“Legal Update: House Bill 797—Modernizing Chapter 617 of the Florida Statutes” – FLCAJ
On Thursday, June 25, 2026, the governor signed House Bill 797 (HB 797) completely overhauling Chapter 617 of the Florida Statutes, formerly known as the Florida Not For Profit Corporation Act. Chapter 617 became the Florida Nonprofit Corporation Act on July 1, 2026. Many of the statutory changes in this bill impact Florida condominium associations, cooperative associations, and homeowners’ associations. Note that most community associations in Florida are Chapter 617 corporations, but not every provision within Chapter 617 applies to every community association. Herein I address a few key changes.
The Florida Nonprofit Corporation Act now includes new Sections 617.0741 through 617.0747, which establish a comprehensive statutory framework for derivative actions. A derivative action is a lawsuit brought by a member of a corporation on behalf of the corporation to remedy alleged harm to the corporation. In the association context, a member may bring a derivative action against one or more directors, officers, or other persons whose conduct allegedly harmed the association. A derivative action allows a member to seek enforcement of the association’s rights when the member believes those in control of the association have failed or refused to do so. The new statutory framework establishes requirements for standing, new demand procedures, and requirements for both investigations and settlement of claims.
Section 617.0832 has been significantly revised to clarify the rules governing director conflict-of-interest transactions and to establish new procedures for the approval of such transactions. Sections 718.3027(2) and 720.3033(2)(a), Florida Statutes, specifically require condominium boards and homeowners’ association boards, respectively, to comply with the requirements of Florida Statute 617.0832. Under the revised statute an interested transaction must be fair to the corporation at the time the transaction is authorized. The statute provides a framework for validating interested transactions with approval by disinterested directors or members. If a conflict is properly disclosed and a majority of disinterested directors approve the transaction, then the transaction is presumed to be valid. In a legal challenge to the transaction, the party challenging the transaction would then bear the burden of proof to show the presumptively valid transaction was unfair to the corporation. But, if the board fails to comply with the statutory procedures for approval of an interested transaction, then the burden of proof would shift to the interested director to prove the transaction was fair to the corporation at the time the transaction was authorized.
New section 617.0844 codifies a standard of conduct specifically for officers. These standards supplement the fiduciary standards for directors set forth in Florida Statutes 718.111, 719.104, and 720.303. A significant new addition is the officer’s duty to inform. Under the new section an officer must inform a superior officer, or the board of directors, of any material information known to the officer concerning the corporation as well as any material violation of the law involving the corporation, its board of directors, or a committee of the board. In addition, the statute requires an officer to report any material breach of duty of an officer, employee, or agent of the corporation that has occurred as well as any such breach that the officer reasonably believes is likely to occur.
HB 797 establishes a mechanism for judicial removal of directors if certain misconduct is proven and the court determines removal is in the best interests of the corporation. A corporation may bring an action seeking removal of a director, or a member can pursue such a claim derivatively on behalf of the corporation. A court may remove a director if it finds a director has engaged in fraudulent conduct, grossly abused the position of director, or intentionally harmed the corporation. In addition to removing the director from the board, the court may also bar the director from seeking reelection for a period determined by the court.
Additionally, Section 617.0502, Florida Statutes, establishes the duties of a corporation’s registered agent and provides default procedures for changing, replacing, or resigning a registered agent. Section 617.1002 substantially revises the statutory default process for amending a corporation’s Articles of Incorporation including the notice requirements and minimum voting thresholds appliable when member approval is required. Section 617.01201 modifies the process for filing documents with the Department of State, Division of Corporations; and Section 617.0124 revises the process for correcting errors in filed documents.
HB 797 represents a significant modernization of Florida’s Nonprofit Corporation Act, and it will have important implications for community associations. While this article addresses only a limited portion of the 327-page legislation, the creation of a comprehensive framework for derivative actions, the revisions to conflict-of-interest transactions, the new statutory standards of conduct for corporate officers, and the changes affecting registered agents and filing procedures all reflect a continuation of the legislative effort to improve transparency and accountability in corporate governance.
Bryony Swift, Shareholder, Becker
Bryony (Brian-ee) Swift is a shareholder in the firm’s community association practice group. She focuses her practice in the areas of general representation and dispute resolution for condominium and homeowner associations. With a focus in community association general counsel work, Bryony assists her clients in navigating corporate governance issues, regulatory compliance issues, owner compliance issues, governing document revisions, and day-to-day operations. As a former litigator, she has significant practical experience with the legal process, from intake to post-trial motions and has experience in handling class action litigation. Her courtroom experience helps her respond to violations within a community with practical solutions while also helping her guide her clients to the best possible outcomes. For more information, call 941-957-2991, email bswift@beckerlawyers.com, or visit www.beckerlawyers.com.
