

    • Unit Owners – This language would permit unit owners to file a petition challenging the board’s failure to duly notice and hold a board meeting to certify the recall or the board’s failure to file a petition for arbitration pursuant to Section 718.1255, F.S., if it refuses to certify the recall. The petition must be filed within 60 days after the expiration of the applicable 5 full business day period after adjournment of the annual meeting. The DBPR arbitrator is limited to determining if the recall petition was properly served on the board and whether the written agreements or ballots are valid.

    • Board Members – This measure would enable recalled board members to challenge the validity of the recall by filing a petition within 60 days following the recall certification.

Section 3 – Hurricane Protection (F.S. 718.113 – Condominiums)

  • Hurricane Protection – In addition to hurricane shutters, impact glass, or other code-compliant windows, this measure amends Section 718.113(5)(a), F.S., allowing a majority of the total voting interests to approve installation of “code-compliant doors” and “other types of hurricane protection.” Amending Section 718.113(5)(c), F.S., no upgrade vote is required if the association maintains, repairs and replaces any of these code-compliant hurricane mitigations in which case Section 718.115(1)(e), mandates its treatment as a common expense. If the association isn't responsible for maintenance, repairs and replacement of these protections, the cost of installation is not a common expense, and shall be charged individually to the unit owners based on the cost of installation appurtenant to the unit. Amending Section 718.113(5)(d), F.S., the board may not prohibit a unit owner from installing these protections if they conform to board-approved specifications.

Section 4 – Existing Hurricane Protection (F.S. 718.115 – Condominiums)

  • Hurricane Protection costs – Amends Section 718.115(1)(e), providing that a unit owner who installs code-compliant protections must be credited with a pro-rata share of the assessed installation cost for protections that are subsequently approved by the association. However, the unit owner remains responsible for the pro rata share of expenses for hurricane shutters, impact glass, code compliant windows or doors, or other types of code compliant hurricane protection installed on common elements and association property and remains responsible for the pro rata share of the expense of the replacement, operation, repair and maintenance of such shutters, impact glass, code compliant windows or doors, or other types of code compliant hurricane protection.

Section 5 – Suspension of Rights (F.S. 718.303 – Condominiums)

  • Governing Document Violations – Intended to address another technical glitch in the 2011 bill, this provision amends Section 718.303(3)(a), F.S., clarifying exceptions to suspended common area and facilities use rights for unit owners (and/or a unit owner’s tenant, guest or invitee) due to violations of the association’s governing documents (the declaration, bylaws or reasonable rules and regulations of the association).

    Like common area use rights suspended for delinquency, the suspensions don’t include access to limited common elements that uniquely service that unit (i.e. balconies), common elements needed to access the unit (i.e. entry and egress), utility services provided to the unit, parking spaces or elevators.

  • Suspension of Voting Rights – This measure amends Section 718.303(5), F.S., removing language added in 2011 stating that a suspended voting right may not be counted towards or impact the total number of voting interests necessary to constitute a quorum, the number of voting interests required to conduct an election, or the number of voting interests required to approve an action under the statute or pursuant to the condominium, cooperative, or governing documents.

Section 6 – Phase Condominiums (F.S. 718.403 – Condominiums)

    Click Here to Real Property Probate and Trust Law (RPPTL) Section of the Florida Bar

  • Phase Condominiums – The Real Property Probate and Trust Law (RPPTL) Section of the Florida Bar drafted this amendment to Section 718.403(1), F.S., a provision which relates to the development of condominium phases. While all phases must be added within seven (7) years of submitting the original declaration for the initial phase, Section 718.110(1)(a), F.S., provides that during the last three (3) years the owners may vote to amend the deadline by indicating the size of any time extension albeit not to exceed a total period of 10 years after the date of recording the original declaration of condominium.

    While the Florida Bar’s provision requires adherence to the amendment procedures described in F.S. 718.110(1)(a), it doesn’t require compliance with terms described in F.S. 718.110(4) when voting to extend the initial 7-year period.

Section 7 – Condominiums within Condominiums (F.S. 718.406 – Condominiums)

  • Condominiums within Condominiums – Frequently referred to as “hotel condominiums” or “condos in a condo”, although Florida Statutes provide for a single commercial structure comprised of a master or “primary” condominium and one or more sub-condominiums or “secondary” condominiums, various legal and operational aspects of these entities were neglected when originally enacted.

    The bill creates Section 718.406, F.S., providing guidance in authorizing owners of the primary condominium to exercise rights on behalf of subdivided unit owners, establishes the relationship between the board representing the primary condominium and its counterpart for the secondary condominiums, provides for the collection of assessments by the primary and secondary associations, provides that the owners of secondary units are subject to the provisions of both the primary and secondary condominium declarations, provides when owner and mortgagee consents are required to create a secondary condominium, establishes that the primary association can dictate specifications for hurricane or other building protections and establishes insurance requirements and obligations of the associations managing and operating both primary and secondary condominiums pursuant to Section 718.111(11), F.S., of the Condominium Act.

Section 8 – Condominium Ombudsman Staff Employment (F.S. 718.5011 – Condominiums)

  • This provision amends Section 718.5011, F.S., removing a prohibition against “actively engaging in any other business or profession” for full-time Condominium Ombudsman staffers, as long as a secondary position does not directly or indirectly relate to or conflict with their responsibilities in the Condominium Ombudsman’s office.

Section 9 – Official Records (F.S. 719.104 – Cooperatives)

  • Personal Information – This measure amends Section 719.104(2)(c), F.S., providing cooperative owners with the same personal privacy safeguards that currently protect members of condo and homeowner associations when the association responds to a records request, including any record protected by the lawyer-client privilege as provided in Section 90.502 F.S., electronic security measures used by the association to safeguard data (including passwords) as well as “the software and operating system used by the association which allows manipulation of data.”

    Unless a cooperative owner consents to waive this privacy right in writing, a records request would exclude any Social Security Number, Driver License Number, credit card numbers, e-mail addresses, telephone numbers, emergency contact information and any address other than the addresses required for the association’s notice obligations. In short, the only personal identifying information that will be made available is the owner’s name, unit designation, mailing address and property address.

  • Personnel Records – Already provided for in condominiums, this measure would prohibit member access to the personnel records of association or management company employees, including but not limited to, disciplinary, payroll, health, and insurance records. Since they aren’t considered “personnel records,” written employment agreements with an association employee or management company will remain accessible to unit owners, as will budgetary or financial records indicating the compensation paid to an association employee.

Section 10 – Lender/Mortgagee Consent Requirements (F.S. 719.1055 – Cooperatives)

  • Lender/Mortgagee Consent Requirements – The bill creates Section 719.1055(7), F.S., duplicating a 2007 provision adopted in the Condominium Act. After the legislation’s effective date, cooperative association documents would be precluded from requiring a lender’s consent for amendments that don’t affect the lender’s rights or interests. For mortgages entered into prior to this date, the bill proposes clear protocols for boards to obtain lender consent and provides that any lender who fails to respond to an association’s request for approval within 60 days after the date mailed shall be deemed to have consented to the amendment.

Section 11 – Bylaw Glitch Repairs and Clarifications (F.S. 719.106 – Cooperatives)

  • Closed Board Meetings – Amending Section 719.106(1)(c), F.S., board or committee meetings held for the purpose of discussing personnel matters are exempt from the requirement that they be open to the unit owners - making cooperative law consistent with condominiums.

  • Election Challenges – Amending Section 719.106(1)(d)1.a., F.S., it provides that cooperative election challenges must commence within 60 days after the announced election results.

  • Recall of Board Members – Amends Section 719.106(1)(f), F.S., providing that:

    • Recall Arbitration Deadlines – Under this change, the Division would not accept recall arbitration petitions if there are 60 or fewer days until the member being recalled is up for reelection; or 60 or fewer days have passed since the board member being recalled has been elected.

    • Unit Owners – This language would permit unit owners to file a petition challenging the board’s failure to duly notice and hold a board meeting to certify the recall or the board’s failure to file a petition for arbitration pursuant to Section 719.1255 if it refuses to certify the recall. The petition must be filed within 60 days after the expiration of the applicable 5 full business day period after adjournment of the annual meeting. The DBPR arbitrator is limited to determining if the recall petition was properly served on the board and whether the written agreements or ballots are valid.

    • Board Members – This measure would enable recalled board members to challenge the validity of the recall by filing a petition within 60 days following the recall certification.

Section 12 – Suspension of Rights (F.S. 719.303 – Cooperatives)

  • Governing Document Violations – Intended to address another technical glitch in the 2011 bill, this provision amends Section 719.303(3)(a), F.S., clarifying exceptions to suspended common area and facilities use rights for unit owners (and/or a unit owner’s tenant, guest or invitee) due to violations of the association’s governing documents (the declaration, bylaws or reasonable rules and regulations of the association).

    Like common area use rights suspended for delinquency, the suspensions don't include access to limited common elements that uniquely service that unit (i.e. balconies), common elements needed to access the unit (i.e. entry and egress), utility services provided to the unit, parking spaces or elevators.

  • Suspension of Voting Rights – This measure amends Section 719.303(5), F.S., removing language added in 2011 stating that a suspended voting right may not be counted towards or impact the total number of voting interests necessary to constitute a quorum, the number of voting interests required to conduct an election, or the number of voting interests required to approve an action under the statute or pursuant to the cooperative's governing documents.

Section 16 – Effective Date (Condominiums & Cooperatives) – If passed by both the Senate and the House and signed by the Governor, the provisions in HB 73 will become effective July 1, 2013.


The Journey

Moraitis at Civil Justice Subcommittee
MORAITIS AT CIVIL JUSTICE SUBCOMMITTEE
Civil Justice Subcommittee - February 7 Meeting
CIVIL JUSTICE SUBCOMMITTEE - FEB. 7
HB 73 and SB 436 must navigate a gauntlet of vetting committees in the Statehouse and Senate, where the bills’ content will be amended, revised and partially or wholly replaced as required to mollify Committee concerns. On January 11, 2013, HB 73 was scheduled for review by the Civil Justice Subcommittee, the Business & Professional Regulation Subcommittee and the Judiciary Committee. Its first hearing in the Civil Justice Subcommittee was scheduled for February 7, 2013. Of five changes proposed by Moraitis and unanimously approved by the subcommittee, Amendments 2 through 5 target condominiums and/or cooperatives.

  • Amendment 2 (Condominiums) – Amends Section 718.111(8)(c), F.S., conforming the approval process required for the association to purchase land or a recreational lease to the process applicable to the acquisition of leaseholds, as provided for in Section 718.114, F.S.

  • Amendment 3 (Condominiums) – Amends Section 718.111(11)(g)2., F.S., Amends Section 718.111(11)(g)2., F.S., specifying repair costs for which the unit owner is responsible and provides that if the reconstruction is undertaken by the association, the cost is chargeable to the unit owner as an assessment which may be collected in the manner provided for the collection of assessments pursuant to Section 718.116, F.S.

  • Amendment 4 (Condominiums) – Amends Section 718.111(11)(j), F.S., limiting any reconstruction, repair, or replacement of insured property as a common expense to condominium property damaged during an insurable event.

  • Amendment 5 (Cooperatives) – Amends Section 719.501(1)(k), F.S., directing the Division to provide reasonable and cost-effective educational programs for cooperative association board members and unit owners, suggesting web-based electronic media, live training and seminars offered by providers in various locations throughout the state.

Senate Bill 436 was filed on January 21, 2013. On January 28, it was referred to the Senate Committees on Regulated Industries (where it currently awaits review), Judiciary and Appropriations. If both bills successfully wade through these legislative mine fields, they will be enrolled and enacted into law... if the Governor can find his pen.

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Fast-Tracking Florida Foreclosures

House Bill 87: Passidomo Readies for Round III

Click to House Bill 87 January 31, 2013 - Last year, Naples Representative Kathleen C. Passidomo filed House Bill 213 - the Fair Foreclosure Act. She anticipated prodding lenders into reviving stalled Florida foreclosures and lifting 368,000 properties out of hopelessly clogged dockets and into the market. The huge backlog of Florida foreclosures mired in judicial limbo burdened communities with 1.7 million deteriorating vacant structures while banks were left holding portfolios filled with bad paper.

Representative Kathleen C. Passidomo
REP. KATHLEEN PASSIDOMO
Since Florida is one of the nation’s 20 “Judicial States,” the courts spend an average of roughly two years guiding lenders and property owners through the third longest foreclosure process in the country. Non-judicial states with comparably astronomical foreclosure rates, like California and Nevada, complete the same ordeal in 4 months. Proceedings in those states are handled privately, although they can be shifted into a courtroom at the discretion of either party.

Mortgage contracts in non-judicial states are generally based on a clause in the deed that enables a lender to launch foreclosure proceedings against a defaulted borrower without a judge’s blessing. If the homeowner contests the foreclosure, the parties cut a deal or slug it out in court. If the homeowner fails to respond, the farmer takes the cheese – game over. By making court oversight an option available to either party instead of a requirement, about 20 months are purged from a painfully dilatory process.

Click to Florida Legislature Office of Economic and Demographic Research: An Overview of Foreclosures When a borrower defaults in a judicial state, the lender must ask the court to liquidate the property and square the debt. After lodging a complaint, the lender must serve a summons on the borrower (and other parties to the action) and file a notice of lis pendens, a public warning that any interests in the title are subject to the outcome of litigation. A final judgment of foreclosure is followed by a judicial sale, after which certificates of sale and disbursement are served on all parties by the Clerk of Court. Since Florida courts are so clogged with legal detritus, for every ten minutes spent productively moving the foreclosure forward, the association’s members must finance the frozen unit for another month – and lenders couldn’t be happier.

Until recycled into productive assets, Florida’s festering upside down inventory will continue to plague associations with non-contributing parasitic units, deter new construction (along with badly needed jobs), squeeze credit thresholds and depress property values across the state. Despite the legislation’s approval in the Statehouse, its popularity with associations and its potential for kick starting the somnolent housing market and Florida’s recovery, HB 213 was marked for death by the State’s omnipotent lending lobby.

Click to Florida Bankers Association (FBA) web page Tallahassee’s most influential trade organization refused to allow Senate approval of a provision believed to be the bill’s most important consumer protection. Under current law, lenders have five years to seek a deficiency judgment – payment for any outstanding loan balance in excess of the property’s value. The bill would have reduced that period to one year. Murphy’s Law intervened.

Anthony DiMarco, Executive Vice President of Government Affairs for the Florida Bankers Association
ANTHONY DiMARCO
Executive Vice President of Government Affairs for the Florida Bankers Association (FBA), Anthony DiMarco, who was largely silent throughout the bill’s legislative journey in the lower body, suddenly disparaged the provisiont following the bill’s approval by the Statehouse. As the session closed, key Senate beneficiaries of the banking lobby’s campaign “largesse” stranded Passidomo’s bill in the Judiciary Committee, where it died. Passidomo learned the hard way that DiMarco’s objective was never to expedite foreclosures but to provide his lender constituents with unobstructed control over every aspect of the foreclosure process.

When the 2010 “robo-signing” scandal froze foreclosures across the country while the federal government and 49 state attorneys general struggled to find a dollar amount that was tolerable to shareholders of the five leading mortgage banks yet adequate to quell the public thirst for retribution, scores of Federal and state regulators agreed to the token $25 billion nationwide settlement that rebooted the nation’s financial system. In the Sunshine State, the agreement cleared the way to a 20% increase in statewide foreclosure filings - giving Florida the nation’s highest foreclosure rate with the second largest number of filings.

Click to Lender Processing Services (LPS) web page On the dark side, Lender Processing Services - whose clients include a majority of the nation’s 50 largest banks - reminds us that one in five Florida mortgages is currently delinquent, and more than half of those have not yet entered the foreclosure process. With 377,272 pending foreclosure cases awaiting adjudication by Florida’s 20 circuit courts, the average foreclosure process has increased during the past year from 676 days to 858 days. Without legislative relief, Florida’s recovery will remain hostage to this bloated backlog of bad loans.

Miami Statehouse Representative George Moraitis
REP. GEORGE MORAITIS
Coveting another bite at the apple, Passidomo teamed with last year’s bill co-sponsor George Moraitis - our District 93 Statehouse Representative - to file House Bill 87 on January 3, 2013. This modified version of last year’s “Fair Foreclosure Act” must walk a tightrope between consumer advocates - who equate any foreclosure reform with a violation of due process - and the State’s economic recovery. Led by Orlando Representative Darren Soto (who has since ascended to Florida’s District 14 Senate seat), two busloads of property rights advocates and homeowners in foreclosure descended on the Capitol last year and held mid-session demonstrations protesting the 2012 bill that was later smoked by the bank lobby. On January 7, 2013, Passidomo commented on the revised legislation she filed four days earlier, stating “We need to make sure the process is as efficient as possible while at the same time giving the borrower their due process rights. Unfortunately, if you don’t have an income or you can’t afford to pay anything, the property can’t just sit in limbo forever.”

Orlando Representative Darren Soto leads demonstration against HB 213
REPRESENTATIVE SOTO SPEAKS AGAINST HB 213
This is Passidomo’s third foreclosure bill in as many years, as her first attempt in 2011, House Bill 1191, was referred to the House Civil Justice Committee on March 14, where it was ignored until the session ended on May 7, 2011. Her first foreclosure bill was a victim of suspicions prompted by an appalling foreclosure bill filed in the Statehouse one year earlier.

Former OFR Deputy Commissioner Tom Grady
FORMER OFR COMM.
TOM GRADY
House Bill 1523 was drafted by lobbyists for the Florida Bankers Association (FBA) and filed by then Naples Representative Tom Grady in 2010. Instead of expediting foreclosures by providing fair guidelines for lenders, homeowners and associations, it simply moved the foreclosure process out of the courtroom and into the lender’s back office. Under Grady’s bill, in exchange for statutory control of the foreclosure process, lenders would consider partially forgiving any loan balance for homeowners who vacated the property immediately after receiving a foreclosure notice.

Becker & Poliakoff association attorney Ken Direktor
BECKER & POLIAKOFF ASSN
ATTY KEN DIREKTOR
However, the problem for associations was never about dawdling homeowners, but the tactical delays implemented by lenders to dodge their statutory obligations to the association. If Grady’s bill was enacted, lenders could toss out the homeowner without ever taking title to the unit until they lined up a sale, possibly two or three years later. Commenting on the adverse impact that Grady’s gift to the bank lobby would have on common interest communities, senior Becker & Poliakoff association attorney Ken Direktor complained, “…we don’t have the ability to go to the judge and say the banks are dragging their feet. It gives banks complete control.”

Click to Office of Financial Regulation (OFR) website DiMarco didn’t choose Grady by accident. Often likened to a slippery grifter, Tom Grady is the same political button man who singlehandedly dismantled the state’s Mortgage fraud unit within 3 months of being named Commissioner of the Office of Financial Regulation (OFR) in 2011 by Governor Rick Scott, whose Naples home is located on the same block as Grady’s. Since Florida leads the nation in Mortgage fraud, Federal, State and local law enforcement authorities were aghast when Grady canned 81 OFR investigators and support personnel while closing regional offices in Fort Myers, Jacksonville, Pensacola and Fort Lauderdale (aptly known to State and Federal investigators as “Fraud Lauderdale”).

OFR Deputy Commissioner Greg Hila
OFR DEP. COMM. GREG HILA
After Grady neutered the only State agency equipped to combat financial fraud and replaced the Division Director with Naples Chiropractor turned part-time real estate agent Greg Hila (one of Scott’s golfing buddies), Scott sent Grady to work his magic as interim President of Citizens Property Insurance, where the board dumped him after he ran up a $10,000 travel bill for trips to Bermuda and Amelia Island within five weeks of his appointment.

Tom Grady and Lt. Gov. Jennifer Carroll party with Ann Scott, the wife of Gov. Rick Scott
TOM GRADY AND LT. GOV. JENNIFER CARROLL PARTY
WITH ANN SCOTT, THE WIFE OF GOV. RICK SCOTT
Needless to say, while her 2011 foreclosure bill languished in committee, Passidomo spent the balance of the session convincing colleagues and constituents that her bill was nothing like Grady’s banker-drafted legislation. As a result, her 2012 bill would have been enacted into law if it hadn’t been euthanized by chief bank lobbyist DiMarco.

In 1993, lenders seeking to more quickly recycle non-producing properties in South Florida’s red-hot real estate environment pushed the legislature to create a process to fast track homeowner-stalled foreclosures through an order to show cause. When the housing market collapsed, the lending industry reversed its policy objectives. To avoid the statutory “safe harbor” financial obligations triggered by taking title to defaulted association properties, lenders exploited procedural loopholes to stave off finalizing association foreclosures, forcing the association’s members to subsidize their units.

Click to Real Property Probate and Trust Law section of the Florida Bar web page Passidomo’s 2013 bill would equip condos, co-ops and HOAs with a fast-track option available only to lenders under current law. She wants to arm associations with the same right to file an “Order to Show Cause,” demanding that a Judge review the file of a frozen foreclosure and set a hearing within forty-five (45) days of the order. In the context of this bill, the order would mandate that the parties explain to the Judge why a final judgment shouldn’t be entered immediately. Passidomo’s handiwork would raise the bar on defendants, who can currently thwart a fast-track foreclosure just by showing up at the hearing. If foot-dragging lenders fail to respond, the bill would allow the association to file default motions that push the foreclosure to final judgment and sale.

Tallahassee Attorney and Lobbyist Peter Dunbar
TALLAHASSEE ATTORNEY
LOBBYIST PETER DUNBAR
To shore up consumer protections and improve the bill’s prospects, Passidomo solicited input from renowned Tallahassee legal icon Peter Dunbar. As legislative counsel for the Real Property Probate and Trust Law section of the Florida Bar and general counsel to the Conference of Circuit Court Judges, Dunbar was uniquely qualified to tailor a more balanced bill. HB 87 addresses some of the consumer complaints that afflicted the bill’s earlier incarnations. In 2010, when bank employees (or staffers in bank law firms) attested in writing to having personally reviewed mortgage documents they never saw, thousands of properties were illegally stripped from homeowners by lenders with no legal standing to foreclose the property. The 2013 bill requires mortgage lenders to certify that their paperwork substantiates their right to foreclose. Another feature of last year’s bill that drew blowback from Property Rights advocates was an expedited foreclosure process for properties that appear abandoned. The double stigma of evicting unknown homeowners without proper notice spurred bill sponsors to delete the “apparently abandoned property” measure from this year’s legislation. Dunbar remarked, “I would say this bill is improved significantly because ideas that became controversial in last year’s bill are not in this one.”

To help chill lender opposition, the legislation shields banks from some notoriously problematic legal entanglements. For instance, if sued for wrongfully foreclosing on a home, a lender could face court-mandated return of the subject property, which it may have since sold to an unsuspecting third party. This legally untenable scenario exposes the lender to a Chinese menu of damage actions by virtually everyone with standing, including the victimized plaintiff, the actual noteholder and the third party purchaser whose title was compromised. By shielding the unaffiliated purchaser’s clear title to the property, Passidomo’s bill would consequently free the bank from any obligation to recoup a house it sold after a faulty foreclosure. As long as the property’s title remains uncompromised, the victimized homeowner will instead be entitled to lender compensation for damages sustained when improperly expelled from the property, as well as a laundry list of punitive damages, statutory damages, consequential damages, injunctive relief, legal fees and court costs.

Representative Kathleen C. Passidomo Discusses Foreclosures on House Floor
REP. KATHLEEN C. PASSIDOMO DISCUSSES
FORECLOSURES ON HOUSE FLOOR
It is unclear whether these added bank protections will win lender support, since the 2013 bill still reduces the window during which banks can pursue a “deficiency judgment” against a homeowner from 5 years to one year – the provision that precipitated the bill’s demise last year. On the flip side, Passidomo is still beset by a coalition of property rights hard liners, homeowners in foreclosure who hope to continue their cost-free accommodations, mortgage modification consultants concerned about their shrinking niche industry, foreclosure activists and due process watchdogs. These strange bedfellows began organizing opposition to this bill shortly after last session’s Sine Die, when Passidomo pledged to refile again this year.

Florida Senate President Don Gaetz
FLORIDA SENATE
PRESIDENT DON GAETZ
Since HB 87 will finally afford associations a legal vehicle with which lenders can be forced to recycle frozen properties into contributing units instead of sponging off association budgets, support from association advocacy groups should help it sail through the Statehouse. Since the nationwide mortgage banking settlement, state legislatures have been grinding out laws to facilitate the cleanup of local housing markets. Having voted for Passidomo’s failed HB 213 last year in committee, Senate President Don Gaetz (R-Niceville) issued an invitation to refile in 2013, stating “I voted for (the bill) last year, I thought it was a good bill. I would expect that there would be some expedited foreclosure avenues created in legislation or at least attempted in legislation.” DiMarco may have had a change of heart. In the FBA’s post session newsletter, while admitting that there were enough votes in the Senate to pass last year’s bill and blaming its demise on “internal Senate politics,” the FBA planned to push for foreclosure legislation in 2013. If Passidomo and Moraitis stay on point, the bill should survive any adversarial Senate patronage and make it to the Governor’s desk, where the Governor may either sign it, or roll it and light up.

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Broward County Property Appraiser Lori Parrish
BCPA LORI PARRISH
January 17, 2013 - On June 17, 2010, Broward County Property Appraiser
Lori Parrish addressed the Galt Mile Community Association Advisory Board. As the two-hour meeting came to a close, GMCA President Pio Ieraci expressed concern about an official correspondence requesting that Galt Mile associations turn over to the Property Appraiser’s office any information about unit owners that may have improperly applied for a Homestead Exemption. Pio said “I am disturbed by this request. Not only are we being asked to do your job, I believe that it’s wrong to violate the confidentiality of our members’ information.”

GMCA President Pio Ieraci
GMCA PRESIDENT
PIO IERACI
When discussed at a prior meeting, Advisory Board members decided against cooperating with this request. While fraud costs everyone money, it was deemed inappropriate for associations to disclose confidential information about their members unless withholding that information exposes anyone to danger. To deter inappropriate compliance with this request by some unsuspecting association office employee, it was also suggested that each association should instruct their administrative personnel to pass such requests to the Board.

Click to BCPA Homestead Fraud web page Parrish answered Ieraci, “I understand that that you may be hesitant to inform on your neighbors or reveal information you consider confidential. The letter is simply a request for your help. I hope you understand why I am so passionate about fraudulent exemptions. These people are increasing the tax bill for every other Broward property owner, not unlike those association members who default on their assessments and force their neighbors to assume their obligations.” She emphasized that this type of fraud is often a strategically planned annual rip-off, not a desperate knee-jerk reaction to current financial pressures. Particularly irksome to Parrish is the fact that most violators can well afford the assessment. Parrish said “These crooks couldn’t care less that they are hurting every one of their neighbors. When I see the pain suffered by taxpayers struggling to scrape by this tough economy, I don’t have much patience for those who deliberately add to their burden - and yours - and mine!”

Click to BCPA Homestead Fraud web page Hoping to better illustrate the moral dilemma precipitated by her request, Ieraci retorted, “Lori - we are all very grateful for the improvements you’ve engineered in the Property Appraiser’s Office. We all support your efforts to stamp out the fraud that costs us $millions every year. Although I personally agree that fraudulent exemptions are despicable, I believe that Board members are obligated to safeguard confidential information about the association’s members.” In what appeared to be a duel for the last word, the Property Appraiser leveled a response that was pure Parrish, “I understand, Pio – nobody likes a rat.”

District 28 Senator Nancy Detert
SEN. NANCY DETERT
Two and a half years later, Sarasota Senator Nancy Detert (District 28) is looking for a few good rats. On January 7, 2013, she filed Senate Bill 182, legislation drafted to deter the abuse of Florida’s homestead exemptions. The bill mobilizes two vehicles to thwart tax cheats. The opening section provides for placement of a bounty on scoundrels who improperly claim Homestead Exemptions. The local tax collector must pay whistleblowers “a reward of up to 20 percent of the amount ultimately recovered in back taxes, interest, and penalties, not to exceed $500.” If two stoolies report the same scofflaw, whoever reported the violation first - using the reporting method included in the legislation - bags the booty.

Actually, it’s not a bad concept. It costs us nothing and might serve as a reasonably effective deterrent. Any recovered funds are sure to be welcomed by cash-needy local jurisdictions. Trying to determine which of their nosy neighbors will drop the dime that ends their scam will drive nervous scofflaws crazy.

The vast majority of homestead cheats are double dippers, people with homes in several jurisdictions who simultaneously claim homestead status for two or more of these properties. Violations also accrue to exempted properties that are rented out for any portion of the year, with the exception of military homesteaders who are out-of-residence under orders.

Bay County Property Appraiser Dan Sowell
BAY COUNTY PROPERTY
APPRAISER DAN SOWELL
Property Appraisers are less than enthusiastic about Detert’s bill. According to Bay County Property Appraiser Dan Sowell, most Property Appraisers with legitimate fraud units already receive a steady stream of tips from anonymous sources, each of which must be researched and verified. The quality of reported tips seemingly varies by motive, with the best information coming from those morally irked by fraud or resentful of having to subsidize tax obligations dodged by scofflaws. Far less reliable is the huge volume of accusations rooted in personal animosity. Sowell believes the new bill will disproportionately incentivize capricious reports in unprecedented numbers.

For every tax cheat they snag, tax collectors will have to research scores of questionable “tips” from snitches, many of who will view the payout as an added benefit to ratting out neighbors they simply don’t like. Leery about the potential for false reporting by an army of mercenary squealers, Sowell fears that the legislation will bury tax collectors in dubious feedback that will unproductively consume a Property Appraiser’s limited research and verification resources. Presumably, the applicable reporting requirements will preclude an enterprising octogenarian from grabbing the phone book and sending in one page of names each day.

Segue to Detert’s two dilemmas. She had to prevent armchair canaries from automating their snitch service by mischaracterizing random lists of names and addresses as scurrilous tax cheats, condemning the Property Appraiser to an endless fool’s errand. Secondly, when two or more squealers rat out the same poor slob, she needed some vehicle for determining who was first to pull the plug and win the jackpot. After myriad sleepless nights, she finally devised a methodology that nailed both birds with one stone.

Click to Florida Department of Revenue website SB 182 directs the Florida Department of Revenue to create a form that the snitch must complete and submit to the Property Appraiser for time and date stamping, thereby establishing each informant’s relative eligibility for payment. Mandated to be downloadable from the Department’s website and available on request from any local Property Appraiser, the form will contain “the name and address of the person reporting the suspected violation, the address of the property suspected of illegally or improperly receiving a homestead exemption, and the basis for suspecting that a homestead exemption violation has occurred.” Here’s the rub.

Informants with hard information about a tax cheat are rightfully adamant about preserving their anonymity, given the prospect for retribution from scofflaws who stand to lose a truckload of assets. Although a White Collar crime, among its perpetrators are knuckle busters, leg breakers and others capable of visiting vengeance on a suspected squealer. When Detert’s whistleblowers submit their names and addresses to the Property Appraiser to claim the bounty, the forms become public records, available to anyone on request. WHOOPs!

The prospect of being identified as the stool pigeon is likely to induce the vast majority of reliable informants to forego the few dollars in tip money, leaving those solely motivated by the payoff to participate in Detert’s vision. Remarking “I could certainly see some hard feelings,” Sowell called the bill an “unnecessary incentive” and lamented its potential for abusive harassment while fomenting divisive feuds within communities. He concluded, “I would be against SB 182.”

The second section of the bill houses a poison pill. It requires that every Condominium and Cooperative association submit to the County Property Appraiser by January 31 “a list of the units that were rented in the previous year rather than occupied by the owner.” Notwithstanding anyone’s sentiments about tax avoidance, drafting associations to work for the local Property Appraiser is fraught with sticky and dangerous pitfalls.

While forcing associations to generate uncompensated work product may fall short of indentured servitude - it is clearly an unfunded mandate. The annual cost of researching, compiling and forwarding this data to the local Property Appraiser will be added to every unit owner’s maintenance obligation. In addition to the slippery slope created by requiring a specific class of homeowner to involuntarily finance the local Property Appraiser’s responsibilities, the bill threatens unit owners and their associations with legal jeopardy.

The real danger to associations posed by the bill is largely a by-product of its legislative omissions. When the Property Appraiser nails long-time scofflaws for $millions in back taxes, penalties and interest, they can pay the tab, negotiate a more modest settlement or go to court. As the stakes increase on a case by case basis, so does the incentive to contest the assessment in a courtroom. The bill fails to mention that their mandated involvement threatens to place associations at ground zero in a legal maelstrom they would otherwise observe from the sidelines. Minor mistakes or typos by office staffers could threaten disastrous repercussions. For instance, when the Property Appraiser aggressively pursues the owner of a unit mistakenly identified by the association as having been rented, the bill’s silence on the association’s liability for damages is deafening.

Additionally, volunteers elected to serve on an association’s governing board are vested by statute with a fiduciary responsibility to the association and its members. In requiring associations to violate their residents’ confidentiality, it is unclear whether complying board members will also be violating that statutory obligation.

As currently drafted, SB 182 also equips boards with a dangerously intimidating weapon that carries a significant potential for abuse. A vindictive administration could apply some skewed standard to selectively report troublemakers, political opponents or anyone that “ticked off” the wrong board member. Implied retribution from an abusive board could have a chilling effect on association elections and the unobstructed exercise of members’ rights.

Click Here to Community Advocacy Network of Florida - CAN
Donna Berger
DONNA BERGER
One day after the bill was filed, acclaimed association Attorney Donna Berger, who serves as Executive Director of the Community Advocacy Network (CAN), stated her intention to meet with Senator Detert in hopes of revising the bill’s poorly conceived association protocols or mitigating their potentially dangerous consequences. Hopefully, Berger will find a way to help Detert realize her bill’s objectives, without shooting herself in the foot – or us in the neck.

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