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Senate Bill 0902

Senate Bill sb0902c1

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    Florida Senate - 2007                            CS for SB 902

    By the Committee on Regulated Industries; and Senator Jones





    590-1973-07

  1                      A bill to be entitled

  2         An act relating to community associations;

  3         creating s. 712.11, F.S.; providing for the

  4         revival of certain covenants that have lapsed;

  5         amending s. 718.106, F.S.; prohibiting local

  6         governments from limiting the access of certain

  7         persons to beaches adjacent to or adjoining

  8         condominium property; amending s. 718.110,

  9         F.S.; revising provisions relating to the

10         amendment of declarations; providing

11         legislative findings and a finding of

12         compelling state interest; providing criteria

13         for consent to an amendment; requiring notice

14         regarding proposed amendments to mortgagees;

15         providing criteria for notification; providing

16         for voiding certain amendments; amending s.

17         718.114, F.S.; providing that certain

18         leaseholds, memberships, or other possessory or

19         use interests shall be considered a material

20         alteration or substantial addition to certain

21         real property; amending s. 718.404, F.S.;

22         providing retroactive application of provisions

23         relating to mixed-use condominiums; amending s.

24         719.103, F.S.; providing a definition; amending

25         s. 719.507, F.S.; prohibiting laws, ordinances,

26         or regulations that apply only to improvements

27         that are or may be subjected to an equity club

28         form of ownership; amending s. 720.302, F.S.;

29         revising governing provisions relating to

30         corporations that operate residential

31         homeowners' associations; amending s. 720.303,

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    Florida Senate - 2007                            CS for SB 902
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 1         F.S.; revising application to include certain

 2         meetings; requiring the association to provide

 3         certain information to prospective purchasers

 4         or lienholders; authorizing the association to

 5         charge a reasonable fee for providing certain

 6         information; requiring the budget to provide

 7         for annual operating expenses; authorizing the

 8         budget to include reserve accounts for capital

 9         expenditures and deferred maintenance;

10         providing a formula for calculating the amount

11         to be reserved; authorizing the association to

12         adjust replacement reserve assessments

13         annually; authorizing the developer to vote to

14         waive the reserves or reduce the funding of

15         reserves for a certain period; revising

16         provisions relating to financial reporting;

17         revising time periods in which the association

18         must complete its reporting; repealing s.

19         720.303(2), F.S., as amended, relating to board

20         meetings, to remove conflicting versions of

21         that subsection; creating s. 720.3035, F.S.;

22         providing for architectural control covenants

23         and parcel owner improvements; authorizing the

24         review and approval of plans and

25         specifications; providing limitations;

26         providing rights and privileges for parcel

27         owners as set forth in the declaration of

28         covenants; amending s. 720.305, F.S.; providing

29         that, where a member is entitled to collect

30         attorney's fees against the association, the

31         member may also recover additional amounts as

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 1         determined by the court; amending s. 720.306,

 2         F.S.; providing that certain mergers or

 3         consolidations of an association shall not be

 4         considered a material or adverse alteration of

 5         the proportionate voting interest appurtenant

 6         to a parcel; amending s. 720.307, F.S.;

 7         requiring developers to deliver financial

 8         records to the board in any transition of

 9         association control to members; requiring

10         certain information to be included in the

11         records and for the records to be prepared in a

12         specified manner; amending s. 720.308, F.S.;

13         providing circumstances under which a guarantee

14         of common expenses shall be effective;

15         providing for approval of the guarantee by

16         association members; providing for a guarantee

17         period and extension thereof; requiring the

18         stated dollar amount of the guarantee to be an

19         exact dollar amount for each parcel identified

20         in the declaration; providing payments required

21         from the guarantor to be determined in a

22         certain manner; providing a formula to

23         determine the guarantor's total financial

24         obligation to the association; providing that

25         certain expenses incurred in the production of

26         certain revenues shall not be included in the

27         operating expenses; amending s. 720.311, F.S.;

28         revising provisions relating to dispute

29         resolution; providing that the filing of any

30         petition for arbitration or the serving of an

31         offer for presuit mediation shall toll the

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 1         applicable statute of limitations; providing

 2         that certain disputes between an association

 3         and a parcel owner shall be subject to presuit

 4         mediation; revising provisions to conform;

 5         providing that temporary injunctive relief may

 6         be sought in certain disputes subject to

 7         presuit mediation; authorizing the court to

 8         refer the parties to mediation under certain

 9         circumstances; requiring the aggrieved party to

10         serve on the responding party a written offer

11         to participate in presuit mediation; providing

12         a form for such offer; providing that service

13         of the offer is effected by the sending of such

14         an offer in a certain manner; providing that

15         the prevailing party in any subsequent

16         arbitration or litigation proceedings is

17         entitled to seek recovery of all costs and

18         attorney's fees incurred in the presuit

19         mediation process; requiring the mediator or

20         arbitrator to meet certain certification

21         requirements; removing a requirement relating

22         to development of an education program to

23         increase awareness of the operation of

24         homeowners' associations and the use of

25         alternative dispute resolution techniques;

26         providing effective dates.

27  

28  Be It Enacted by the Legislature of the State of Florida:

29  

30         Section 1.  Section 712.11, Florida Statutes, is

31  created to read:

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    Florida Senate - 2007                            CS for SB 902
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 1         712.11  Covenant revitalization.--A homeowners'

 2  association not otherwise subject to chapter 720 may use the

 3  procedures set forth in ss. 720.403-720.407 to revive

 4  covenants that have lapsed under the terms of this chapter.

 5         Section 2.  Subsection (5) is added to section 718.106,

 6  Florida Statutes, to read:

 7         718.106  Condominium parcels; appurtenances; possession

 8  and enjoyment.--

 9         (5)  A local government may not prohibit condominium

10  unit owners or an association from permitting guests,

11  licensees, or invitees access to a public beach adjacent to or

12  adjoining the condominium property.

13         Section 3.  Effective October 1, 2007, subsection (11)

14  of section 718.110, Florida Statutes, is amended to read:

15         718.110  Amendment of declaration; correction of error

16  or omission in declaration by circuit court.--

17         (11)  The Legislature finds that the procurement of

18  mortgagee consent to amendments that do not affect the rights

19  or interests of mortgagees is an unreasonable and substantial

20  logistical and financial burden on the unit owners and that

21  there is a compelling state interest in enabling the members

22  of a condominium association to approve amendments to the

23  condominium documents through legal means. Accordingly, and

24  notwithstanding any provision to the contrary contained in

25  this section:

26         (a)  As to any mortgage recorded on or after October 1,

27  2007, any provision in the declaration, articles of

28  incorporation, or bylaws that requires recorded after April 1,

29  1992, may not require the consent or joinder of some or all

30  mortgagees of units or any other portion of the condominium

31  property to or in amendments to the declaration, articles of

                                  5

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    Florida Senate - 2007                            CS for SB 902
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 1  incorporation, or bylaws or for any other matter shall be

 2  enforceable only as to the following matters: unless the

 3  requirement is limited to amendments materially affecting the

 4  rights or interests of the mortgagees, or as otherwise

 5  required by the Federal National Mortgage Association or the

 6  Federal Home Loan Mortgage Corporation, and unless the

 7  requirement provides that such consent may not be unreasonably

 8  withheld. It shall be presumed that, except as to

 9         1.  Those matters described in subsections (4) and

10  (8).,

11         2.  Amendments to the declaration, articles of

12  incorporation, or bylaws that adversely affect the priority of

13  the mortgagee's lien or the mortgagee's rights to foreclose

14  its lien or that otherwise materially affect the rights and

15  interests of the mortgagees.

16         (b)  As to mortgages recorded before October 1, 2007,

17  any existing provisions in the declaration, articles of

18  incorporation, or bylaws requiring mortgagee consent shall be

19  enforceable.

20         (c)  In securing consent or joinder, the association

21  shall be entitled to rely upon the public records to identify

22  the holders of outstanding mortgages. The association may use

23  the address provided in the original recorded mortgage

24  document, unless there is a different address for the holder

25  of the mortgage in a recorded assignment or modification of

26  the mortgage, which recorded assignment or modification must

27  reference the official records book and page on which the

28  original mortgage was recorded. Once the association has

29  identified the recorded mortgages of record, the association

30  shall, in writing, request of each unit owner whose unit is

31  encumbered by a mortgage of record any information the owner

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1  has in his or her possession regarding the name and address of

 2  the person to whom mortgage payments are currently being made.

 3  Notice shall be sent to such person if the address provided in

 4  the original recorded mortgage document is different from the

 5  name and address of the mortgagee or assignee of the mortgage

 6  as shown by the public record. The association shall be deemed

 7  to have complied with this requirement by making the written

 8  request of the unit owners required under this paragraph. Any

 9  notices required to be sent to the mortgagees under this

10  paragraph shall be sent to all available addresses provided to

11  the association.

12         (d)  Any notice to the mortgagees required under

13  paragraph (c) may be sent by a method that establishes proof

14  of delivery, and any mortgagee who fails to respond within 60

15  days after the date of mailing shall be deemed to have

16  consented to the amendment.

17         (e)  For those amendments requiring mortgagee consent

18  on or after October 1, 2007, do not materially affect the

19  rights or interests of mortgagees. in the event mortgagee

20  consent is provided other than by properly recorded joinder,

21  such consent shall be evidenced by affidavit of the

22  association recorded in the public records of the county where

23  the declaration is recorded. Any amendment adopted without the

24  required consent of a mortgagee shall be voidable only by a

25  mortgagee who was entitled to notice and an opportunity to

26  consent. An action to void an amendment shall be subject to

27  the statute of limitations beginning 5 years after the date of

28  discovery as to the amendments described in subparagraphs

29  (a)1. and 2. and 5 years after the date of recordation of the

30  certificate of amendment for all other amendments. This

31  

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 1  provision shall apply to all mortgages, regardless of the date

 2  of recordation of the mortgage.

 3         (f)  Notwithstanding the provisions of this section,

 4  any amendment or amendments to conform a declaration of

 5  condominium to the insurance coverage provisions in s.

 6  718.111(11) may be made as provided in that section.

 7         Section 4.  Section 718.114, Florida Statutes, is

 8  amended to read:

 9         718.114  Association powers.--An association has the

10  power to enter into agreements, to acquire leaseholds,

11  memberships, and other possessory or use interests in lands or

12  facilities such as country clubs, golf courses, marinas, and

13  other recreational facilities. It has this power whether or

14  not the lands or facilities are contiguous to the lands of the

15  condominium, if they are intended to provide enjoyment,

16  recreation, or other use or benefit to the unit owners. All of

17  these leaseholds, memberships, and other possessory or use

18  interests existing or created at the time of recording the

19  declaration must be stated and fully described in the

20  declaration. Subsequent to the recording of the declaration,

21  agreements acquiring these leaseholds, memberships, or other

22  possessory or use interests not entered into within 12 months

23  following the recording of the declaration shall be considered

24  a material alteration or substantial addition to the real

25  property that is association property, and the association may

26  not acquire or enter into agreements acquiring these

27  leaseholds, memberships, or other possessory or use interests

28  except as authorized by the declaration as provided in s.

29  718.113. The declaration may provide that the rental,

30  membership fees, operations, replacements, and other expenses

31  are common expenses and may impose covenants and restrictions

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    Florida Senate - 2007                            CS for SB 902
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 1  concerning their use and may contain other provisions not

 2  inconsistent with this chapter. A condominium association may

 3  conduct bingo games as provided in s. 849.0931.

 4         Section 5.  Subsections (1) and (2) of section 718.404,

 5  Florida Statutes, are amended to read:

 6         718.404  Mixed-use condominiums.--When a condominium

 7  consists of both residential and commercial units, the

 8  following provisions shall apply:

 9         (1)  The condominium documents shall not provide that

10  the owner of any commercial unit shall have the authority to

11  veto amendments to the declaration, articles of incorporation,

12  bylaws, or rules or regulations of the association. This

13  subsection shall apply retroactively as a remedial measure.

14         (2)  Subject to s. 718.301, where the number of

15  residential units in the condominium equals or exceeds 50

16  percent of the total units operated by the association, owners

17  of the residential units shall be entitled to vote for a

18  majority of the seats on the board of administration. This

19  subsection shall apply retroactively as a remedial measure.

20         Section 6.  Subsections (18) through (27) of section

21  719.103, Florida Statutes, are renumbered as subsections (19)

22  through (28), respectively, and a new subsection (18) is added

23  to that section to read:

24         719.103  Definitions.--As used in this chapter:

25         (18)  "Equity facilities club" means a club comprised

26  of recreational facilities in which proprietary membership

27  interests are sold to individuals, which membership interests

28  entitle the individuals to use certain physical facilities

29  owned by the equity club. Such physical facilities do not

30  include a residential unit or accommodation. For purposes of

31  this definition, the term "accommodation" shall include, but

                                  9

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    Florida Senate - 2007                            CS for SB 902
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 1  is not limited to, any apartment, residential cooperative

 2  unit, residential condominium unit, cabin, lodge, hotel or

 3  motel room, or other accommodation designed for overnight

 4  occupancy for one or more individuals.

 5         Section 7.  Section 719.507, Florida Statutes, is

 6  amended to read:

 7         719.507  Zoning and building laws, ordinances, and

 8  regulations.--All laws, ordinances, and regulations concerning

 9  buildings or zoning shall be construed and applied with

10  reference to the nature and use of such property, without

11  regard to the form of ownership. No law, ordinance, or

12  regulation shall establish any requirement concerning the use,

13  location, placement, or construction of buildings or other

14  improvements which are, or may thereafter be, subjected to the

15  cooperative or equity facilities club form of ownership,

16  unless such requirement shall be equally applicable to all

17  buildings and improvements of the same kind not then, or

18  thereafter to be, subjected to the cooperative or equity

19  facilities club form of ownership. This section does not apply

20  if the owner in fee of any land enters into and records a

21  covenant that existing improvements or improvements to be

22  constructed shall not be converted to the cooperative form of

23  residential ownership prior to 5 years after the later of the

24  date of the covenant or completion date of the improvements.

25  Such covenant shall be entered into with the governing body of

26  the municipality in which the land is located or, if the land

27  is not located in a municipality, with the governing body of

28  the county in which the land is located.

29         Section 8.  Subsections (4) and (5) of section 720.302,

30  Florida Statutes, are amended to read:

31         720.302  Purposes, scope, and application.--

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 1         (4)  This chapter does not apply to any association

 2  that is subject to regulation under chapter 718, chapter 719,

 3  or chapter 721; or to any nonmandatory association formed

 4  under chapter 723, except to the extent that a provision of

 5  chapter 718, chapter 719, or chapter 721 is expressly

 6  incorporated into this chapter for the purpose of regulating

 7  homeowners' associations.

 8         (5)  Unless expressly stated to the contrary,

 9  corporations not for profit that operate residential

10  homeowners' associations in this state shall be governed by

11  and subject to chapter 607, if the association was

12  incorporated under that chapter, or to chapter 617, if the

13  association was incorporated under that chapter, and this

14  chapter. This subsection is intended to clarify existing law.

15         Section 9.  Subsections (2), (6), and (7) of section

16  720.303, Florida Statutes, are amended, and paragraph (d) is

17  added to subsection (5) of that section, to read:

18         720.303  Association powers and duties; meetings of

19  board; official records; budgets; financial reporting;

20  association funds; recalls.--

21         (2)  BOARD MEETINGS.--

22         (a)  A meeting of the board of directors of an

23  association occurs whenever a quorum of the board gathers to

24  conduct association business. All meetings of the board must

25  be open to all members except for meetings between the board

26  and its attorney with respect to proposed or pending

27  litigation where the contents of the discussion would

28  otherwise be governed by the attorney-client privilege. The

29  provisions of this subsection shall also apply to the meetings

30  of any committee or other similar body when a final decision

31  will be made regarding the expenditure of association funds

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 1  and to meetings of any body vested with the power to approve

 2  or disapprove architectural decisions with respect to a

 3  specific parcel of residential property owned by a member of

 4  the community.

 5         (b)  Members have the right to attend all meetings of

 6  the board and to speak on any matter placed on the agenda by

 7  petition of the voting interests for at least 3 minutes. The

 8  association may adopt written reasonable rules expanding the

 9  right of members to speak and governing the frequency,

10  duration, and other manner of member statements, which rules

11  must be consistent with this paragraph and may include a

12  sign-up sheet for members wishing to speak. Notwithstanding

13  any other law, the requirement that board meetings and

14  committee meetings be open to the members is inapplicable to

15  meetings between the board or a committee and the

16  association's attorney, with respect to meetings of the board

17  held for the purpose of discussing personnel matters.

18         (c)  The bylaws shall provide for giving notice to

19  parcel owners and members of all board meetings and, if they

20  do not do so, shall be deemed to provide the following:

21         1.  Notices of all board meetings must be posted in a

22  conspicuous place in the community at least 48 hours in

23  advance of a meeting, except in an emergency.  In the

24  alternative, if notice is not posted in a conspicuous place in

25  the community, notice of each board meeting must be mailed or

26  delivered to each member at least 7 days before the meeting,

27  except in an emergency. Notwithstanding this general notice

28  requirement, for communities with more than 100 members, the

29  bylaws may provide for a reasonable alternative to posting or

30  mailing of notice for each board meeting, including

31  publication of notice, provision of a schedule of board

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 1  meetings, or the conspicuous posting and repeated broadcasting

 2  of the notice on a closed-circuit cable television system

 3  serving the homeowners' association. However, if broadcast

 4  notice is used in lieu of a notice posted physically in the

 5  community, the notice must be broadcast at least four times

 6  every broadcast hour of each day that a posted notice is

 7  otherwise required. When broadcast notice is provided, the

 8  notice and agenda must be broadcast in a manner and for a

 9  sufficient continuous length of time so as to allow an average

10  reader to observe the notice and read and comprehend the

11  entire content of the notice and the agenda. The bylaws or

12  amended bylaws may provide for giving notice by electronic

13  transmission in a manner authorized by law for meetings of the

14  board of directors, committee meetings requiring notice under

15  this section, and annual and special meetings of the members;

16  however, a member must consent in writing to receiving notice

17  by electronic transmission.

18         2.  An assessment may not be levied at a board meeting

19  unless the notice of the meeting includes a statement that

20  assessments will be considered and the nature of the

21  assessments. Written notice of any meeting at which special

22  assessments will be considered or at which amendments to rules

23  regarding parcel use will be considered must be mailed,

24  delivered, or electronically transmitted to the members and

25  parcel owners and posted conspicuously on the property or

26  broadcast on closed-circuit cable television not less than 14

27  days before the meeting.

28         3.  Directors may not vote by proxy or by secret ballot

29  at board meetings, except that secret ballots may be used in

30  the election of officers. This subsection also applies to the

31  meetings of any committee or other similar body, when a final

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 1  decision will be made regarding the expenditure of association

 2  funds, and to any body vested with the power to approve or

 3  disapprove architectural decisions with respect to a specific

 4  parcel of residential property owned by a member of the

 5  community.

 6         (d)  If 20 percent of the total voting interests

 7  petition the board to address an item of business, the board

 8  shall at its next regular board meeting or at a special

 9  meeting of the board, but not later than 60 days after the

10  receipt of the petition, take the petitioned item up on an

11  agenda. The board shall give all members notice of the meeting

12  at which the petitioned item shall be addressed in accordance

13  with the 14-day notice requirement pursuant to subparagraph

14  (c)2. Each member shall have the right to speak for at least 3

15  minutes on each matter placed on the agenda by petition,

16  provided that the member signs the sign-up sheet, if one is

17  provided, or submits a written request to speak prior to the

18  meeting. Other than addressing the petitioned item at the

19  meeting, the board is not obligated to take any other action

20  requested by the petition.

21         (5)  INSPECTION AND COPYING OF RECORDS.--The official

22  records shall be maintained within the state and must be open

23  to inspection and available for photocopying by members or

24  their authorized agents at reasonable times and places within

25  10 business days after receipt of a written request for

26  access. This subsection may be complied with by having a copy

27  of the official records available for inspection or copying in

28  the community. If the association has a photocopy machine

29  available where the records are maintained, it must provide

30  parcel owners with copies on request during the inspection if

31  the entire request is limited to no more than 25 pages.

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 1         (d)  The association or its authorized agent is not

 2  required to provide a prospective purchaser or lienholder with

 3  information about the residential subdivision or the

 4  association other than information or documents required by

 5  this chapter to be made available or disclosed. The

 6  association or its authorized agent may charge a reasonable

 7  fee to the prospective purchaser or lienholder or the current

 8  parcel owner or member for providing good faith responses to

 9  requests for information by or on behalf of a prospective

10  purchaser or lienholder, other than that required by law, if

11  the fee does not exceed $150 plus the reasonable cost of

12  photocopying and any attorney's fees incurred by the

13  association in connection with the response.

14         (6)  BUDGETS.--

15         (a)  The association shall prepare an annual budget

16  that sets out the annual operating expenses. The budget must

17  reflect the estimated revenues and expenses for that year and

18  the estimated surplus or deficit as of the end of the current

19  year. The budget must set out separately all fees or charges

20  paid for by the association for recreational amenities,

21  whether owned by the association, the developer, or another

22  person. The association shall provide each member with a copy

23  of the annual budget or a written notice that a copy of the

24  budget is available upon request at no charge to the member.

25  The copy must be provided to the member within the time limits

26  set forth in subsection (5).

27         (b)  In addition to annual operating expenses, the

28  budget may include reserve accounts for capital expenditures

29  and deferred maintenance for which the association is

30  responsible to the extent that the governing documents do not

31  limit increases in assessments, including reserves. If the

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 1  budget of the association includes reserve accounts, such

 2  reserves shall be determined, maintained, and waived in the

 3  manner provided in this subsection. Once an association

 4  provides for reserve accounts in the budget, the association

 5  shall thereafter determine, maintain, and waive reserves in

 6  compliance with this subsection.

 7         (c)  If the budget of the association does not provide

 8  for reserve accounts governed by this subsection and the

 9  association is responsible for the repair and maintenance of

10  capital improvements that may result in a special assessment

11  if reserves are not provided, each financial report for the

12  preceding fiscal year required by subsection (7) shall contain

13  the following statement in conspicuous type: THE BUDGET OF THE

14  ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL

15  EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN

16  SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE

17  ACCOUNTS PURSUANT TO THE PROVISIONS OF SECTION 720.303(6),

18  FLORIDA STATUTES, UPON THE APPROVAL OF NOT LESS THAN A

19  MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION.

20         (d)  An association shall be deemed to have provided

21  for reserve accounts when reserve accounts have been initially

22  established by the developer or when the membership of the

23  association affirmatively elects to provide for reserves. If

24  reserve accounts are not initially provided for by the

25  developer, the membership of the association may elect to do

26  so upon the affirmative approval of not less than a majority

27  of the total voting interests of the association. Such

28  approval may be attained by vote of the members at a duly

29  called meeting of the membership or upon a written consent

30  executed by not less than a majority of the total voting

31  interests in the community. The approval action of the

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 1  membership shall state that reserve accounts shall be provided

 2  for in the budget and designate the components for which the

 3  reserve accounts are to be established. Upon approval by the

 4  membership, the board of directors shall provide for the

 5  required reserve accounts for inclusion in the budget in the

 6  next fiscal year following the approval and in each year

 7  thereafter. Once established as provided in this subsection,

 8  the reserve accounts shall be funded or maintained or shall

 9  have their funding waived in the manner provided in paragraph

10  (f).

11         (e)  The amount to be reserved in any account

12  established shall be computed by means of a formula that is

13  based upon estimated remaining useful life and estimated

14  replacement cost or deferred maintenance expense of each

15  reserve item. The association may adjust replacement reserve

16  assessments annually to take into account any changes in

17  estimates of cost or useful life of a reserve item.

18         (f)  Once a reserve account or reserve accounts are

19  established, the membership of the association, upon a

20  majority vote at a meeting at which a quorum is present, may

21  provide for no reserves or less reserves than required by this

22  section. If a meeting of the unit owners has been called to

23  determine whether to waive or reduce the funding of reserves

24  and no such result is achieved or a quorum is not present, the

25  reserves as included in the budget shall go into effect. After

26  the turnover, the developer may vote its voting interest to

27  waive or reduce the funding of reserves. Any vote taken

28  pursuant to this subsection to waive or reduce reserves shall

29  be applicable only to one budget year.

30         (g)  Funding formulas for reserves authorized by this

31  section shall be based on either a separate analysis of each

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 1  of the required assets or a pooled analysis of two or more of

 2  the required assets.

 3         1.  If the association maintains separate reserve

 4  accounts for each of the required assets, the amount of the

 5  contribution to each reserve account shall be the sum of the

 6  following two calculations:

 7         a.  The total amount necessary, if any, to bring a

 8  negative component balance to zero.

 9         b.  The total estimated deferred maintenance expense or

10  estimated replacement cost of the reserve component less the

11  estimated balance of the reserve component as of the beginning

12  of the period for which the budget will be in effect. The

13  remainder, if greater than zero, shall be divided by the

14  estimated remaining useful life of the component.

15  

16  The formula may be adjusted each year for changes in estimates

17  and deferred maintenance performed during the year and may

18  include factors such as inflation and earnings on invested

19  funds.

20         2.  If the association maintains a pooled account of

21  two or more of the required reserve assets, the amount of the

22  contribution to the pooled reserve account as disclosed on the

23  proposed budget shall not be less than that required to ensure

24  that the balance on hand at the beginning of the period for

25  which the budget will go into effect plus the projected annual

26  cash inflows over the remaining estimated useful life of all

27  of the assets that make up the reserve pool are equal to or

28  greater than the projected annual cash outflows over the

29  remaining estimated useful lives of all of the assets that

30  make up the reserve pool, based on the current reserve

31  analysis. The projected annual cash inflows may include

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 1  estimated earnings from investment of principal. The reserve

 2  funding formula shall not include any type of balloon

 3  payments.

 4         (h)  Reserve funds and any interest accruing thereon

 5  shall remain in the reserve account or accounts and shall be

 6  used only for authorized reserve expenditures unless their use

 7  for other purposes is approved in advance by a majority vote

 8  at a meeting at which a quorum is present. Prior to turnover

 9  of control of an association by a developer to parcel owners,

10  the developer-controlled association shall not vote to use

11  reserves for purposes other than those for which they were

12  intended without the approval of a majority of all

13  nondeveloper voting interests voting in person or by limited

14  proxy at a duly called meeting of the association.

15         (7)  FINANCIAL REPORTING.--Within 90 days after the end

16  of the fiscal year, or annually on the date provided in the

17  bylaws, the association shall prepare and complete, or

18  contract with a third party for the preparation and completion

19  of, a financial report for the preceding fiscal year. Within

20  21 days after the final financial report is completed by the

21  association or received from the third party, but not later

22  than 120 days after the end of the fiscal year or other date

23  as provided in the bylaws, the association shall prepare an

24  annual financial report within 60 days after the close of the

25  fiscal year. The association shall, within the time limits set

26  forth in subsection (5), provide each member with a copy of

27  the annual financial report or a written notice that a copy of

28  the financial report is available upon request at no charge to

29  the member. Financial reports shall be prepared as follows:

30         (a)  An association that meets the criteria of this

31  paragraph shall prepare or cause to be prepared a complete set

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 1  of financial statements in accordance with generally accepted

 2  accounting principles as adopted by the Board of Accountancy.

 3  The financial statements shall be based upon the association's

 4  total annual revenues, as follows:

 5         1.  An association with total annual revenues of

 6  $100,000 or more, but less than $200,000, shall prepare

 7  compiled financial statements.

 8         2.  An association with total annual revenues of at

 9  least $200,000, but less than $400,000, shall prepare reviewed

10  financial statements.

11         3.  An association with total annual revenues of

12  $400,000 or more shall prepare audited financial statements.

13         (b)1.  An association with total annual revenues of

14  less than $100,000 shall prepare a report of cash receipts and

15  expenditures.

16         2.  An association in a community of fewer than 50

17  parcels, regardless of the association's annual revenues, may

18  prepare a report of cash receipts and expenditures in lieu of

19  financial statements required by paragraph (a) unless the

20  governing documents provide otherwise.

21         3.  A report of cash receipts and disbursement must

22  disclose the amount of receipts by accounts and receipt

23  classifications and the amount of expenses by accounts and

24  expense classifications, including, but not limited to, the

25  following, as applicable: costs for security, professional,

26  and management fees and expenses; taxes; costs for recreation

27  facilities; expenses for refuse collection and utility

28  services; expenses for lawn care; costs for building

29  maintenance and repair; insurance costs; administration and

30  salary expenses; and reserves if maintained by the

31  association.

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 1         (c)  If 20 percent of the parcel owners petition the

 2  board for a level of financial reporting higher than that

 3  required by this section, the association shall duly notice

 4  and hold a meeting of members within 30 days of receipt of the

 5  petition for the purpose of voting on raising the level of

 6  reporting for that fiscal year. Upon approval of a majority of

 7  the total voting interests of the parcel owners, the

 8  association shall prepare or cause to be prepared, shall amend

 9  the budget or adopt a special assessment to pay for the

10  financial report regardless of any provision to the contrary

11  in the governing documents, and shall provide within 90 days

12  of the meeting or the end of the fiscal year, whichever occurs

13  later:

14         1.  Compiled, reviewed, or audited financial

15  statements, if the association is otherwise required to

16  prepare a report of cash receipts and expenditures;

17         2.  Reviewed or audited financial statements, if the

18  association is otherwise required to prepare compiled

19  financial statements; or

20         3.  Audited financial statements if the association is

21  otherwise required to prepare reviewed financial statements.

22         (d)  If approved by a majority of the voting interests

23  present at a properly called meeting of the association, an

24  association may prepare or cause to be prepared:

25         1.  A report of cash receipts and expenditures in lieu

26  of a compiled, reviewed, or audited financial statement;

27         2.  A report of cash receipts and expenditures or a

28  compiled financial statement in lieu of a reviewed or audited

29  financial statement; or

30  

31  

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 1         3.  A report of cash receipts and expenditures, a

 2  compiled financial statement, or a reviewed financial

 3  statement in lieu of an audited financial statement.

 4         Section 10.  Subsection (2) of section 720.303, Florida

 5  Statutes, as amended by section 2 of chapter 2004-345 and

 6  section 15 of chapter 2004-353, Laws of Florida, is repealed.

 7         Section 11.  Section 720.3035, Florida Statutes, is

 8  created to read:

 9         720.3035  Architectural control covenants; parcel owner

10  improvements; rights and privileges.--

11         (1)  The authority of an association or any

12  architectural, construction improvement, or other such similar

13  committee of an association to review and approve plans and

14  specifications for the location, size, type, or appearance of

15  any structure or other improvement on a parcel, or to enforce

16  standards for the external appearance of any structure or

17  improvement located on a parcel, shall be permitted only to

18  the extent that the authority is specifically stated or

19  reasonably inferred as to such location, size, type, or

20  appearance in the declaration of covenants or other published

21  guidelines and standards authorized by the declaration of

22  covenants.

23         (2)  If the declaration of covenants or other published

24  guidelines and standards authorized by the declaration of

25  covenants provides options for the use of material, the size

26  of the structure or improvement, the design of the structure

27  or improvement, or the location of the structure or

28  improvement on the parcel, neither the association nor any

29  architectural, construction improvement, or other such similar

30  committee of the association shall restrict the right of a

31  parcel owner to select from the options provided in the

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 1  declaration of covenants or other published guidelines and

 2  standards authorized by the declaration of covenants.

 3         (3)  Unless otherwise specifically stated in the

 4  declaration of covenants or other published guidelines and

 5  standards authorized by the declaration of covenants, each

 6  parcel shall be deemed to have only one front for purposes of

 7  determining the required front setback even if the parcel is

 8  bounded by a roadway or other easement on more than one side.

 9  When the declaration of covenants or other published

10  guidelines and standards authorized by the declaration of

11  covenants do not provide for specific setback limitations, the

12  applicable county or municipal setback limitations shall

13  apply, and neither the association nor any architectural,

14  construction improvement, or other such similar committee of

15  the association shall enforce or attempt to enforce any

16  setback limitation that is inconsistent with the applicable

17  county or municipal standard or standards.

18         (4)  Each parcel owner shall be entitled to the rights

19  and privileges set forth in the declaration of covenants or

20  other published guidelines and standards authorized by the

21  declaration of covenants concerning the architectural use of

22  the parcel, and the construction of permitted structures and

23  improvements on the parcel and such rights and privileges

24  shall not be unreasonably infringed upon or impaired by the

25  association or any architectural, construction improvement, or

26  other such similar committee of the association. If the

27  association or any architectural, construction improvement, or

28  other such similar committee of the association should

29  unreasonably, knowingly, and willfully infringe upon or impair

30  the rights and privileges set forth in the declaration of

31  covenants or other published guidelines and standards

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 1  authorized by the declaration of covenants, the adversely

 2  affected parcel owner shall be entitled to recover damages

 3  caused by such infringement or impairment, including any costs

 4  and reasonable attorney's fees incurred in preserving or

 5  restoring the rights and privileges of the parcel owner set

 6  forth in the declaration of covenants or other published

 7  guidelines and standards authorized by the declaration of

 8  covenants.

 9         (5)  Neither the association nor any architectural,

10  construction improvement, or other such similar committee of

11  the association shall enforce any policy or restriction that

12  is inconsistent with the rights and privileges of a parcel

13  owner set forth in the declaration of covenants or other

14  published guidelines and standards authorized by the

15  declaration of covenants, whether uniformly applied or not.

16  Neither the association nor any architectural, construction

17  improvement, or other such similar committee of the

18  association may rely upon a policy or restriction that is

19  inconsistent with the declaration of covenants or other

20  published guidelines and standards authorized by the

21  declaration of covenants, whether uniformly applied or not, in

22  defense of any action taken in the name of or on behalf of the

23  association against a parcel owner.

24         Section 12.  Subsection (1) of section 720.305, Florida

25  Statutes, is amended to read:

26         720.305  Obligations of members; remedies at law or in

27  equity; levy of fines and suspension of use rights; failure to

28  fill sufficient number of vacancies on board of directors to

29  constitute a quorum; appointment of receiver upon petition of

30  any member.--

31  

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 1         (1)  Each member and the member's tenants, guests, and

 2  invitees, and each association, are governed by, and must

 3  comply with, this chapter, the governing documents of the

 4  community, and the rules of the association. Actions at law or

 5  in equity, or both, to redress alleged failure or refusal to

 6  comply with these provisions may be brought by the association

 7  or by any member against:

 8         (a)  The association;

 9         (b)  A member;

10         (c)  Any director or officer of an association who

11  willfully and knowingly fails to comply with these provisions;

12  and

13         (d)  Any tenants, guests, or invitees occupying a

14  parcel or using the common areas.

15  

16  The prevailing party in any such litigation is entitled to

17  recover reasonable attorney's fees and costs. A member

18  prevailing in an action between the association and the member

19  under this section, in addition to recovering his or her

20  reasonable attorney's fees, may recover additional amounts as

21  determined by the court to be necessary to reimburse the

22  member for his or her share of assessments levied by the

23  association to fund its expenses of the litigation. This

24  relief does not exclude other remedies provided by law. This

25  section does not deprive any person of any other available

26  right or remedy.

27         Section 13.  Paragraph (c) of subsection (1) of section

28  720.306, Florida Statutes, is amended to read:

29         720.306  Meetings of members; voting and election

30  procedures; amendments.--

31         (1)  QUORUM; AMENDMENTS.--

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 1         (c)  Unless otherwise provided in the governing

 2  documents as originally recorded or permitted by this chapter

 3  or chapter 617, an amendment may not materially and adversely

 4  alter the proportionate voting interest appurtenant to a

 5  parcel or increase the proportion or percentage by which a

 6  parcel shares in the common expenses of the association unless

 7  the record parcel owner and all record owners of liens on the

 8  parcels join in the execution of the amendment. For purposes

 9  of this section, a change in quorum requirements is not an

10  alteration of voting interests. The merger or consolidation of

11  one or more associations under a plan of merger or

12  consolidation under chapter 607 or chapter 617 shall not be

13  considered a material or adverse alteration of the

14  proportionate voting interest appurtenant to a parcel.

15         Section 14.  Paragraph (t) is added to subsection (3)

16  of section 720.307, Florida Statutes, to read:

17         720.307  Transition of association control in a

18  community.--With respect to homeowners' associations:

19         (3)  At the time the members are entitled to elect at

20  least a majority of the board of directors of the homeowners'

21  association, the developer shall, at the developer's expense,

22  within no more than 90 days deliver the following documents to

23  the board:

24         (t)  The financial records, including financial

25  statements of the association, and source documents from the

26  incorporation of the association through the date of turnover.

27  The records shall be audited by an independent certified

28  public accountant for the period from the incorporation of the

29  association or from the period covered by the last audit, if

30  an audit has been performed for each fiscal year since

31  incorporation. All financial statements shall be prepared in

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 1  accordance with generally accepted accounting principles and

 2  shall be audited in accordance with generally accepted

 3  auditing standards, as prescribed by the Board of Accountancy,

 4  pursuant to chapter 473. The certified public accountant

 5  performing the audit shall examine to the extent necessary

 6  supporting documents and records, including the cash

 7  disbursements and related paid invoices to determine if

 8  expenditures were for association purposes and the billings,

 9  cash receipts, and related records of the association to

10  determine that the developer was charged and paid the proper

11  amounts of assessments. This paragraph applies to associations

12  with a date of incorporation after December 31, 2007.

13         Section 15.  Section 720.308, Florida Statutes, is

14  amended to read:

15         720.308  Assessments and charges.--

16         (1)  ASSESSMENTS.--For any community created after

17  October 1, 1995, the governing documents must describe the

18  manner in which expenses are shared and specify the member's

19  proportional share thereof. Assessments levied pursuant to the

20  annual budget or special assessment must be in the member's

21  proportional share of expenses as described in the governing

22  document, which share may be different among classes of

23  parcels based upon the state of development thereof, levels of

24  services received by the applicable members, or other relevant

25  factors. While the developer is in control of the homeowners'

26  association, it may be excused from payment of its share of

27  the operating expenses and assessments related to its parcels

28  for any period of time for which the developer has, in the

29  declaration, obligated itself to pay any operating expenses

30  incurred that exceed the assessments receivable from other

31  members and other income of the association. This section does

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 1  not apply to an association, no matter when created, if the

 2  association is created in a community that is included in an

 3  effective development-of-regional-impact development order as

 4  of the effective date of this act, together with any approved

 5  modifications thereto.

 6         (2)  GUARANTEES OF COMMON EXPENSES.--

 7         (a)  Establishment of a guarantee.--If a guarantee of

 8  the assessments of parcel owners is not included in the

 9  purchase contracts or declaration, any agreement establishing

10  a guarantee shall only be effective upon the approval of a

11  majority of the voting interests of the members other than the

12  developer. Approval shall be expressed at a meeting of the

13  members voting in person or by limited proxy or by agreement

14  in writing without a meeting if provided in the bylaws. Such

15  guarantee must meet the requirements of this section.

16         (b)  Guarantee period.--The period of time for the

17  guarantee shall be indicated by a specific beginning and

18  ending date or event.

19         1.  The ending date or event shall be the same for all

20  of the members of an association, including members in

21  different phases of the development.

22         2.  The guarantee may provide for different intervals

23  of time during a guarantee period with different dollar

24  amounts for each such interval.

25         3.  The guarantee may provide that after the initial

26  stated period, the developer has an option to extend the

27  guarantee for one or more additional stated periods. The

28  extension of a guarantee is limited to extending the ending

29  date or event; therefore, the developer does not have the

30  option of changing the level of assessments guaranteed.

31  

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 1         (3)  MAXIMUM LEVEL OF ASSESSMENTS.--The stated dollar

 2  amount of the guarantee shall be an exact dollar amount for

 3  each parcel identified in the declaration. Regardless of the

 4  stated dollar amount of the guarantee, assessments charged to

 5  a member shall not exceed the maximum obligation of the member

 6  based on the total amount of the adopted budget and the

 7  member's proportionate share of the expenses as described in

 8  the governing documents.

 9         (4)  CASH FUNDING REQUIREMENTS DURING GUARANTEE.--The

10  cash payments required from the guarantor during the guarantee

11  period shall be determined as follows:

12         (a)  If at any time during the guarantee period the

13  funds collected from member assessments at the guaranteed

14  level and other revenues collected by the association are not

15  sufficient to provide payment, on a timely basis, of all

16  assessments, including the full funding of the reserves unless

17  properly waived, the guarantor shall advance sufficient cash

18  to the association at the time such payments are due.

19         (b)  Expenses incurred in the production of

20  nonassessment revenues, not in excess of the nonassessment

21  revenues, shall not be included in the assessments. If the

22  expenses attributable to nonassessment revenues exceed

23  nonassessment revenues, only the excess expenses must be

24  funded by the guarantor. Interest earned on the investment of

25  association funds may be used to pay the income tax expense

26  incurred as a result of the investment; such expense shall not

27  be charged to the guarantor; and the net investment income

28  shall be retained by the association. Each such

29  nonassessment-revenue-generating activity shall be considered

30  separately. Any portion of the parcel assessment which is

31  

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 1  budgeted for designated capital contributions of the

 2  association shall not be used to pay operating expenses.

 3         (5)  CALCULATION OF GUARANTOR'S FINAL OBLIGATION.--The

 4  guarantor's total financial obligation to the association at

 5  the end of the guarantee period shall be determined on the

 6  accrual basis using the following formula: the guarantor shall

 7  pay any deficits that exceed the guaranteed amount, less the

 8  total regular periodic assessments earned by the association

 9  from the members other than the guarantor during the guarantee

10  period regardless of whether the actual level charged was less

11  than the maximum guaranteed amount.

12         (6)  EXPENSES.--Expenses incurred in the production of

13  nonassessment revenues, not in excess of the nonassessment

14  revenues, shall not be included in the operating expenses. If

15  the expenses attributable to nonassessment revenues exceed

16  nonassessment revenues, only the excess expenses must be

17  funded by the guarantor. Interest earned on the investment of

18  association funds may be used to pay the income tax expense

19  incurred as a result of the investment; such expense shall not

20  be charged to the guarantor; and the net investment income

21  shall be retained by the association. Each such

22  nonassessment-revenue-generating activity shall be considered

23  separately. Any portion of the parcel assessment which is

24  budgeted for designated capital contributions of the

25  association shall not be used to pay operating expenses.

26         Section 16.  Section 720.311, Florida Statutes, is

27  amended to read:

28         720.311  Dispute resolution.--

29         (1)  The Legislature finds that alternative dispute

30  resolution has made progress in reducing court dockets and

31  trials and in offering a more efficient, cost-effective option

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 1  to litigation. The filing of any petition for mediation or

 2  arbitration or the serving of a demand for presuit mediation

 3  as provided for in this section shall toll the applicable

 4  statute of limitations. Any recall dispute filed with the

 5  department pursuant to s. 720.303(10) shall be conducted by

 6  the department in accordance with the provisions of ss.

 7  718.112(2)(j) and 718.1255 and the rules adopted by the

 8  division. In addition, the department shall conduct mandatory

 9  binding arbitration of election disputes between a member and

10  an association pursuant to s. 718.1255 and rules adopted by

11  the division. Neither election disputes nor recall disputes

12  are eligible for presuit mediation; these disputes shall be

13  arbitrated by the department. At the conclusion of the

14  proceeding, the department shall charge the parties a fee in

15  an amount adequate to cover all costs and expenses incurred by

16  the department in conducting the proceeding. Initially, the

17  petitioner shall remit a filing fee of at least $200 to the

18  department. The fees paid to the department shall become a

19  recoverable cost in the arbitration proceeding, and the

20  prevailing party in an arbitration proceeding shall recover

21  its reasonable costs and attorney's fees in an amount found

22  reasonable by the arbitrator. The department shall adopt rules

23  to effectuate the purposes of this section.

24         (2)(a)  Disputes between an association and a parcel

25  owner regarding use of or changes to the parcel or the common

26  areas and other covenant enforcement disputes, disputes

27  regarding amendments to the association documents, disputes

28  regarding meetings of the board and committees appointed by

29  the board, membership meetings not including election

30  meetings, and access to the official records of the

31  association shall be the subject of a demand filed with the

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 1  department for presuit mandatory mediation served by an

 2  aggrieved party before the dispute is filed in court. Presuit

 3  mediation proceedings must be conducted in accordance with the

 4  applicable Florida Rules of Civil Procedure, and these

 5  proceedings are privileged and confidential to the same extent

 6  as court-ordered mediation. Disputes subject to presuit

 7  mediation under this section shall not include the collection

 8  of any assessment, fine, or other financial obligation,

 9  including attorney's fees and costs, claimed to be due or any

10  action to enforce a prior mediation settlement agreement

11  between the parties. Also, in any dispute subject to presuit

12  mediation under this section where emergency relief is

13  required, a motion for temporary injunctive relief may be

14  filed with the court without first complying with the presuit

15  mediation requirements of this section. After any issues

16  regarding emergency or temporary relief are resolved, the

17  court may either refer the parties to a mediation program

18  administered by the courts or require mediation under this

19  section. An arbitrator or judge may not consider any

20  information or evidence arising from the presuit mediation

21  proceeding except in a proceeding to impose sanctions for

22  failure to attend a presuit mediation session or to enforce a

23  mediated settlement agreement. Persons who are not parties to

24  the dispute may not attend the presuit mediation conference

25  without the consent of all parties, except for counsel for the

26  parties and a corporate representative designated by the

27  association. When mediation is attended by a quorum of the

28  board, such mediation is not a board meeting for purposes of

29  notice and participation set forth in s. 720.303. An aggrieved

30  party shall serve on the responding party a written demand to

31  

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 1  participate in presuit mediation in substantially the

 2  following form:

 3  

 4         STATUTORY OFFER TO PARTICIPATE IN PRESUIT MEDIATION

 5  

 6         The alleged aggrieved party,__________________,

 7         hereby demands that _________________, as the

 8         responding party, engage in mandatory presuit

 9         mediation in connection with the following

10         disputes, which by statute are of a type that

11         are subject to presuit mediation:

12  

13         (List specific nature of the dispute or

14         disputes to be mediated and the authority

15         supporting a finding of a violation as to each

16         dispute.)

17  

18         Pursuant to section 720.311, Florida Statutes,

19         this demand to resolve the dispute through

20         presuit mediation is required before a lawsuit

21         can be filed concerning the dispute. Pursuant

22         to the statute, the parties are required to

23         engage in presuit mediation with a neutral

24         third-party mediator in order to attempt to

25         resolve this dispute without court action, and

26         the aggrieved party demands that you likewise

27         agree to this process. If you fail to

28         participate in the mediation process, suit may

29         be brought against you without further warning.

30  

31  

                                  33

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1         The process of mediation involves a supervised

 2         negotiation process in which a trained, neutral

 3         third-party mediator meets with both parties

 4         and assists them in exploring possible

 5         opportunities for resolving part or all of the

 6         dispute. By agreeing to participate in presuit

 7         mediation, you are not bound in any way to

 8         change your position. Furthermore, the mediator

 9         has no authority to make any decisions in this

10         matter or to determine who is right or wrong

11         and merely acts as a facilitator to ensure that

12         each party understands the position of the

13         other party and that all options for reasonable

14         settlement are fully explored.

15  

16         If an agreement is reached, it shall be reduced

17         to writing and becomes a binding and

18         enforceable commitment of the parties. A

19         resolution of one or more disputes in this

20         fashion avoids the need to litigate these

21         issues in court. The failure to reach an

22         agreement, or the failure of a party to

23         participate in the process, results in the

24         mediator declaring an impasse in the mediation,

25         after which the aggrieved party may proceed to

26         court on all outstanding, unsettled disputes.

27         If you have failed or refused to participate in

28         the entire mediation process, you will not be

29         entitled to recover attorney's fees, even if

30         you prevail.

31  

                                  34

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1         The aggrieved party has selected and hereby

 2         lists five certified mediators who we believe

 3         to be neutral and qualified to mediate the

 4         dispute. You have the right to select any one

 5         of these mediators. The fact that one party may

 6         be familiar with one or more of the listed

 7         mediators does not mean that the mediator

 8         cannot act as a neutral and impartial

 9         facilitator. Any mediator who cannot act in

10         this capacity is required ethically to decline

11         to accept engagement. The mediators that we

12         suggest, and their current hourly rates, are as

13         follows:

14  

15         (List the names, addresses, telephone numbers,

16         and hourly rates of the mediators. Other

17         pertinent information about the background of

18         the mediators may be included as an

19         attachment.)

20  

21         You may contact the offices of these mediators

22         to confirm that the listed mediators will be

23         neutral and will not show any favoritism toward

24         either party. The Florida Supreme Court can

25         provide you a list of certified mediators.

26  

27         Unless otherwise agreed by the parties, section

28         720.311(2)(b), Florida Statutes, requires that

29         the parties share the costs of presuit

30         mediation equally, including the fee charged by

31         the mediator. An average mediation may require

                                  35

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1         three to four hours of the mediator's time,

 2         including some preparation time, and the

 3         parties would need to share equally the

 4         mediator's fees as well as their own attorney's

 5         fees if they choose to employ an attorney in

 6         connection with the mediation. However, use of

 7         an attorney is not required and is at the

 8         option of each party. The mediators may require

 9         the advance payment of some or all of the

10         anticipated fees. The aggrieved party hereby

11         agrees to pay or prepay one-half of the

12         mediator's estimated fees and to forward this

13         amount or such other reasonable advance

14         deposits as the mediator requires for this

15         purpose. Any funds deposited will be returned

16         to you if these are in excess of your share of

17         the fees incurred.

18  

19         To begin your participation in presuit

20         mediation to try to resolve the dispute and

21         avoid further legal action, please sign below

22         and clearly indicate which mediator is

23         acceptable to you. We will then ask the

24         mediator to schedule a mutually convenient time

25         and place for the mediation conference to be

26         held. The mediation conference must be held

27         within ninety (90) days of this date, unless

28         extended by mutual written agreement. In the

29         event that you fail to respond within 20 days

30         from the date of this letter, or if you fail to

31         agree to at least one of the mediators that we

                                  36

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1         have suggested or to pay or prepay to the

 2         mediator one-half of the costs involved, the

 3         aggrieved party will be authorized to proceed

 4         with the filing of a lawsuit against you

 5         without further notice and may seek an award of

 6         attorney's fees or costs incurred in attempting

 7         to obtain mediation.

 8  

 9         Therefore, please give this matter your

10         immediate attention. By law, your response must

11         be mailed by certified mail, return receipt

12         requested, and by first-class mail to the

13         address shown on this demand.

14  

15         _____________________

16         _____________________

17  

18         RESPONDING PARTY: YOUR SIGNATURE INDICATES YOUR

19         AGREEMENT TO THAT CHOICE.

20  

21                   AGREEMENT TO MEDIATE

22  

23         The undersigned hereby agrees to participate in

24         presuit mediation and agrees to attend a

25         mediation conducted by the following mediator

26         or mediators who are listed above as someone

27         who would be acceptable to mediate this

28         dispute:

29  

30         (List acceptable mediator or mediators.)

31  

                                  37

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1         I/we further agree to pay or prepay one-half of

 2         the mediator's fees and to forward such advance

 3         deposits as the mediator may require for this

 4         purpose.

 5  

 6         _______________________

 7         Signature of responding party #1

 8  

 9         _______________________

10         Telephone contact information

11  

12         _______________________

13         Signature and telephone contact information of

14         responding party #2 (if applicable)(if property

15         is owned by more than one person, all owners

16         must sign)

17  

18         (b)  Service of the statutory demand to participate in

19  presuit mediation shall be effected by sending a letter in

20  substantial conformity with the above form by certified mail,

21  return receipt requested, with an additional copy being sent

22  by regular first-class mail, to the address of the responding

23  party as it last appears on the books and records of the

24  association. The responding party has 20 days from the date of

25  the mailing of the statutory demand to serve a response to the

26  aggrieved party in writing. The response shall be served by

27  certified mail, return receipt requested, with an additional

28  copy being sent by regular first-class mail, to the address

29  shown on the statutory demand. Notwithstanding the foregoing,

30  once the parties have agreed on a mediator, the mediator may

31  reschedule the mediation for a date and time mutually

                                  38

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1  convenient to the parties. The department shall conduct the

 2  proceedings through the use of department mediators or refer

 3  the disputes to private mediators who have been duly certified

 4  by the department as provided in paragraph (c). The parties

 5  shall share the costs of presuit mediation equally, including

 6  the fee charged by the mediator, if any, unless the parties

 7  agree otherwise, and the mediator may require advance payment

 8  of its reasonable fees and costs. The failure of any party to

 9  respond to a demand or response, to agree upon a mediator, to

10  make payment of fees and costs within the time established by

11  the mediator, or to appear for a scheduled mediation session

12  without the approval of the mediator, shall constitute the

13  failure or refusal to participate in the mediation process and

14  shall operate as an impasse in the presuit mediation by such

15  party, entitling the other party to proceed in court and to

16  seek an award of the costs and fees associated with the

17  mediation. Additionally, notwithstanding the provisions of any

18  other law or document, persons who fail or refuse to

19  participate in the entire mediation process may not recover

20  attorney's fees and costs in subsequent litigation relating to

21  the dispute. If any presuit mediation session cannot be

22  scheduled and conducted within 90 days after the offer to

23  participate in mediation was filed, an impasse shall be deemed

24  to have occurred unless both parties agree to extend this

25  deadline. If a department mediator is used, the department may

26  charge such fee as is necessary to pay expenses of the

27  mediation, including, but not limited to, the salary and

28  benefits of the mediator and any travel expenses incurred. The

29  petitioner shall initially file with the department upon

30  filing the disputes, a filing fee of $200, which shall be used

31  to defray the costs of the mediation. At the conclusion of the

                                  39

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1  mediation, the department shall charge to the parties, to be

 2  shared equally unless otherwise agreed by the parties, such

 3  further fees as are necessary to fully reimburse the

 4  department for all expenses incurred in the mediation.

 5         (c)(b)  If presuit mediation as described in paragraph

 6  (a) is not successful in resolving all issues between the

 7  parties, the parties may file the unresolved dispute in a

 8  court of competent jurisdiction or elect to enter into binding

 9  or nonbinding arbitration pursuant to the procedures set forth

10  in s. 718.1255 and rules adopted by the division, with the

11  arbitration proceeding to be conducted by a department

12  arbitrator or by a private arbitrator certified by the

13  department. If all parties do not agree to arbitration

14  proceedings following an unsuccessful presuit mediation, any

15  party may file the dispute in court. A final order resulting

16  from nonbinding arbitration is final and enforceable in the

17  courts if a complaint for trial de novo is not filed in a

18  court of competent jurisdiction within 30 days after entry of

19  the order. As to any issue or dispute that is not resolved at

20  presuit mediation, and as to any issue that is settled at

21  presuit mediation but is thereafter subject to an action

22  seeking enforcement of the mediation settlement, the

23  prevailing party in any subsequent arbitration or litigation

24  proceeding shall be entitled to seek recovery of all costs and

25  attorney's fees incurred in the presuit mediation process.

26         (d)(c)  The department shall develop a certification

27  and training program for private mediators and private

28  arbitrators which shall emphasize experience and expertise in

29  the area of the operation of community associations. A

30  mediator or arbitrator shall be authorized to conduct

31  mediation or arbitration under this section certified by the

                                  40

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1  department only if he or she has been certified as a circuit

 2  court civil mediator or arbitrator, respectively, pursuant to

 3  the requirements established attended at least 20 hours of

 4  training in mediation or arbitration, as appropriate, and only

 5  if the applicant has mediated or arbitrated at least 10

 6  disputes involving community associations within 5 years prior

 7  to the date of the application, or has mediated or arbitrated

 8  10 disputes in any area within 5 years prior to the date of

 9  application and has completed 20 hours of training in

10  community association disputes. In order to be certified by

11  the department, any mediator must also be certified by the

12  Florida Supreme Court. Settlement agreements resulting from

13  mediation shall not have precedential value in proceedings

14  involving parties other than those participating in the

15  mediation to support either a claim or defense in other

16  disputes. The department may conduct the training and

17  certification program within the department or may contract

18  with an outside vendor to perform the training or

19  certification. The expenses of operating the training and

20  certification and training program shall be paid by the moneys

21  and filing fees generated by the arbitration of recall and

22  election disputes and by the mediation of those disputes

23  referred to in this subsection and by the training fees.

24         (e)(d)  The presuit mediation procedures provided by

25  this subsection may be used by a Florida corporation

26  responsible for the operation of a community in which the

27  voting members are parcel owners or their representatives, in

28  which membership in the corporation is not a mandatory

29  condition of parcel ownership, or which is not authorized to

30  impose an assessment that may become a lien on the parcel.

31  

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1         (3)  The department shall develop an education program

 2  to assist homeowners, associations, board members, and

 3  managers in understanding and increasing awareness of the

 4  operation of homeowners' associations pursuant to this chapter

 5  and in understanding the use of alternative dispute resolution

 6  techniques in resolving disputes between parcel owners and

 7  associations or between owners. Such education program may

 8  include the development of pamphlets and other written

 9  instructional guides, the holding of classes and meetings by

10  department employees or outside vendors, as the department

11  determines, and the creation and maintenance of a website

12  containing instructional materials. The expenses of operating

13  the education program shall be initially paid by the moneys

14  and filing fees generated by the arbitration of recall and

15  election disputes and by the mediation of those disputes

16  referred to in this subsection.

17         Section 17.  Except as otherwise expressly provided in

18  this act, this act shall take effect July 1, 2007.

19  

20  

21  

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 2                         Senate Bill 902

 3                                 

 4  The CS creates s. 712.11, F.S., to provide for revival of
    declaration of covenants that have lapsed.
 5  
    The CS amends s 718.106, F.S., to provide for beach access for
 6  condominiums.

 7  The bill amends s. 718.110, F.S., to limit the enforcement of
    any provision in the governing documents of a condominium
 8  association recorded on or after October 1, 2007 that require
    the consent or joinder of some or all mortgages, of units or
 9  any other portion of the condominium property for those
    mortgages, with certain exceptions. It also provides that
10  amendments intended to conform a declaration of condominium to
    the insurance coverage provisions of s. 719.111(11), F.S., may
11  be made as provided in that section.

12  The CS amends s. 718.114, F.S., to restrict leaseholds,
    memberships, or other possessory or use interest acquired
13  within 12 months after a declaration in acquired.

14  The CS amends s. 718.404(1) and (2), F.S., to provide that
    these subsections apply retroactively as a remedial measure.
15  
    The CS creates s. 719.103, F.S., to define the term "equity
16  facilities club."  It also amends s. 719.507, F.S., to
    prohibit certain laws, ordinances, or regulations that are not
17  equally applicable to other forms of ownership.

18  The CS amends s. 720.302(4), F.S., to provide that ch. 720,
    F.S., does not apply to any association regulated under chs.
19  718, 719, 721, or 723, F.S., except to the extent that those
    chapters expressly incorporate ch. 720, F.S, for the purpose
20  of regulating homeowners' associations.

21  The CS amends s. 720.302(5), F.S., to require that
    corporations operating residential homeowners' associations in
22  Florida are to be governed by and subject to ch. 607, F.S., or
    to ch. 617, F.S.
23  
    The CS amends s. 720.303(2)(a), F.S., as amended by section 18
24  of ch. 2004-345, L.O.F., and section 135 of ch. 2005-2,
    L.O.F., relating to open meeting requirements for homeowner's
25  association boards.  It also repeals section 18 of ch.
    2004-345, L.O.F., and section 135 of ch. 2005-2, L.O.F.
26  
    The CS amends s. 720.303(5), F.S., to provide for an
27  association's duty to provide a prospective purchaser or
    lienholder with information about the residential subdivision
28  or the association, and to authorize the association to charge
    a reasonable fee, including any attorney's fees incurred by
29  the association in connection with the response.

30  The CS also repeals s. 720.303(2), F.S., as amended by section
    2 of chapter 2004-345, L.O.F., and section 15 of chapter
31  2004-353.

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    Florida Senate - 2007                            CS for SB 902
    590-1973-07




 1  The CS creates s. 720.3035, F.S., to limit the association's
    authority to review and approve building plans and
 2  specifications, including options for the use of material, and
    the size or design, only to the extent that it is specifically
 3  stated or reasonably inferred in the declaration of covenants,
    or other published guidelines and standards authorized by the
 4  declaration of covenants.  It provides for the determination
    of setbacks.  It also provides for recovery of damages by a
 5  parcel owner that is adversely affected by the infringement or
    impairment of the rights set forth in the declaration of
 6  covenants, or other published guidelines and standards
    authorized by the declaration of covenants.
 7  
    The CS amends s. 720.305, F.S., to provide for the
 8  reimbursement of assessments levied to fund the association's
    expenses of the litigation with a member who prevails in the
 9  litigation.

10  The CS amends s. 720.306(1)(c), F.S., to provide that the
    merger or consolidation of one or more associations is not
11  considered a material or adverse alteration of the
    proportionate voting interest appurtenant to a parcel.
12  
    The CS amends the homeowner's association dispute resolution
13  procedures in s. 720.311, F.S.

14  

15  

16  

17  

18  

19  

20  

21  

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  

                                  44

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