Florida’s new House Bill 1021 (HB 1021), commonly known as Condo 3.0, went into effect on July 1, 2024. What does this mean for condo owners and boards in Florida? Let’s dive in to find out.
The Legislative Background
The collapse of the Champlain Towers South in Surfside, Florida, in June 2021 was a devastating event that exposed severe regulatory shortcomings in the oversight of condominium buildings. In response, Florida lawmakers introduced a series of reforms culminating in HB 1021, aimed at enhancing building safety and the governance of condo associations. Governor Ron DeSantis signed HB 1021 into law on June 14, 2024. The majority of its provisions came into effect on July 1, 2024, while certain transparency requirements will begin on October 1, 2024, giving condo associations time to comply with the new standards.
Key Features of HB 1021
- Structural Integrity Reserve Studies
- Condos that are three stories or higher must undergo Structural Integrity Reserve Studies (SIRS) every 10 years, starting at either 25 or 30 years old depending on their proximity to the coast.
- Within 45 days after receiving the SIRS, the association must distribute a copy of the report, or a notice that the report is available for inspection/copying upon written request, to all the unit owners.
- Increased Transparency
- Condos with 25 units or more must create websites to display important documents such as bylaws, budgets, and contractor lists by October 1, 2024. This measure aims to keep owners well-informed and reduce misuse of funds through greater transparency.
- Detailed financial reporting, including monthly income and expense statements and annual reports, must be provided by condo associations.
- Education and Anti-Corruption Measures
- Existing directors must complete a four-hour educational curriculum by June 30, 2025, intended to help them provide adequate oversight and ensure responsible governance. Newly appointed directors will have 90 days to complete the training course.
- The bill revises Florida’s anti-SLAPP laws, preventing board members from using association funds for defamation actions. It also includes criminal penalties for kickbacks, fraudulent voting activities, and withholding records.
- Strengthened Enforcement
- The Department of Business and Professional Regulation (DBPR) is allocated $7.5 million annually to hire staff for stricter enforcement actions against mismanagement or corruption in condos.
- The Division of Condominiums has enhanced authority to remove board members found guilty of fraud or conflicts of interest.
Impact on Community Association Boards
The new law places significant responsibilities on community association boards, especially regarding record keeping and transparency:
1. Record Keeping Requirements
- Condo associations must maintain extensive records, including financial statements, building permits, and educational certificates of board members. These records must be made available for inspection upon written request. Repeated refusal to release records is classified as a second-degree misdemeanor, escalating to a third-degree felony if the refusal is to cover up crimes.
- Associations with 25 units or more are required to publicly post building records online, ensuring that all owners have access to important information about the property’s condition and management.
2. Challenges and Compliance
- Meeting these new requirements may be challenging for many condo boards and their management teams due to the increased amount of administrative work required. For communities where regular inspections and proper reserve funding has been neglected, becoming compliant may result in increases to condo fees, creating an unexpected financial burden on owners.
- Educational requirements for directors, along with the increased scrutiny brought on by HB 1021, may make it more difficult to recruit the volunteers needed to serve as members of the board.
- Mixed-use condos present unique challenges, potentially leading to legal disputes between owners, associations, and developers over property rights and expenses.
HB 1021 represents a significant shift in the governance and operation of condo associations in Florida. Understanding and adhering to these new regulations is crucial for condo managers and directors. By maintaining detailed documentation and ensuring transparency, associations can navigate the complexities of the new legal landscape, ensuring safety and accountability. Partnering with a professional third-party minute-taking company like Minutes Solutions can provide the necessary support to keep accurate records, helping associations remain compliant and focused on their core responsibilities.