Have They Remembered What They Had Pledged When Becoming Directors?

The State of Florida recently passed new laws regarding HOA Boards, and instituted new requirements for Board Directors.  It had become apparent that the Board of Directors in some cases were not functioning per the oath that they took before taking their positions. Let’s look at what the oath states.

The primary basis of the oath addresses the Fiduciary responsibility of being a Director. What is a Fiduciary responsibility? It is expected that Fiduciary behavior encompasses a duty of obedience, loyalty, disclosure, confidentiality, honest accounting, exercising reasonable care, and most important, acting in the association’s best interest. It has been observed and reported that in certain circumstances HOA Boards have become more political in their actions by forming cabals within the communities they oversee. These cabals become a political force, controlling the Boards they run, and carrying out programs that are self-serving for these cabal Boards, with no regard to those in the community not participating with  the cabals. The new laws were put in place to hold the Directors accountable, and, among other issues, to mitigate the cabal problem. Remember, Directors are to act in the association’s best interest, not their own or a cabal’s interest. Not acting in the best interest of the association can now result in misdemeanors and felonies.

With Aquarina’s current and recent past majority Boards, several actions could be considered acting not in the whole association’s best interest, e.g. the renovated Brassie Grille, the Lakeside Pool debacle, the moving of the gym room, the extravagant expenses for the golf course beyond membership revenue, the forgotten community pool, the refusal of requests for particular AGI’s financials, and the ongoing failed elevator/lift at the Beach Club.  The resulting expenses and spending for some of these events were Board decisions with no community vote or consensus. These expenses were for “Betterments”.  Let’s discuss them

This glaring and continued burden foisted on the community has been the continued spending of Resident funds on what the By-Laws label Betterments, i.e. improvements, and additional and upgraded amenities. This spending would be more reasonable and a duty to use on our Reserves, for the expected diligence for maintaining and for the maintenance of our aging infrastructure. However, this does not appear to be the case in Aquarina.  In many instances Betterments have taken priority over basic community infrastructure needs, e.g. roads, irrigation, buildings, daily cleanup, rising insurance costs, roof replacement, etc.  Though some of these infrastructure items have been addressed, they had lingered for many years as Betterments took the primary position. Is spending on selfish Betterments prudent and in the best interest of the whole community, where we are in a state of inflation, high interest rates, and soaring insurance costs. In addition, new reserve rules for residential buildings are driving maintenance fees skyward.

Hopefully, the current majority Aquarina Board will keep themselves reminded of the new HOA requirements and guidelines, and the oath by which they pledged.  See the revised HOA Laws below.

What are the New Florida HOA Laws 2024?

The legislative session in Florida this year has led to five significant bills affecting community associations. These are HB 1203, HB 1029, HB 1021, HB 59, and HB 293. These bills affect both homeowners associations and condominium associations. They cover a variety of topics, including hurricane protection, criminal penalties for board members, voting rights, and new board meeting mandates.

 HB 1203

For Homeowners Associations

House Bill 1203, passed on May 31, 2024, introduces new rules for HOAs in Florida and will be effective from July 1, 2024.

Education for Directors and Officers

New directors must submit a written certification within 90 days of election or appointment. This certification confirms that they have read the association’s governing documents, will uphold them, and will faithfully carry out their duties. They must also complete a state-approved condominium education course.

This certification is valid for four years. Directors must complete continuing education annually: four hours for associations with fewer than 2,500 parcels and eight hours for those with 2,500 or more.

 Director and Officer Offenses

HB 1203 outlines criminal charges and penalties for HOA operations. Directors or officers must be removed from office if charged with certain crimes, including forgery, theft, embezzlement, obstruction of justice, or fraudulent voting activities.

Criminal penalties include:

  • Second-degree misdemeanor for knowingly violating records inspection requests
  • First-degree misdemeanor for defacing or destroying required accounting records
  • Third-degree felony for withholding records to avoid legal penalties
  • First-degree misdemeanor for fraudulent activities related to association elections

 Elections and Voting

The bill allows homeowners to consent to electronic voting in elections, using electronic means to provide their consent.

 Official Record Requirements

Starting January 1, 2025, associations with 100 or more parcels must maintain a website where members can download official records. These records must be kept for at least seven years unless the governing documents require a longer period.

 Enforcement

HOAs and their committees must enforce standards fairly across all parcel owners, providing written notice of the rules when denying a construction request. HOAs cannot restrict homeowners from installing vegetable gardens and clotheslines if not visible from the street, neighboring properties, or common areas. Associations also can’t restrict the interior of homes if the changes aren’t visible from the outside.

 Fines and Suspensions

Before imposing fines or suspensions, associations must:

  • Provide 14-day written notice of the right to a hearing
  • Hold the hearing within 90 days
  • Dismiss fines or suspensions if the violation is corrected before the hearing
  • Offer a written decision within seven days, including details of fines, suspensions, or remedies

 Parking

HOAs cannot prohibit personal or work vehicles (not commercial motor vehicles) from parking in a homeowner’s driveway. They also cannot ban first responder vehicles from parking on public roads within the community.

 Fiduciary Duties

Chapter 720 now explicitly references Section 617.0830, highlighting that HOA officers and directors have a fiduciary duty to act in the association’s best interests. This includes acting in good faith, with due care, and in a manner believed to be in the corporation’s best interests.

 Additional Updates from HB 1203

  • Assisting Law Enforcement. Associations must comply with subpoenas by providing requested records within five business days.
  • Prohibition on Debit Cards. Associations are banned from using debit cards to pay expenses. If used improperly, the responsible person must be removed from office.
  • Financial Reporting. Associations with 1,000 or more parcels must provide audited financial statements, and they cannot reduce the required level of financial reporting for consecutive years.
  • Parcel Owner Accountings. Owners can request a detailed accounting of amounts owed. If the association fails to respond within 15 business days, any overdue fines over 30 days will be waived, provided the owner wasn’t previously notified of the fines.

 Financial Reporting and Reserve Management

The bill restricts associations from preparing consecutive financial reports to fulfill annual requirements. Associations must now notify unit owners that a Structural Integrity Reserve Study (SIRS) is available for inspection within 45 days of its completion.

Associations must also inform the division within this timeframe. A database of associations that have completed the SIRS will be created by January 1, 2025. The division’s annual report will include this information starting after December 31, 2024.

Additionally, condominium associations can pause or reduce reserve funding if a building becomes uninhabitable due to a natural disaster. However, they must resume contributions once the building is livable again. Misusing a debit card in the association’s name without proper board approval is now considered theft, leading to immediate removal from office.

 Mandatory Structural Inspections

The law now excludes single, two-, three-, and four-family dwellings with three or fewer stories from mandatory structural inspections.

 Official Records

Email addresses are now considered official records if the unit owner consents to electronic notices or explicitly authorizes sharing their information. Associations are responsible for ensuring that personal information is not shared with third parties, with some liability protections in place unless the disclosure was intentional.

Additional invoices, transaction receipts, building permits, and board member education certificates are now official records. Associations must keep these records organized and respond to requests with a checklist that documents all provided records. The association must keep this checklist for seven years. It also serves as proof of compliance.

Furthermore, if records are posted online, the association can direct requestors to the website to fulfill record requests. The division can request access to an association’s website to investigate complaints about record access.

Destroying or failing to maintain required accounting records with intent to cause harm is now a first-degree misdemeanor, punishable by civil penalties and removal from office. Anyone who willfully refuses to produce records to evade detection, arrest, or punishment is guilty of a third-degree felony.