2017 Legislative Update for Florida’s Community Association Laws: Part III

On July 1^st, the 2017 amendments to the Florida Statutes affecting community associations became effective.  The 2017 legislative amendments to the Condominium Act and Homeowners Association Act are substantial.  This post is Part III in a blog series detailing these legislative amendments, and focuses on changes to the law concerning conflicts of interest, member voting rights, use of debit cards, and other issues.

Conflicts of Interest:  (Applies to condominiums only).

• An association may not hire an attorney who also represents the association’s management company;
• A board member, manager, or management company may not purchase a unit at the association’s assessment lien foreclosure sale or take title by deed-in-lieu of foreclosure. Also, a party contracting to provide maintenance or management services to an association, or an officer or board member of such party, may not purchase a unit at the association’s assessment lien foreclosure sale;
• An association may not employ or contract with any service provider that is owned or operated by a board member or with any person who has a financial relationship with a board member or officer or a relative within the third degree. (This does not apply if the Board member, officer or relative owns less than one percent of the equity shares);
• Board members and officers, and the relatives of board members and officers, must now disclose to the association any activity that may reasonably be construed as a conflict of interest. There is a rebuttable presumption that a conflict exists if a director, officer, or relative has an interest in a company that enters into a contract with the association;
• If a director or officer, or relative, proposes to engage in an activity that is a conflict of interest, the proposed activity must be listed on, and all contracts and transactional documents related to the proposed activity must be attached to, the meeting agenda. If the board votes against the proposed activity, the director or officer, or relative, must notify the board in writing of his or her intention not to pursue the proposed activity or to withdraw from office;
• If 50 percent or more of the units are owned by a party contracting to provide maintenance or management services to a residential condominium after turnover, or by an officer or board member of such party, the contract may be cancelled by a majority vote of the owners other than the contracting party.

Suspension of Voting Rights:  (Applies to condominiums only).

• A member’s voting rights may only be suspended if the delinquent amount is more than $1,000 and more than 90 days delinquent;
• Proof of such monetary obligation must be provided to the member 30 days before such suspension can take effect;

Debit Cards:  (Applies to condominiums only).

• An association and its officers, directors, employees and agents may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expense;
• The use of a debit card issued in the name of the association, or billed directly to the association, for any expense that is not a lawful obligation of the association may be prosecuted as credit card fraud;

Term Limits:  (Applies to condominiums only).

• A board member may not serve more than four consecutive 2-year terms, unless approved by an affirmative vote of two-thirds of the total voting interest of the association or unless there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy;

Recalls:  (Applies to condominiums only).

• After a recall, the recalled board member shall return to the board within 10 business days all records and property of the association in his/her possession;
• The new statute still requires the board to hold a meeting within 5 business days after receipt of the recall; however, the board is no longer required to vote to certify or not certify the recall. The board can still file a petition for recall arbitration challenging the recall.