Homeowners Association New Legal Requirements

The new amendments to the Homeowner Association Act went into effect July 1, 2013.  This created new obligations and restrictions for Homeowner Associations and their Board of Directors as follows:

          1.       All Homeowners Associations must register with the Department of Business and Professional Regulation by November 22, 2013.  The format for registration is expected to be available online by October 1, 2013.  Information to be given includes the Homeowner Association’s legal name, federal employer identification number, mailing and physical addresses, the total number of parcels/units, and the total amount of revenues and expenses from the Homeowner Association’s annual budget.

          2.       The new records retention requirements now mirror the existing Condominium Act, including a requirement for records to be maintained for seven years and the records must be maintained within forty-five miles of the community or within the same county.  Homeowners Associations are also allowed to maintain Association records electronically via the Internet or on portable media such as cd-roms or thumb drives in lieu of providing paper copies.  The right to charge for copy costs has been reduced to $.25 per page, and personnel costs for requests that exceed one-half hour or more than twenty-five pages is limited to a charge of $20.00 per hour.

          3.       Each new board member must certify, within ninety days of election or appointment that they have read the governing documents and will uphold them to the best of their ability and that they will faithfully discharge their fiduciary responsibility to the Association or, in the alternative, that they have satisfactorily completed an educational curriculum administered by a division-approved association education provider.  Our firm provides free forms for completion via e-mail request at mjposner@warddamon.com (please put Director Certificate in the subject line).

          4.       All Homeowners Associations must obtain a Fidelity Bond/Crime and Fidelity Insurance. This requirement can be waived by a majority vote at an annual or special meeting of the members in the same manner as other permissible waivers.  No minimum coverage amount is currently set forth in statute, but we are recommending not less than $100,000.00 for small Associations, with larger amounts for large Associations.

          5.       Contracts with Board of Director members must now be approved by a 2/3rds vote of the Board (and excluding the vote of the Director involved), and the vote must include a finding that the contract is both fair and reasonable.  After approval, Board of Directors must disclose the contract at next member meeting.  Any member at that meeting can make a motion to cancel the contract and if cancelled by a majority vote, the contract is void.  Therefore, any contracts signed by the Association must include a termination provision without penalty if the members vote to cancel the contract.

          6.       The new law now prevents officers, directors and property managers from receiving any good or services without payment (or reduced payment) from any third party soliciting or providing services to the Homeowners Association in a way to cut back on kick- backs.  One exception is for meals not to exceed $25.00 as part of a business meeting or items at trade fairs or education programs.  Violation of this new law means immediate expulsion from the violator’s position. 

          7.       Any director or officer charged with a theft of Homeowners Association funds must be immediately removed from office, but if charges are dropped or the person is acquitted they must be reinstated to the same office within the Association.

          The new laws impose greater burdens on Homeowners Associations, in a push to add further condominium like regulations of Homeowners Associations.  Each Board member should carefully review the law to insure timely compliance.

Michael Posner, Esq., is a partner in Ward Damon a mid-sized real estate and business oriented law firm serving all of South Florida, with offices in Palm Beach County.  They specialize in real estate and can assist community associations in all legal matters.  They can be reached at 561.594.1452, or at mjposner@warddamon.com