This week continues our review of 2021 legislative changes to Florida’s community association statutes. Today will continue the discussion of Senate Bill 630 and its amendments to the Florida Homeowners’ Association Act. These changes took effect July 1, 2021.
One of the more significant changes to the laws this year was to Section 720.303(6) of the Homeowners’ Association Act, dealing with reserves for homeowners’ associations. Previously, the statute provided that reserves were only considered “mandatory” if reserves had been “established by developer” in the original association budgets, or had ever been “voted in” by a majority of all homeowners. Otherwise, reserves in the HOA context are considered discretionary, and of course subject to any provision or requirement of the governing documents for the community.
Under the new statute, reserves are considered “mandatory” if the declaration, articles, or bylaws obligate the developer to create reserves. The statute continues to provide that reserves are considered “mandatory” if the reserve accounts were established upon the affirmative approval of a majority of the total voting interests of the association (“voted in”). Establishment of reserves under the developer-controlled association budgets is no longer relevant to determining the requirement for mandatory reserves.
The statute also revises the disclosure language required to be included in year-end financial reports, such as an audit. If the budget does not provide for reserve accounts, and the association is responsible for the repair and maintenance of capital improvements that may result in a special assessment, certain disclosure language in conspicuous type is now required to be included in the year-end report.
There is also a new provision to clarify the conditions under which a developer is obligated to fund the reserve accounts of a homeowners’ association. Under the new statute, while a developer is in control of a homeowners’ association, the developer may, but is not required to, include reserves in the budget. If the developer includes reserves in the budget, the developer may determine the amount of the reserves included. The developer is not obligated to pay for:
- Contributions to reserve accounts for capital expenditures and deferred maintenance, as well as any other reserves that the homeowners’ association or the developer may be required to fund pursuant to any state, municipal, county, or other governmental statute or ordinance;
- Operating expenses; or
- Any other assessments related to the developer’s parcels for any period of time for which the developer has provided in the declaration that in lieu of paying assessments imposed on any parcel owned by the developer, the developer need only pay the deficit, if any, in the fiscal year of the association, between the total amount of the assessments receivable from other members plus any other association income and the lesser of the budgeted or actual expenses incurred by the association during such fiscal year.
Payment of Fines
Section 720.305(2), of the Homeowners’ Association Act has been amended to clarify the notice requirements for collecting fines. Consistent with the same amendment to the Condominium Act, a fine is due 5 days after notice of the approved fine is provided to the property owner and, if applicable, to any tenant, licensee, or invitee of the owner. The previous statute provided that the fine was due 5 days after the date of the committee meeting, at which the fine was confirmed. Curiously, this new change applies only to the payment of fines, not suspension of use rights.
Next week we will complete our review of Senate Bill 630 and move on to reviewing a number of other bills which affect community associations, including some major changes to the collections laws and some significant changes addressing COVID-19 issues impacting associations.
Joseph Adams is a Board Certified Specialist in Condominium and Planned Development Law, and an Office Managing Shareholder with Becker & Poliakoff. Please send your community association legal questions to firstname.lastname@example.org. Past editions of the Q&A may be viewed at floridacondohoalawblog.com.