Frequently Asked Questions...BEST VALUE SAVE $76 Entire 20-hour Course 20 $99.00 Are you a Florida board-approved provider? Yes, Elite is approved by the Regulatory Council of Community

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What are the requirements for license renewal?Licenses Expire CE Hours Required Mandatory Courses

Community Association Managers’ licenses expire September 30th of even numbered years.

20

(All can be completed through home-study)

4 hours of Legal Updates

How do I complete this course and receive my certificate of completion? On-Line Submission: Go to CAMS.EliteCME.com and follow the prompts. You will be able to print your certificate immediately upon completion of the course.

Fax or E-mail Submission: Fax to (386) 673-3563, be sure to include your credit card information. All completions will be processed within 2 business days of receipt and certificates e-mailed to the e-mail address provided*.

Mail Submission: Mail to Elite, PO Box 37, Ormond Beach, FL 32175. All completions will be processed and certificates issued within 10 business days from the date it is mailed*.

*Please note - providing a valid e-mail address is the quickest and most efficient way to receive your certificates when submitting via fax, e-mail or mail.

Submissions without a valid e-mail address will be mailed to the address provided at registration.

How much will it cost?Course Title CE Hours Price

2018 Legal Update 4 $35.00Budgets and Financial Planning for Community Association Management (Meets Elective Requirement) 4 $35.00

Effective Community Association Boards: Addressing Conflict and Liability (Meets Human Resources Requirement) 4 $35.00

Hurricane Preparation and Restoration for Community Association Management (Meets Operation of Physical Property Requirement) 4 $35.00

Insurance for Florida Community Associations (Meets Insurance/Financial Management Requirement) 4 $35.00

BEST VALUE SAVE $76 Entire 20-hour Course 20 $99.00

Are you a Florida board-approved provider?Yes, Elite is approved by the Regulatory Council of Community Association Managers. Provider number 0001553.

Are my credit hours reported to the Florida board?Yes, your course will be processed the same day we receive it and electronically reported to the Department of Business and Professional Regulation within one business day.

Is my information secure?Yes! Our website is secured by Thawte, we use SSL encryption, and we never share your information with third-parties.

What if I still have questions? What are your business hours?No problem, we have several options for you to choose from! Online at CAMS.EliteCME.com you will see our robust FAQ section that answers many of your questions, simply click FAQ in the upper right hand corner, or E-mail us at [email protected] or call us toll free at 1-888-857-6920, Monday - Friday 9:00 am - 6:00 pm, EST.

Important information for licenseesAlways check your state’s board website to determine the number of hours required for renewal, and the amount that may be completed through home-study. Also, make sure that you notify the board of any changes of address. It is important that your most current address is on file.

Division of ProfessionsRegulatory Council of Community Association Managers2601 Blair Stone RoadTallahassee, FL 32399-0783

Phone: (850) 487-1395 | Website: http://www.myfloridalicense.com/dbpr/pro/cam/index.html

Frequently Asked Questions

Page ii CAMS.EliteCME.com

Table of Contents2018 CE for Florida CommunityAssociation ManagersCHAPTER 1: FLORIDA COMMUNITY ASSOCIATION MANAGEMENT: 2018 LEGAL UPDATES PAGE 1

This course will review the amendments to the 2016 statutes, as well as the 2017 revisions and additions to the Florida Statutes that impact community association management. Additionally, the portions of the statutes that have been added, revised, or deleted will be covered along with the justifications for these changes.

2018 Legal Update Final Exam Page 22

CHAPTER 2: BUDGETS AND FINANCIAL PLANNING FOR COMMUNITY ASSOCIATION MANAGEMENT PAGE 23

This course will review the Florida Statutes and the Florida Administrative Code (FAC) requirements for the preparation of a community association’s budget, including operation and reserve estimates, recurring expenses, deferred maintenance and capital expenditures, maintenance of financial records, and options for financial growth. The requirements for calculating and levying assessments will be covered.

Budgets and Financial Planning for Community

Association Management Final Exam Page 39

CHAPTER 3: EFFECTIVE COMMUNITY ASSOCIATION BOARDS: ADDRESSING CONFLICT AND LIABILITY PAGE 40

This course will review common problems that occur among board members that can erode their ability to effectively fulfill their duties to the community association owners. Community Association Managers (CAMs) also experience conflicts with board members during the course of their management duty. Common problems will be addressed and strategies for remediation will be discussed to help build a cohesive and productive board.

Effective Community Association Boards: Addressing

Conflict and Liability Final Exam Page 56

©2018. All Rights Reserved. Materials may not be reproduced without the expressed written permission or consent of Elite Professional Education, LLC. The materials presented in this course are meant to provide the consumer with general information on the topics covered. The information provided was prepared by professionals with practical knowledge in the areas covered. It is not meant to provide medical, legal or professional advice. Elite Professional Education, LLC recommends that you consult a medical, legal or professional services expert licensed in your state. Elite Professional Education, LLC has made all reasonable efforts to ensure that all content provided in this course is accurate and up to date at the time of printing, but does not represent or warrant that it will apply to your situation or circumstances and assumes no liability from reliance on these materials.

Why Choose Elite?

State-ApprovedThis correspondence book includes all state-required courses for Community Association Managers.

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Table of Contents2018 CE for Florida CommunityAssociation ManagersCHAPTER 4: HURRICANE PREPARATION AND RESTORATION FOR COMMUNITY ASSOCIATION MANAGEMENT PAGE 57

This course will explore the necessary components to include in a community association’s hurricane preparation and restoration plan. Applicable Florida Statutes will be discussed which overview the duties of the board and the CAM during hurricane preparation, as well as safety during the storm and restoration after the storm. Sections of this course will be devoted to relevant information which is offered by various federal and emergency organizations. This course will also provide helpful instructions and guidelines to observe when assisting owners in the preparation, the evacuation, and the subsequent restoration of their units.

Hurricane Preparation and Restoration for Community

Association Management Final Exam Page 73

CHAPTER 5: INSURANCE FOR FLORIDA COMMUNITY ASSOCIATIONS PAGE 74

This course provides a review of the types of insurance coverage that Florida community associations should consider when acquiring insurance. It also provides an overview of relevant Florida State Statutes and Administrative Codes that govern community association insurance coverage.

Insurance for Florida Community Associations Final Exam Page 90

Student Final Exam Answer Sheet Page 92

Course Evaluation Page 93

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Chapter 1: Florida Community Association Management: 2018 Legal Updates

4 CE Hours

By: Deborah Converse, MA, NBCT

Objectives � Identify the amendments that address director and board member

conduct and criminal penalties. � List and discuss the amendments related to requests and disclosure

of association documents. � Review and discuss the amendments regulating financial conflicts

of interest for board members and community association management companies.

� Discuss the additions in the 2016 statutes related to fire safety. � Explain the Florida Supreme Court’s opinion on Community

Association Manager (CAM) activities. � Identify the 2017 changes to board member term limits. � Review and discuss the 2017 requirements for arbitration and

mediation.

� List the amendments related to the sale of foreclosed units. � Define the changes to rules that govern an association’s

responsibility for estoppel certificates. � Review and discuss the community association website’s

requirements. � Define the components of optional termination of a condominium

association. � Identify changes in the amendments regarding requirements for

reporting financial records. � List and discuss the major 2016-2017 court cases that inform

Florida’s community association management.

OverviewThis course will review the amendments to the 2016 statutes, as well as the 2017 revisions and additions to the Florida Statutes that impact community association management. Additionally, the portions of the statutes that have been added, revised, or deleted will be covered along with the justifications for these changes.

The 2017 amendments were effective as of July 1, 2017, except for the amendment that requires associations with more than 150 units to have a website to post official records, which will go into effect on July 1, 2018.

Many of the House and Senate bills cover amendments in the same content areas; therefore, this course will be organized according to topic. Many amendments by both the House and Senate, for example,

address rules for records requests and disclosure with sanctions for violations in this area.

Many bills under consideration during the 2017 legislative session were altered, combined, and substituted by House and Senate committees before they were signed into law, possibly under different classification numbers than the original bill. The Florida Legislature bill citatory section on the Online Sunshine website is updated several times a day to provide the history of a bill and final determination.

To read any Florida Statutes, refer to Online Sunshine site, type in the chapter number and select the year to review the law. The Online Sunshine site provides a summary and a PDF of the entire bills, or statutes, that are discussed throughout this course.

IntroductionAll statutes are open for revision each year during Florida’s legislative session. In 2016, a large number of House and Senate bills were written that would have significantly altered the community association’s management by the board of directors, community association managers (CAMs), and association management companies. Many of these bills did not pass and did not become law; however, there were a number of changes and additions to existing legislation.

In 2017, a large number of amendments to Florida Statutes 718 and 720 were proposed by the House Bill 1237 and Senate Bills 1520,

6027, and 398. Many amendments focused on board conduct and penalties for directors who knowingly violate association bylaws or Florida law. These amendments are primarily found in House Bill 1237, a fifty-one page bill, which includes many additions to the 2017 community association statutes as a result of Florida civil and criminal board and management misconduct cases.

Once proposed bills have been passed by the House and Senate, they move to the governor to be vetoed or signed into. The governor may allow a bill to become law without his signature by that date.

GlossaryCommittee substitute (CS or C1): A Senate bill going through the committee hearing process sometimes has numerous amendments, or the amendments change the original concept of the bill. In these cases, the bill is rewritten and becomes a committee substitute. The next committee of reference may again rewrite the bill, and more than one bill may be combined. The committee substitute continues to carry the identifying number of the original bill filed. A CS/CS or C2 is a committee substitute for committee substitute (Florida Senate, 2017).

DBPR: Department of Business and Professional Regulation. The DBPR is the agency charged with licensing and regulating businesses and professionals in the State of Florida, including community association managers. The mission of the DBPR is to license and regulate the profession. This Department is under the executive branch of the governor, and is governed by Chapter 120 of the Florida Statutes. Additionally, it is structured according to the requirements of Section 20.165, F.S. (DBPR, 2017).

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Estoppel: Legal rule of evidence (and not a cause of action) which (1) prevents a party from making an allegation or denial that contradicts what it had previously stated, or what has been legally established, as the truth, (2) supports a claim for damages of the party that had a good-faith reliance on a misleading representation of another party (Business Dictionary, 2017).

Fiduciary duty: Under Florida law, a fiduciary duty exists whenever a person places confidence or trust in another person regarding a particular transaction or in financial affairs. A breach of fiduciary duty arises whenever a fiduciary relationship is established; a breach of that duty is shown; and that breach of duty is the proximate cause of the plaintiff’s damage/harm.

A lawsuit based upon breach of fiduciary duty may proceed in Florida courts as long as the plaintiff can show that one party has accepted the trust and assumed the duty to protect a weaker party (Pankauski & Hauser, 2015).

Marketable Records Title Act (MRTA) 2016 Fl. St. 712.02: Marketable record title; suspension of applicability. Any person having the legal capacity to own land in this state, who, alone or together with her or his predecessors in title, has been vested with any estate in land of record for 30 years or more, shall have a marketable record title to such estate in said land, which shall be free and clear of all claims except the matters set forth as exceptions to marketability in s. 712.03. A person shall have a marketable record title when the public records

disclosed a record title transaction affecting the title to the land which has been of record for not less than 30 years purporting to create such estate either in:1. The person claiming such estate; or2. Some other person from whom, by one or more title transactions,

such estate has passed to the person claiming such estate, with nothing appearing of record, in either case, purporting to divest such claimant of the estate claimed (Online Sunshine, 2017).

Regulatory council of community association managers: A division of The Department of Business and Professional Regulations.

The Regulatory Council of Community Association Managers’ duties relate to licensure examination, continuing education requirements, continuing education providers, fees, and professional practice standards relative to the CAM profession. The Council holds quarterly meetings and engages in rulemaking to implement the provisions set forth in its Statutes, and as necessary, conducts other general business.

The Division of Florida Condominiums, Timeshares, and Mobile Homes provides consumer protection for Florida residents living in the regulated communities through education, complaint resolution, mediation and arbitration, as well as developer disclosure. This Division also licenses and regulates yacht and ship brokers and regulates condominiums, cooperatives, timeshares, and mobile home parks (DBPR, 2017).

The 2017 legislative sessionThe following section will review the bills that were passed into law during the 2017 Florida legislative session that impact community association management. The letters “CS” indicate that the bill was changed, or substituted, in committee; it is then attributed to the committee, rather than to an individual(s).

HB 6027- Financial Reporting Effective 7/1/17By: Rep. Williamson (CS/SB 294 by Judiciary Committee and Senator Bracy).Prepared by: Regulated Industries Committee (RI)

Bill summary from Online Sunshine 2017:The bill provides substantively identical changes to the annual financial reporting requirements for condominium, cooperative, and homeowners’ associations. Under existing 2016 law, these associations must prepare annual financial statements. The complexity of these statements is based on the annual revenues of the association. Associations having larger revenues must prepare more complex financial statements. The members of these associations, however, may vote to allow the association to prepare less complex financial statements than otherwise required by law – but not for more than three consecutive years. The bill repeals the three-consecutive-year limit on allowing a condominium or cooperative association to prepare less complex financial statements. Current law does not limit the ability of homeowners’ associations to prepare less complex financial statements.

The bill also repeals the provisions of law that require condominium, cooperative, and homeowners’ associations having fewer than 50 units or parcels to prepare a report of cash receipts and expenditures. This change will require these associations to prepare annual financial reports based on annual revenues, unless the association votes to prepare a less complex financial statement.

The key components of the 2017 revision follow:An act relating to financial reporting; amending ss.718.111, 719.104, and 720.303, F.S.; deleting a provision authorizing certain associations to prepare a report of cash receipts and expenditures in lieu of specified financial statements; deleting provisions prohibiting condominium and cooperative associations

from waiving certain financial reporting requirements; providing an effective date.

Be it enacted by the Legislature of the State of Florida:Section 1- Subsection (13) of section 718.111, Florida Statutes, is amended to read: 718.111 The association

FINANCIAL REPORTING - Within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws, the association shall prepare and complete, or contract for the preparation and completion of, a financial report for the preceding fiscal year. Within 21 days after the final financial report is completed by the association or received from the third party, but not later than 120 days after the end of the fiscal year or other date as provided in the bylaws the association shall mail to each unit owner at the address last furnished to the association by the unit owner, or hand deliver to each unit owner, a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, upon receipt of a written request from the unit owner. The division shall adopt rules setting forth uniform accounting principles and standards to be used by all associations and addressing the financial reporting requirements for multi-condominium associations. The rules must include, but not be limited to, standards for presenting a summary of association reserves, including a good faith estimate disclosing the annual amount of reserve funds that would be necessary for the association to fully fund reserves for each reserve item based on the straight-line accounting method. This disclosure is not applicable to reserves funded via the pooling method. In adopting such rules, the division shall consider the number of members and annual revenues of an association. Financial reports shall be prepared as follows: a. An association that meets the criteria of this paragraph shall

prepare a complete set of financial statements in accordance with generally financial statements must be annual revenues, as follows: 1. An association with or more, but less than $300,000, shall

prepare compiled financial statements.


2. An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements.

3. An association with total annual revenues of $500,000 or more shall prepare audited financial statements.

b. 1. An association with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures.

A report of cash receipts and disbursements must disclose the amount of receipts by accounts and receipt classifications and the amount of expenses by accounts and expense classifications, including, but not limited to, the following, as applicable: costs for security, professional and management fees and expenses, taxes, costs for recreation facilities, expenses for refuse collection and utility services, expenses for lawn care, costs for building

maintenance and repair, insurance costs, administration and salary expenses, and reserves accumulated and expended for capital expenditures, deferred maintenance, and any other category for which the association maintains reserves.

The remaining sections of CS/CS/HB 1237 outline financial reporting for cooperatives.

Note: The major deleted section repeals the provision of law that requires condominium associations having fewer than 50 units to prepare a report of cash receipts and expenditures in lieu of financial statements required in Paragraph a., above.

Termination of Condominium Associations SB 1520Senate Bill 1520 was signed into law effective July 1, 2017. The following is a summary of the bill (Florida Senate, 2017).

CS/SB 1520 - Termination of condominium association effective 7/1/17Summary from Online Sunshine 2017The bill revises the requirements for the optional termination of a condominium. Regarding optional terminations, current law requires that 80 percent of a condominium’s voting interests must approve a plan of optional termination, regardless of what a condominium’s governing documents may provide. The bill reduces from 10 percent to 5 percent the percentage of voting interests necessary to veto a termination plan.

The bill increases the minimum time periods between successive votes on a termination plan. If 5 percent or more of the voting interests of a condominium reject a plan of termination, a subsequent plan may not be considered for 24 months, instead of 18 months as under current law.

The bill also expands the requirement that a termination plan disclose to the unit owners when a person owns a significant portion of the condominium. Specifically, the plan must include written, sworn disclosures of the identity of any person or entity that owns or controls at least 25 percent, instead of 50 percent in current law, of the condominium units. Moreover, the bill also requires the written, sworn disclosures of any natural person or persons who, directly or indirectly, own or control 10 percent, instead of 20 percent as under current law, or more of the artificial entity or entities that constitute the bulk owner.

Regarding optional terminations, the bill increases consumer protections by:

● Entitling all persons whose condominium unit is their homestead to be paid at least the original purchase price paid for their units; and

● Requiring approval of a termination plan by the Department of Business and Professional Regulation.

● Additionally, the bill expressly states the amendments made by the bill to s. 718.117, F.S., are intended to clarify existing law, are remedial in nature, and are intended to address the rights and liabilities of the affected parties, and apply to all condominiums created under the Condominium Act.

SB 1520 Changes to the 2016 Statute for Optional TerminationSB 1520 amends 718.117 of the Florida Statutes and makes it more difficult for a plan of optional termination to be passed. It calls for full consent of the unit owners, allows a lower number of unit owners to reject termination, adds a longer time period for a new vote, provides that the owner will receive no less than the purchase price for the unit, as well as requires the Division of Florida Condominiums, Timeshares, and Mobile Homes division of the Department of Business and Professional Regulation (DBPR) to approve the plan.

The DBPR will review the plan based on the facts of the case and issues of public policy.

Changes were made to 718.117(1), (3) with the addition of (21): ● The language of the 2017 statute takes precedence over association

declaration documents for all condominiums created on or after July 1, 2007. The phrase, “Unless the declaration provides for a lower percentage” has been stricken, indicating that the threshold established in the statute is the minimum vote required for optional termination.

● The 2016 statute provides that 80% of unit owners must approve the plan, and no more than 10% of unit owners can object. The 2017 amended statute changes to 80% unit owner vote approving a plan of termination, with less than 5% objecting. When the owners pass the plan of termination, it moves on to the DBPR for evaluation and approval.

● When the plan of termination is rejected by 5% or more of unit owners, there can be no additional plan presented for a vote for 24 months. The 2016 statute provides for a new plan to be presented to the owners for a vote after 18 months.

DBPR review and evaluationThe 2016 statute gives the DBPR 45 days to review and approve or reject the plan. If the plan is not approved, then the DBPR must notify the association to give the reasons for the rejection. If the DBPR does not issue a response during the 45-day period, the plan is considered passed. The 2017 amended law requires the plan to show factual evidence of compliance with Florida Statute 718.117, and public policy as discussed in the section as follows:1. Legislative Findings.-The Legislature finds that condominiums

are created as authorized by statute. In circumstances that may create economic waste, areas of disrepair, or obsolescence of a condominium property for its intended use and thereby lower property tax values, the Legislature further finds that it is the public policy of this state to provide by statute a method to preserve the value of the property interests and the rights of alienation thereof that owners have in the condominium property before and after termination. The Legislature further finds that it is contrary to the public policy of this state to require the continued operation of a condominium when to do so constitutes economic waste or when the ability to do so is made impossible by law or regulation. This section applies to all condominiums in this state in existence on or after July 1, 2007.

Following are the public policy issues that will be considered during the DBPR evaluation for optional termination (Siegfried et al.):

● Ensure continued maintenance, management, and repair of storm water management systems, conservation areas, and conservation easements; or avoiding the costs and responsibilities of maintenance, management, and repair from falling on the shoulders of the taxpayers.


● Prevent covenants from impairing the continued productive use of the property.

● Protect state residents from health and safety hazards. ● Provide fair treatment and just compensation for individuals, and

preserve property values. ● Protect homestead property and homestead property rights. ● The 2016 statute states that the original owner who bought the

unit from the developer has the right to be made “whole” upon

termination of the condominium association. This means that under the termination plan, the owner would be paid no less than the original purchase price. The 2017 SB 1520 amendment omits the language that refers to the rights of the original owner only, and provides that the owner of a resale condominium has the same right to be paid no less than the purchase price if an optional termination plan is passed.

CS/CS/HB 1237: Condominiums effective 7/1/17Summary from Online Sunshine 2017By: Judiciary Committee; Civil Justice and Claims Subcommittee; (CS/CS/SB 1682 by Rules Committee; Regulated Industries Committee; Prepared by: Judiciary Committee (JU)

The bill establishes two main categories of changes relating to the regulation and operation of condominium associations. They:

● Define and prohibit or restrict activities constituting a conflict of interest which may be detrimental to the unit owners of a condominium; and

● Increase access to records by unit owners.

These changes are substantially based on a final report by a Miami-Dade County grand jury entitled, “Addressing Condo Owners’ Pleas for Help: Recommendations for Legislative Action.” The grand jury found that the existing statutes do not sufficiently restrict self-dealing by members of the condominium boards, or sufficiently deter other forms of misconduct, such as election fraud. Additionally, the grand jury found that the existing statutory mechanisms were insufficient to force condominium associations to make their official records available to unit owners in a timely manner.

Conflicts of interestThe bill prohibits conflicts of interest among those who are responsible for operating a condominium as follows:

● Attorneys are prohibited from representing both the board of a condominium association and the management company of the association.

● Members of the board or of the management company (for a condominium association that is not a timeshare condominium) are prohibited from purchasing a unit at a foreclosure sale which results from the association’s foreclosure of its lien for unpaid assessments, or from taking the title to the unit by deed in lieu of foreclosure.

● Condominium associations (that are not timeshare condominiums) are prohibited from contracting with a service provider that is owned or operated by a board member, or by a person who has a financial relationship with a board member, or who is a close relative of either a board member or an officer.

The bill also prohibits a party that contracts to provide maintenance or management services, or a board member of the party, from

owning more than 50 percent of the units of the condominium or from purchasing a property that is subject to a lien by the association.

Additionally, officers and directors of a condominium board are required to disclose activities that may reasonably be construed to be a conflict of interest. In some cases, the officer or the director who are engaged in a conflict of interest must choose to no longer pursue the activity creating the conflict, or withdraw from office. Otherwise, the board must remove the officer or director.

Access to association recordsThe bill requires condominium associations to keep additional records and generally to take actions to make those records available to unit owners as follows:

● A condominium association must maintain its bids for materials, equipment, and services as part of its official records.

● A condominium association must permit renters to inspect and copy the association’s bylaws and rules.

● A condominium association must provide an annual report to the Department of Business and Professional Regulation listing the financial institutions at which it maintains accounts, and unit owners may obtain the report from the department.

● A unit owner may give his/her notice to the Division of Condominiums, Timeshares, and Mobile Homes (division) of the Department of Business and Professional Regulation that an association has failed to mail or hand deliver to him/her a copy of the most recent financial statement after a request. The division must then give the association notice that it must comply with the request. If the association fails to comply with that request within 5 business days, the association may not prepare less complex financial statements than the statutory default requirements for 3 years.

● An officer or director of a condominium who is charged with certain crimes relating to the condominium generally may not access association records without a court order while the charges are pending.

● A condominium association that has 150 (or more) units must post copies of most of its official records on its website; however, the records must be inaccessible to the general public.

The 2017 bill contains many additions, as well as a few word changes and minor omissions. Due to length constraints, the major additions are included below. The entire bill should be reviewed online.

2017 additions to CS/CS/HB 1237 Fiduciary dutyThe owners of units shall be shareholders or members of the association. The officers and directors of the association have a fiduciary relationship to the unit owners. It is the intent of the Legislature that nothing in this paragraph shall be construed as providing for or removing a requirement of a fiduciary relationship between any managers employed by the association and the unit owners. An officer, director, or manager may not solicit, offer to accept, or accept anything or service of value or kickback for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. Any such

officer, director, or manager who knowingly so solicits, offers to accept, or accepts anything or service of value or kickback is subject to a civil penalty pursuant to s.718.501 (1) (d) and, if applicable, a criminal penalty as provided in paragraph (d). However, this paragraph does not prohibit an officer, director, or manager from accepting services or items received in connection with trade fairs or education programs. An association may operate more than one condominium.

As required by s. 617.0830, an officer, director, or agent shall discharge his or her duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner he or she reasonably believes to be in the interests of the association. An officer, director, or agent


shall be liable for monetary damages as provided in s. 617.0834 if such officer, director, or agent breached or failed to perform his or her duties and the breach of, or failure to perform, his or her duties constitutes a violation of criminal law as provided in s. 617.0834; constitutes a transaction from which the officer or director derived an improper personal benefit, either directly or indirectly; or constitutes recklessness or an act or omission that was in bad faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights, safety, or property. Forgery of a ballot envelope or voting certificate used in a condominium association election is punishable as provided in s. 831.01, the theft or embezzlement of funds of a condominium association is punishable as provided in s. 812.014, and the destruction of or the refusal to allow inspection or copying of an official record of a condominium association that is accessible to unit owners within the time periods required by general law in furtherance of any crime is punishable as tampering with physical evidence as provided in s. 918.13 or as obstruction of justice as provided in chapter 843. An officer or director charged by information or indictment with a crime referenced in this paragraph must be removed from office, and the vacancy shall be filled as provided in s. 718.112(2)(d)2. until the end of the officer’s or director’s period of suspension or the end of his or her term of office, whichever occurs first.

Purchase of unitsThe association has the power, unless prohibited by the declaration, articles of incorporation, or bylaws of the association, to purchase units in the condominium and to acquire and hold, lease, mortgage, and convey them. There shall be no limitation on the association’s right to purchase a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments, or to take title by deed in lieu of foreclosure. However, except for a timeshare condominium, a board member, manager, or management company may not purchase a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments or take title by deed in lieu of foreclosure.

Websites1. By July 1, 2018, an association with 150 or more units which

does not manage timeshare units shall post digital copies of the documents specified in subparagraph 2. on its website.a. The association’s website must be:

I. An independent website or web portal wholly owned and operated by the association;

II. A website or web portal operated by a third-party provider with whom the association owns, leases, rents, or otherwise obtains the right to operate a web page, subpage, web portal, or collection of subpages or web portals dedicated to the association’s activities and on which required notices, records, and documents may be posted by the association.

b. The association’s website must be accessible through the Internet and must contain a subpage, web portal, or other protected electronic location that is inaccessible to the general public and accessible only to unit owners and employees of the association.

c. Upon a unit owner’s written request, the association must provide the unit owner with a username and password an access to the protected sections of the association’s website that contain any notices, records, or documents that must be electronically provided.

2. A current copy of the following documents must be posted in digital format on the association’s website: a. The recorded declaration of condominium of

each condominium operated by the association and each amendment to each declaration.

b. The recorded bylaws of the association and each amendment to the bylaws.

c. The articles of incorporation of the association or other documents creating thereto. The copy posted to this sub-subparagraph must be a copy of the articles of incorporation filed with the Department of State.

d. The rules of the association.e. Any management agreement, lease, or other contract to which

the association is a party or under which the association or the unit owners have an obligation or responsibility. Summaries of bids for materials, equipment, or services must be maintained on the website for 1 year.

f. The annual budget required by s. 718.112(2) (f) and any proposed budget to be considered at the annual meeting.

g. The financial report required by subsection (13) and any proposed financial report to be considered at a meeting.

h. The certification of each director required by s. 718.112(2) (d) 4.b.

i. All contracts or transactions between the association and any director, officer, corporation, firm, or association that is not an affiliated condominium association or any other entity in which an association director is also a director or officer and financially interested.

j. Any contract or document regarding a conflict of interest or possible conflict of interest as provided in ss. 468.436(2) and 718.3026(3).

k. The notice of any unit owner meeting and the agenda for the meeting, as required by s. 718.112(2) (d) 3., no later than 14 days before the meeting. The notice must be posted in plain view on the front page of the website, or on a separate subpage of the website labeled “Notices” which is conspicuously visible and linked from the front page. The association must also post on its website any document to be considered and voted on by the owners during the meeting or any document listed on the agenda at least 7 days before the meeting at which the document or the information within the document will be considered. 1. Notice of any board meeting, the agenda, and any other

document required for the meeting as required by s. 718.112(2)(c), which must be posted no later than the date required for notice pursuant to s. 718.112(2)(c).

2. The association shall ensure that the information and records described in paragraph (c), which are not permitted to be accessible to unit owners, are not posted on the association’s website. If protected information or information restricted from being accessible to unit owners is included in documents that are required to be posted on the association’s website, the association shall ensure the information is redacted before posting the documents online.

Access to financial recordsA unit owner may provide written notice to the division of the association’s failure to mail or hand deliver him or her a copy of the most recent financial report within 5 business days after he or she submitted a written request to the association for a copy of such report. If the division determines that the association failed to mail or hand deliver a copy of the most recent financial report to the unit owner, the division shall provide written notice to the association that the association must mail or hand deliver a copy of the most recent financial report to the unit owner and the division within 5 business days after it receives such notice from the division. An association that fails to comply with the division’s request may not waive the financial reporting requirement provided in paragraph (d). A financial report received by the division pursuant to this paragraph shall be maintained, and the division shall provide a copy of such report to an association member upon his or her request.


Debit card a. An association and its officers, directors, employees, and agents

may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expense.

b. Use of a debit card issued in the name of the association, or billed directly to the association, for any expense that is not a lawful obligation of the association may be prosecuted as credit card fraud pursuant to s. 817.61. Section 2- To implement the website requirement in section 1 of this act, the Department of Business and Professional Regulation is directed to include within the next condominium association annual fee statement required by s. 718.501(2) (a) Florida Statutes, a notice informing condominium associations of 150 or more units of the requirement to create a website for association documents that is operational on or before July 1, 2018.

Term limitsBoard members may serve 2-year terms if permitted by the bylaws or articles of incorporation. A board member may not serve more than four consecutive 2-year terms, unless approved by an affirmative vote of two-thirds of the total voting interests of the association or unless there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy.

Arbitration A person may only be certified by the division to act as an arbitrator if he or she has been a member in good standing of The Florida Bar for at least 5 years and has mediated or arbitrated at least 10 disputes involving condominiums in this state during the 3 years immediately preceding the date of application, mediated or arbitrated at least 30 disputes in any subject area in this state during the 3 years immediately preceding the date of application, or attained board certification in real estate law or condominium and planned development law from The Florida Bar. Arbitrator certification is valid for 1 year. An arbitrator who does not maintain the minimum qualifications for initial certification may not have his or her certification renewed. The department may not enter into a legal services contract for an arbitration hearing under this chapter with an attorney who is not a certified arbitrator unless a certified arbitrator is not available within 50 miles of the dispute.

Upon determination by the division that a dispute exists and that the petition substantially meets the requirements of paragraphs (a) and (b) and any other applicable rules, the division shall assign or enter into a contract with an arbitrator and serve a copy of the petition shall be served by the division upon all respondents. The arbitrator shall conduct a hearing within 30 days after being assigned or entering into a contract unless the petition is withdrawn or a continuance is granted for good cause shown. The arbitration decision shall be rendered within 30 days after the hearing and presented to the parties in writing. An arbitration decision is final in those disputes in which the parties have agreed to be bound. An arbitrator’s failure to render

a written decision within 30 days after the hearing may result in the cancellation of his or her arbitration certification.

A party contracting to provide maintenance or management services to an association managing a residential condominium after transfer of control of the association, as provided in s. 718.301, which is not a timeshare condominium association, or an officer or board member of such party, may not purchase a unit at a foreclosure sale resulting from the association’s foreclosure of association lien for unpaid assessments or take a deed in lieu of foreclosure. If 50 percent or more of the units in the condominium are owned by a party contracting to provide maintenance or management services to an association managing a residential condominium after transfer of control of the association, as provided in s. 718.301, which is not a timeshare condominium association, or by an officer or board member of such party, the contract with the party providing maintenance or management services may be cancelled by a majority vote of the unit owners other than the contracting party or an officer or board member of such party.

718.71 Financial institution reporting.- An association shall provide an annual report to the department containing the names of all of the financial institutions with which it maintains accounts and a copy of such report may be obtained from the department upon written request of any association member.

The law should be reviewed in its entirety at https://www.flsenate.gov/Session/Bill/2017/1237/BillText/er/PDF

Discussion of HB 1237Goin (2017a) suggests the following information for consideration:

● The law addresses board member term limits and criminal penalties against volunteer board members for certain violations, including failure to provide access to official records and fraudulent activities related to the election of directors.

● Legislators proposed this bill in an attempt to address the election fraud and financial crimes revealed in a recent Miami grand jury’s report.

● Director term limits have been discussed for years, but most people agree that the bigger problem is the lack of people interested in serving on community association boards; therefore, preventing those who are willing to serve from doing so is not the most productive idea.

● It is not good public policy to criminalize violations of civil real estate laws unless a crime has been committed, such as theft or forgery. Unpaid volunteer board members should not be held criminally liable if, for example, they fail to turn over records within 10 days or if they incorrectly count a ballot that should have been disregarded. In many communities, these functions are not handled by board members; rather, they are delegated entirely to the professional manager. The over-broad criminal penalties in the bills may have a chilling effect on the ability of associations to find qualified persons to serve on a board. It is important that any criminal penalties be narrowly drawn to deal with the extreme cases.

SB 398: Estoppel certificates effective 7/1/17The 2016 bill prohibited associations from collecting a fee when the certificate was prepared. The new version of the bill will continue to allow associations to collect the fee when the certificate is prepared, but provides for significant penalties if the association does not refund the amounts collected when a closing does not occur (Goin, 2017b).

Summary from Online Sunshine 2017SB 398 addresses estoppel certificates. It became law on July 1, 2017. The 2017 amendment revises the 2016 requirements relating to the issuance of an estoppel certificate to specified persons; requiring a condominium, cooperative, or homeowners’ association to designate a street or e-mail address on its website for estoppel certificate requests; prohibiting an association from charging a preparation and delivery

fee or making certain claims if it fails to deliver an estoppel certificate within certain timeframes.

Under 2016 law, when an ownership interest in a condominium unit, cooperative unit, or homeowners’ parcel is transferred, the new owner is jointly and severally liable with the previous owner for unpaid assessments owed to a condominium, cooperative, or homeowners’ association. Unpaid assessments may also become a lien on the property. Purchasers may request that the seller provide an estoppel certificate from the condominium, cooperative, or homeowners’ association to protect against undisclosed financial obligations so that title to the property may be transferred free of any lien or encumbrance in favor of the association. An estoppel certificate certifies the


amount of any total debt owed to the association for unpaid monetary obligations by a unit or parcel owner as of a specified date.

The 2017 bill: ● Revises the period in which an association must respond to a

request for an estoppel certificate from 15 days to 10 business days.

● Requires an association to designate on its website a person or entity with a street or e-mail address for receipt of a request for an estoppel certificate.

● Provides an estoppel certificate delivered by hand, mail, or e-mail has a 30-day effective period, and a certificate sent by regular mail has a 35-day effective period.

● Identifies the persons who may complete the estoppel certificate on behalf of the board or association.

● Specifies the information the association must provide in the estoppel certificate.

● Prohibits an association from charging a fee for an amended estoppel certificate, and provides a new effective period of 30 days or 35 days, depending on the method used to deliver the amended certificate.

● Provides an association who waives the right to collect any moneys owed in excess of the amounts set forth in the estoppel certificate from any person, and his or her successors and assigns, which in good faith relies upon the certificate.

● Prohibits an association from charging a fee for preparing and delivering an estoppel certificate that is requested, if it is not delivered within 10 business days.

● Authorizes the use of a summary proceeding pursuant to s. 51.011, F.S., to compel compliance with the estoppel certificate requirements for a cooperative association, as existing law provides for condominium and homeowners’ associations.

● Permits an association to charge a maximum fee of $250 for the preparation and delivery of an estoppel certificate, if there are no delinquent amounts owed to the association.

● Permits an association to charge an additional $100 fee for an expedited estoppel certificate delivered within 3 business days after a request for an expedited certificate.

● Permits an association to charge an additional maximum fee of $150, if there is a delinquent amount owed to the association.

● Specifies the maximum fee an association may charge when it receives simultaneous requests for estoppel certificates for multiple units or parcels owned by the same person and there are no past due monetary obligations owed to the association.

● Provides a lender or purchaser who pays for the preparation of an estoppel certificate may not waive the right to reimbursement if the closing does not occur and the prevailing party in a suit to enforce a right of reimbursement shall be awarded damages, attorney fees, and costs.

● Authorizes a cooperative to charge a fee for preparing and delivering an estoppel certificate but the authorization must be established be a written resolution adopted by either the board or a written management, booking, or maintenance contract.

● Requires the Department of Business and Professional Regulation to adjust the estoppel certificate fees for inflation every five years, rounded to the nearest dollar, and to publish the adjusted amounts on its website.

According to Goin (2017b), the estoppel certificate must contain all of the following information:

● Date of issuance; ● Name(s) of the unit owner(s) as reflected in the books and records

of the association; ● Unit designation and address; ● Parking or garage space number, as reflected in the books and

records of the association;

● Attorney’s name and contact information if the account is delinquent and has been turned over to an attorney for collection. No fee may be charged for this information;

● Fee for the preparation and delivery of the estoppel certificate; and ● Name of the requestor.

The estoppel certificate must also contain the following “Assessment Information”:

● The regular periodic assessment levied against the unit is $____ per ____ (insert frequency of payment);

● The regular periodic assessment is paid through ______ (insert date paid through);

● The next installment of the regular periodic assessment is due ____ (insert due date) in the amount of $____;

● An itemized list of all assessments, special assessments, and other moneys owed on the date of issuance to the association by the unit owner for a specific unit is provided; and

● An itemized list of any additional assessments, special assessments, and other moneys that are scheduled to become due for each day after the date of issuance for the effective period of the estoppel certificate is provided. In calculating the amounts that are scheduled to become due, the association may assume that any delinquent amounts will remain delinquent during the effective period of the estoppel certificate.

The estoppel certificate must also contain the following “Other Information”:

● Is there a capital contribution fee, resale fee, transfer fee, or other fee due? __ (Yes) ___ (No).

● If yes, specify the type and the amount of the fee. ● Is there any open violation of rule or regulation noticed to the unit

owner in the association official records? ___ (Yes) ___ (No). ● Do the rules and regulations of the association applicable to the

unit require approval by the board of directors of the association for the transfer of the unit? ___ (Yes) ___ (No).

● If yes, has the board approved the transfer of the unit? ____ (Yes) ____ (No).

● Is there a right of first refusal provided to the members or the association? ____ (Yes) ____ (No).

● If yes, have the members or the association exercised that right of first refusal? ____ (Yes) ____ (No).

● Provide a list of, and contact information for, all other associations of which the unit is a member.

● Provide contact information for all insurance maintained by the association.

● Provide the signature of an officer or authorized agent of the association.

The association, at its option, may include additional information in the estoppel certificate.

An estoppel certificate that is hand-delivered or sent by electronic means has a 30-day effective period. An estoppel certificate that is sent by regular mail has a 35-day effective period.

If additional information is needed, or a mistake related to the estoppel certificate becomes known to the association within the effective period, an amended estoppel certificate may be delivered and becomes effective if a sale or refinancing of the unit has not been completed during the effective period. A fee may not be charged for an amended estoppel certificate. An amended estoppel certificate must be delivered on the date of issuance, and a new 30-day or 35-day effective period begins on such date.

An association waives the right to collect any moneys owed in excess of the amounts set forth in the estoppel certificate from any person, and his or her successors and assigns, who in good faith relies upon the certificate.


The statute prohibits an association from charging a fee for preparing and delivering an estoppel certificate that is requested, if it is not delivered within 10 business days.

The law authorizes the use of a summary proceeding pursuant to s. 51.011, F.S., to compel compliance with the estoppel certificate requirements. This was added to the Cooperative Act, already the law for Condominiums and HOAs.

An association is authorized to charge a fee for preparing and delivering an estoppel certificate but the authorization must be established be a written resolution adopted by the board or a written management, bookkeeping, or maintenance contract.

Also added to the Cooperative Act already the law for Condominiums and HOAs:The maximum amount of the estoppel certificate fee is as follows:

● $250 if there are no delinquent amounts owed to the association. ● An additional $100 fee for an expedited estoppel certificate

delivered within 3 business days after a request for an expedited certificate.

● An additional maximum fee of $150, if there is a delinquent amount owed to the association.

The maximum fee that an association may charge when it receives simultaneous requests for estoppel certificates for multiple units or

parcels owned by the same person and there are no past due monetary obligations owed to the association is as follows:

● For 25 or fewer units, $750. ● For 26 to 50 units, $1,000. ● For 51 to 100 units, $1,500. ● For more than 100 units, $2,500.

A person who pays for the preparation of an estoppel certificate may request a refund if the certificate is requested in conjunction with the sale or mortgage of a unit, but the closing does not occur. The request for the refund must be in writing and must occur no later than 30 days after the closing date. The refund must be provided within 30 days after the receipt of a written request.

The right to a refund if the closing does not occur may not be waived or modified by any contract or agreement.

The prevailing party in a suit to enforce a right of reimbursement shall be awarded damages, attorney fees, and costs.

The fees specified shall be adjusted every 5 years based on increases in the Consumer Price Index. The Department of Business and Professional Regulation shall periodically calculate the fees, rounded to the nearest dollar, and publish the adjusted amounts on its website.

CS/SB 818: Timeshares, effective 5/23/17By: Regulated Industries Committee and Senator Hutson.Prepared by: Regulated Industries Committee (RI)

The bill amends Ch. 721, F.S., the Florida Vacation Plan and Timesharing Act, which establishes requirements for the creation, sale, exchange, promotion, and operation of timeshare plans, including requirements for full and fair disclosure to purchasers.

The changes made by the bill: ● Revise the term “interest holder” with respect to a multisite

timeshare plan governed by part II of the act;

● Revise requirements for instruments that establish or govern a component site property regime, including the requirement to issue or provide certain documents to creditors;

● Revise requirements for terminations of timeshare plans; ● Revise requirements for extensions of timeshare plans, which

apply to all timeshare properties in the state; ● Allow reasonable termination expenses to be paid pro rata by

owners of former timeshare properties; and ● Amend requirements for voting upon an extension of a term of

a timeshare plan, including meeting notices, voter eligibility, proxies, and quorum requirements.

Important note: HB 653: The “Retrofitting with Fire Sprinklers” bill vetoed 6/26/17CS/CS/CS/HB 653 - Community associationsThis 2017 bill revision received extensive time and attention from media reports and legal websites, but it was vetoed by the governor on 6/26/17. Associations should consult local fire safety officials to review local ordinances, as well as their legal counsel to ensure they are acting in the best interest and safety of the association and complying with state and local law.

Chapter 468 Part VIII: Community association managementThis chapter is included under 2017 because it will appear that way on the Florida Online Sunshine website. In fact, it has not been changed since 2014 and some sections have not been changed since 2008. When looking at any statute, be sure to put in the correct year for review. The reader can view the history of all bills at the bottom of each section on the Online Sunshine website. This Chapter will be summarized below and can be viewed in its entirety on the website: Community Association Management468.431 Definitions. - As used in this part:1. “Community association” means a residential homeowners’

association in which membership is a condition of ownership of a unit in a planned unit development, or of a lot for a home or a mobile home, or of a townhouse, villa, condominium, cooperative, or other residential unit which is part of a residential development scheme and which is authorized to impose a fee which may become a lien on the parcel.

2. “Community association management” means any of the following practices requiring substantial specialized knowledge, judgment,

and managerial skill when done for remuneration and when the association or associations served contain more than 10 units or have an annual budget or budgets in excess of $100,000: controlling or disbursing funds of a community association, preparing budgets or other financial documents for a community association, assisting in the noticing or conduct of community association meetings, determining the number of days required for statutory notices, determining amounts due to the association, collecting amounts due to the association before the filing of a civil action, calculating the votes required for a quorum or to approve a proposition or amendment, completing forms related to the management of a community association that have been created by statute or by a state agency, drafting meeting notices and agendas, calculating and preparing certificates of assessment and estoppel certificates, responding to requests for certificates of assessment and estoppel certificates, negotiating monetary or performance terms of a contract subject to approval by an association, drafting prearbitration demands, coordinating or performing maintenance for real or personal property and other related routine services involved in the operation of a community association, and complying with the association’s governing documents and the requirements of law as necessary to perform such practices.

3. “Community association management firm” means a corporation, limited liability company, partnership, trust, association, sole proprietorship, or other similar organization engaging in the business of community association management for the purpose of providing any of the services described in subsection (2).


4. “Community association manager” means a natural person who is licensed pursuant to this part to perform community association management services.

5. “Council” means the Regulatory Council of Community Association Managers.

6. “Department” means the Department of Business and Professional Regulation.

468.4315 Regulatory Council of Community Association Managers1. The Regulatory Council of Community Association Managers is

created within the department and shall consist of seven members appointed by the Governor and confirmed by the Senate.a. Five members of the council shall be licensed community

association managers, one of whom may be a community association manager employed by a timeshare managing entity as described in ss. 468.438 and 721.13, who have held an active license for at least 5 years. The remaining two council members shall be residents of this state, must not be or ever have been connected with the business of community association management, and shall not be prohibited from serving because the member is or has been a resident or board member of a community association.

b. The Governor shall appoint members for terms of 4 years. Such members shall serve until their successors are appointed. Members’ service on the council shall begin upon appointment and shall continue until their successors are appointed.

2. The council may adopt rules relating to the licensure examination, continuing education requirements, continuing education providers, fees, and professional practice standards to assist the department in carrying out the duties and authorities conferred upon the department by this part.

468.432 Licensure of community association managers and community association management firms; exceptions1. A person shall not manage or hold herself or himself out to the

public as being able to manage a community association in this state unless she or he is licensed by the department in accordance with the provisions of this part. However, nothing in this part prohibits any person licensed in this state under any other law or court rule from engaging in the profession for which she or he is licensed.

2. As of January 1, 2009, a community association management firm or other similar organization responsible for the management of more than 10 units or a budget of $100,000 or greater shall not engage or hold itself out to the public as being able to engage in the business of community association management in this state unless it is licensed by the department as a community association management firm in accordance with the provisions of this part.a. A community association management firm or other

similar organization desiring to be licensed as a community association management firm shall apply to the department on a form approved by the department, together with the application and licensure fees required by s. 468.435(1)(a) and (c). Each community association management firm applying for licensure under this subsection must be actively registered and authorized to do business in this state.

b. Each applicant shall designate on its application a licensed community association manager who shall be required to respond to all inquiries from and investigations by the department or division.

c. Each licensed community association management firm shall notify the department within 30 days after any change of information contained in the application upon which licensure is based.

d. Community association management firm licenses shall expire on September 30 of odd-numbered years and shall be renewed every 2 years. An application for renewal shall be

accompanied by the renewal fee as required by s. 468.435(1) (d).

e. The department shall license each applicant whom the department certifies as meeting the requirements of this subsection.

f. If the license of at least one individual active community association manager member is not in force, the license of the community association management firm or other similar organization is canceled automatically during that time.

g. Any community association management firm or other similar organization agrees by being licensed that it will employ only licensed persons in the direct provision of community association management services as described in s. 468.431(3).

468.433 Licensure by examinationl. A person desiring to be licensed as a community association

manager shall apply to the department to take the licensure examination. Each applicant must file a complete set of fingerprints that have been taken by an authorized law enforcement officer, which set of fingerprints shall be submitted to the Department of Law Enforcement for state processing and to the Federal Bureau of Investigation for federal processing. The cost of processing shall be borne by the applicant.

2. The department shall examine each applicant who is at least 18 years of age, who has successfully completed all prelicensure education requirements, and who the department certifies is of good moral character.a. Good moral character means a personal history of honesty,

fairness, and respect for the rights of others and for the laws of this state and nation.

b. The department may refuse to certify an applicant only if:1. There is a substantial connection between the lack of

good moral character of the applicant and the professional responsibilities of a community association manager;

2. The finding by the department of lack of good moral character is supported by clear and convincing evidence; or

3. The applicant is found to have provided management services requiring licensure without the requisite license.

c. When an applicant is found to be unqualified for a license because of a lack of good moral character, the department shall furnish the applicant a statement containing its findings, a complete record of the evidence upon which the determination was based, and a notice of the rights of the applicant to a rehearing and appeal.

d. The council shall establish by rule the required amount of prelicensure education, which shall consist of not more than 24 hours of in-person instruction by a department-approved provider and which shall cover all areas of the examination specified in subsection (3). Such instruction shall be completed within 12 months prior to the date of the examination. Prelicensure education providers shall be considered continuing education providers for purposes of establishing provider approval fees. A licensee shall not be required to comply with the continuing education requirements of s. 468.4337 prior to the first license renewal. The department shall, by rule, set standards for exceptions to the requirement of in-person instruction in cases of hardship or disability.

3. The council shall approve an examination for licensure. The examination must demonstrate that the applicant has a fundamental knowledge of state and federal laws relating to the operation of all types of community associations and state laws relating to corporations and nonprofit corporations, proper preparation of community association budgets, proper procedures for noticing and conducting community association meetings, insurance matters relating to community associations, and management skills.


4. The department shall issue a license to practice in this state as a community association manager to any qualified applicant who successfully completes the examination in accordance with this section and pays the appropriate fee.

468.4334 Professional practice standards; liability1. A community association manager or a community association

management firm is deemed to act as agent on behalf of a community association as principal within the scope of authority authorized by a written contract or under this chapter. A community association manager and a community association management firm shall discharge duties performed on behalf of the association as authorized by this chapter loyally, skillfully, and diligently; dealing honestly and fairly; in good faith; with care and full disclosure to the community association; accounting for all funds; and not charging unreasonable or excessive fees.

2a. A contract between a community association and a community association manager or a contract between a community association and a community association management firm may provide that the community association indemnifies and holds harmless the community association manager and the community association management firm for ordinary negligence resulting from the manager or management firm’s act or omission that is the result of an instruction or direction of the community association. This paragraph does not preclude any other negotiated indemnity or hold harmless provision.

b. Indemnification under paragraph (a) may not cover any act or omission that violates a criminal law; derives an improper personal benefit, either directly or indirectly; is grossly negligent; or is reckless, is in bad faith, is with malicious purpose, or is in a manner exhibiting wanton and willful disregard of human rights, safety, or property.

468.4336 Renewal of license1. The department shall renew a license upon receipt of the renewal

application and fee and upon proof of compliance with the continuing education requirements of s. 468.4337.

2. The department shall adopt rules establishing a procedure for the biennial renewal of licenses.

468.4337 Continuing education- The department may not renew a license until the licensee submits proof that the licensee has completed the requisite hours of continuing education. No more than 10 hours of continuing education annually shall be required for renewal of a license. The number of hours, criteria, and course content shall be approved by the council by rule.

468.4338 Reactivation; continuing education- The council shall prescribe by rule continuing education requirements for reactivating a license. The continuing education requirements for reactivating a license may not exceed one renewal cycle of continuing education.

468.435 Fees; establishment; disposition1. The council shall establish fees for the described purposes and

within the ranges specified in this section:2. Until the council establishes fees under subsection (1), the lower

amount in each range shall apply.3. Fees collected under this section shall be deposited to the credit of

the Professional Regulation Trust Fund.4. The council shall establish fees that are adequate to fund the cost

to implement the provisions of this part. Fees shall be based on the department estimates of the revenue required to implement this part and the provisions of law with respect to the regulation of community association managers.

468.436 Disciplinary proceedings1. The department shall investigate complaints and allegations of a

violation of this part, chapter 455, or any rule adopted thereunder, filed against community association managers or firms and forwarded from other divisions under the Department of Business

and Professional Regulation. After a complaint is received, the department shall conduct its inquiry with due regard to the interests of the affected parties. Within 30 days after receipt of a complaint, the department shall acknowledge the complaint in writing and notify the complainant whether or not the complaint is within the jurisdiction of the department and whether or not additional information is needed by the department from the complainant. The department shall conduct an investigation and shall, within 90 days after receipt of the original complaint or of a timely request for additional information, take action upon the complaint. However, the failure to complete the investigation within 90 days does not prevent the department from continuing the investigation, accepting or considering evidence obtained or received after 90 days, or taking administrative action if reasonable cause exists to believe that a violation of this part, chapter 455, or a rule of the department has occurred. If an investigation is not completed within the time limits established in this subsection, the department shall, on a monthly basis, notify the complainant in writing of the status of the investigation. When reporting its action to the complainant, the department shall inform the complainant of any right to a hearing pursuant to ss. 120.569 and 120.57.

2. The following acts constitute grounds for which the disciplinary actions in subsection (4) may be taken:a. Violation of any provision of s. 455.227(1).b. Violation of any provision of this part.c. Violation of any lawful order or rule rendered or adopted by

the department or the council.d. Being convicted of or pleading nolo contendere to a felony in

any court in the United States.e. Obtaining a license or certification or any other order, ruling,

or authorization by means of fraud, misrepresentation, or concealment of material facts.

f. Committing acts of gross misconduct or gross negligence in connection with the profession.

g. Contracting, on behalf of an association, with any entity in which the licensee has a financial interest that is not disclosed.

h. Violating any provision of chapter 718, chapter 719, or chapter 720 during the course of performing community association management services pursuant to a contract with a community association as defined in s. 468.431(1).

3. The council shall specify by rule the acts or omissions that constitute a violation of subsection (2).

4. When the department finds any community association manager or firm guilty of any of the grounds set forth in subsection (2), it may enter an order imposing one or more of the following penalties:a. Denial of an application for licensure.b. Revocation or suspension of a license.c. Imposition of an administrative fine not to exceed $5,000 for

each count or separate offense.d. Issuance of a reprimand.e. Placement of the community association manager on probation

for a period of time and subject to such conditions as the department specifies.

f. Restriction of the authorized scope of practice by the community association manager.

5. The department may reissue the license of a disciplined community association manager or firm upon certification by the department that the disciplined person or firm has complied with all of the terms and conditions set forth in the final order.

468.4365 Availability of disciplinary records and proceedings- Notwithstanding s. 455.225, any complaint or record maintained by the Department of Business and Professional Regulation pursuant to the discipline of a licensed community association manager and any proceeding held by the department to discipline a licensed community association manager shall remain open and available to the public.


468.437 Penalties- Any person who violates any of the provisions of this part shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

468.438 Timeshare management firms1. The provisions of this section apply only to community

association management performed by a management firm acting as managing entity of a timeshare plan pursuant to chapter 721.

2. A timeshare management firm shall only be required to employ at least one individual licensed under this part at each noncontiguous geographic location at which the management

firm provides community association management. No other person providing community association management on behalf of such management firms shall be required to hold a license pursuant to this part, provided that any community association management provided pursuant to this section must be performed under the direct supervision and control of a licensed community association manager. A community association manager licensed pursuant to this part and employed by a timeshare management firm pursuant to this section assumes responsibility for all community association management performed by unlicensed persons employed by the timeshare management firm.

CS/CS/HB 241: Alarm systems 6/2/17Alarm systems; Redefining the term “low-voltage alarm system project” to include low-voltage electric fences; providing requirements for a low-voltage electric fence to be permitted as a low-voltage alarm system project; providing exclusions from the requirement for a verification call before alarm dispatch for specified premises under certain circumstances.

The 2017 Bill, with additions and deletions, reads as follows:Amending s. 489.529, F.S.; providing exclusions from the requirement for a verification call before alarm dispatch for specified premises under certain circumstances; requiring alarm monitoring companies to make reasonable efforts to inform certain customers of specified rights; providing effective dates. Section 1- Subsections (3) through (10) of section 553.793, Florida Statutes, are redesignated as subsections (4)through (11), respectively, subsection (1) and present subsection (6) are amended, and a new subsection (3) is added to that section, to read: 553.793 Streamlined low-voltage alarm system installation permitting.

1. As used in this section, the term:a. “Contractor” means a person who is qualified to engage in the

business of electrical or alarm system contracting pursuant to a certificate or registration issued by the department under part II of chapter 489.

b. “Low-voltage alarm system project” means a project related to the installation, maintenance, inspection, replacement, or service of a new or existing alarm system, as defined in s. 489.505, that is hardwired and operating at low voltage, as defined in the National Electrical Code Standard 70, Current Edition, or a new or existing low-voltage electric fence, and ancillary components or equipment attached to such a system or fence, including, but not limited to, home-automation equipment, thermostats, closed-circuit television systems, access controls, battery recharging devices, and video cameras.

c. “Low-voltage electric fence” means an alarm system, as defined in s. 489.505, that consists of a fence structure and an energizer powered by a commercial storage battery not exceeding 12 volts which produces an electric charge upon contact with the fence structure.

d. “Wireless alarm system” means a burglar alarm system or smoke detector that is not hardwired. A low-voltage electric fence must meet all of the following requirements to be permitted as a low-voltage alarm system project and no further permit shall be required for the low-voltage alarm system project other than as provided in this.

a. The electric charge produced by the fence upon contact must not exceed energizer characteristics set forth in paragraph 22.108

and depicted in Figure 102 of International Electro technical Commission Standard No. 60335-2-76, Current Edition.

b. A nonelectric fence or wall must completely enclose the low-voltage electric fence. The low-voltage electric fence may be up to 2 feet higher than the perimeter nonelectric fence or wall.

c. The low-voltage electric fence must be identified using warning signs attached to the fence at intervals of not more than 60 feet.

d. The low-voltage electric fence shall not be installed in an area zoned exclusively for single-family or multi-family residential use.

e. The low-voltage electric fence shall not enclose the portions of a property which are used for residential purposes.

7. A contractor is not required to notify the local enforcement agency before commencing work on a low-voltage alarm system project. However, a contractor must submit a Uniform Notice of a Low-Voltage Alarm System Project as provided under subsection (8) to the local enforcement agency within 14 days after completing the project. A local enforcement agency may take disciplinary action against a contractor who fails to timely submit a Uniform Notice of a Low-Voltage Alarm System Project.

Section 2- Effective October 1, 2017, section 489.529, Florida Statutes, is amended to read: 489.529 Alarm verification calls required.- All residential or commercial intrusion/burglary alarms that have central monitoring must have a central monitoring verification call made to a telephone number associated with the premises generating the alarm signal, before prior to alarm monitor personnel contacting a law enforcement agency for alarm dispatch. The central monitoring station must employ call-verification methods for the premises generating the alarm signal if the first call is not answered. However, verification calling is not required if:1. The intrusion/burglary alarm has a properly operating visual or

auditory sensor that enables the monitoring personnel to verify the alarm signal; or

2. The intrusion/burglary alarm is installed on a premises that is used for the storage of firearms or ammunition by a person who holds a valid federal firearms license as a manufacturer, importer, or dealer of firearms or ammunition, provided the customer notifies the alarm monitoring company that he or she holds such license and would like to bypass the two- call verification protocol. Upon initiation of a new alarm monitoring service contract, the alarm monitoring company shall make reasonable efforts to inform a customer who holds a valid of firearms or ammunition of his or her right to opt out of the two-call verification protocol.

Section 3- Except as otherwise expressly provided in this act, this act shall take effect upon becoming a law.

CS/CS/HB 615: Professional regulation 7/1/2017 Professional Regulation; Creates the Occupational Opportunity Act; revises length of time active duty service member may remain in good standing with administrative board or program; requires that spouse or surviving spouse be kept in good standing & be exempt from

licensure renewal provisions; requires DBPR to issue professional license to spouse or surviving spouse of active duty member; provides requirements related to application, fees, & renewal; provides for fee waiver for specified persons; provides appropriation.


Here is the 2017 Bill with additions and deletions:An act relating to professional regulation; providing a short title; amending s. 455.02, F.S.; revising the length of time that an active duty member of the Armed Forces of the United States may remain in good standing with an administrative board or program under certain circumstances; requiring that a spouse or surviving spouse be kept in good standing and be exempt from licensure renewal provisions under certain circumstances; requiring, rather than authorizing, the Department of Business and Professional Regulation to issue a professional license, rather than a temporary license, to specified applicants; revising application requirements; requiring the department to waive the applicant’s initial licensure application fee; authorizing licensure renewal; amending s. 455.219, F.S.; providing for a fee waiver for active duty members of the Armed Forces, certain spouses or surviving spouses of an active duty member, and low- income individuals; providing rulemaking authority; providing an appropriation; providing an effective date. Be It Enacted by the Legislature of the State of Florida: Section 1- This act may be cited as the “Occupational Opportunity Act.”

Section 2- Section 455.02, Florida Statutes, is amended to read: 455.02 Licensure of members of the Armed Forces in good standing and their spouses or surviving spouses with administrative boards or programs. 1. Any member of the Armed Forces of the United States now or

hereafter on active duty who, at the time of becoming such a member, was in good standing with any of the boards or programs listed in s. 20.165 and was entitled to practice or engage in his or her profession or vocation in the state shall be kept in good standing by the applicable board or program, without registering, paying dues or fees, or performing any other act on his or her part to be performed, as long as he or she is a member of the Armed Forces of the United States on active duty and for a period of 2 years after discharge from active duty as a member of the Armed Forces of the United States, if he or she is not engaged in his or her licensed profession or vocation in the private sector for profit.

2. A spouse of a member of the Armed Services of the United States who is married to a member during a period of active duty, or a surviving spouse of a member who at the time of death was serving on active duty, who is in good standing with any of the boards or programs listed in s. 20.165 shall be kept in good standing by the applicable board or program as described in subsection(1) and shall be exempt from licensure renewal provisions, but only in cases of his or her absence from the state because of his or her spouse’s duties with the Armed Forces.

3a. The department shall issue a professional license to an applicant who is or was the spouse of an active duty member of the Armed Forces of the United States, or who is a spouse or surviving spouse of such member, upon application to the department in a the format prescribed by the department. An application must include proof that: 1. The applicant is or was an active duty member of the Armed

Forces of the United States or is married to a member of the Armed Forces of the United States and was married to the member during any period of active duty or was married to such a member who at the time of the member’s death was serving on active duty. An applicant who was an active duty member of the Armed Forces of the United States must have received an honorable discharge upon separation or discharge from the Armed Forces of the United States.

2. The applicant holds a valid license for the profession issued by another state, the District of Columbia, any possession or territory of the United States, or any foreign jurisdiction.

3. The applicant, where required by the specific practice act, has complied with insurance or bonding requirements.

4a. A complete set of the applicant’s fingerprints is submitted to the Department of Law Enforcement for a statewide criminal history check. b. The Department of Law Enforcement shall forward the

fingerprints submitted pursuant to sub-subparagraph a. to the Federal Bureau of Investigation for a national criminal history check. The department shall, and the board may, review the results of the criminal history checks according to the level 2 screening standards in s. 435.04 and determine whether the applicant meets the licensure requirements. The costs of fingerprint processing shall be borne by the applicant. If the applicant’s fingerprints are submitted through an authorized agency or vendor, the agency or vendor shall collect the required processing fees and remit the fees to the Department of Law Enforcement.

b. The department shall waive the applicant’s initial licensure application fee.

c. An applicant who is issued a license under this section may renew such license upon completion of the conditions for renewal required of license holders under the applicable practice act, including, without limitation, continuing education requirements. This paragraph does not limit waiver of initial licensure requirements under this subsection.

Section 3- Subsection (7) is added to section 455.219, Florida Statutes, to read: 455.219 Fees; receipts; disposition; periodic management reports.7a. The department, or a board thereunder, shall waive the initial

licensing fee for a member of the Armed Services of the United States that has served on active duty, the spouse of a member of the Armed Services of the United States who was married to the member during a period of active duty, the surviving spouse of a member of the Armed Services of the United States who at the time of death was serving on active duty, or a low-income individual upon application by the individual in a format prescribed by the department. The application format must include the applicant’s signature, under penalty of perjury, and supporting documentation as required by the department. For purposes of this subsection, the term “low-income individual” means a person whose household income, before taxes, is at or below 130 percent of the federal poverty guidelines prescribed for the family’s household size by the United States Department of Health and Human Services, proof of which may be shown through enrollment in a state or federal public assistance program that requires participants to be at or below 130 percent of the federal poverty guidelines to qualify.

b. The department, or a board thereunder, shall process an application for a fee waiver within 30 days of receiving it from the applicant.

c. The department shall adopt rules necessary to implement the provisions of this subsection. Section 4- For the 2017-2018 fiscal year, the nonrecurring sum of $31,000 from the Administrative Trust Fund is appropriated to the Department of Business and Professional Regulation for costs associated with technology infrastructure and licensing modifications needed for the purposes of implementing this act.

Section 5- This act shall take effect July 1, 2017.

2016 Legislative update for community associationsFlorida Statute 633: Fire prevention and control: Fire sprinkler opt-outThere are separate standards for high rise buildings seventy-five feet above the lowest point of fire department entry and those that are up

to four stories in height. The standards required the building to be retrofitted with sprinkler systems, unless an opt-out vote was approved by the association members.


Buildings that are four stories and under must comply with standards set by the local fire marshal, and may require more stringent fire standards and sprinkler systems for low- and mid-rise buildings.

Florida Statutes Chapters 718 and 719 which govern condominiums and cooperatives follow Chapter 633, and allow for associations to opt-out of any requirement to retrofit the common elements, association property, or units of a residential condominium, or residential a cooperative with a fire sprinkler system based upon Chapter 633, Florida Statutes, or “any other code, statute, ordinance, administrative rule, or regulation, or any interpretation of the foregoing” through a membership vote (Perez-Martinez, 2016). 1. The vote required to opt out is a majority of all voting interests in

the association and the vote must be completed by December 31, 2016.

2. A certificate attesting to the vote must be recorded in the public records of the county in which the building is located.

3. Notice of the results of the opt-out vote must be mailed to all members within thirty (30) days of the vote.

4. The association must report the membership vote to opt out and the recording of the required certificate to the Division of Florida Condominiums, Timeshares and Mobile Homes.

5. The opt-out vote is not effective until a certificate is recorded in the public records. If the association does not timely and successfully complete the opt-out vote and other procedural requirements, the association is required to start the permit application process and complete the retrofitting process by the end of 2019.

Section 633.202(18)-(19) Minimum radio signal strength for fire department communications in high rise buildings and areas of refuge 18. The authority having jurisdiction shall determine the minimum

radio signal strength for fire department communications in all new high-rise and existing high-rise buildings. Existing buildings are not required to comply with minimum radio strength for fire department communications and two-way radio system enhancement communications as required by the Florida Fire

Prevention Code until January 1, 2022. However, by December 31, 2019, an existing building that is not in compliance with the requirements for minimum radio strength for fire department communications must apply for an appropriate permit for the required installation with the local government agency having jurisdiction and must demonstrate that the building will become compliant by January 1, 2022. Existing apartment buildings are not required to comply until January 1, 2025. However, existing apartment buildings are required to apply for the appropriate permit for the required communications installation by December 31, 2022.

19. Areas of refuge shall be provided if required by the Florida Building Code, Accessibility. Required portions of an area of refuge shall be accessible from the space they serve by an accessible means of egress.

SB 130 – Discharge of a firearm effective 2/24/16This bill outlines criminal penalties for discharging a firearm in a residential area comprised of at least one unit per acre.

Bill summary:Section 1- Subsection (4) is added to section 790.15, Florida Statutes, to read:790.15 Discharging firearm in public or on residential property.4. Any person who recreationally discharges a firearm outdoors,

including for target shooting or celebratory shooting, in an area that the person knows or reasonably should know is primarily residential in nature and that has a residential density of one or more dwelling units per acre, commits a misdemeanor of the first degree, punishable as provided in s.775.082 or s. 775.083. This subsection does not apply:a. To a person lawfully defending life or property or performing

official duties requiring the discharge of a firearm; orb. If, under the circumstances, the discharge does not pose a

reasonably foreseeable risk to life, safety, or property.


CS/CS/HB 431: Fire safetySummary from Online Sunshine Fire Safety; Revises provisions relating to certain structures located on agricultural property which are exempt from Florida Fire Prevention Code; requires that certain structures used for agritourism activity be classified; provides criteria for such classifications; provides that certain structures are subject to annual inspection; specifies applicable fire prevention standards; requires that State Fire Marshal adopt rules; revises certain dimensions of tent that is exempt from code; requires that State Fire Marshal adopt rules; authorizes local fire official to consider specified publication when identifying an alternative to fire safety code.

Effective Date: 7/1/2016

Here is the revised 2016 Bill that remains current in 2017.An act relating to fire safety; amending s. 633.202,F.S.; providing definitions; revising provisions relating to certain structures located on agricultural property which are exempt from the Florida Fire Prevention Code; requiring that certain structures used for agritourism activity be classified; providing criteria for such classifications; providing that certain structures are subject to annual inspection; specifying applicable fire prevention standards; requiring the State Fire Marshal to adopt rules; revising certain dimensions of a tent that is exempt from the code; requiring that the State Fire Marshall adopt rules; amending s. 633.208, F.S.; authorizing a local fire official to consider a specified publication when identifying an alternative to a fire safety code; providing an effective date.

Be It Enacted by the Legislature of the State of Florida: 20 Section 1. Subsection (16) of section 633.202, Florida Statutes, is amended to read:633.202 Florida Fire Prevention Code. 16a. As used in this subsection, the term:

3. “Agricultural pole barn” means a nonresidential farm building in which 70 percent or more of the perimeter walls are permanently open and allow free ingress and egress.

4. “Nonresidential farm building” has the same meaning as provided in s. 604.50.

b. Notwithstanding any other provision of law: 1. A nonresidential farm building in which the occupancy is

limited by the property owner to no more than 35 persons is exempt from the Florida Fire Prevention Code, including the national codes and Life Safety Code incorporated by reference.

2. An agricultural pole barn is exempt from the Florida Fire Prevention Code, including the national codes and the Life Safety Code incorporated by reference.

3. Except for an agricultural pole barn, a structure on a farm, as defined in s. 823.14(3)(a) which is used by an owner for agritourism activity, as defined in s. 570.86, for which the owner receives consideration must be classified in one of the following classes:

a. Class 1: A nonresidential farm building that is used by the owner 12 or fewer times per year for agritourism activity with up to 100 persons occupying the structure at one time. A structure in this class is subject to annual inspection for classification by the local authority having jurisdiction. This


class is not subject to the Florida Fire Prevention Code but is subject to rules adopted by the State Fire Marshal pursuant to this section.

b. Class 2: A nonresidential farm building that is used by the owner for agritourism activity with up to 300 persons occupying the structure at one time. A structure in this class is subject to annual inspection for classification by the local authority having jurisdiction. This class is not subject to the Florida Fire Prevention Code but is subject to rules adopted by the State Fire Marshal pursuant to this section.

c. Class 3: A structure or facility that is used primarily for housing, sheltering, or otherwise accommodating members of the general public. A structure or facility in this class is subject to annual inspection for classification by the local authority having jurisdiction. This class is subject to the Florida Fire Prevention Code.

c. The State Fire Marshal shall adopt rules to administer this section, including, but not limited to:1. The use of alternative life safety and fire prevention standards

for structures in Classes 1 and 2; 2. Notification and inspection requirements for structures in

Classes 1 and 2;3. The application of the Florida Fire Prevention Code for

structures in Class 3; and4. Any other standards or rules deemed necessary in order to

facilitate the use of structures for agritourism activities.17. A tent up to 900 square feet is exempt from the Florida Fire

Prevention Code, including the national codes incorporated by reference.

Section 2- Subsection (5) of section 633.208, Florida Statutes, is amended to read: 633.208 Minimum fire safety standards.

5. With regard to existing buildings, the Legislature recognizes that it is not always practical to apply any or all physical limitations may require disproportionate effort or expense with little increase in fire or life safety. Before applying the minimum fire safety code to an existing building, the local fire official shall determine whether a threat to life safety or property exists. If a threat to life safety or property exists, the fire official shall apply the applicable fire safety code for existing buildings to the extent practical to ensure a reasonable degree of life safety and reasonable alternative that affords an equivalent degree of life safety and safety of property. The local fire official may consider the fire safety evaluation systems found in NFPA Guide on Alternative Approaches to Life Safety, adopted by the State Fire Marshal, as acceptable systems for the identification of low-cost, reasonable alternatives. The decision of the local fire official may be appealed to the local administrative board described in s. 553.73.


CS/CS/HB 965: Fire safetyBelow are additions that have been added in 2016 related to assisted living facilities.

GENERAL BILL by Health and Human Services Committee; Appropriations Committee; Harrison

Fire safety; Revises fire safety standards for assisted living facilities & provides exemption for certain assisted living facilities under certain conditions.

Uniform fire safety standards for assisted living facilities shall be established by the State Fire Marshal pursuant to s. 633.206. The requirements for and maintenance of facilities not in conflict with chapter 553, relating to plumbing, heating, cooling, lighting, ventilation, living space, and other housing conditions, which will ensure the health, safety, and comfort of residents.

1. Fire safety evacuation capability determination. An evacuation capability evaluation for initial licensure shall be conducted within 6 months after the date of licensure.

Note: The entire remainder of this that section on specifics to evacuation from the 1990s was stricken from the law.

2. Fire safety requirements.The National Fire Protection Association, Life Safety Code, NFPA 101 and 101A, current editions shall be used in determining the uniform fire safety code adopted by the State Fire Marshal for assisted living facilities, pursuant to s. 633.206.

A local government or a utility may charge fees only in an amount not to exceed the actual expenses incurred by the local government or the utility relating to the installation and maintenance of an automatic fire sprinkler system in a licensed assisted living facility.

An assisted living facility that is issued a building permit or certificate of occupancy before July 1, 2016, may at its option and after notifying the authority having jurisdiction, remain under the provisions of the 1994 and 1995 editions of the National Fire Protection Association, Life Safety Code, NFPA 101, and NFPA 101A. The facility opting to remain under such provisions may make repairs, modernizations, renovations, or additions to, or rehabilitate, the facility in compliance with NFPA 101, 1994 edition, and may utilize the alternative approaches to life safety in compliance with NFPA 101A, 1995 edition. However, a facility for which a building permit or certificate of occupancy is issued before July 1, 2016, that undergoes Level III building alteration or rehabilitation, as defined in the Florida Building Code, or seeks to utilize features not authorized under the 1994 or 1995 editions of the Life Safety Code must thereafter comply with all aspects of the uniform fire safety standards established under s. 633.206, and the Florida Fire Prevention Code, in effect for assisted living facilities as adopted by the State Fire Marshal.

SB 184: Military service personnel rental approvals: Effective 2/24/2016Bill Summary CS/SB 184- Military and Veterans AffairsSubmitted by the Appropriations Committee

Housing rental applications for military service membersThe bill provides that a landlord is required to process a rental application from a military service member within seven days of submission, if the landlord requires an application before residing in a rental unit. Within that seven-day period, the landlord must provide to the service member a response in writing of the approval or denial of their application and, if denied, the reason for denial. Should the landlord not provide a timely denial of the rental application, the landlord must lease the rental unit to the service member if all other terms of the application and lease are met. These provisions also apply in situations in which a service member seeks to rent a unit or

parcel within the control of a condominium association, cooperative association, or homeowners’ association.

SB 498 – Repeal of the Cohabitation Ban By: Committee on Criminal Justice

This bill permits the cohabitation of an unmarried man and woman that is currently banned by Florida law.

The bill repeals the crime of cohabitation in s. 798.02 of the state’s criminal code, which makes it a second- degree misdemeanor for a man and woman, lewdly and lasciviously, to associate and cohabit together without being married to each other.


CS/SB 190: Conservation easements effective 7/1/16A conservation easement is “a right or interest in real property which is appropriate to retaining land or water areas predominantly in their natural, scenic, open, or wooded condition; retaining such areas as suitable habitat for fish, plants, or wildlife; retaining the structural integrity or physical appearance of sites or properties of historical, architectural, archaeological, or cultural significance; or maintaining existing land uses.”

In November 2008, Florida’s voters amended the Florida Constitution to provide an ad valorem tax exemption for perpetual conservation easements. An ad valorem tax or property tax is an annual tax levied by counties, cities, school districts, and some special districts. The tax is based on the taxable value of property as of January 1 of each year. To determine the ad valorem tax of a property, a property appraiser determines the just value of a property and then applies relevant exclusions, assessment limitations, and exemptions to determine the property’s taxable value.

Florida currently requires annual applications for the ad valorem exemption for property subject to a perpetual conservation easement.

The bill provides that once an original application for an ad valorem tax exemption for property subject to a perpetual conservation easement has been granted, the property owner is not required to file a renewal application until the use of the property no longer complies with the restrictions and requirements of the conservation easements.

CS/SB 1174: Residential FacilitiesHere is the 2016 summary of this Bill.

Residential Facilities; Specifying applicability of siting requirements for community residential homes; providing applicability with respect to local land use and zoning, etc.

Here are the 2016 changes to this Bill.Section 1- Subsection (2) of section 419.001, Florida Statutes, is amended to read:419.001 Site selection of community residential homes.2. Homes of six or fewer residents which otherwise meet the

definition of a community residential home shall be deemed a single-family unit and a noncommercial, residential use for the purpose of local laws and ordinances. Homes of six or fewer residents which otherwise meet the definition of a community residential home shall be allowed in single-family or multifamily zoning without approval by the local government, provided that such homes are not located within a radius of 1,000 feet of another existing such home with six or fewer residents or within a radius of 1,200 feet of another existing community residential home. Such homes with six or fewer residents are not required to comply with the notification provisions of this section; provided that, before licensure, the sponsoring agency provides the local government with the most recently published data compiled from the licensing entities that identifies all community residential homes within the jurisdictional limits of the local government in which the proposed site is to be located in order to show that there is not a home of six or fewer residents which otherwise meets the definition of a community residential home within a radius of 1,000 feet and not a community residential home within a radius of 1,200 feet of the proposed home. At the time of home occupancy, the sponsoring agency must notify the local government that the home is licensed by the licensing entity. For purposes of local land use and zoning determinations, this subsection does not affect the legal nonconforming use status of any community residential home lawfully permitted and operating as of July 1, 2016.


CS/CS/CS/HB 535: Relating to building codes (Chapter No. 2016-129), effective 7/1/16 By Regulatory Affairs Committee; Government Operations Appropriations Subcommittee; Business and Professions Subcommittee; (CS/CS/SB 704 by Fiscal Policy Committee; Community Affairs Committee Prepared by: Community Affairs Committee (CA)

In 1974, Florida adopted a state minimum building code law requiring all local governments to adopt and enforce a building code that would ensure minimum standards for public health and safety. Four separate model codes were available that local governments could consider and adopt. The state’s role was limited in adopting all (or relevant parts) of the four new model code editions in that system. Local governments could amend and enforce their local codes as they desired.

In 1996, a study commission was appointed to review the system of local codes and to make recommendations for modernizing the entire system. The 1998 Legislature adopted the study commission recommendations for a single state building code and an enhanced oversight role for the state in local code enforcement. The 2000 Legislature authorized implementation of the Florida Building Code (Code); that first edition replaced all local codes on March 1, 2002. In 2004, for the second edition of the Code, the state adopted the International Code Council Codes. All subsequent Codes have been adopted utilizing the International Code Council as the base code. The most recent Code is the fifth edition which is referred to as the 2014 Code. The 2014 Code went into effect June 30, 2015.

The Florida Building Commission (FBC) was statutorily created to implement the Code. The FBC, which is housed within the Department of Business and Professional Regulation, is a 27-member technical body responsible for the development, maintenance, and interpretation of the Code. Most substantive issues before the FBC are vetted through a workgroup process where consensus recommendations are

developed and submitted by appointed representative stakeholder groups in an open process with several opportunities for public input. According to the FBC, through this participatory process, the members “strive for agreements which all of the members can accept, support, live with or agree not to oppose”; when the FBC finds that 100 percent acceptance or support is not achievable, “final decisions require at least 75 percent favorable vote of all members present and voting.”

The bill makes the following changes to law: ● Makes several adjustments to the training and experience required

to take the certification examinations for building code inspector, plans examiner, and building code administrator requiring 3 years verifiable experience in inspection or plan review, and has satisfactorily completed a building code inspector or plans examiner training program that provides at least 100 hours but not more than 200 hours of cross-training in the certification category sought. The board shall accept all classroom training offered by an approved provider if the content substantially meets the intent of the classroom component of the training program. They may currently hold a standard certificate issued by the board or a fire safety inspector license issued pursuant to chapter 633 and:a. Has at least 5 years’ verifiable full-time experience as an

inspector or plans examiner in a standard certification category currently held or has a minimum of 5 years’ verifiable full-time experience as a fire safety inspector licensed pursuant to chapter 633.

b. Has satisfactorily completed a building code inspector or plans examiner classroom training course or program that provides at least 200 but not more than 300 hours in the certification category sought, except for one-family and two-family dwelling training programs, which must provide at least 500 but not more than 800 hours of training as


prescribed by the board. The board shall establish by rule criteria for the development and implementation of classroom training courses and programs in each certification category. In addition, the applicant must have completed training consisting of at least 20 hours, but not more than 30 hours, of instruction in state laws, rules, and ethics relating to the professional standards of practice, duties, and responsibilities of a certificate holder.

● Exempts employees of apartment communities with 100 or more units from contractor licensing requirements if making minor repairs to existing electric water heaters or existing electric heating, ventilation, and air conditioning (HVAC) systems, if they meet certain training and experience criteria and the repair involves parts costing under $1,000;

● Allows Category I liquefied petroleum gas dealers, liquefied petroleum gas installers, and specialty installers to disconnect and reconnect water lines in the servicing or replacement of existing water heaters;

● Adds Division II contractors to the Florida Homeowners’ Construction Recovery Fund section, which would allow homeowners to make a claim and receive restitution from the fund when they have been harmed by a Division II contractor, subject to certain requirements and financial caps;

● Exempts specific low-voltage landscape lighting from having to be installed by a licensed electrical contractor;

● Clarifies that portable pools that are used for swimming lessons that are sponsored or provided by school districts and temporary pools used in conjunction with a sanctioned national or international swimming or diving event are considered private pools and not subject to regulation;

● Provides that a residential pool that is equipped with a pool alarm that, when placed in the pool, will sound if it detects an accidental or unauthorized entrance into the water meets the safety requirements for residential pools;

● Creates the Calder Sloan Swimming Pool Electrical-Safety Task Force to study and report on specific standards, especially with regard to minimizing risks of electrocutions linked to swimming pools;

● Replaces a representative on the Accessibility Advisory Council for a defunct organization with the new organization;

● Revises the panels designated to review interpretations of the Florida Building Code and the Florida Accessibility Code for Building Construction;

● Provides funding for the recommendations made by the Building Code System Uniform Implementation Evaluation Workgroup and provides funding for Florida Fire Prevention Code informal interpretations;

● Allows local boards created to address conflicts between the Florida Building Code and the Florida Fire Prevention Code to combine to create a single local board that must include at least one fire professional;

● Requires the Florida Building Code to mandate having two fire service access elevators in all buildings above a certain height;

● Authorizes local building officials to issue phased permits for construction;

● Subjects certain building officials to discipline if they deny, revoke, or modify a specified permit without providing a reason for the denial, revocation, or modification;

● Requires a contractor and an alarm system monitoring company to provide notice to a property owner regarding the obligation to register their alarm system, if applicable;

● Provides that a contractor or an alarm system monitoring company is not liable for any penalties assessed or imposed by

the applicable local government for failure to register the alarm, dispatch to an unregistered user, or excessive false alarms;

● Prohibits local enforcement agencies from requiring payment of any additional fees, charges, or expenses associated with providing proof of licensure as a contractor, recording a contractor license, or providing or recording evidence of workers’ compensation insurance covered by a contractor;

● Excludes roof covering replacement and repair work associated with the prevention of degradation of the residence from the requirement to include the provision of opening protections in any activity requiring a building permit with a cost over $50,000;

● Adds Underwriters Laboratories, LLC, and Intertek Testing Services NA, Inc., to the list of entities that are authorized to produce information on which product approvals are based, related to the Florida Building Code;

● Reinstates a wind mitigation exemption for professional engineer certification of HVAC units being installed;

● Exempts Wi-Fi smoke alarms and those that contain multiple sensors, such as those combined with carbon monoxide alarms, from the 10-year, non removable, non replaceable battery provision;

● Provides that the mandatory blower door testing for residential buildings or dwellings does not take effect until July 1, 2017, and does not apply to construction permitted before July 1, 2017;

● Requires the local enforcement agency to accept duct and air infiltration tests conducted in accordance with the Florida Building Code if performed by certain individuals;

● Adds provisions to the Fire Prevention Code to: ○ Require new high-rise buildings to comply with minimum

radio signal strength for fire department communications set by the local authority with jurisdiction. Existing high-rise buildings must comply by 2022 and existing apartment buildings must comply by 2025;

○ Require areas of refuge to be provided when required by the Accessibility volume of the Florida Building Code;

○ Authorize fire officials to use the Fire Safety Evaluation System to identify low-cost alternatives for compliance; and

○ Require technicians that work on fire pump control panels and drivers to be under contract with a licensed fire protection contractor;

● Requires a restaurant, a cafeteria, or a similar dining facility, including an associated commercial kitchen, to have sprinklers only if it has a fire area occupancy load of over 200 patrons;

● Adds provisions to the Florida Building Code regarding fire separation distance and roof overhang projections;

● Creates the Construction Industry Task Force within the University of Florida Rinker School of Construction;

● Provides exceptions to the residential shower lining requirements in the Florida Building Code;

● Allows a specific energy rating index as an option for compliance with the Energy Conservation volume of the Florida Building Code;

● Requires the Florida Building Commission to continue its current adoption process of the 2015 International Energy Conservation Code and determine by October 1, 2016, whether onsite renewable power generation may be used for compliance and whether onsite renewable power generation may be used for a period longer than 3 years but not more than 6 consecutive years; and

● Effective July 1, 2017, requires counties and local enforcement agencies to post each type of building permit application on its website and allow for the submittal of completed applications to the appropriate building department.


CS/CS/SB 826: Mobile homes 7/1/16By: Fiscal Policy Committee; Community Affairs CommitteePrepared by: Regulated Industries Committee (RI)

The bill requires the Division of Florida Condominiums, Timeshares, and Mobile Homes (division) within the Department of Business and Professional Regulation (department) to notify the complainant of the status of the investigation within 30 days and within 90 days after receipt of a written complaint. The bill also requires the division to notify the complainant and the party complained against of the results of the investigation and disposition of the complaint.

The bill permits mobile home park owners to pass on to the tenant, at any time during the term of the rental agreement, non-ad valorem assessments or increases of non-ad valorem assessments, if the passing on of this charge was disclosed prior to the tenancy. The bill requires the park owner to give the tenant notice of a rent increase 90 days before the renewal date of the rental agreement. If the 90-day notice is not provided, the rental amount will remain with the same terms until a 90-day notice of increase in lot rental amount is given.

The purchaser of a mobile home is permitted to cancel or rescind a contract if the tenancy has not been approved by the park owner 5 days before the closing of the purchase.

The bill clarifies that in order to exercise the rights of a homeowners’ association provided under Ch. 723, F.S., mobile home owners must form an association. Additionally, upon incorporation of an association, all consenting mobile home owners in the park may become members or shareholders, and they consent to be bound by the articles of incorporation, bylaws, and policies of the incorporated homeowners’ association. All the successors of the consenting homeowner are no longer bound to the articles of incorporation, the bylaws, and restrictions of the homeowners’ association.

The bill provides that the joint owner of a mobile home or subdivision lot must be counted as one vote when determining the number of votes required for a majority and that only one vote may be counted per mobile home or subdivision lot. It permits association members to vote by secret ballot, including an absentee ballot.

CS/CS/HB 931: Operations of the Citizens Property Insurance CorporationBelow is the summary of the HB 932.

Insurance and Banking Subcommittee; Operations of the Citizens Property Insurance Corporation; Specifying that a consumer representative appointed by the Governor to the Citizens Property Insurance Corporation’s board of governors is not prohibited from practicing in a certain profession if required or permitted by law or ordinance; revising the requirements for licensed agents of the corporation; revising provisions related to the corporation’s use of certain public and private hurricane loss-projection models in establishing certain rates; revising a provision to permit specified information from certain underwriting and claims files to be made available to certain entities; providing limitations for the use of such information by the entities, etc.

Effective Date: 7/1/2016

The following changes were made to the 2014 Bill in 2016. Though not specifically directed to CAM this information is included for those holding policies with Citizens Property Insurance Corporation.

Note: Corporation as used refers to Citizens Property Insurance.

The corporation shall revise the programs adopted pursuant to sub-subparagraph (q) 3.a. for personal lines residential policies to maximize policyholder options and encourage increased participation by insurers and agents. After January 1, 2017, a policy may not be

taken out of the corporation unless the provisions of this paragraph are met.

1. The corporation must publish a periodic schedule of cycles during which an insurer may identify, and notify the corporation of, policies that the insurer is requesting to take out. A request must include a description of the coverage offered and an estimated premium and must be submitted to the corporation in a form and manner prescribed by the corporation.

2. The corporation must maintain and make available to the agent of record a consolidated list of all insurers requesting to take out a policy. The list must include a description of the coverage offered and the estimated premium for each take-out request.

3. The corporation must provide written notice to the policyholder and the agent of record regarding all insurers requesting to take out the policy and regarding the policyholder’s option to accept a take-out offer or to reject all take-out offers and to remain with the corporation. The notice must be in a format prescribed by the corporation and include, for each take-out offer:a. The amount of the estimated premium;b. A description of the coverage; andc. A comparison of the estimated premium and coverage offered

by the insurer to the estimated premium and coverage provided by the corporation.


2016 legislation of interests that failedSB 1122- Relating to Homeowners’ AssociationsThis bill would have made significant changes to the Homeowners’ Association Act, Chapter 720, Florida Statutes (“HOA Act”), and would have given the Division of Condominiums, Timeshares and Mobile Homes (“Division”) the authority to regulate homeowners’ associations governed by the HOA Act. Some of the component in the failed bill included increasing minimum damages for the willful failure to comply with official records requests to $500 per day up to 30 days, to begin after the 11th day; and also allowed a cause of action to be brought against a management company or manager (“CAM”) if the association had delegated records inspections to them and prohibited the CAM being reimbursed or indemnified for damages.

● Removed language from the HOA Act which currently allows fines of more than $1000 to become a lien on a parcel.

● Amended the turnover requirements in Section 720.307, Florida Statutes, to require an earlier turnover date in certain circumstances.

● Required the Division to provide “binding arbitration” of disputes involving covenants, restrictions, rule enforcement and duties to maintain and make safe pursuant to declaration of covenants, rules and other governing documents; disputes involving assessments; and disputes involving official records of the association.

HB 203 – Estoppel lettersCompanion bill with SB722The bill would revise the process for providing estoppel certificates by designating a specific response time, duration of certificate, and amount of the fee that can be levied (Harrison, Sale & McCloy, 2016).

SB 792 – Amending rentals in HOA HOA amendments that modified rental duration would only be applicable to those who consented to the amendment and to those who acquired a parcel or unit after the adoption of the new amendment.


Companion bills HB 653 and SB 1502 – State regulationThis bill would have renamed the Division of Condominiums and provide for the regulation of mandatory homeowners’ associations as follows (Harrison, Sale & McCloy, 2016):1. Would allow for the Division to assess an annual $4.00 per home

fee payable to the Division.2. Would allow for the Division to conduct investigations and

imposed penalties for violations.3. Revised the procedures for transition from developer control.4. Would regulate proxies and elections.

Additional community association management bills that did not become law (Harrison, Sale & McCloy, 2016):1. Mandatory binding arbitration of homeowners’ association

disputes (i.e. inclusion of HOAs in DBPR);2. Removing the exemption for less than 50 units related to audits,

reviews and compilations;3. Accounting requirements would be based solely on revenues;4. Mandatory websites for condominiums and homeowner’s

associations;5. Exempting covenants and restrictions from the Marketable Record

Title Act (MRTA);6. Requiring payment plans for delinquent owners;7. Limiting the ability of homeowners’ associations to adopt

amendments restricting rentals;8. Extending protections from termination to non-homestead

properties; and9. Requiring payment plans for delinquent owners.

Florida 2015-2016 case law updates related to community association management Safe Harbor Updates (Harrison, Sale & McCloy, 2016):1. Catalina West HOA, Inc. v. FNMA, 3D15-217 (Fla. 3d DCA

March 30, 2016).The Florida Safe Harbor Act rule limits the liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure to the lesser of 12 months of assessments or one percent of the original mortgage value (720.3085, 2016). Safe Harbor, Fla. Stat. §720.3085, does not include late fees, attorneys’ fees, etc., prior to the bank taking title.

According to Vega (2016)In Catalina West HOA and Old Cutler Lakes by the Bay Community Association v. Federal National Mortgage Association, borrowers entered into a mortgage loan with JPMorgan Chase Bank, N.A. Federal National Mortgage Association (“Fannie Mae”) later purchased the borrowers’ loan and after the borrowers defaulted on their loans, Fannie Mae filed a judicial foreclosure action. On February 6, 2013, Fannie Mae obtained a Final Judgment of Foreclosure, and on April 2, 2013, Fannie Mae obtained a Certificate of Title. On December 19, 2013, the homeowners’ associations each provided estoppel letters to Fannie Mae that included violation charges, costs, and attorneys’ fees.

In response, Fannie Mae filed a declaratory action, alleging that the non-assessment, collateral charges violated the Florida Safe Harbor statute. The two defendant associations argued that they complied with §720.3085, which requires payments to be allocated first to late charges and interest, the costs and attorneys’ fees incurred in collection, and finally assessments. The trial court granted summary judgment in favor of Fannie Mae and found that the safe harbor barred the associations from seeking recovery beyond the past 12 months of assessments before Fannie Mae obtained title to the property.

Note: According to Becker & Poliakoff (2016), when a first mortgagee takes title to a unit, the amount that is demanded by the association from the first mortgagee must be limited to twelve (12) months past due assessments or 1% of the original mortgage debt, whichever is

less. The association should not demand interest, late fees, costs, or attorney’s fees above the safe harbor amount of twelve (12) months past due assessments or 1% of the original mortgage debt, whichever is less.

1. Pudlit 2 Joint Venture LLP v. Westwood Gardens Homeowners’ Association, Inc., 4D14-1385 (Fla. 4th DCA May 27, 2015).

If there is a conflict between the Safe Harbor provisions in the HOA Declaration and the statute, the Declaration controls (Becker & Poliakoff, 2016):

The Declaration of Covenants and Restrictions for the Westwood Gardens Homeowners’ Association, Inc. provided that a subsequent owner of a property within the association will not be liable for payment of any assessments owed by the prior owner is conflicted with Section 720.3085, Florida Statutes, which provides that a parcel owner is jointly and severally liable with the previous parcel owner for all unpaid assessments that came due up to the time of transfer of title. The court held that the language in the Declaration controlled and a purchaser was NOT liable for any of the past due assessments of the prior owner.

Note: This case is applicable to condominiums, cooperatives, and homeowners’ associations. Associations should review their governing documents to determine whether the documents include language absolving a purchaser from paying past due assessments of the prior delinquent owner. If so, the documents should be amended to take advantage of more favorable provisions found in current statutes.

Attorney-client privilege discussions (Harrison, Sale & McCloy, 2016)In Las Olas River House Condo Association, Inc. v. Lorh, LLC, 181 So. 3d 556, 557 (Fla. 4th DCA 2015), a re-hearing was denied on January 26, 2016.

In the course of the case, the owner asked the association to disclose all communications between the association, its attorney, and its management. The owner argued that the association waived the attorney privilege when it included the manager in communications with the attorney.

The trial court agreed with the owner and ordered that all those communications be disclosed. The association appealed, and subsequently “won” the appeal; unfortunately, this was no big victory. The appellate court told the trial court to reexamine the issue instead of ruling that these communications were inherently protected by the privilege. This leaves open the possibility that these communications may still not be protected.

The management contracts should include that the association intends to extend the attorney-client privilege to management.

Statute of limitations to challenge an amendment (Harrison, Sale & McCloy, 2016)1. Hilton v. Pearson, 2016 WL 517105 (Fla 1st DCA 10 2016).

This case looks at the issue of a five years’ limit to challenge the amendment process as follows:

“A suit challenging the validity of an amendment to restrictive covenants must be filed within five years of the date that the amendment is recorded even if the suit alleges that the amendment was void because it was not properly enacted.”

2. Harris v. Aberdeen Prop. Owners Association, Inc., 135 So. 3d 365, 369 (Fla. 4th DCA 2014), sets five years to challenge the interpretation or meaning of an amendment.

Architectural restrictions (Harrison, Sale & McCloy, 2016)Leamer v. White, 156 So. 3d 567, 573 (Fla. 1st DCA 2015):

● Covenants state: “Ostentatious Site Features. The construction of ostentatious site features such as topiary, sculpture, free standing


fountains in the foreground of townhouses or lighting systems which may be offensive to adjacent neighbors is unacceptable.”

● What does that mean? Are all topiaries and sculptures ostentatious? Is the decision of whether or not something is ostentatious completely in the eye of your adjoining neighbor?

Note: Be very careful of the words used in all rules. They must be explicitly clear and cannot leave room for interpretation.

Regulatory Council of Community Association Managers: 2016 legislative updateThe following section is included because the DBPR issued a statement in response to the Florida Supreme Court’s most recent ruling on what activities constituted the illegal practice of law by community association managers. The rule was in response to a petition by the Florida Bar to revisit the 1996 opinion, Florida Bar Re: Advisory Opinion on Activities of Community Association Managers, 681 So. 2d 1119 (Fla., 1996). The petitioner asked for a new ruling on fourteen additional activities, sometimes performed by non-lawyer community association managers, to determine if these activities were, in fact, the unlicensed practice of law (No. SC13-889, 2015). For the purpose of this course, the opinion has been summarized from the original Florida Supreme Court ruling on the fourteen activities, including the 1996 decision as a point of reference.

The Statement of the DBPR Regulatory Council of Community Association Managers regarding Supreme Court Advisory Opinion No. SC13-889,”Activities of Community Association Managers,” was issued as part of the 2016 Legislative update (DBPR, 2016) as follows:

On May 14, 2015, the Florida Supreme Court issued Advisory Opinion SC13-889, The Florida Bar Re: Advisory Opinion - Activities of Community Association Managers (“Opinion”). The Opinion, which has the same force as any order of the Court, identifies a number of activities within the field of community association management which constitute the practice of law. The full Opinion can be obtained at http://www.floridasupremecourt.org/decisions/2015/sc13-889.pdf.

The Council encourages all CAMs licensees to carefully read the Florida Supreme Court’s opinion and consult with their legal advisors to obtain legal advice which is specific to their individual facts and circumstances. The Council has no statutory authority to issue any opinions, comments, or guidance regarding the Opinion, including inter-relations between the Opinion and Florida Statutes relating to the practice of community association management.

The Opinion specifically addresses the Unlicensed Practice of Law (“UPL”). Neither the Council nor the Department of Business and Professional Regulation have jurisdiction or authority to investigate or act upon UPL complaints. UPL is investigated, and if necessary, prosecuted, by the Florida Bar, and carries potential criminal penalties.

The Court’s justification and ruling on the fourteen activities follows: 1. Preparation of a Certificate of Assessments due once the

delinquent account is turned over to the association’s lawyer. Preparation of a Certificate of Assessments due once a foreclosure against the unit has commenced.

2. Preparation of Certificate of Assessments due once a member submits a dispute in writing to the association concerning the amount allegedly owed.

3. It is the opinion of the Standing Committee that a CAM’s preparation of these documents would not constitute the unlicensed practice of law.

4. Drafting of amendments (and certificates of amendment that are recorded in the official records) to declaration of covenants, bylaws, and articles of incorporation when such documents are to be voted upon by the members.

In the 1996 opinion, the Court held that the drafting of documents which determines substantial rights is the practice of law. The governing documents set forth above determine substantial rights of both the community association and the property owners.

Consequently, under the 1996 opinion, the preparation of these documents constitutes the unlicensed practice of law. Therefore, it is the opinion of the Standing Committee that the Court’s holding in the 1996 opinion should stand, and non-lawyer preparation of the amendments to the documents would constitute the unlicensed practice of law.

5. Determination of number of days to be provided for statutory notice. In the 1996 opinion, the Court found that determining the timing, method, and form of giving notices of meetings requires the interpretation of statutes, administrative rules, governing documents, and rules of civil procedure and that such interpretation constitutes the practice of law. Thus, if the determination of the number of days to be provided for statutory notice requires the interpretation of statutes, administrative rules, governing documents or rules of civil procedure, then, as found by the Court in 1996, it is the opinion of the Standing Committee that it would constitute the unlicensed practice of law for a CAM to engage in this activity. If this determination does not require such interpretation, then it would not be the unlicensed practice of law.

6. Modification of limited proxy forms promulgated by the State. In the 1996 opinion, the Court found that the modification of limited proxy forms that involved ministerial matters could be performed by a CAM, while more complicated modifications would have Court found the following to be ministerial matters: modifying the form to include the name of the community association; phrasing a yes or no voting question concerning either waiving reserves or waiving the compiled, reviewed, or audited financial statement requirement;

● Phrasing a yes or no voting question concerning carryover of excess membership expenses; and phrasing a yes or no voting question concerning the adoption of amendments to the Articles of Incorporation, Bylaws, or condominium documents. As to more complicated modifications, however, an attorney must be consulted.

For more complicated modifications, the Court found that an attorney must be consulted. The 1996 opinion did not provide any examples of more complicated modifications which would require consultation with an attorney. The Standing Committee believes this activity requires further clarification by example.

Using the examples given by the Court, the types of questions that can be modified without constituting the unlicensed practice of law do not require any discretion in the phrasing. For example, the sample form provided by the state has the following question: “Do you want to provide for less than full funding of reserves than is required by § 718.112(2) (f), Florida Statutes, for the next fiscal/calendar year? ________ YES _______ NO.” There is no discretion regarding the wording: it is a yes or no question. The question could be reworded as follows: “Section 718.112(2) (f), Florida Statutes, discusses funding of reserves. Do you want to provide for less than full funding of reserves than is required by the statute for the next fiscal/calendar year? ________ YES _______ NO.” It is still a yes or no question. As no discretion is involved, it does not constitute the unlicensed practice of law to modify the question.

On the other hand, if the question requires discretion in the phrasing, or involves the interpretation of statute or legal documents, the CAM may not modify the form. After the above question regarding the


reserves the form states “If yes, vote for one of the board proposed options below: (The option with the most votes will be the one implemented) LIST OPTIONS HERE.” Listing the options would be a modification of the form. If what to include in the list requires discretion or an interpretation of statute, an attorney would have to be consulted regarding the language and the CAM could not make a change. For example, §718.112(f) contains language regarding when a developer may vote to waive the reserves. The statute discusses the timing of the waiver and under what circumstances it may occur. As a question regarding this waiver requires the interpretation of statute, a CAM could not modify the form by including this question without consulting with a member of the Florida Bar. As found in the 1996 opinion, making such a modification would constitute the unlicensed practice of law.

7. Preparation of documents concerning the right of the association to approve new prospective owners.

In the 1996 opinion, the Court found that drafting the documents required to exercise a community association’s right of approval or first refusal to a sale or lease may or may not constitute the unlicensed practice of law depending on the specific factual circumstances. It may require the assistance of an attorney, since there could be legal consequences to the decision. Although CAMs may be able to draft the documents, they cannot advise the association as to the legal consequences of taking a certain course of action. Thus, the specific factual circumstances will determine whether or not it constitutes the unlicensed practice of law for a CAM to engage in this activity.

This finding can also be applied to the preparation of documents concerning the right of the association to approve new prospective owners. While there was no testimony giving examples of such documents, the Court’s underlying principle was that if the preparation requires the exercise of discretion or the interpretation of statutes or legal documents, a CAM may not prepare the documents. For example, the association documents may contain provisions regarding the right of first refusal. Preparing a document regarding the approval of new owners may require an interpretation of this provision. An attorney should be consulted to ensure that the language comports with the association documents. On the other hand, the association documents may contain a provision regarding the size of pets an owner may have. Drafting a document regarding this would be ministerial in nature, as an interpretation of the documents is generally not required.

8. Determination of affirmative votes needed to pass a proposition or amendment to recorded documents.

9. Determination of owners’ votes needed to establish a quorum. In the 1996 opinion, the Court found that determining the votes necessary to take certain actions – where the determination would require the interpretation and application both of condominium acts and of the community association’s governing documents – would constitute the practice of law. Thus, if these determinations require the interpretation and the application of statutes and the community association’s governing documents, then it is the opinion of the Standing Committee that it would constitute the unlicensed practice of law for a CAM to make these determinations. If these determinations do not require such interpretation and application, it is the opinion of the Standing Committee that they would not constitute the unlicensed practice of law.

10. Drafting of pre-arbitration demand letters required by 718.1255, Florida Statutes.

Under Section 718.1255 of the Florida Statues, prior to filing an action in court, a party to a dispute must participate in nonbinding arbitration. The nonbinding arbitration is before the Division of Florida Condominiums, Time Shares, and Mobile Homes (hereinafter “the Division”). Prior to filing the petition for arbitration with the Division,

the petitioner is required to serve a pre-arbitration demand letter on the respondent, providing:

1. Advance written notice of the specific nature of the dispute;2. A demand for relief, and a reasonable opportunity to comply or

to provide the relief; and 3. Notice of the intention to file an arbitration petition or other

legal action in the absence of a resolution of the dispute.

Failure to include the allegations or proof of compliance with these prerequisites requires the dismissal of the petition without prejudice.

In the 1996 opinion, the Court found that if the preparation of a document requires the interpretation of statutes, administrative rules, governing documents, and rules of civil procedure, then the preparation of the documents constitutes the practice of law. It is the opinion of the Standing Committee that the preparation of a pre-arbitration demand letter would not require the interpretation of the above-referenced statute. The statutory requirements appear to be ministerial in nature, and do not appear to require significant legal expertise and interpretation or legal sophistication or training. Consequently, the preparation of this letter would not satisfy the second prong of the Sperry test, which requires that the person providing the service possess legal skill and knowledge of the law greater than that possessed by the average citizen. For these reasons, it is the opinion of the Standing Committee that the preparation of a pre-arbitration demand letter by a CAM would not constitute the unlicensed practice of law.

Moreover, an argument can be made that the activity, even if the practice of law, is authorized. As noted in the Petitioner’s March 28, 2012 letter, the Division has held that the statute does not require an attorney to draft the letter (Formal Advisory Opinion request). In Florida Bar v. Moses, 380 So. 2d 412 (Fla. 1980), the Court held that the legislature could oust the Supreme Court’s authority to protect the public and authorize a non-lawyer to practice law before administrative agencies. As the Division of Florida Condominiums, Time Shares, and Mobile Homes has held that a non-lawyer may prepare the letter, the activity is authorized and not the unlicensed practice of law.

11. Preparation of construction lien documents (e.g. notice of commencement, and lien waivers, etc.).

In the 1996 opinion, the Court found that the drafting of a notice of commencement form constitutes the practice of law because it requires a legal description of the property and this notice affects legal rights. Further, failure to complete or prepare this form accurately could result in serious legal and financial harm to the association. While the 1996 opinion did not specifically address the preparation of lien waivers, the 1996 opinion found that preparing documents that affect legal rights constitutes the practice of law. A lien waiver would certainly affect an association’s legal rights. Further, as suggested by one of the witnesses, the area of construction lien law is a very complicated and technical area (Tr., p. 40, l. 10-19). Therefore, it is the Standing Committee’s opinion that the preparation of construction lien documents by a CAM would constitute the unlicensed practice of law.

12. Preparation, review, drafting and/or substantial involvement in the preparation/execution of contracts, including construction contracts, management contracts, cable television contracts, etc.In the 1996 opinion, the Court found that the preparation of documents that established and affected the legal rights of the community association was the practice of law. Further, in Sperry, the Court found the preparation of legal instruments, including contracts, by which legal rights are either obtained, secured, or given away, was the practice of law. Thus, it is the Standing Committee’s opinion that it constitutes the unlicensed practice of law for a CAM to prepare such contracts for the community association.


13. Identifying, through review of title instruments, the owners to receive pre-lien letters.The testimony on this subject was mixed. Some witnesses felt that this activity was ministerial and would not be the unlicensed practice of law, while others thought that this would constitute the unlicensed practice if performed by a CAM. However, none of the testimony defined what was meant by identifying the owners to receive pre-lien letters.

It is the opinion of the Standing Committee that if the CAM is only searching the public records to identify who has owned the property over the years, then such review of the public records is ministerial in nature and not the unlicensed practice of law. In other words, if the CAM is merely making a list of all record owners, the conduct is not the unlicensed practice of law.

On the other hand, if the CAM uses the list and then makes the legal determination of who needs to receive a pre-lien letter, this would constitute the unlicensed practice of law. This determination goes beyond merely identifying owners: It requires a legal analysis of who must receive pre-lien letters. Making this determination would constitute the unlicensed practice of law.

14. Any activity that requires statutory or case law analysis to reach a legal conclusion.

In the 1996 opinion, the Court found that it constituted the unlicensed practice of law for a CAM to respond to a community association’s questions concerning the application of law to specific matters being considered, or to advise community associations that a course of action may not be authorized by law or rule. The court found that this amounted to non-lawyers giving legal advice and answering specific legal questions, which the court specifically prohibited in previous rulings.

Further, in Florida Bar v. Warren, 655 So. 2d 1131 (Fla. 1995), the Court held that it constitutes the unlicensed practice of law for a non-lawyer to advise persons of their rights, duties, and responsibilities under Florida or federal law and to construe and interpret the legal effect of Florida law and statutes for third parties. In Florida Bar v. Mills, 410 So. 2d 498 (Fla. 1982), the Court found that it constitutes the unlicensed practice of law for a non-lawyer to interpret case law and statutes for others. Thus, it is the Standing Committee’s opinion that it would constitute the unlicensed practice of law for a CAM to engage in activity requiring statutory or case law analysis to reach a legal conclusion.

In addition to the statement on the Supreme Court opinion on CAM activities, the DPBPR lists the following information on 2016 legislative updates: House Bill 303 Relating to unlicensed activity fees The bill requires the Department to waive the $5.00 unlicensed activity renewal fee assessed against each licensee of a profession when the

profession’s unlicensed activity account balance at the beginning of the previous fiscal year totals more than twice the prior two fiscal years’ expenditures on unlicensed activity enforcement efforts and the profession’s operating account is not in a deficit or projected to be in a deficit anytime within the next 5 fiscal years.

Senate Bill 826 Relating to mobile homes This bill amends certain notice requirements for: written complaints; authorizing a mobile home park owner to pass on non-ad valorem assessments to a tenant under certain circumstances; authorizing a mobile home purchaser to cancel or rescind the contract to purchase under certain circumstances; revising the rights that mobile home owners exercise if they form an association; adding definitions for “member” or “shareholder; specifying who is entitled to vote in a mobile home or subdivision lot when there is joint ownership; and providing what constitutes a majority vote.

Senate Bill 180 Relating to trade secrets The bill expands the definition of trade secret to include financial information, which is not defined. If the information in the Department of Business and Professional Regulation’s (Department) possession is deemed to be financial information and therefore a trade secret, the current practices of multiple divisions, such as the publication of reports and data on their respective websites, may no longer be lawful. In addition, the Department may have to amend its procedures for responding to public record requests.

The bill amends procedures for agencies to follow when initiating rulemaking in response to a petition for rulemaking and for rule challenges. The bill also requires an agency that uses an email notification system to notify licensees or other recipients of notices to use that service to notify recipients of the publication of notices of development and notices of proposed rulemaking. The bill requires agency review and certification of what violations of rules have been designated as minor violations. The bill also requires that minor violations be published on the agency website or incorporated into the disciplinary guidelines by rulemaking.

House Bill 183 Relating to administrative procedures House Bill 183 amends procedures for agencies to follow when initiating rulemaking in response to a petition for rulemaking and for rule challenges. The bill also requires an agency that uses an email notification system to notify licensees or other recipients of notices to use that service to notify recipients of the publication of notices of development and notices of proposed rulemaking. The bill requires agency review and certification of what violations of rules have been designated as minor violations. The bill also requires that minor violations be published on the agency’s website, or incorporated into the disciplinary guidelines by rulemaking.

ConclusionThe community association manager and board must review the Florida Statutes and the Administrative Codes at the end of each legislative session to ensure that they have current information to guide their management and decision-making. The omission or the deletion of key words or phrases may lead to changes in state requirements for community associations. Often a statute remains unchanged from year to year to year or only certain sections will be altered so it is important to review the statutes at the end of each session. In addition, statute numbers may change from year to year so it is important to be sure the date is correct on the stature for being reviewed.

The statute requirements will inform the planning and determine any course of action taken by the CAM and the board.

The board and management have a fiduciary responsibility to the association members and can be held personally accountable for their actions. Recent Florida court cases related to board misconduct, whether intentional or not, have greatly influenced the development of the 2017 Senate Bill 6027 and House Bill 1237. These are examples of complex and highly-detailed laws that must be incorporated into all association procedures immediately.


References � Becker, A.S., Poliakoff, K. (2016). Legislative Guide for Condominiums, Cooperatives and

Homeowners’ Associations. Retrieved June 14, 2017 from http://www.bplegal.com/webfiles/pdf/legislative_guide/2016_leg_guide_web_20160901_.pdf

� Business Dictionary. (2017). Definition of Estoppel. Retrieved June 23, 2017 from http://www.businessdictionary.com/definition/estoppel.html

� Department of Business and Professional Regulations. (2016). 2016 Legislative Update. Retrieved June 14, 2017 from http://www.myfloridalicense.com/dbpr/pro/cam/index.html

� Florida Legislature. (2017). Glossary of Legislative Terms. Retrieved June 19, 2017 from http://www.leg.state.fl.us/cgi-bin/View_Page.pl?File=glossary.html&Directory=Info_Center/glossary/&Location=app&Tab=info_center&Submenu=4.

� Florida Senate. (2017). Florida Statutes. Retrieved June 13, 2017 from http://www.flsenate.gov/Laws/Statutes/.

� Goin, Y. (2016). Legislative Session Ends With No Major Community Association Bills Passing. Retrieved June 11, 2017. Retrieved June 10, 2017 from http://www.floridacondohoalawblog.com/2016/03/articles/call-alert/2016-legislative-session-ends-with-no-major-community-association-bills-passing/

� Goin, Y. (2017a.). Condo Criminal Penalties Bills, Fire Sprinkler Bill, and Estoppel Bill to be Heard in Committee this Week; New HOA Rental Bill—CALL Alert for March 20, 2017. Retrieved June 17, 2017 from http://www.floridacondohoalawblog.com/2017/03/articles/call-alert/condo-criminal-penalties-bills-fire-sprinkler-bill-and-estoppel-bill-to-be-heard-in-committee-this-week-new-hoa-rental-bill-call-alert-for-march-20-2017/

� Goin, Y. (2017 b.). Estoppel Bill Approved by Governor and Remaining Community Association Bills Presented to the Governor. Retrieved June 16, 2017 from http://www.floridacondohoalawblog.com/2017/06/articles/estoppel/estoppel-bill-approved-by-governor-and-remaining-community-association-bills-presented-to-the-governor/

� Harrison, Sale, D.J., & Mc Cloy, D.R. (2016). Community Associations - 2016 Legislative Update. Retrieved June 19, 2017 from http://www.hsmclaw.com/blog/community-associations-2016-legislative-update

� Online Sunshine. (2016). Fl. House Bill 931. Retrieved August 14, 2017 from https://www.flsenate.gov/Session/Bill/2016/931/BillText/er/PDF

� Online Sunshine, (2017).Florida Statute Chapters. Retrieved June 12, 2017 from http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0712/0712.html

� Pankauski, J.J. & Hauser, R.J. (2015). Breach of Fiduciary Duty: Claims and Defenses in Florida. Retrieved June 21, 2017 from https://www.pankauskilawfirm.com/blog/breach-of-fiduciary-duty-claims-and-defenses-in-florida/

� Perez-Martinez. (2016). Community Update 2016, Volume 05. Retrieved June 20, 2017 from http://www.floridacondohoalawblog.com/2016/08/articles/call-alert/community-update-2016-volume-05-is-now-online/

� Regulatory Council of Community Association Managers. (2016). Statement of the Regulatory Council of Community Association Managers regarding Supreme Court Advisory Opinion No. SC13-889, Activities of Community Association Managers. Retrieved June 17, 2017 from http://www.myfloridalicense.com/Dbpr/pro/cam/index.html

� Siegfried, S.M., Rivera, O.R., Hyman, M.L., Lerner, L.A, De La Torre, N., Mars, G.M., & Sobel, S. (2017). Legislative Update: Condominium Terminations Bill Signed Into Law. Retrieved June 23, 2017 from https://www.floridahoalawyerblog.com/2017/06/legislative-update-condominium-terminations-bill-signed-law.html#print

� Supreme Court of Florida. (2015). No. SC13-889. The Florida Bar Re: Advisory Opinion-Activities of Community Association Managers. Retrieved June 13, 2017 from http://www.floridasupremecourt.org/decisions/2015/sc13-889.pdf

� Vega, J.D. (2016). Florida Appellate Court Bolsters Statutory HOA Safe Harbor. Retrieved June, 11, 2017 from https://www.financialservicesperspectives.com/2016/04/florida-appellate-court-bolsters-statutory-hoa-safe-harbor/.

FLORIDA COMMUNITY ASSOCIATION MANAGEMENT: 2018 LEGAL UPDATESFinal Examination Questions

Select the best answer for each question and mark your answers on the answer sheet found on page 92 or complete your test online at CAMS.EliteCME.com

1. The members of these associations, however, may vote to allow the association to prepare less complex financial statements than otherwise required by law but not for more than five consecutive years.

¨ True ¨ False

2. If 5 percent or more of the voting interests of a condominium reject a plan of termination, a subsequent plan may not be considered for 24 months.

¨ True ¨ False

3. Members of the board or the management company for a condominium association that is not a timeshare condominium are prohibited from purchasing a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments.

¨ True ¨ False

4. A condominium association does NOT have to permit renters to inspect and copy the association’s bylaws and rules.

¨ True ¨ False

5. Any such officer, director, or manager who knowingly so solicits, offers to accept, or accepts anything or service of value or kickback is subject to a civil penalty pursuant to s.718.501 (1) (d) and, if applicable, a criminal penalty.

¨ True ¨ False

6. By July 1, 2017, an association with 150 or more units which does not manage timeshare units shall post digital copies of the documents specified in subparagraph 2 on its website.

¨ True ¨ False

7. Board members may serve 2-year terms if permitted by the bylaws or articles of incorporation. A board member may not serve more than 2 consecutive 2-year terms, unless approved by an affirmative vote of two-thirds of the total voting interests.

¨ True ¨ False

8. A person may only be certified by the division to act as an arbitrator if he or she has been a member in good standing of The Florida Bar for at least 5 years.

¨ True ¨ False

9. An estoppel certificate that is hand delivered or sent by electronic means has a 30-day effective period. An estoppel certificate that is sent by regular mail has a 35-day effective period.

¨ True ¨ False

10. If the CAM is drafting of amendments (and certificates of amendment that are recorded in the official records) to declaration of covenants, bylaws, and articles of incorporation when such documents are to be voted upon by the members, is NOT unlicensed practice of the law.

¨ True ¨ False

CAMFL04LUE18


Chapter 2: Budgets and Financial Planning for Community Association Management

4 CE Hours


Objectives � Discuss the Florida State Statutes and the Florida Administrative

Codes that govern community associations’ budgets and financial requirements.

� Identify and discuss the two main components of the budget. � Explain the information and the historical data that must be

gathered to inform the budget preparation process. � List the requirements for maintaining and reporting financial

records. � Identify the statutory requirements for budget meeting notices.

� Describe the required content for an association’s operating budget.

� List the guidelines to establish mandatory reserves. � Explain the pooled reserves method. � Summarize the steps to determine a reserve schedule. � Identify management procedures and tax implications of surplus

funds. � Describe the procedures to calculate and collect assessments. � Explain the fiduciary duty of the board when preparing the budget.

OverviewThis course will review the Florida Statutes and the Florida Administrative Code (FAC) requirements for the preparation of a community association’s budget, including operation and reserve estimates, recurring expenses, deferred maintenance and capital

expenditures, maintenance of financial records, and options for financial growth. The requirements for calculating and levying assessments will be covered.

GlossaryAccounting records: Include all of the books and records identified in Section 718.111(12)(a)11 of the Florida Statutes (2016), and any other records that identify, measure, record, or communicate financial information - whether the records are maintained electronically or otherwise including: all payroll and personnel records of the association; all invoices for purchases made by the association, and; all invoices for services provided to the association (Rule: 61B-22.001 FAC, 2016).

Assessments: The individual owners’ share of the funds needed to cover association expenses determined by the budget. Florida Statute 720.303 provides the following definition:

“Assessment” or “amenity fee” means a sum or sums of money payable to the association, to the developer or other owner of common areas, or to recreational facilities and other properties serving the parcels by the owners of one or more parcels as authorized in the governing documents, which if not paid by the owner of a parcel, can result in a lien against the parcel.

Capital expenditure: Means any expenditure of funds for:a. The purchase of an asset whose useful life is greater than one year

in length;b. The replacement of an asset whose useful life is greater than one

year in length; orc. The addition to an asset that extends the useful life of the

previously existing asset for a period greater than one year in length (Rule: 61B-22.001 FAC, 2016).

Capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as “property”, “plant” and “equipment.” The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset (Accounting Coach, 2017).

Deferred maintenance: Means any maintenance or repair that:a. Will be performed less frequently than yearly; andb. Will result in maintaining the useful life of an asset (Rule: 61B-

22.001 FAC, 2016).

Fiduciary: According to Florida Statute Chapter 720.303(2016), the board has a fiduciary relationship with the unit owners. According to Larson (2012), a fiduciary is a person who stands in a special relation of trust, confidence, and responsibility in his or her obligations to others.

Funds: Means money and negotiable instruments and includes cash, checks, notes, and securities (Rule: 61B-22.001 FAC, 2016).

Homeowners’ association or “association”: A Florida corporation responsible for the operation of a community or a mobile home subdivision in which the voting membership is made up of parcel owners or their agents, or a combination thereof, and in which membership is a mandatory condition of parcel ownership, and which is authorized to impose assessments that, if unpaid, may become a lien on the parcel. The term “homeowners’ association” does not include a community development district or other similar special taxing district created pursuant to statutes (Florida Statute Chapter 720.303, 2016).

Nonrecurring capital expenses: An unusual charge, expense, or loss that is unlikely to occur again in the normal course of a business. Nonrecurring costs include write-offs such as design, development, and investment costs, fire or theft losses, lawsuit payments, losses on sale of assets, and moving expenses. Also referred to as “extraordinary cost” (Business Dictionary, 2017).

Operating expense: An operating expense that which a business incurs through its normal business operations. Often abbreviated as “OPEX.” Operating expenses include rent, equipment, inventory costs, marketing, payroll, and insurance (Investopedia, 2017).


Reserves: Any funds, other than operating funds, that are restricted for deferred maintenance and capital expenditures, including the items required by Section 718.112(2)(f)2., Florida Statutes, and any other funds restricted as to use by the condominium documents or the

condominium association. Funds that are not restricted as to use by Section 718.112(2)(f), Florida Statutes, the condominium documents or by the association shall not be considered reserves within the meaning of this rule (Rule: 61B-22.001 FAC, 2016).

IntroductionThe association’s budget Much like a for-profit corporation, the association board must develop a plan to provide revenues to cover expenses for the year. The annual budget is an estimate of all revenues, expenses and reserves for operating and reserve fund management, deferred maintenance and capital expenditure projects. The board has a fiduciary responsibility to protect the interests of the owners and the financial assets of the association. The budget provides an estimate of the funds needed to cover recurring expenses for the association’s day to day operations and long-term expenses. It also governs assessment collection and directs the financial decisions of the board for the fiscal year.

Budget estimates are based on a number of factors; it may be necessary to make changes to the budget which covers the annual fiscal year. A fiscal year operates within a twelve-month period that is established in the bylaws of an association and must have a beginning and ending date. In Florida, many community associations follow the calendar year from January 1st through December 31st, while others choose alternative time frames - such as October 1st through September 30th.

In addition to the budget for the fiscal year, the board is required to prepare and distribute a financial report to all owners according to statutory guidelines (Larson, 2012):

Within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws, the association must prepare a financial report for the preceding fiscal year. No later than 120 days after the end of the fiscal year, or other date as provided in the bylaws, the association must mail to each unit owner at the address last furnished to the association by the unit owner, or hand deliver to each unit owner, a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, upon receipt of a written request from the unit owner. The report must comply with statutory oversight provisions.

The Florida Statutes and Administrative Codes set the requirements for the budgeting process. These documents often use all capital letter formats for emphasis: this format has been maintained within the legal sections throughout this course.

Florida Statute Chapter 718.112(f) Annual budget1. The proposed annual budget of estimated revenues and expenses

must be detailed and must show the amounts budgeted by accounts and expense classifications, including, at a minimum, any applicable expenses listed in s. 718.504(21). A multi-condominium association shall adopt a separate budget of common expenses for each condominium the association operates and shall adopt a separate budget of common expenses for the association. In addition, if the association maintains limited common elements with the cost to be shared only by those entitled to use the limited common elements as provided for in s. 718.113(1), the budget or a schedule attached to it must show the amount budgeted for this maintenance. If, after turnover of control of the association to the unit owners, any of the expenses listed in s. 718.504(21) are not applicable, they need not be listed.

2a. In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. The amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection.b. Before turnover of control of an association by a developer to

unit owners other than a developer pursuant to s. 718.301, the developer may vote the voting interests allocated to its units to waive the reserves or reduce the funding of reserves through the period expiring at the end of the second fiscal year after the fiscal year in which the certificate of a surveyor and mapper is recorded pursuant to s. 718.104(4)(e) or an instrument

that transfers title to a unit in the condominium which is not accompanied by a recorded assignment of developer rights in favor of the grantee of such unit is recorded, whichever occurs first, after which time reserves may be waived or reduced only upon the vote of a majority of all non-developer voting interests voting in person or by limited proxy at a duly called meeting of the association. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves and no such result is achieved or a quorum is not attained, the reserves included in the budget shall go into effect. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

3. Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and may be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association. Before turnover of control of an association by a developer to unit owners other than the developer pursuant to s. 718.301, the developer-controlled association may not vote to use reserves for purposes other than those for which they were intended without the approval of a majority of all non-developer voting interests, voting in person or by limited proxy at a duly called meeting of the association.

4. The only voting interests that are eligible to vote on questions that involve waiving or reducing the funding of reserves, or using existing reserve funds for purposes other than purposes for which the reserves were intended, are the voting interests of the units subject to assessment to fund the reserves in question. Proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended must contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.


Florida Statute Chapter 720.303: Budgetsa. The association shall prepare an annual budget that sets out the

annual operating expenses. The budget must reflect the estimated revenues and expenses for that year and the estimated surplus or deficit as of the end of the current year. The budget must set out separately all fees or charges paid for by the association for recreational amenities, whether owned by the association, the developer, or another person. The association shall provide each member with a copy of the annual budget or a written notice that a copy of the budget is available upon request at no charge to the member. The copy must be provided to the member within the time limits set forth in subsection (5).

b. In addition to annual operating expenses, the budget may include reserve accounts for capital expenditures and deferred maintenance for which the association is responsible. If reserve accounts are not established pursuant to paragraph (d), funding of such reserves is limited to the extent that the governing documents limit increases in assessments, including reserves. If the budget of the association includes reserve accounts established pursuant to paragraph (d), such reserves shall be determined, maintained, and waived in the manner provided in this subsection. Once an association provides for reserve accounts pursuant to paragraph (d), the association shall thereafter determine, maintain, and waive reserves in compliance with this subsection. This section does not preclude the termination of a reserve account established pursuant to this paragraph upon approval of a majority of the total voting interests of the association. Upon such approval, the terminating reserve account shall be removed from the budget.c1. If the budget of the association does not provide for reserve

accounts pursuant to paragraph (d) and the association is responsible for the repair and maintenance of capital improvements that may result in a special assessment if reserves are not provided, each financial report for the preceding fiscal year required by subsection (7) must contain the following statement in conspicuous type:THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO SECTION 720.303(6), FLORIDA STATUTES, UPON OBTAINING THE APPROVAL OF A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION BY VOTE OF THE MEMBERS AT A MEETING OR BY WRITTEN CONSENT.

2. If the budget of the association does provide for funding accounts for deferred expenditures, including, but not limited to, funds for capital expenditures and deferred maintenance, but such accounts are not created or established pursuant to paragraph (d), each financial report for the preceding fiscal year required under subsection (7) must also contain the following statement in conspicuous type:THE BUDGET OF THE ASSOCIATION PROVIDES FOR LIMITED VOLUNTARY DEFERRED EXPENDITURE ACCOUNTS, INCLUDING CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE, SUBJECT TO LIMITS ON FUNDING CONTAINED IN OUR GOVERNING DOCUMENTS. BECAUSE THE OWNERS HAVE NOT ELECTED TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO SECTION 720.303(6), FLORIDA STATUTES, THESE FUNDS ARE NOT SUBJECT TO THE RESTRICTIONS ON USE OF SUCH FUNDS SET FORTH IN THAT STATUTE, NOR ARE RESERVES CALCULATED IN ACCORDANCE WITH THAT STATUTE.

d. An association is deemed to have provided for reserve accounts if reserve accounts have been initially established by the developer or if the membership of the association affirmatively elects to provide for reserves. If reserve accounts are established by the developer, the budget must designate the components for which the reserve accounts may be used. If reserve accounts are not initially provided by the developer, the membership of the association may elect to do so upon the affirmative approval of a majority of the total voting interests of the association. Such approval may be obtained by vote of the members at a duly called meeting of the membership or by the written consent of a majority of the total voting interests of the association. The approval action of the membership must state that reserve accounts shall be provided for in the budget and must designate the components for which the reserve accounts are to be established. Upon approval by the membership, the board of directors shall include the required reserve accounts in the budget in the next fiscal year following the approval and each year thereafter. Once established as provided in this subsection, the reserve accounts must be funded or maintained or have their funding waived in the manner provided in paragraph (f).

e. The amount to be reserved in any account established shall be computed by means of a formula that is based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates of cost or useful life of a reserve item.

f. After one or more reserve accounts are established, the membership of the association, upon a majority vote at a meeting at which a quorum is present, may provide for no reserves or less reserves than required by this section. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves and such result is not achieved or a quorum is not present, the reserves as included in the budget go into effect. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves. Any vote taken pursuant to this subsection to waive or reduce reserves is applicable only to one budget year.

g. Funding formulas for reserves authorized by this section must be based on a separate analysis of each of the required assets or a pooled analysis of two or more of the required assets.1. If the association maintains separate reserve accounts for each

of the required assets, the amount of the contribution to each reserve account is the sum of the following two calculations:a. The total amount necessary, if any, to bring a negative

component balance to zero.b. The total estimated deferred maintenance expense or

estimated replacement cost of the reserve component less the estimated balance of the reserve component as of the beginning of the period the budget will be in effect. The remainder, if greater than zero, shall be divided by the estimated remaining useful life of the component.

The formula may be adjusted each year for changes in estimates and deferred maintenance performed during the year and may include factors such as inflation and earnings on invested funds.

2. If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget may not be less than that required to ensure that the balance on hand at the beginning of the period the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful life of all of the assets that make


up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all the assets that make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal and accounts receivable minus the allowance for doubtful accounts. The reserve funding formula may not include any type of balloon payments.

h. Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a meeting at which a quorum is present. Prior to turnover of control of an association by a developer to parcel owners, the developer-controlled association shall not vote to use reserves for purposes other than those for which they were intended without the approval of a majority of all non-developer voting interests voting in person or by limited proxy at a duly called meeting of the association.

The Florida Administrative CodeIn addition to the Florida Statutes previously discussed, the Florida Administrative Code outlines additional requirements for community association budgets as follows: 61B-22.003: Budgets.1. Required elements for estimated operating budgets. The budget for

each association shall:a. State the estimated common expenses or expenditures on at

least an annual basis;b. Disclose the beginning and ending dates of the period covered

by the budget;c. Show the total assessment for each unit type according to

proportion of ownership on a monthly basis, or for any other period for which assessments will be due;

d. Include all estimated common expenses or expenditures of the association including the categories set forth in Section 718.504(21)(c), Florida Statutes. Reserves for capital expenditures and deferred maintenance required by Section 718.112(2)(f), Florida Statutes, must be included in the proposed annual budget and shall not be waived or reduced prior to the mailing to unit owners of a proposed annual budget. If the estimated common expense for any category set forth in the statute is not applicable, the category shall be listed followed by an indication that the expense is not applicable;

e. Unless the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the association shall include a schedule stating each reserve account for capital expenditures and deferred maintenance as a separate line item with the following minimum disclosures:1. The total estimated useful life of the asset;2. The estimated remaining useful life of the asset;3. The estimated replacement cost or deferred maintenance

expense of the asset;4. The estimated fund balance as of the beginning of the

period for which the budget will be in effect; and5. The developer’s total funding obligation, when all units

are sold, for each converter reserve account established pursuant to Section 718.618, Florida Statutes, if applicable.

f. If the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the association shall include a separate schedule of any pooled reserves with the following minimum disclosures:1. The total estimated useful life of each asset within the

pooled analysis;2. The estimated remaining useful life of each asset within

the pooled analysis;3. The estimated replacement cost or deferred maintenance

expense of each asset within the pooled analysis; and4. The estimated fund balance of the pooled reserve account

as of the beginning of the period for which the budget will be in effect.

g. Include a separate schedule of any other reserve funds to be restricted by the association as a separate line item with the following minimum disclosures:1. The intended use of the restricted funds; and

2. The estimated fund balance of the item as of the beginning of the period for which the budget will be in effect.

2. Unrestricted expense categories. Expense categories that are not restricted as to use shall be stated in the operating portion of the budget rather than the reserve portion of the budget.

3. Record keeping requirements for budgets. The minutes of the association shall reflect the adoption of the budget and a copy of the proposed and adopted budgets shall be maintained as part of the financial records of the association.

4. Multicondominium associations. Multicondominium associations shall comply with the following requirements:a. Provide a separate budget for each condominium operated by

the association as well as for the association. Each such budget shall disclose:1. Estimated expenses specific to a condominium such as

the maintenance, deferred maintenance or replacement of the common elements of the condominium which shall be provided for in the budget of the specific condominium;

2. Estimated expenses of the association that are not specific to a condominium such as the maintenance, deferred maintenance or replacement of the property serving more than one condominium which shall be provided for in the association budget; and

3. Multicondominium associations created after June 30, 2000, or that have created separate ownership interests of the common surplus of the association for each unit as provided in Sections 718.104(4)(h) and 718.110(12), Florida Statutes, shall include each unit’s share of the estimated expenses of the association, referred to in subsection (2) of this rule, which shall be shown on the individual condominium budgets. Multicondominium associations created prior to July 1, 2000, that have not created separate ownership interests of the common surplus of the association for each unit as provided in Sections 718.104(4)(h) and 718.110(12), Florida Statutes, shall include each condominium’s share of the estimated expenses of the association, referred to in subsection (2) of this rule, which shall be shown on the individual condominium budgets.

4. The budgets of multicondominium associations created after June 30, 2000 or of multicondominium associations that have created separate ownership interests of the common surplus of the association for each unit as provided in Sections 718.104(4)(h) and 718.110(12), Florida Statutes, shall show the estimated revenues of each condominium and of the association.

b. Associations that operate separate condominiums in a consolidated fashion pursuant to Section 718.111(6), Florida Statutes, may utilize a single consolidated budget.

5. Limited common elements. If an association maintains limited common elements at the expense of only those unit owners entitled to use the limited common elements pursuant to Section 718.113(1), Florida Statutes, the budget shall include a separate schedule, or schedules, conforming to the requirements for budgets


as stated in this rule, of all estimated expenses specific to each of the limited common elements, including any applicable reserves for deferred maintenance and capital expenditures. The schedule or schedules may group the maintenance expense of any limited common elements for which the declaration provides that the maintenance expense is to be shared by a group of unit owners.

6. Phase condominium budgets. By operation of law, the annual budget of a phase condominium created pursuant to Section 718.403, Florida Statutes, shall automatically be adjusted to incorporate the change in proportionate ownership of the common elements by the purchasers and to incorporate any other changes related to the addition of phases in accordance with the declaration of condominium. The adjusted annual budget shall be effective on the date that the amendment to the declaration adding a phase

to a phase condominium is recorded in the official records of the county in which the condominium is located. Notwithstanding the requirements of subsection (7) of this rule, the association shall not be required to follow the provisions of Section 718.112(2)(c), Florida Statutes, unless, as a result of the budget adjustment, the assessment per unit has changed.

7. Budget assessment amendments. The association may amend a previously approved annual budget. In order to do so the board of administration shall follow the provisions of Section 718.112(2)(e), Florida Statutes. For example, the board shall mail a meeting notice and copies of the proposed amended annual budget to the unit owners not less than 14 days prior to the meeting at which the budget amendment will be considered.

Gathering informationBoards should gather and compare information from previous budgets to plan for the new budget in advance of the effective date. This process should begin three to five months before the start date of the new budget.

Rodriguez (2014) states that, “When the mid-year mark has passed, the association’s financials will carry sufficient history to prepare a budget draft. The community association manager can then meet with the treasurer and committees to discuss and edit the budget. He prefers to see the budget prepared early to allow sufficient time for the association to notify the membership and hold the required meetings.”

Flanagan (2014) explains 75 to 80 percent of the budget is normally recurring expenses, such as utilities, insurance, and lawn maintenance.

Information gathering for budget planning should include: ● Comparisons of the historical budget data to the current data for

expenditures. ● Payment histories of monthly or quarterly assessment fees by

owners. ● Currents costs of equipment, services, and recurring charges.

● Estimates of utility costs for water, sewer, electricity, natural gas, or costs associated with solar energy equipment.

● Expenditures for insurance. These estimates will vary due to type of construction, size, location, level of risk, and specific insurance needs and should be reviewed and adjusted annually. Consult an insurance professional for the specific type of association and construction to ensure adequate coverage for replacement costs in the event of a natural disaster and total loss. It is also important to budget to cover any insurance deductibles in these cases. Associations may want to set aside funds to cover unexpected emergencies and unbudgeted operating expenses to avoid special assessments and the depletion of reserves.

● Current maintenance needs and expenditures. ● Study and estimate required reserves for nonrecurring capital

expenses. ● Review revenues and assessments needed to fund adequate

expenditures. ● Review required reserve funds and expenditures. ● Estimate projected upcoming changes in recurring expenses. ● Include necessary inflation adjustments for the next fiscal year,

following the Bureau of Labor Statistics’ Inflation Calculator.

Reviewing historical data The first step in making estimates to prepare a future budget is to review and compare the budgets against actual revenues and expenditures over the past two or three years.

This historical information can inform the current board of any funding issues or disconnects between actual funding requirements and the estimated budget for that item. Comparisons of past budget incomes and actual expenditures can expose trends that will assist the board with its estimates. If, for example, insurance or utility costs have increased five percent it would be wise to anticipate this trend when estimating these expenditures.

Tully-Davis suggests reviewing the history of budgeted income and expenses to identify trends related to inflation. She notes that even if income remains stable to allow for a five to 10 percent increase in expenses to adequately allow for any inflation.

The historical data comparisons may assist the board in identifying changes that have (or will) occur, and that must be addressed when projecting future expenditures. Here are some suggestions:

● Is there evidence that insurance was not adequate to cover property damage or liability based on actual expenses?

● Were reserves insufficient? Were special assessments required? ● Did the association have to acquire loans? ● Do payroll or overtime payments reflect the need to hire and insure

additional staff? ● Are taxes projected to increase based on historical trends? ● Are there maintenance and/or equipment needs that indicate

increased costs for repair or replacement?

● Have costs for routine services increased?

Information gathering can be an immense job; therefore many boards elicit the help of the association members to form committees on specific topics. As owners, they may also have valuable input concerning historical background knowledge, resources, and expertise to assist in budget preparation. Committees may look at insurance needs, new state or federal laws, maintenance and equipment replacement needs, improvements to save energy costs (such as solar systems), and preventative measures (such as hurricane shutters or wind resistant windows).

When owners are involved in these functions, they will have a better understanding of the budgeting processes, justifications as well as the use of assessment funds, maintenance and replacement costs. They will also have a better understanding of the duties and the roles of the board and the CAM. The end result can improve the relationships among the owners, the board, and the management. Improved relations are always a positive outcome.

Spectrum Association Management (2017) sums up the steps for budget preparations:

● Review. Pay attention to last year’s expenses. Sometimes things end up costing more than expected, so it is important to review expected versus actual costs when planning the next year’s budget.

● Forecast. Do a walk-through to identify what kinds of projects your community will face in the upcoming year(s). For example, does the community pergola need painting? Do the streets need to be repaved? Maybe your common-area grass needs extensive


work/replacement. All communities have projects that will impact their bottom lines. Proactively planning projects is a vital part of budget preparation and is one part of fulfilling the obligation as board members.

● Shop around. Talk to existing vendors about pricing. If the board feels that it is overpaying for goods or services, do not hesitate to shop around. Make sure the cost of vendor services are agreed upon in advance, and that any additional work/costs will be first approved by the board. Balancing quality and cost is recommended; the lowest bid is not always the best.

● Evaluate utilities. Sometimes simple changes like moving to LED lights or adding rain override sensors to the sprinkler system can

save hundreds, or even thousands, of dollars over the course of the year.

● Focus on preventative maintenance. Instead of waiting for things to break down, focus on keeping them in good condition. Take good care of fences, pools, and pergolas so that they last longer and require less money for major repairs or replacements.

● Expect the unexpected. The community association will always face surprises; sufficient preparation will ease the hurt. The best way to do this is by regularly contributing to the association’s reserve account and making sure that the account is fully funded, in accordance with the reserve study.

Drafting the budgetAfter the board gathers its information, it will meet to begin the process of drafting the budget. These meetings must be posted and open to members following the Florida Statutes. The notice of the meeting must include the date, time, and location. The notice should also contain agenda items to be addressed and must be posted at least 48 hours in advance in a designated area for all to view.

720.303(2)(c)(1) states “Notices of all board meetings must be posted in a conspicuous place in the community at least 48 hours in advance of a meeting, except in an emergency.”

The Condominium Act, Chapter 718.112, states:Budget meeting1. Any meeting at which a proposed annual budget of an association

will be considered by the board or unit owners shall be open to all unit owners. At least 14 days prior to such a meeting, the board shall hand deliver to each unit owner, mail to each unit owner at the address last furnished to the association by the unit owner, or electronically transmit to the location furnished by the unit owner for that purpose a notice of such meeting and a copy of the proposed annual budget. An officer or manager of the association, or other person providing notice of such meeting, shall execute an affidavit evidencing compliance with such notice requirement, and such affidavit shall be filed among the official records of the association.

2a. If a board adopts in any fiscal year an annual budget which requires assessments against unit owners which exceed 115 percent of assessments for the preceding fiscal year, the board shall conduct a special meeting of the unit owners to consider a substitute budget if the board receives, within 21 days after adoption of the annual budget, a written request for a special meeting from at least 10 percent of all voting interests. The special meeting shall be conducted within 60 days after adoption of the annual budget. At least 14 days prior to such special meeting, the board shall hand deliver to each unit owner, or mail to each unit owner at the address last furnished to the association, a notice of the meeting. An officer or manager of the association, or other person providing notice of such meeting shall execute an affidavit evidencing compliance with this notice requirement, and such affidavit shall be filed among the official records of the association. Unit owners may consider and adopt a substitute budget at the special meeting. A substitute budget is adopted if approved by a majority of all voting interests unless the bylaws require adoption by a greater percentage of voting interests. If there is not a quorum at the special meeting or a substitute budget is not adopted, the annual budget previously adopted by the board shall take effect as scheduled.

b. Any determination of whether assessments exceed 115 percent of assessments for the prior fiscal year shall exclude any authorized provision for reasonable reserves for repair or replacement of the condominium property, anticipated expenses of the association

which the board does not expect to be incurred on a regular or annual basis, or assessments for betterments to the condominium property.

c. If the developer controls the board, assessments shall not exceed 115 percent of assessments for the prior fiscal year unless approved by a majority of all voting interests.

The first draft is often written by the CAM and then is reviewed by the budget/finance committee, if there is one. Finally, it is reviewed by the board president and the treasurer. Tully-Davis notes that the responsibility for creating an annual budget generally falls to the association’s president, secretary, and treasurer - with input and assistance from the accountant and the association’s attorney.

The board may make any number of changes to the draft and/or hold budget meetings prior to the final adoption at a board meeting where the board gives the budget its final approval.

Budget componentsThe budget for community associations has two main components that cover specific types of expenditures. The first are the recurring expenses that are considered to be within a predictable range. These include utilities, taxes, insurance, salaries, and routine maintenance costs in the operating budget. Pay attention to utility and insurance costs; they may increase dramatically in a year. These are listed as line items and appear from year to year within the budget. Maintaining the same line items will make historical and actual expenditure comparisons easier from year to year.

The second type is the capital budget. The capital budget covers funds for long-range planning, major projects, and emergencies. These expenses cannot be easily compared or predicted and may change according to a number of factors related to the type of community.

An association’s revenue, or income, comes from assessment fees, fines, or penalties and are listed in the bylaws. Some associations may have other forms of income based on business revenues that may be operated by the association.

The operating budgetAccording to the Florida Department of Business and Professional Regulation (FDBPR, 2012), the line items identified in the operating section of the budget include expenses that can be anticipated on a fairly consistent and regular basis. The allocation for operating expenses on each line item is not restricted to the estimate, and the board can use funds from one item for another purpose. The Condominium Act requires that sufficient funds are collected in advance to pay all of the anticipated expenses. In other words, the board should not carry out the day-to-day operations of the association at a deficit or on the basis of special assessments (FDBPR, 2010).


Proposed budget requirements: Operating sectionThe FDBPR (2010) lists the minimum requirements for the operating section of the budget. These minimum requirements are listed below. All estimated common expenses or expenditures of the association include, but are not limited to, the following items:

● Administration of the association; ● Management fees; ● Maintenance; ● Rent for recreational and other commonly-used facilities. This

refers to any facility the association uses, but does not own. An example of this would be if a condominium is part of a large recreation association that operates recreational facilities which serves the condominium unit owners. Since the unit owner pays assessments directly to the recreation association, this expense would not be part of the condominium assessment; it is included for disclosure purposes (Larson, 2012).

● Taxes upon association property; ● Taxes upon leased areas; ● Insurance; ● Security provisions; ● Other expenses; ● Operating capital refers to a surplus built in for the association; ● Rent for a unit, if subject to a lease; ● Rent payable by the unit owner directly to the lessor or agent

under any recreational lease or lease for the use of commonly used facilities. This use and payment is a mandatory condition of ownership and is not included in the common expenses or assessments for common maintenance paid by the unit owners to the association;

● Fees payable to the division; ● Expenses for a unit owner. Larson (2012) explains that these are

not common expenses to be included in the budget. Instead, these expense disclosures notify unit owners of additional expenses that they may incur. These expenses are not counted as expenses collectible through assessments, and are generally related to disclosures during developer control of the association. An example of this category may be a maid service that is available on a pay-as-needed basis.

● All estimated common expenses or expenditures stated on an annual basis;

● All estimated expenses shown on a monthly basis; ● Beginning and ending dates of the period covered by the budget;

and ● The total assessment for each unit type according to the proportion

of ownership on a monthly basis, or for any other period for which assessments will be due.

NOTE: If the association maintains limited common elements with the cost shared by only those entitled to use them, a separate schedule (or schedules) must be attached which contains the same disclosures as in the budget. The schedule(s) must show all estimated expenses specific to each limited common element, including reserves for deferred maintenance and capital expenditures, if applicable.

When preparing these estimates, the income sources from maintenance fees, assessments, fines, and penalties must be considered. Estimates are based on the analysis of information from historical data from previous budgets, as previously discussed.

Figure 1: Sample operating section of the proposed budget (FDBPR, 2010)For the Fiscal Year January 1, 20XX through December 31, 20XX

REVENUES Assessment Income: $345,600 Interest Income: Operating Account $3,510 Savings Account 2,610 Total: 6,120

Other Income: Miscellaneous $108 Drinks 4,800 Fax 250 Laundry 9,640 Snacks 600 Games 5,508 Total: $20,906

TOTAL REVENUES $372,626

Reserves: Roof Replacement $8,000 Pavement Resurfacing 3,504 Building Painting 18,008 Elevators 800 Clubhouse 3,000 Walkways 3,000 Total $36,312

Administration: Accounting $5,004 Bad Debt 1,054 Annual Condominium Fee 640 Annual Corporate Fee 62 Insurance (D&O, Fidelity, Flood, P&C) 32,004 Legal 804 Licenses and Taxes Licenses 504 County 144 State 804 Management Fees 6,000 Office Supplies 2,400 Postage 660 Total $50,080

Salaries: Casual Labor $204 Maintenance Staff 80,012 Payroll Taxes 15,004 Worker’s Compensation 17,600 Total $112,820

Maintenance and Repair:Buildings $8,004 Elevators 4,000 Fire Systems 3,000 Grounds 7,008 Supplies and Tools 8,008 Swimming Pool 6,408 Tennis Courts 660 Laundry 5,000 Miscellaneous 504 Total $42,592

Utilities:Electricity $23,004 Pest Control 4,008 Sanitation 14,004 Sewer 28,500 Telephone 1,404 Water 12,504 Total $83,424


Vending: Drinks $2,000 Fax 120 Soap Products 3,000 Snacks 360 Games 120 Total $5,600

Other Expenses: Security $25,008 Rent for Recreational / Other 0 Commonly Used Facilities 0 Taxes on Association Property 0 Taxes on Leased Areas 0 Operating Capital Special Enhancements 7,250 Contingency 9,540 Total $41,798

ADDITIONAL EXPENSES FOR A UNIT OWNER

Rent for Unit Subject to Lease 0 Rent Payable by Owner Directly to Lessor 0 Under Recreational Lease / Lease for 0 Commonly Used Facilities 0 Total $0

EXPENSES FOR ASSOCIATION & CONDOMINIUMMONTHLY OPERATING EXPENSES $31,052 NET INCOME (LOSS) $0

ASSESSMENTS FOR EACH UNIT (160 units) Annual $2,158 Monthly $180

OPERATING EXPENSES (w/o reserves) $336,314 TOTAL OPERATING EXPENSES $372,626 Note: The above table is a sample for demonstration purposes only.

ReservesThe Florida Administrative Code, Rule: 61B-22.001, defines reserves to mean any funds (other than operating funds) that are restricted for deferred maintenance and capital expenditures, including the items required by Section 718.112(2)(f)2., Florida Statutes. The FDBPR (2010) explains:

Reserves are monies set aside for specific expenditures that will be incurred in the future. Usually, such expenditures relate to the cost of major repairs to, or replacements of, the condominium property. If money is not set aside for these expenses, unit owners will usually have to pay a special assessment at the time such repair or replacement occurs. Reserves may also be established for other types of expenditures that are paid infrequently, such as a premium for a three-year flood insurance policy. When funds are set aside for a specific use, whether it’s for repairs to or replacements of the property or for other purposes, means the association must comply with certain requirements such as disclosing reserve information in the budget as well as in the year-end financial reporting disclosure.

Florida Statutes Section 718.112(2)(f)2: Reserves.2a. In addition to annual operating expenses, the budget must

include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. The amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection.

b. Before turnover of control of an association by a developer to unit owners other than a developer pursuant to s. 718.301, the developer may vote the voting interests allocated to its units to waive the reserves or reduce the funding of reserves through the period expiring at the end of the second fiscal year after the fiscal year in which the certificate of a surveyor and mapper is recorded pursuant to s. 718.104(4)(e) or an instrument that transfers title to a unit in the condominium which is not accompanied by a recorded assignment of developer rights in favor of the grantee of such unit is recorded, whichever occurs first, after which time reserves may be waived or reduced only upon the vote of a majority of

all non-developer voting interests voting in person or by limited proxy at a duly called meeting of the association. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves and no such result is achieved or a quorum is not attained, the reserves included in the budget shall go into effect. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

3. Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and may be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association. Before turnover of control of an association by a developer to unit owners other than the developer pursuant to s. 718.301, the developer-controlled association may not vote to use reserves for purposes other than those for which they were intended without the approval of a majority of all non-developer voting interests, voting in person or by limited proxy at a duly called meeting of the association.

4. The only voting interests that are eligible to vote on questions that involve waiving or reducing the funding of reserves, or using existing reserve funds for purposes other than purposes for which the reserves were intended, are the voting interests of the units subject to assessment to fund the reserves in question. Proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended must contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.

Florida Administrative Code-61B-22.005: Reserves.1. Reserves required by statute. Reserves required by Section

718.112(2)(f), Florida Statutes, for capital expenditures and deferred maintenance including roofing, painting, paving, and any other item for which the deferred maintenance expense or replacement cost exceeds $10,000 shall be included in the budget. For the purpose of determining whether the deferred maintenance expense or replacement cost of an item exceeds $10,000, the association may consider each asset of the association separately. Alternatively, the association may group similar or related assets together. For example, an association responsible for the maintenance of two swimming pools, each of which will


separately require $6,000 of total deferred maintenance, may establish a pool reserve, but is not required to do so.

2. Commingling operating and reserve funds. Associations that collect operating and reserve assessments as a single payment shall not be considered to have commingled the funds provided the reserve portion of the payment is transferred to a separate reserve account, or accounts, within 30 calendar days from the date such funds were deposited.

3. Calculating reserves required by statute. Reserves for deferred maintenance and capital expenditures required by Section 718.112(2)(f), Florida Statutes, shall be calculated using a formula that will provide funds equal to the total estimated deferred maintenance expense or total estimated replacement cost for an asset or group of assets over the remaining useful life of the asset or group of assets. Funding formulas for reserves required by Section 718.112(2)(f), Florida Statutes, shall be based on either a separate analysis of each of the required assets or a pooled analysis of two or more of the required assets. a. If the association maintains separate reserve accounts for

each of the required assets, the amount of the current year contribution to each reserve account shall be the sum of the following two calculations:1. The total amount necessary, if any, to bring a negative

account balance to zero; and2. The total estimated deferred maintenance expense or

estimated replacement cost of the reserve asset less the estimated balance of the reserve account as of the beginning of the period for which the budget will be in effect. The remainder, if greater than zero, shall be divided by the estimated remaining useful life of the asset. The formula may be adjusted each year for changes in estimates and deferred maintenance performed during the year and may consider factors such as inflation and earnings on invested funds.

b. If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all of the assets that make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal. The reserve funding formula shall not include any type of balloon payments.

4. Estimating reserves that are not required by statute. Reserves that are not required by Section 718.112(2)(f), Florida Statutes, are not required to be based on any specific formula.

5. Estimating non-converter reserves when the developer is funding converter reserves. For the purpose of estimating non-converter reserves, the estimated fund balance of the non-converter reserve account related to any asset for which the developer has established converter reserves pursuant to Section 718.618, Florida Statutes, shall be the sum of:a. The developer’s total funding obligation, when all units are

sold, for the converter reserve account pursuant to Section 718.618, Florida Statutes; and

b. The estimated fund balance of the non-converter reserve account, excluding the developer’s converter obligation, as of the beginning of the period for which the budget will be in effect.

6. Timely funding. Reserves included in the adopted budget are common expenses and must be fully funded unless properly waived or reduced. Reserves shall be funded in at least the same

frequency that assessments are due from the unit owners (e.g., monthly or quarterly).

7. Restrictions on use. In a multicondominium association, no vote to allow an association to use reserve funds for purposes other than that for which the funds were originally reserved shall be effective as to a particular condominium unless conducted at a meeting at which the same percentage of voting interests in that condominium that would otherwise be required for a quorum of the association is present in person or by proxy, and a majority of those present in person or by limited proxy, vote to use reserve funds for another purpose. Expenditure of unallocated interest income earned on reserve funds is restricted to any of the capital expenditures, deferred maintenance or other items for which reserve accounts have been established.

8. Annual vote required to waive reserves. Any vote to waive or reduce reserves for capital expenditures and deferred maintenance required by Section 718.112(2)(f)2., Florida Statutes, shall be effective for only one annual budget. Additionally, in a multicondominium association, no waiver or reduction is effective as to a particular condominium unless conducted at a meeting at which the same percentage of voting interests in that condominium that would otherside be required for a quorum of the association is present, in person or by proxy, and a majority of those present in person or by limited proxy vote to waive or reduce reserves. For multicondominium associations in which the developer is precluded from casting its votes to waive or reduce the funding of reserves, no waiver or reduction is effective as to a particular condominium unless conducted at a meeting at which the same percentage of non-developer voting interests in that condominium that would otherwise be required for a quorum of the association is present, in person or by proxy, and a majority of those present in person or by limited proxy vote to waive or reduce reserves.

As previously stated in Florida Statute Section 718.112(2)(f)2, condominium associations are required to budget for any capital repair or deferred maintenance with an expected expense of $10,000 or more.

Since the community association’s primary source of income is assessments, or maintenance fees paid by the owners, the reserve funds can serve to build funds over time to pay for projected components and future scheduled upgrades or replacements.

Example (FDBPR, 2010):An association repaints its building every five years. The last time the association painted the building it cost $20,000. The association funds a painting reserve each year in the amount of $4,000 in order to avoid making a special assessment of $20,000 every five years.

The first step in preparing a budget for capital repairs and replacement projects can be the completion of a reserve study.

A professional engineer should be consulted for this specific task so that the board can accurately gauge the expense of any large projects and develop a realistic timeline to fund any needed reserves.

Reserve schedule calculations should be made using a formula based on the useful life of an item, the remaining useful life, as well as the replacement cost component (Rodriguez, 2014). Kuisle (2014) notes, “This information is required to be on the proposed budget for every Florida condominium association and for those HOAs that have statutory reserve funds.”

Though this is not a requirement, the association would be wise to annually review all reserve account categories and adjust (or correct) the reserve budget to accommodate for possible increases in maintenance or replacement cost funds. The board should also inspect the equipment and components for deterioration. Deterioration might accelerate repair or replacement requiring additional reserve funds.


Deferred maintenance and capital expenditure reservesThe FDBPR (2010) provides the following information which includes examples of capital expenditures and deferred maintenance reserves:

● Roof replacement; ● Sidewalk improvement; ● Building painting; ● Boardwalk replacement; ● Pavement resurfacing; ● Seawall replacement; ● Balcony restoration; and ● Air conditioning replacement.

There must be a specified purpose for each reserve component and the title should reflect that purpose, as shown above. Since these funds are restricted for a specific purpose, they cannot be used for routine maintenance. Maintenance costs should be funded from the operating account for routine and frequent maintenance.

Remember that according to Florida Statutes, deferred maintenance is defined by repairs and maintenance that occur less frequently than a year, and with the purpose of maintaining the useful life of the item or system.

Example (FDBPR, 2010):An example of a deferred maintenance reserve is building painting. Painting a building is usually done less frequently than annually, and it results in maintaining the life of the building. Deferred maintenance can be confused with regular or routine maintenance. Touch up painting is a routine maintenance item that should be included in the operating section of the budget and should be paid for with operating funds.

Since a capital expenditure indicates funds dedicated for replacement of a component with a useful life beyond one year, or repair that will extend the useful life beyond a year, it correlates with deferred maintenance needs.

Examples of capital expenditures (FDBPR, 2010):An example of a capital expenditure is the purchase of a swimming pool heater. The association may pay for this expenditure with funds from its reserve account titled “Pool-Heater Purchase.” Another example of a capital expenditure is the purchase of a new lawn tractor to replace the one currently owned by the association. This account could be called “Lawn Tractor Replacement.” Another type of capital expenditure is a repair such as replacing the pilings to a dock. The dock’s useful life expectancy will be extended by more than one year. The budget should include a reserve schedule for one or both types of reserve methods, depending on which method(s) are used.

The reserve schedule is designed to disclose information - including how long an asset will last, its remaining useful life, and the cost for deferred maintenance or a capital expenditure. The Statutes and Administrative Rules outline the minimum disclosures, or reserve components, that must be included in the budget. This information is important for the owners and board members to understand projected future expenses and when they will take place, as well as what reserves have been (or will be) set aside to cover these expenses in order to allow all parties to make informed decisions.

The reserve schedule disclosure of deferred maintenance and capital expenditures is based on the following data:

1. All required deferred maintenance and capital expenditure reserve items (FDBPR, 2012).

2. The total estimated useful life of each of the required items. 3. The estimated remaining useful life of each of the required

items.4. The estimated deferred maintenance or cost of capital

expenditure of each of the required items. 5. The estimated fund balance for each item as of the beginning

of the proposed budget year (end of the current year). 6. The required funding amount for the budget year for each

item.

Estimating reserves Begin the process by identifying any items that will require funds of more than $10,000 for repair, replacement or purchase, as required by the Florida Statutes. Next, estimate the total expected life of the component, the remaining life of the component, and the amount of funds that have been collected and earmarked to repair or replace the component(s). It is critical to be as accurate as possible when determining these estimates: if reserves are underfunded, the result will be special assessments for the owners. It is important to analyze components annually when preparing new budgets to determine if reserve funds are adequate for each component - they will change due to a number of factors. The type of construction, the quality of construction, weather events, the degree of maintenance, geography, building costs, product availability or obsolescence, as well as inflation are some factors that will affect reserve funding cost estimates. Take at least an annual inventory of the property and evaluate the condition of each component, as follows (FDBPR, 2012):

● Examine the original plans and specifications. ● Review reports from unit owners about repairs that need to be

made. ● Speak to other board members and owners who may have special

knowledge about the condominium. ● Consult professionals such as architects, engineers, contractors,

vendors and suppliers. The board should consider hiring a professional engineer to perform an analysis of the condition of the facilities at least every three to five years.

FDBPR (2010) provides the following steps to prepare the reserve schedule:

Step one: List all reserve items on the schedule.Not only is a list including reserves required by the Condominium Act, but also any other deferred maintenance and capital expenditure reserve items (or any other reserves) that the association would like to fund. Roof replacement, pavement resurfacing, building painting, and clubhouse roof replacement are all required by the Condominium Act to be listed in the budget. List the following:

● The name of each item, disclosing the intended use of the funds; ● The estimated balance of each of these reserve items at the

beginning of the proposed budget period; and ● The amount of funds to be set aside for each of these items in the

current budget.

Step two: Write the estimated total useful life on the schedule.The estimated total useful life of a reserve asset is the total life of a newly-purchased asset before deferred maintenance or a replacement of the item is needed. This estimate will go in the first column of the schedule.

Step three: Write the estimated remaining useful life on the schedule. The estimate for each reserve item’s remaining useful life will be placed in the second column of the schedule. The estimated remaining useful life of a reserve asset is the length of time that a particular asset has left, before deferred maintenance or a capital expenditure is needed.

Example: The 2012 engineer’s report given to the association stated that the estimated total useful life of the roof was 10 years. All


subsequent re-evaluations supported the 2012 findings. It is now 2018. Based on this information, the estimated remaining useful life of the roof is four years. In 2022, a capital expenditure to replace the roof will probably be needed.

Step four: Write the costs for estimated deferred maintenance or a capital expenditure on the schedule. Once the amounts are listed, a total should be provided at the bottom of the column.

Step five: Write the estimated fund balances on the schedule.The fifth step in preparing the reserve schedule is to identify the estimated fund balance, as of the beginning of the period for which the budget is being prepared for each reserve item and to write these amounts on the schedule. The estimated fund balance is the amount of money that should be in the reserve account. The methods used for determining estimated fund balances may vary based on the complexity and sophistication of the association’s accounting system. The reserves must be identified separately in the accounting records, even if all reserves are maintained in one bank account. In other words, the accounting records must be maintained according to good accounting practices.

Example: The board is working on next year’s budget in October. In order to determine what the roof reserve’s fund balance will be at the close of business December 31, it can begin by checking the amount of money that was in the roof reserve at the end of September. Then, add all of the assessments that should be deposited in the roof reserve, based on the current budget for the months of October, November, and December. Finally, subtract any expenditures that are anticipated for those three months. This total should give the estimated fund balance for the roof reserve as of December 31. Identify each reserve’s estimated fund balance, write the amounts in the “Estimated Fund Balance” column on the schedule, and total them.

Step six: Compute the current year’s funding requirements; write the requirements on the schedule. When the proposed budget is given to the unit owners, the reserve schedule must provide for full funding of the reserves. The current-year funding requirement is the amount of money that must be deposited in the reserves during the year. This amount should ensure that sufficient funds are available when it is time to perform the deferred maintenance or a capital expenditure. Keep in mind that the current year funding requirement is different than the fund balance. The funding requirement is what must be deposited during the year; the fund balance is the amount that should be in the reserve account at any given time. The formula for computing the current year funding requirement must take into account the estimated deferred maintenance or capital expenditure amount, estimated fund balance, and the number of years remaining until deferred maintenance or a capital expenditure is needed. Since these estimates are part of the formula, the current year funding requirement will change from year to year. The formula is addressed by rule 61B-22.005(3), F.A.C.

Example, segregated method: Assume that you are preparing next year’s budget (January to December) in October. The remaining useful life of the roof is four years, and the estimated cost to replace the roof is $86,000: $50,000 should be in the roof reserve when the budget becomes effective on January 1. To determine the amount that must be deposited during the proposed budget year, subtract $50,000 from $86,000. The result is $36,000. Then divide this amount by the remaining useful life of four years. The final answer is that $9,000 is the current year funding requirement.

● 41 ($86,000 - $50,000) / 4 = $9,000.

As the current year’s funding requirements are computed for each reserve, place them in the “Current Year Funding Requirement” column on the schedule and total them.

Figure 2. Sample reserves section of the proposed budget – Segregated method (FDBPR, 2010) SCHEDULE OF DEFERRED MAINTENANCE & CAPITAL EXPENDITURE RESERVES

(for the fiscal year of January 1, 20XX through December 31, 20XX)

Reserve Items Estimated Total Useful

Life

(in years)

Estimated Remaining Useful Life

(in years)

Estimated Cost for Deferred Maintenance/ Capital Expenditure ($)

Estimated Fund Balance as of 12-31-

XX ($)

Funding Required for Proposed Budget

Period ($) Roof Replacement 12 1 $95,000 $87,000 $8,000

Pavement Resurfacing 18 7 55,000 30,472 3,504

Building Painting 5 4 92,000 19,968 18,008 Elevator Repair & Modernization 25 14 20,000 8,800 800

Clubhouse Roof Replacement 12 1 60,000 57,000 3,000

Walkway Improvements 10 9 30,000 3,000 3,000

TOTALS $352,000 $206,240 $36,312

NOTE: This schedule is for illustrative purposes only and does not represent the FDBPR’s (2010) position regarding the life expectancies, or costs, of reserve assets. Multi-condominium associations have additional disclosure requirements for the proposed budget and reserve schedule. Refer to Rule 61B-22.003, F.A.C. for more information.

There are two methods commonly used to fund reserves. The component method, or straight-line method, provides separate accounts for reserve funds that can only be used for a specific purpose. An exception could be made if the majority of owners vote to use the funds for another item on the reserve schedule.

The second method uses pooled reserves. Pooled reserves allow some flexibility for boards to access one source of reserve account funds that can be used to fund multiple categories on the reserve budget. The

Florida Division of Condominiums amended the Administrative Code in 2002 to establish pooled reserve accounts. Larson (2012) provides the following example:

An association establishes a pooled reserve account for roof replacement, building painting and pavement resurfacing, funds may be drawn from this account to pay for any of the three items. Prior to the change in the rules associations were required to maintain separate accounts for each of these items and approval from the membership would be required in order to use funds from one category to pay for another.

Pooled reserves can only be used to fund expenses that are listed components. In addition, transferring reserve funds from the individual components to a pooled reserve requires a majority vote by the owners.


The following sections of the Florida Administrative Code (FAC), 61B-22.003 and 61B-22.005, address pooled reserves: Florida Administrative Code 61B-22.003. f. If the association maintains a pooled account for reserves required

by Section 718.112(2)(f)2., Florida Statutes, the association shall include a separate schedule of any pooled reserves with the following minimum disclosures:1. The total estimated useful life of each asset within the pooled

analysis;2. The estimated remaining useful life of each asset within the

pooled analysis;3. The estimated replacement cost or deferred maintenance

expense of each asset within the pooled analysis; 4. The estimated fund balance of the pooled reserve account as

of the beginning of the period for which the budget will be in effect.

Florida Administrative Code-61B-22.005 b. If the association maintains a pooled account of two or more of

the required reserve assets, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all of the assets that

make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal. The reserve funding formula shall not include any type of balloon payment.

Errors are made when systems and structures are overlooked when estimating and budgeting funding reserves. Areas that are often omitted include balcony railings, decks, concrete restoration, drainage systems, elevators, electrical systems, plumbing systems, as well as security and fire alarm systems. Interior projects - such as painting, flooring, and remodeling - are also overlooked, but often represent a major expense for a large community. Mistakes happen when boards lump items together under mechanical reserves without sufficient details and funding for larger items, such as heating and air conditioning systems or elevators.

Kuisle (2017) notes:According to a national study done by the Foundation for Community Association Research, 18 percent of communities do not believe they are setting aside adequate reserve funds. In my experience, I would say the actual number is much higher, but I think a majority of communities actually don’t know if they are fully funding. They may promote ‘fully funded reserves,’ but the schedule they adopt is missing major components like concrete restoration or balcony railings. This is really a bad situation for the boards when the time comes for repairs or replacements and they don’t have enough money, despite their claim of passing a ‘fully funded’ reserve budget each year.

Negative reserve balanceIn the case of a negative reserve balance, which is a violation of the Florida Statutes, a zero balance means that the association overspent in one or more reserve components. The FAC rules require that this deficit must be corrected in the budget year, as well as funding the replacement cost over the life of the component. Funds cannot be built up over the remaining life of the replaced component because funds being collected over the life of the new component are needed to fund future repairs and replacement of that item.

Figure 3: Sample reserve schedule using the pooling method (Larson, 2012)

Replacement Item Total Estimated

Life (Years)

Remaining Life

(Years)

Cost

Roof Replacement 12 1 $95,000

Pavement Resurfacing 18 7 $55,000

Building Painting 5 4 $92,000

Elevator Repair & Modernization

25 14 $20,000

Clubhouse Roof Replacement

12 1 $60,000

Walkway improvements 10 9 $30,000

It is important to review reserves annually to assess each category carefully. Building supply costs may increase with the rising price of oil; increases in the real estate market values may lead to higher construction costs.

The term “fully funded” is often misinterpreted by owners and board members and is based on the specified budgeted amounts. To be fully funded means that the proposed budget must show sufficient funds for deferred maintenance or capital expenses based on estimates in the budget categories. The association will set aside assessment funds to cover all of the components of the reserve schedule. This does not

mean, however, that funds will be available to completely cover every possible expense that may arise.

When the proposed budget is presented to the owners, a vote can be taken to reduce (or waive) the funding of reserves. The majority of the association’s documents allow the board to approve and adopt the budget; yet they cannot reduce or waive the reserve fund independent of the owners’ vote. The outcome of the vote is only in effect for the current fiscal year. If there is no quorum for the vote to waive or reduce the reserves, they will be fully funded and the budget will then be approved. This occurs because the vote to waive or reduce the reserves applies only to the funding of the reserves. The reserve disclosures cannot be waived or reduced and must be included in the proposed budget (FDBPR, 2010). The vote to waive or reduce the reserves requires an actual vote or the use of a limited proxy.

Accounting recordsAccording to the Florida Department of Business and Professional Regulation (FDBPR, 2010), accounting records consist of all documents that record, measure and communicate financial information, whether maintained electronically or otherwise. These records include items such as:

● Accurate, itemized, and detailed records of all receipts and expenditures;

● A current account and a monthly, bimonthly, or quarterly statement of the account for each unit designating the name of the unit owner, the due date and amount of each assessment, the amount paid upon the account, and the balance due;

● All audits, reviews, accounting statements, and financial reports of the association;

● All contracts for work to be performed. Bids for work to be performed are official records and must be maintained for a period of one year; and

● Any other records that identify, measure, record, or communicate financial information.

NOTE: Multi-condominium associations must maintain separate accounting records for themselves, as well as for each condominium they operate.


NOTE: The accounting records must be maintained within the State of Florida and retained by the association for at least seven years.

The association should consult an accounting firm for information about purchasing an accounting general ledger software program appropriate for its size and budget. The program will produce the records with specific codes for the revenue and expense accounting required for financial reporting, according to the Florida Statutes and the Florida Administrative Code.

FDBPR (2012) explains that the Condominium Act requires the following:

● Maintenance of current accounting. ● Maintenance of monthly, bi-monthly, or quarterly statements of

the account for each unit on a separate page. This must include the name of the unit owner, the amount of each assessment, the due dates, the amounts paid upon the account, and the balance due.

● Accounting records must be open to inspection by any unit owner or authorized representative at all reasonable times.

● If a written request for access to the records is received by the association, the records must be made available within five working days.

● The unit owner or authorized representative has the right to make or obtain copies from the association.

● A fee cannot be charged for simply accessing the records.

Associations may set clear and reasonable rules for owners to request, access, inspect, and copy records, including the location for these activities. If the association does not allow unit owners to access records according to the established association rules, Florida Statute

Section 718.112(2) provides for sanctions, including monetary damages, for the unit owner.

Funding the reservesRule 61B-22.005(6), F.A.C., requires that reserves must be funded at a rate at least as often as assessments are collected such as monthly or quarterly.

For assessments paid each month, 1/12 of the funds listed in the annual reserve requirement must be placed in the reserve account each month.

Rule 61B-22.005(2), F.A.C., states 2) Commingling operating and reserve funds. Associations that collect operating and reserve assessments as a single payment shall not be considered to have commingled the funds, provided the reserve portion of the payment is transferred to a separate reserve account, or accounts, within 30 calendar days from the date such funds were deposited.

Example (FDBPR, 2010):Assume that the condominium documents require that assessments are collected on a quarterly basis, reserves have not been waived, and that assessments from unit owners are deposited on January 5, 2018. The association must transfer any reserve portion of that deposit to the appropriate reserve bank account(s), no later than February 4, 2018. One-fourth of the annual funding requirement must be set aside in the reserve account(s) no later than March 31, 2018, even if not all of the unit owners have made their quarterly payments. In other words, reserves are required to be funded - even if some unit owners are delinquent in their payments. Should the association experience chronic delinquencies, it is a good idea to build a line item into the operating budget in order to ensure adequate cash flow to pay for all of the operating expenses and fund the reserves.

Hurricanes: Florida Statute 720.303Windstorm insurance coverage for a group of no fewer than three communities created and operated under Chapter 718, Chapter 719, this Chapter, or Chapter 721 may be obtained and maintained for the communities if the insurance coverage is sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. Such insurance coverage is deemed adequate windstorm coverage for purposes of this chapter.

Kuisle (2014) advises:In addition to the general 60-90 days of working capital, every association should also have some ‘rainy day’ savings. Here in Florida, that rain might be accompanied by hurricane force winds. If an association has the ability, I would recommend saving over time for the insurance deductible. You never know when, or if, these funds will be necessary, but any amount will help for emergency cleanup and or the association’ deductible payment.

Surplus fundsThe board can maintain a surplus if the funds are not needed during the hurricane season, as long as it is documented and reported in financial reports. These funds can be transferred into reserves or other areas, depending on the needs of the association.

The association may vote to deposit the surplus funds into an interest-bearing account, or designate the funds for upcoming and/or special projects. It is always better to have a surplus of funds, especially in Florida where hurricane season presents an annual risk of unpredictable proportion.

Associations may want to hold a vote to move surplus funds at the end of the fiscal year from the operating budget to the budget for the next fiscal year. This will assist the association in paying less tax based on the amount of excess funds in the operating account. Another option

would be to refund the excess to the owners; however, this rarely happens.

It is crucial to consult an accountant or tax attorney. The most common tax return options used by associations are the form 1020, a corporate income tax return, or an 1120-H which associations may use that allow for exclusions of income from assessments, dues, membership fees from taxable income.

If the association plans to file an 1120-H tax return, the owners’ votes are not needed to move the surplus funds. If at some point in the year the association income increases due to funds (other than assessments), to the point that the assessment income portion drops below 60 percent of the total income, the association will not qualify for 1120-H. At this point, the association would have to file under 1120 and be taxed on the excess income, unless there is a vote to move the funds to the next fiscal year.

To be safe, the association should conduct a vote each year to transfer the excess funds for the tax advantage.

Adopting the budgetOnce the budget is completed, it should be checked for accuracy, and to make sure it includes all the required components. In addition, the association’s documents should be reviewed to determine if the bylaws include specific declarations about budget adoption. Most condos, for example, allow the board the final approval, as previously mentioned. Others give the approval to the association members and to the owners through a majority vote.

According to the statutory requirements, the board must provide a meeting notice that includes the agenda and a copy of the budget proposal. This must be mailed or hand delivered to owners at least 14 days in advance of the meeting. Any proposed assessment must be included in the notice. In addition, the notice and agenda must be posted 48 hours in advance at a designated location that can be accessed by all. Whoever provides the meeting notice and agenda


will complete an affidavit to document that the appropriate notice was issued which must be filed in the permanent, official association records.

This will be an important meeting and a chance to communicate with - and educate - the owners about the operations and future needs of the association. The FDBPR (2010) notes that the following types of information, though not required by law, may help unit owners understand the budget components:

● Explain any major projects that are planned for the year and why they need to be performed. In addition, explain large variances from the prior year’s budget, especially if the association has a column that lists the prior year’s budgeted amounts next to the proposed amounts

● Explain hard-to-understand line items. ● If the decision is made to present a vote to the owners to waive

or reduce the funding of reserves, explain what happens when these reserves are not fully funded. Unit owners need to know that when reserves are funded, they are providing funding for future expenses. If the funding of reserves is waived or reduced, owners may not realize that it could result in large special assessments.

● If the decision is made to present the vote, or to waive or reduce reserve funding, include a disclosure of what assessments will be with and without reserve funding. It is important that the meeting minutes are complete, show the adoption of the budget, and become part of the permanent record.

Assessment requirementsAccording to Florida Statute 720.303:

An assessment may not be levied at a board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature of the assessments. Written notice of any meeting at which special assessments will be considered or at which amendments to rules regarding parcel use will be considered must be mailed, delivered, or electronically transmitted to the members and parcel owners and posted conspicuously on the property or broadcast on closed-circuit cable television not less than 14 days before the meeting.

720.308: Assessments and charges.1. Assessments.-For any community created after October 1, 1995,

the governing documents must describe the manner in which expenses are shared and specify the member’s proportional share thereof.a. Assessments levied pursuant to the annual budget or special

assessment must be in the member’s proportional share of expenses as described in the governing document, which share may be different among classes of parcels based upon the state of development thereof, levels of services received by the applicable members, or other relevant factors.

b. While the developer is in control of the homeowners’ association, it may be excused from payment of its share of the operating expenses and assessments related to its parcels for any period of time for which the developer has, in the declaration, obligated itself to pay any operating expenses incurred that exceed the assessments receivable from other members and other income of the association.

c. Assessments or contingent assessments may be levied by the board of directors of the association to secure the obligation of the homeowners’ association for insurance acquired from a self-insurance fund authorized and operating pursuant to s. 624.462.

d. This section does not apply to an association, no matter when created, if the association is created in a community that is included in an effective development-of-regional-impact development order as of October 1, 1995, together with any approved modifications thereto.

2. Guarantees of Common Expenses.a. Establishment of a guarantee. If a guarantee of the assessments

of parcel owners is not included in the purchase contracts or declaration, any agreement establishing a guarantee shall only be effective upon the approval of a majority of the voting interests of the members other than the developer. Approval shall be expressed at a meeting of the members voting in person or by limited proxy or by agreement in writing without a meeting if provided in the bylaws. Such guarantee must meet the requirements of this section.

b. Guarantee period. The period of time for the guarantee shall be indicated by a specific beginning and ending date or event.

1. The ending date or event shall be the same for all of the members of an association, including members in different phases of the development.

2. The guarantee may provide for different intervals of time during a guarantee period with different dollar amounts for each such interval.

3. The guarantee may provide that after the initial stated period, the developer has an option to extend the guarantee for one or more additional stated periods. The extension of a guarantee is limited to extending the ending date or event; therefore, the developer does not have the option of changing the level of assessments guaranteed.

3. Maximum Level of Assessments. The stated dollar amount of the guarantee shall be an exact dollar amount for each parcel identified in the declaration. Regardless of the stated dollar amount of the guarantee, assessments charged to a member shall not exceed the maximum obligation of the member based on the total amount of the adopted budget and the member’s proportionate share of the expenses as described in the governing documents. The assessment allocation is either based on equal fractions or the square footage of the unit.

The budget must list the time frame for paying assessments, normally monthly or quarterly, and give the assessment amount due for each type of unit, according to the proportion owned. The association documents information on assessment collection and penalties for delinquent payments. Income for the association is based on assessments paid, as well as the proportion of ownership, by unit owners for condominiums, shareholders for a cooperative, or the property owner in a home owners’ association.

To compute assessments, the board must know the following: ● Assessment allocations for the different types of units; ● The number or units on the property; and ● The schedule for collection of assessments. The Condominium Act

requires assessments be collected at least four times a year.

With these three types of information, the formula for calculating the “per unit” assessment can be applied as follows:

● Total Operating Expenses - Anticipated Revenues = Total Amount to be Assessed.

● Total Amount to be Assessed x Ownership Share = Total Assessment Per Unit.

● Total Assessment Per Unit / Frequency of the Assessment = Periodic Assessment, Monthly or Quarterly).

Once the annual and periodic assessments are determined for each unit, they will be added to the operating budget. When assessments are added, the budget process is complete.

A budget that exceeds 115 percent of prior year’s assessments The Condominium Act allows owners to petition the board to call for a special meeting to propose a new budget if the board adopts a budget that increases assessments more that 15 percent over than the previous


year’s budget. The statute states that certain items should be excluded from current and prior budgets when making a determination of this percentage.

These items include:1. Reserves. 2. Anticipated expenses not expected to be incurred on an annual

basis. 3. Assessments for betterments to the property.

First, subtract these items from both budgets, and then divide the newly-adopted budget’s annual total assessment by the previous budget annual total assessment. If the percentage is greater than 115 percent of the previous budget, 15 percent, the owners may proceed with the petition to address the excess assessment. At least 10 percent of the owners would need to petition the board within 21 days after the board’s adoption of the budget to take action. The board would then be required to call a special association owners’ meeting within 60 days after the adoption of the budget. Again, at least a 14-day notice must be given to the owners for this meeting.

To adopt a new budget at this meeting, quorum must be achieved and a majority vote by the owners is required, unless the bylaws of the association require a greater number of votes in this case. The vote

may be submitted in person or by limited proxy, and if adopted, the new budget will be in effect.

If a quorum is not met and the second budget is not adopted, the original budget approved by the board will stand.

NOTE: If the developer is still in control of the board, the board may not impose an assessment for any year greater than 115 percent of the prior year’s assessment without the approval of a majority of all of the voting interests, including those of the developer (FDBPR, 2010).

Special assessmentsElected board members have the fiduciary duty to operate the association in the best interests of the owners and to prepare a budget which meets the needs of the association to protect and maintain the property. If the common expenses are covered adequately by the budget, there will be fewer special assessments due to inadequate reserve funding or poorly-estimated operating expenses.

Special assessments can cause financial hardships for owners, as well as indicate that the board is not budgeting correctly to anticipate operating expenses, deferred maintenance expenses, and emergency funding for the association.

See the previous statute sections for assessments.

Florida Statute 720.303: Financial Reporting7. Financial Reporting-Within 90 days after the end of the fiscal year,

or annually on the date provided in the bylaws, the association shall prepare and complete, or contract with a third party for the preparation and completion of, a financial report for the preceding fiscal year. Within 21 days after the final financial report is completed by the association or received from the third party, but not later than 120 days after the end of the fiscal year or other date as provided in the bylaws, the association shall, within the time limits set forth in subsection (5), provide each member with a copy of the annual financial report or a written notice that a copy of the financial report is available upon request at no charge to the member. Financial reports shall be prepared as follows:a. An association that meets the criteria of this paragraph shall

prepare or cause to be prepared a complete set of financial statements in accordance with generally accepted accounting principles as adopted by the Board of Accountancy. The financial statements shall be based upon the association’s total annual revenues, as follows:1. An association with total annual revenues of $150,000

or more, but less than $300,000, shall prepare compiled financial statements.

2. An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements.

3. An association with total annual revenues of $500,000 or more shall prepare audited financial statements.

b1. An association with total annual revenues of less than $150,000 shall prepare a report of cash receipts and expenditures.2. A report of cash receipts and disbursement must

disclose the amount of receipts by accounts and receipt classifications and the amount of expenses by accounts and expense classifications, including, but not limited to, the following, as applicable: costs for security, professional, and management fees and expenses; taxes; costs for recreation facilities; expenses for refuse collection and utility services; expenses for lawn care; costs for building maintenance and repair; insurance costs; administration and salary expenses; and reserves if maintained by the association.

c. If 20 percent of the parcel owners petition the board for a level of financial reporting higher than that required by this section, the association shall duly notice and hold a meeting of members within 30 days of receipt of the petition for the purpose of voting on raising the level of reporting for that fiscal year. Upon approval of a majority of the total voting interests of the parcel owners, the association shall prepare or cause to be prepared, shall amend the budget or adopt a special assessment to pay for the financial report regardless of any provision to the contrary in the governing documents, and shall provide within 90 days of the meeting or the end of the fiscal year, whichever occurs later:1. Compiled, reviewed, or audited financial statements, if

the association is otherwise required to prepare a report of cash receipts and expenditures;

2. Reviewed or audited financial statements, if the association is otherwise required to prepare compiled financial statements; or

3. Audited financial statements if the association is otherwise required to prepare reviewed financial statements.

d. If approved by a majority of the voting interests present at a properly called meeting of the association, an association may prepare or cause to be prepared:1. A report of cash receipts and expenditures in lieu of a

compiled, reviewed, or audited financial statement;2. A report of cash receipts and expenditures or a compiled

financial statement in lieu of a reviewed or audited financial statement; or

3. A report of cash receipts and expenditures, a compiled financial statement, or a reviewed financial statement in lieu of an audited financial statement.

8. Association Funds; Commingling.-a. All association funds held by a developer shall be maintained

separately in the association’s name. Reserve and operating funds of the association shall not be commingled prior to turnover except the association may jointly invest reserve funds; however, such jointly invested funds must be accounted for separately.

b. No developer in control of a homeowners’ association shall commingle any association funds with his or her funds or with the funds of any other homeowners’ association or community association.


c. Association funds may not be used by a developer to defend a civil or criminal action, administrative proceeding, or arbitration proceeding that has been filed against the developer or directors appointed to the association board by the

developer, even when the subject of the action or proceeding concerns the operation of the developer-controlled association.

9. Applicability.-Sections 617.1601-617.1604 do not apply to a homeowners’ association in which the members have the inspection and copying rights set forth in this section.

ReviewConsider the following quick budget checklist for condominiums (Larson, 2012):

● Does the budget include all of the required statutory provisions? ● Does it specify the beginning and end dates of the fiscal year? ● Does the budget identify the assessment amount by unit type? ● Has the board prepared a current reserve schedule that is part of

the budget? Does it contain the purpose for each component? ● What notice is required? Section 718.112(2)(e) of the Florida

Statutes says that a 14-day notice is required, but do the association documents create additional obligations?

● Do members have the opportunity to vote on the budget? This is not typical, but some association documents leave that power to the members, rather than to the board.

● How does the board handle costs associated with limited common elements in the budget?

● Is the budget in the same format as previous association budgets? ● Is the proposed budget attached with the notice of the budget

meeting? ● Will the adopted budget be sent to the association members

afterwards? ● What about reserve accounts: Does the association have statutory

reserves or non-statutory reserves? Does the board know the difference?

● Does the budget contain the appropriate disclosures? ● Board members have to contend with year-end financial reporting

requirements as well. Does the association need an audit? ● Are there enough funds in the budget to pay for an audit? ● How can financial reports be produced in a timely manner? ● How are the financial reports distributed?

Investing fundsFlorida law does not dictate the types of investments that the association’s board may select; however, members must remember their main obligation as elected board members is that of their fiduciary duty.

This requires careful analysis guided by professionals who are providing financial advice in the best interest of the association. The board must select investments after weighing the risks, not just the potential returns.

One important factor is reducing risk by following limits on deposits that are insured through the federal government. This can be done by staying within those limits and by using several different banks when investing association’s funds for operating and reserve funds. Keeping the two types of funds separate will diminish the chance that the board may comingle funds, or may use the funds that are allocated for specific uses only.

Funds for operations receive assessments that are often collected on a monthly basis. These funds must be easily assessable and liquid. Accounts for reserve funds for deferred and long-term projects will have higher balances, may have less liquidity, and are accessed less frequently. Section 718.111(14), F.S., allows associations to commingling operating and reserve for investment purposes only.

718.111(14): Commingling. All funds collected by an association shall be maintained separately in the association’s name. For investment purposes only, reserve

funds may be commingled with operating funds of the association. Commingled operating and reserve funds shall be accounted for separately, and a commingled account shall not, at any time, be less than the amount identified as reserve funds. This subsection does not prohibit a multi-condominium association from commingling the operating funds of separate condominiums or the reserve funds of separate condominiums. Furthermore, for investment purposes only, a multi-condominium association may commingle the operating funds of separate condominiums with the reserve funds of separate condominiums. A manager or business entity required to be licensed or registered under s. 468.432, or an agent, employee, officer, or director of an association, shall not commingle any association funds with his or her funds or with the funds of any other condominium association or the funds of a community association as defined in s. 468.431.

Investment purposes indicate that the board has the expectation that there will be a return, or a gain, from the investment. The board is not required to use a bank for investments, but must select an investment that best meets the association’s needs and limits its risk.

The board should develop a written policy to structure the investment process and to build accountability.

This investment policy, like all aspects of the budget and financial management process, must follow the statutory guidelines and should frequently be reviewed and adjusted for market changes.

ConclusionThe Florida Statutes are reviewed annually, so the board must check for revisions to the law after each legislative session. The Statutes and the Administrative Code must be reviewed and compared to the association’s documents and bylaws to ensure that all provisions for preparing the budget are met.

Every association has different income and expenses; no two budgets will be alike. It is important to identify any trends in expenses and income by reviewing previous budgets to inform decisions moving forward. In addition to this information, a thorough review and inventory of the components and systems throughout the property should be completed annually, at least. This process includes determining recurring and non-recurring expenses.

Consult contractors, engineers, or other professionals to assist in determining the condition and useful life of components to plan for deferred maintenance and capital expenditures, as well as to prepare the reserve schedule and funding estimates for the future.

Insurance is a major expense and requires careful planning with the assistance of a licensed agent that specializes in the insurance needs for the specific type of association. Plans must also be developed to cover funds for insurance deductibles.

Communication with owners is mandated by the Statutes, and includes timely meeting notices, access to records, proposed budgets, budget adoption, reserve waivers, and voting requirements. The association’s bylaws may add provisions that the board must follow, as well.


Always consult legal counsel if the board is unsure about its role or the information in the association’s bylaws or state law.

Above all else, the elected board has a fiduciary duty to the association and must act in the association’s best interest and avoid conflicts of

interest. Managing association funds through a comprehensive budget as well as adopting and implementing sound investment policies are part of the board’s legally-mandated fiduciary obligation.

References � Accounting Coach. (2017). What is a Capital Expenditure Versus a Revenue Expenditure? Retrieved

June 4, 2017 from https://www.accountingcoach.com/blog/capital-expenditure-revenue-expenditure � Business Dictionary. (2017). What is Non-Recurring Cost? Definition and Meaning. Retrieved June

5, 2017 from http://www.businessdictionary.com/definition/non-recurring-cost.html � Flanagan, J. & Childers, A. (2014). Budgeting and the Bottom Line: Reviewing Your Association’s

Budget. Retrieved June 4, 2017 from Http://Flcooperator.Com/Article/Budgeting-And-The-Bottom-Line

� Danforth, K. (2017). Financial Fitness for Tomorrow, Part Two. Retrieved June 6, 2017 from http://www.fcapgroup.com/flcaj/flcaj-articles/financial-fitness-tomorrow-part-two/

� Florida Administrative Code. (2006). Budgets. Retrieved June 5, 2017 from https://www.flrules.org/gateway/RuleNo.asp?ID=61B-22.003

� Florida Department of Business and Professional Regulation. (2010). Division of Florida Condominiums, Timeshares, and Mobile Homes: Budgets & Reserve Schedules a Self-Study Training Manual. Retrieved June 6, 2017 from http://www.myfloridalicense.com/dbpr/lsc/documents/BudgetsandReserves.Master06092010.pdf

� Florida Department of State. (2016). Florida Administrative Code 61B-22.001: Definitions. Retrieved June 6, 2017 from https://www.flrules.org/gateway/RuleNo.asp?ID=61B-22.001

� Investopedia. (2017). Operating Expense. Retrieved June 6, 2017 from http://www.investopedia.com/terms/o/operating_expense.asp#ixzz4jXRSkjN

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� Rodriquez, M. (2014). In Childers, A. Budgeting and the Bottom Line: Reviewing Your Association’s Budget. Retrieved June 4, 2017 from Http://Flcooperator.Com/Article/Budgeting-And-The-Bottom-Line

� Spectrum Association Management. (2017). HOA Budgeting 101: How to Budget for Your HOA Community. Retrieved June 5, 2017 from https://spectrumam.com/hoa-budgeting-101-how-to-budget-for-your-hoa-community

� Tully-Davis, E.S. (2014). In Childers A. Budgeting and the Bottom Line: Reviewing Your Association’s Budget. Retrieved June 4, 2017 from http://Flcooperator.Com/Article/Budgeting-And-The-Bottom-Line

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BUDGET AND FINANCIAL PLANNING FOR COMMUNITY ASSOCIATION MANAGEMENTFinal Examination Questions


11. Capital expenditure is an amount spent to acquire or improve all equipment or buildings component every six months.

¨ True ¨ False

12. Reserves are any funds, other than operating funds, that are restricted for deferred maintenance and capital expenditures.

¨ True ¨ False

13. Reserve accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing - regardless of the amount of deferred maintenance expense or replacement cost - as well as any other item that has a deferred maintenance expense or replacement cost that exceeds $20,000.

¨ True ¨ False

14. Regarding budget meetings, the board shall deliver to each unit owner, at least 14 days prior to the meeting a notice of the meeting, a copy of the proposed annual budget, by mail to each unit owner (at the address last furnished to the association by the unit owner), or electronically transmitted to the location furnished by the unit owner for that purpose.

¨ True ¨ False

15. If a board adopts an annual budget with assessments against unit owners that exceed 115 percent of assessments for the preceding fiscal year, the board has the fiduciary duty to conduct a special meeting with unit owners to refund the money to them.

¨ True ¨ False

16. The allocation for operating expenses on each line item is restricted to the estimate. The board cannot use funds from one item for another purpose.

¨ True ¨ False

17. The Florida Administrative Code requires that deficits must be corrected in the budget year, as well as funding the replacement cost over the life of the component.

¨ True ¨ False

18. Insurance coverage is sufficient to cover an amount equal to the probable maximum loss for the communities for a 100-year windstorm event.

¨ True ¨ False

19. If the association plans to file an 1120-H tax return, the owners’ vote is not needed to move the surplus funds.

¨ True ¨ False

20. Regarding financial reporting, within 90 days after the end of the fiscal year (or annually on the date provided in the bylaws) the association shall prepare and complete, or contract with a third party for the preparation and completion, a financial report for the preceding fiscal year.

¨ True ¨ False

CAMFL04BFE18


Chapter 3: Effective Community Association Boards: Addressing Conflict and Liability

4 CE Hours

By: Deborah Convers, MA, NBCT

Learning objectives ● Identify the roles of the community association board members, as

governed by the Florida Statutes. ● Define and discuss the fiduciary duty of the board. ● Identify five rules of conduct that could improve board interaction. ● Select three common problems related to board participation;

explain strategies to address these problems. ● Identify and explain the four common personality types that cause

conflict on boards. ● Explain four strategies to develop and maintain a cohesive board.

● Define the remedies to apply, as identified in the Florida Statutes, if a board member must be recalled.

● Identify steps to prevent and manage anger in board meetings. ● Explain strategies to manage a domineering or bullying board

member. ● List information from the Florida Statutes related to conflicts of

interest by board members. ● Identify four ways that the CAM can assist the board to achieve

more effective meetings.

OverviewThis course will review common problems that occur among board members that can erode their ability to effectively fulfill their duties to the community association owners. Community Association Managers (CAMs) also experience conflicts with board members during the course of their management duty. Common problems will be addressed and strategies for remediation will be discussed to help build a cohesive and productive board.

The Florida Statutes will be reviewed concerning the duty of the board, meeting rules, fiduciary duty, and procedures for removing or recalling board members.

Strategies for addressing personality types, building effective communication, managing conflicts during meetings, as well as dealing with bullies on the board will be covered.

IntroductionA quick review of community association management literature shows an abundance of articles written to assist CAMs with conflict management. In addition to communication problems, articles include topics about boards that experience conflicts of interest and difficulties reaching consensuses, as well as those whose board members lack knowledge about content and procedure. Common topics also include intimidation, bullying, apathy, and personality clashes.

These issues have no “one size fits all” remedy. Additionally, these issues may include factors regarding the education and training on the roles of the board, association documents and statutes, as well as skills for working as a team which are necessary for all effective association boards. Most board members have little experience or knowledge to prepare them for the important work and leadership roles that they assume as newly-elected officers.

The CAM will need to have an effective working relationship with the board; the board must govern according to the association documents and the Florida Statutes.

Hopefully, the board will have the best interest of the association as its primary goal. With assistance, education, patience, effective communication, and experience, even the most challenging board can work together effectively for the good of the association.

It is in the CAM’s best interest to develop skills to assist the board in working effectively as a team when conducting association work and communicating with other board members and owners. If the CAM can effectively use skills to diffuse and redirect negative board members, the board’s function will improve, owners will benefit, and the CAM can increase his/her productivity.

Consider this scenario handled by one CAM:One board member was angered by a comment made by an owner during a condominium association’s owners meeting. He got up from the table, faced the audience, and angrily berated the group as he paced back and forth.

The manager responded by joining the board members at the table in the front of the room and began a discussion on the agenda item in a low voice. The other members continued their discussion keeping their voices low, as well; the board member continued to pace and argue with the owner.

A few minutes later one of the other owners told the ranting board member, “Sit down! You are blocking the view and I can’t hear the discussion.” The board member stomped out of the room. The audience was relieved he was gone and the meeting continued uninterrupted.

In this way, the CAM de-escalated the problem in a few minutes by diverting the attention away from the angry board member and the meeting was able to continue.

CAMs, staff, and association boards will inevitably encounter angry board members; knowing how to defuse these situations and how to prevent them from occurring should be part of the training for all CAMs and board members.

In some cases that cannot be resolved, legal counsel may be warranted. Or, in a worst-case scenario, a board member may be asked to relinquish his/her position or may even be recalled according to procedures in the statutes.


Causes of anger and conflict on the boardSome mental health researchers and professionals have noted that there is a decline in civil behavior, as well as a rise in expressions of tension and anger throughout the country.

As co-founder of the Civility Project, Pier Massimo Forni of Johns Hopkins University studied this topic. Forni believes that the prevalence of angry outbursts, rudeness, and lack of behavior control in public today can be attributed, in part, to post-Baby Boomers’ overdeveloped sense of entitlement and a sense of detachment due to the increasing dependence on electronic communication and mass media. Forni notes (Forni, 2012):

“The Internet has depersonalized our relationships,” says Forni. “We email, instant-message and make anonymous comments online. We react quickly and don’t censor ourselves. We live in a time when anyone can say anything about anybody. The shrillest voices are the ones that get the most attention. We shout our opinions because the media seems to tell us that’s the way to be heard. Pundits screaming at one another. This is part of our everyday life. We see this as normal and acceptable.

Because Florida has a large population of retirees who fall into the Baby Boomer category, this issue is particularly relevant to community association issues in the Sunshine State.

Another factor in the prevalence of anger is the recent shake up in the economy and real estate market that caused financial problems for many individuals on a fixed income. These circumstances compound stress, fear, and frustration that may lead to angry outbursts.

Florida attorney, author, and instructor, Ellen Hirsch de Haan, assists community associations in developing strategies to deal with difficult individuals. In response to the decline in civility, Hirsch de Haan (2002) confirms:

This has been a gradually growing trend. When I started doing meetings, I would have one bad meeting a year. Now, I’d say if I have one good one, it’s nice. There is a very definite drop in civility. People feel comfortable being unspeakably rude to total strangers. You see it at the supermarket. You see it on the road. You saw it in the town meetings on health care. And while it may not be the primary cause of rudeness, the economy has exacerbated matters.

Hirsch de Haan explains further (2002):In a condominium setting, we may be dealing with some people who feel they have no identity since their retirement from the job by which they had defined themselves for so many years. We may be dealing with a lonely person who has been angry or fearful all of their lives and have become more so with age. Showing empathy and patience may go a long way to defuse the situation.

Social psychologist Jasmine Martirossian, Ph.D. (2003) agrees that the economy is a factor in the prevalence of angry outbursts among association members:

A lot of the tension is related to the economic cycle, a lot of people are unable to meet their monthly obligations. How associations handle the situation can be a big deal. Bringing a modicum of humanity brings a world of difference. I don’t think anybody moves into a condominium association with the express desire to be bad. No one’s trying to be a horrible board member or a horrible neighbor.

Martirossian identified other factors that influence angry outbursts during board meetings. These include the reality that many volunteer board members normally do not have the training, education, preparation, or experience in business, governance, or community association backgrounds when they are elected (Martirossian, 2003). They may have no background in communicating with - or serving on - committees that must reach a decision for consensus, let alone how to deal with anger on the board.

The newly-elected board member must become familiar with community association documents. These documents may have been written years before and need to be updated. Additionally, s/he must understand the Florida Statutes and Administrative Codes governing their type of association which are updated every year.

The board must be prepared to handle issues concerning personnel, insurance, maintenance, construction, budgeting, finances, reserves, assessments, document enforcement, health and safety code regulations, owner disputes and complaints, and vendor contracts.

Taking on these complex tasks can be overwhelming and frightening. When negative personalities and politics are added into association boards, it is no wonder that tensions spill over into anger for the unprepared board.

In other cases, the board member’s background may be a high-level business environment where the individual enjoyed a position of power in a successful for-profit corporation.

Serving on a community association board is a dramatic change in the job description and role for this person who accepts an office on an association board. This phenomenon can lead to the problem of the “rogue” board member. Paul Patti, a management corporation president, notes:

This is not your father’s board. The management business has become much more sophisticated. Two decades ago, a property manager did the financials, and they did what they called a walk-through or drive-through of the property, and that was all that was expected. We’re now in a situation where a lot of our board members are a lot more sophisticated. A lot of them are CEOs or ex-CEOs of companies, which in many cases is a positive thing, but it can become very difficult because they can become a little dictatorial (Patti, 2014).

These individuals may be used to having total authority or having the final - and most important - vote. They may even have been the primary decision maker, which runs counter to their role on a community association board. This change in roles may be frustrating and it will take time for them to learn how to share power in the group process.

Hidden agendasAnother cause of the “rogue board member” problem concerns an individual’s motivations for joining the board in the first place (Olear, 2014). Association owners may be disgruntled and decide to run for a board position to change an issue in their favor - such as banning pets, changing social room rules, or hoping to add certain amenities. Tim O’Keefe, president of a South Florida management firm, adds:

Often, people get on boards because they have certain agenda items they want to take care of, or feel are important to the board, or to them personally. And it’s like anything else in life: how do you get along with others and how do you work well with others? And not everybody is good at doing that. Board members are typically leaders in something that they’ve done in life and they like to do things certain ways. And if they believe they have better ideas for their community, and they have a bigger personality than other board members, then they might try to impose their opinions on the others. A lot of it depends on what their personality type is. There are strong-willed people, and not everybody is great at compromising (O’Keefe, 2014).

Although board members bring different background experiences, education, and personalities to their roles, it is impossible to be totally prepared for this role. These volunteers (who receive no reimbursement) need commitment to the association process and to their fiduciary duty to owners. Problems occur if strong, and sometimes aggressive, personalities take control and begin to make decisions on their own, or if members band into small factions in


an attempt to take control. When this happens, the board process is broken and it will be impossible to uphold their fiduciary duty to the association of owners.

Every available step should be taken to ensure the board process is effective for the safety, security, and well-being of the owners and to protect the value of their property.

Other factors in board conflictsThe lack of structured procedures, rules of order, or board actions which are counter to the mandates of the Florida Statutes and Administrative Code (2013) will cause major disruptions within the board, as well as within the association at large. This can even lead to personal liability under the law. The board and CAM have a fiduciary responsibility to act in accordance with the association documents, Florida law, good faith, and in the best interest of the owners.

THE 2016 FLORIDA STATUTESThe Florida Statutes govern board duties and meeting structure, as well actions that breach the fiduciary duty of the board. It is important to understand the legal guidelines that govern board behavior to identify

when board members are violating the law and when corrections must be made.

The 2016 Florida Statutes Title XL Real and Personal Property: Chapter 720 Homeowner’s Associations720.303 Association powers and duties; meetings of board; official records; budgets; financial reporting; association funds; recalls.

1. Powers and duties. An association which operates a community as defined in s. 720.301, must be operated by an association that is a Florida corporation. After October 1, 1995, the association must be incorporated and the initial governing documents must be recorded in the official records of the county in which the community is located. An association may operate more than one community. The officers and directors of an association have a fiduciary relationship to the members who are served by the association. The powers and duties of an association include those set forth in this chapter and, except as expressly limited or restricted in this chapter, those set forth in the governing documents. After control of the association is obtained by members other than the developer, the association may institute, maintain, settle, or appeal actions or hearings in its name on behalf of all members concerning matters of common interest to the members, including, but not limited to, the common areas; roof or structural components of a building, or other improvements for which the association is responsible; mechanical, electrical, or plumbing elements serving an improvement or building for which the association is responsible; representations of the developer pertaining to any existing or proposed commonly used facility; and protesting ad valorem taxes on commonly used facilities. The association may defend actions in eminent domain or bring inverse condemnation actions. Before commencing litigation against any party in the name of the association involving amounts in controversy in excess of $100,000, the association must obtain the affirmative approval of a majority of the voting interests at a meeting of the membership at which a quorum has been attained. This subsection does not limit any statutory or common-law right of any individual member or class of members to bring any action without participation by the association. A member does not have authority to act for the association by virtue of being a member. An association may have more than one class of members and may issue membership certificates. An association of 15 or fewer parcel owners may enforce only the requirements of those deed restrictions established prior to the purchase of each parcel upon an affected parcel owner or owners.

2. Board meetings.a. A meeting of the board of directors of an association occurs

whenever a quorum of the board gathers to conduct association business. Meetings of the board must be open to all members, except for meetings between the board and its attorney with respect to proposed or pending litigation where the contents of the discussion would otherwise be governed by the attorney-client privilege. A meeting of the board must be held at a location that is accessible to a physically handicapped person if requested by a physically handicapped person who has a

right to attend the meeting. The provisions of this subsection shall also apply to the meetings of any committee or other similar body when a final decision will be made regarding the expenditure of association funds and to meetings of any body vested with the power to approve or disapprove architectural decisions with respect to a specific parcel of residential property owned by a member of the community.

b. Members have the right to attend all meetings of the board. The right to attend such meetings includes the right to speak at such meetings with reference to all designated items. The association may adopt written reasonable rules expanding the right of members to speak and governing the frequency, duration, and other manner of member statements, which rules must be consistent with this paragraph and may include a sign-up sheet for members wishing to speak. Notwithstanding any other law, meetings between the board or a committee and the association’s attorney to discuss proposed or pending litigation or meetings of the board held for the purpose of discussing personnel matters are not required to be open to the members other than directors.

c. The bylaws shall provide for giving notice to parcel owners and members of all board meetings and, if they do not do so, shall be deemed to provide the following:1. Notices of all board meetings must be posted in a

conspicuous place in the community at least 48 hours in advance of a meeting, except in an emergency. In the alternative, if notice is not posted in a conspicuous place in the community, notice of each board meeting must be mailed or delivered to each member at least 7 days before the meeting, except in an emergency.

Notwithstanding this general notice requirement, for communities with more than 100 members, the bylaws may provide for a reasonable alternative to posting or mailing of notice for each board meeting, including publication of notice, provision of a schedule of board meetings, or the conspicuous posting and repeated broadcasting of the notice on a closed-circuit cable television system serving the homeowners’ association. However, if broadcast notice is used in lieu of a notice posted physically in the community, the notice must be broadcast at least four times every broadcast hour of each day that a posted notice is otherwise required. When broadcast notice is provided, the notice and agenda must be broadcast in a manner and for a sufficient continuous length of time so as to allow an average reader to observe the notice and read and comprehend the entire content of the notice and the agenda. The association may provide notice by electronic transmission in a manner authorized by law for meetings of the board of directors, committee


meetings requiring notice under this section, and annual and special meetings of the members; however, a member must consent in writing to receiving notice by electronic transmission.

2. An assessment may not be levied at a board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature of the assessments. Written notice of any meeting at which special assessments will be considered or at which amendments to rules regarding parcel use will be considered must be mailed, delivered, or electronically transmitted to the members and parcel owners and posted conspicuously on the property or broadcast on closed-circuit cable television not less than 14 days before the meeting.

3. Directors may not vote by proxy or by secret ballot at board meetings, except that secret ballots may be used in the election of officers. This subsection also applies to the meetings of any committee or other similar body, when a final decision will be made regarding the expenditure of association funds, and to any body vested with the power to approve or disapprove architectural decisions with respect to a specific parcel of residential property owned by a member of the community.

d. If 20 percent of the total voting interests petition the board to address an item of business, the board shall at its next regular board meeting or at a special meeting of the board, but not later than 60 days after the receipt of the petition, take the petitioned item up on an agenda. The board shall give all members notice of the meeting at which the petitioned item shall be addressed in accordance with the 14-day notice requirement pursuant to subparagraph (c)2. Each member shall have the right to speak for at least 3 minutes on each matter placed on the agenda by petition, provided that the member signs the sign-up sheet, if one is provided, or submits a written request to speak prior to the meeting. Other than addressing the petitioned item at the meeting, the board is not obligated to take any other action requested by the petition.

Conflict of interest by board membersIt is critical that the board act strictly on the behalf of owners and avoid conflicts of interest.

Conflicts of interest may occur, but may not always indicate misconduct or corruption if they are disclosed according to the procedures in the Florida Statutes for condominium associations and homeowners associations (Wahl, 2015). For example, a board member or his/her relative owns a painting company and submits a bid to the board. There are procedures to follow that can legally allow a contract to be written for the painting services, even if the board member has a financial interest, according to the following statutes.

Title XL: Real and Personal Property: Chapter 718 Condominiums718.3026: Contracts for products and services; in writing; bids; exceptions.

3. As to any contract or other transaction between an association and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested:a. The association shall comply with the requirements of s.

617.0832.b. The disclosures required by s. 617.0832 shall be entered into

the written minutes of the meeting.c. Approval of the contract or other transaction shall require an

affirmative vote of two-thirds of the directors present.

d. At the next regular or special meeting of the members, the existence of the contract or other transaction shall be disclosed to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. Should the members cancel the contract, the association shall only be liable for the reasonable value of goods and services provided up to the time of cancellation and shall not be liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.

This statute applies to the HOA case of conflict of interest:

For HOAs, the corresponding statute is Section 720.3033(2)(a)-(d), Florida Statutes.

Title XL: Real and Personal Property: Chapter 720 Homeowner’s association2. If the association enters into a contract or other transaction with

any of its directors or a corporation, firm, association that is not an affiliated homeowners’ association, or other entity in which an association director is also a director or officer or is financially interested, the board must:a. Comply with the requirements of s. 617.0832.b. Enter the disclosures required by s. 617.0832 into the written

minutes of the meeting.c. Approve the contract or other transaction by an affirmative

vote of two-thirds of the directors present.d. At the next regular or special meeting of the members,

disclose the existence of the contract or other transaction to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other penalty for such cancellation.

3. An officer, director, or manager may not solicit, offer to accept, or accept any good or service of value for which consideration

has not been provided for his or her benefit or for the benefit of a member of his or her immediate family from any person providing or proposing to provide goods or services to the association. If the board finds that an officer or director has violated this subsection, the board shall immediately remove the officer or director from office. The vacancy shall be filled according to law until the end of the director’s term of office. However, an officer, director, or manager may accept food to be consumed at a business meeting with a value of less than $25 per individual or a service or good received in connection with trade fairs or education programs.

4. A director or officer charged by information or indictment with a felony theft or embezzlement offense involving the association’s funds or property is removed from office. The board shall fill the vacancy according to general law until the end of the period of the suspension or the end of the director’s term of office, whichever occurs first. However, if the charges are resolved without a finding of guilt or without acceptance of a plea of guilty or nolo contendere, the director or officer shall be reinstated for any remainder of his or her term of office. A member who has such criminal charges pending may not be appointed or elected to a position as a director or officer.


5. The association shall maintain insurance or a fidelity bond for all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this subsection, the term “persons who control or disburse funds of the association” includes, but is not limited to, persons authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost

of any insurance or bond. If annually approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive the requirement of obtaining an insurance policy or fidelity bond for all persons who control or disburse funds of the association.

Since community associations, according to Florida law are nonprofit corporations, the requirements and procedures in the Florida Not For Profit Act must be followed (Wahl, 2015).

Title XXXVI: Business Organizations: Chapter 617Corporations not for profit.617.0832 Director conflicts of interest.1. No contract or other transaction between a corporation and one or

more of its directors or any other corporation, firm, association, or entity in which one or more of its directors are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest, because such director or directors are present at the meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction, or because his or her or their votes are counted for such purpose, if:a. The fact of such relationship or interest is disclosed or known

to the board of directors or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors;

b. The fact of such relationship or interest is disclosed or known to the members entitled to vote on such contract or transaction, if any, and they authorize, approve, or ratify it by vote or written consent; or

c. The contract or transaction is fair and reasonable as to the corporation at the time it is authorized by the board, a committee, or the members.

2. For purposes of paragraph (1)(a) only, a conflict-of-interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board of directors, or on the committee, who have no relationship or interest in the transaction described in subsection (1), but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors who have no relationship or interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director having a relationship or interest in the transaction does not affect the validity of any action taken under paragraph (1)(a) if the transaction is otherwise authorized, approved, or ratified as provided in subsection (1), but such presence or vote of such a director may be counted for purposes of determining whether the transaction is approved under other sections of this chapter.

3. For purposes of paragraph (1)(b), a conflict-of-interest transaction is authorized, approved, or ratified if it receives the vote of a majority in interest of the members entitled to vote under this subsection. A director who has a relationship or interest in the

transaction described in subsection (1) may not vote to determine whether to authorize, approve, or ratify a conflict-of-interest transaction under paragraph (1)(b). However, the vote of that director is counted in determining whether the transaction is approved under other sections of this chapter. A majority in interest of the members entitled to vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section. As used in this subsection, the term “majority in interest” refers to a majority of the voting shares or other voting units allotted to the members.

Of course, it is important to accurately record all steps that are taken to comply with the requirements and procedures of these statutes in the written minutes, as part of the association’s permanent record. Wahl (2015) advises the following to protect the board in these transactions:

The notice and agenda requirements for the related board and member meetings must be strictly followed as well or the actions taken at those meetings are invalid. As always, it is recommended that board members consult with their association attorney regarding any concerns they have related to the statutory requirements involving board member conflicts of interest.

A successful community association board of directors must understand their individual roles, the history of the association, and the goals for the future. The board must review local ordinances, state statutes, condominium documents, and any federal laws and resources that apply. The National Flood Insurance Plan, managed by the Federal Emergency Management Agency (2014), is one example of a federal resource important to Florida’s community associations.

Tasks undertaken by the board include budgeting, preventive maintenance, building reserves, and obtaining insurance coverage to protect the value of the property, as well as the safety and security of the owners, according to the Florida Statutes and association bylaws. Maintaining the common areas as well as maintaining the building’s structure and grounds are primary responsibilities - in addition to the financial responsibility of managing the business and successfully operating the association. This can be complicated by the geographic and climatic patterns in Florida that may include floodplains, sink holes, rising tides, and hurricanes, for example.

Ideally, each member of the board will complete their tasks to their fullest ability and work together as a team. The first step is to ensure that each board member understands the responsibility and importance of their role and is committed to their fiduciary responsibility to the association of owners.

A brief overview of board roles (HindmanSanchez, 2016) Officers of the associationEach association typically has a president, secretary, and treasurer and may have one or more vice-presidents.

President ● Vested with all the powers generally given to the chief executive

officer of a corporation. ● Presides at all meetings of the board and the membership.

● Executes contracts, orders, and other documents in the name of the association as its agent.

● Assumes general charge of the day-to-day administration of the association and has the authority to order specific actions in furtherance of the board’s policies.

● Serves as spokesman for the board of directors in matters relating to general association business.


● Serves at the will of the board of directors and can be removed with or without cause at any time by a majority of the full board.

Vice-president ● Is vested with all the powers that are required to perform the duties

of the association president in the absence of the president. ● Does not automatically possess inherent powers to act in the

capacity of the chief executive officer, and may act for the president only when the president is actually absent or otherwise unable to act.

● May assume such additional duties as are defined by the board of directors.

● Will often chair one or more substantive committees like that of architectural review.

Secretary ● Is responsible for keeping and maintaining a record of all meetings

of the board and the membership, and is the custodian for most of the official records of the association.

● Is not simply a clerical position. The secretary may not actually keep the minutes of the meetings, but will be responsible for obtaining someone who will do so as a recorder or assistant secretary.

● The secretary is responsible for ensuring access to those records by the members of the association and their authorized representatives.

A note on minutesTaking proper minutes is a critical part of any effective meeting. These minutes become the official and permanent record of the board’s work: They are admissible in court and may be reviewed to determine if the board acted according to the statutes and association documents. The board secretary must be competent to manage this duty and able to attend all the meetings. The CAM may assist in having the minutes typed; they should be carefully reviewed for accuracy. The minutes are the record of past business as well as future projects. Additionally, they inform the meeting agenda. They describe the agreed-upon duties to complete association projects, the assignment of specific tasks, as well as timelines for completion. They hold the board accountable and inform the association of their progress in achieving association goals.

The minutes become a permanent part of association’s documents and should record all of the board’s actions. Minutes may be reviewed by all association members and other authorized parties. Finally, they are especially important to document actions taken in disputes or conflicts that may arise, which means that they must be as thorough and as detailed as possible, without slowing the progress of the meeting.

Treasurer ● Manages funds, securities, and financial records of the association. ● When the association has a manager or management company that

actually handles the funds on a daily basis, the treasurer’s oversees the appropriate people to ensure that the financial records and reports are properly kept and maintained.

● Coordinates the development of the proposed annual budget and prepares and provides the annual financial report on the financial status of the association, unless the bylaws otherwise specify.

● Does not have the authority to bind the association or the board of directors in dealings with third parties, unless the board has provided express authority for the treasurer to do so.

● Does not have to perform the day-to-day record keeping functions of the association when this responsibility is transferred to a management company; however, ultimately ensures that the financial records of the association have been maintained properly in accordance with sound accounting practices.

The Florida Statutes Chapters 718, 720, and 673 detail the duties and prohibited practices for board members and should be viewed in their entirety.

Fiduciary responsibilityBoard conduct is rooted in the concept of fiduciary responsibility and good faith which is in the best interest of the association members/owners. This conduct is the driving force behind the prevention of liability. The board is entrusted by the owners to conduct association business in a way that protects the property and the financial interests of the association members and the lifestyle this affords them, in accordance with the Florida Statutes.

The Florida Statutes 720.3033 and 718.111 state that the board and officers have a fiduciary responsibility to the association’s members and unit owners. In a community association, unit owners invest their trust in board members by casting proxies and ballots in their favor at the annual meeting (Cholst, 1995).

Board members have the power to enact and enforce house rules that profoundly impact residents’ daily lives. In certain cases board members have the discretion to levy fines, withhold services, or deny access to building amenities, all of which confers upon them sweeping powers over shareholders and unit owners. Trust and confidence has been reposed on one side and there is a resulting superiority and influence on the other side. Board members are strictly prohibited from self-dealing to the detriment of their association and its constituent shareholders or unit owners. They are also required by law to treat their shareholders or unit owners with meticulous fairness and equality.

Breach of fiduciary responsibilityThe 2016 Florida Statute 673 defines a breach of fiduciary responsibility. Since 1972, courts have condemned three categories of misconduct. This misconduct includes (Cholst, 1995):

Use of the board position to derive profit or otherwise promote personal interest at the expense of the association of its constituent shareholders and unit owners; use of the board position as a forum for prosecuting personal vendettas against particular shareholders or unit owners; and manifestation of favoritism among shareholders or unit owners.

Florida Statutes: Chapter 673 Uniform commercial code: Negotiable instruments 673.3071 Notice of breach of fiduciary duty1. In this section, the term:

a. “Fiduciary” means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.

b. “Represented person” means the principal, beneficiary, partnership, corporation, or other person to whom the duty stated in paragraph (a) is owed.

2. If an instrument is taken from a fiduciary for payment or collection or for value, the taker has knowledge of the fiduciary status of the fiduciary, and the represented person makes a claim to the

instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:a. Notice of breach of fiduciary duty by the fiduciary is notice of

the claim of the represented person.b. In the case of an instrument payable to the represented person

or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is:1. Taken in payment of or as security for a debt known by the

taker to be the personal debt of the fiduciary;2. Taken in a transaction known by the taker to be for the

personal benefit of the fiduciary; or3. Deposited to an account other than an account of the

fiduciary, as such, or an account of the represented person.


c. If an instrument is issued by the represented person or the fiduciary, as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.

d. If an instrument is issued by the represented person or the fiduciary, as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is:1. Taken in payment of or as security for a debt known by the

taker to be the personal debt of the fiduciary;2. Taken in a transaction known by the taker to be for the

personal benefit of the fiduciary; or3. Deposited to an account other than an account of the

fiduciary, as such, or an account of the represented.

If the responsibility to fiduciary duty is not clear, board members should receive specialized training according to the statutes, using the resources in the next section.

Building a better boardThere are areas that can be addressed to ensure that the board works effectively as a team that prepares them to manage conflict to prevent negative interactions. These areas include: Effective education and training; understanding applicable background knowledge and history; being informed and prepared; fostering participation to effectively level playing fields; understanding the director and officer’s liability and fidelity bond protection, and; establishing appropriate rules of order and conduct.

Education and trainingOne way to build an effective board, based on conduct that follows the law, is through effective education and training. Each board has specific roles that are important to the success of the operation and maintenance of the association and owner’s property and financial investments. The board members must understand that they work as a team, and share the fiduciary responsibility and power. Each member has a vote; the law dictates how the board will carry out their duties.

Paul Patti (2014) emphasizes the importance in training new board members:

One of the most significant things we’ve done recently is to start holding classes for our board members where we describe the business. We’re working to get together some experts to hold a seminar for all of our board members to educate them on what it takes to do the job. It’s more than just coming out once a month and sitting there. When a new board member understands the details, and limitations, of their duties from the get-go, the potential to “go rogue” is significantly reduced.

There are a number of organizations that provide information, inform the board, and answer specific questions. Many law firms that specialize in community association law occasionally offer seminars, online articles, newsletters and blogs that provide a networking forum for CAMs and other professionals in the field. The State of Florida is part of a national organization called the Community Associations Institute that has eight chapters throughout the state. This organization conducts on-line training, webinars, and conferences, provides networking opportunities, and offers educational resources on a variety of association board issues.

Community association attorney Joe Adams (2004) recommends the book entitled, The Condominium Concept, written by Peter Dunbar (2015) to provide excellent information about educating a community Board.

Another resource is the online Community Association Network. This network is a compilation of articles on various topics concerning Florida community association issues.

Additionally, the publication “Florida Community Association Journal” is an excellent source of information for the board.

Finally, the Florida Department of Business and Professional Regulations has the Regulatory Council of Community Association Managers, which publishes legislative updates, information on Florida Statutes and Rules, and current topics of importance to community associations.

Most community associations retain law firms who specialize in their type of association and can provide training and information.

The associations above contain information on seminars, conferences, and events to provide training on topics for both boards and CAMs.

A program has been developed by Peyton Bolin, MBA, entitled Mastering the Business of Your Association (Bolin, 2016):

The program, which will officially launch in December, addresses why associations should view themselves as businesses and how adopting this perspective will benefit their communities. The customizable program is comprised of several learning modules addressing topics such as creating a mission, vision and values, defining board member goals and responsibility, how to transition new members and legal obligations and requirements for associates in the state of Florida.

Background knowledge and historyThe board may inherit problems that began during previous board sessions and were never resolved. Some owners carry on disputes for years and complain to the board, hoping that they will choose sides.

The board must have access to past document amendments, meeting minutes and notes, owner complaint forms, attempted solutions, and renovation histories going back three to five years.

Accurate and complete minutes must be kept to document all meetings to show actions and discussions; these minutes may help track past disputes and alleviate future problems.

Candice Gundel, a senior associate attorney, advises association boards about the importance of following bylaws and the Florida Statues to the letter. According to Gundel (2015):

The short-term risks of informality, corner-cutting and the like tend to be more geared toward inefficiencies in the day-to-day operation of the association, which can include the allocation of funds. Inefficiencies can snowball and cause significant additional work and money to an association over the years.

In addition, an association that does not follow correct protocol is exposing itself to litigation risk. An extreme example of this can be found in HOAs. The 2016 Marketable Record Title Act of the Florida Statutes, Chapter 712, requires that a HOA renew its governing documents every 30 years. If this renewal is ignored or performed improperly, the association’s declaration will no longer be enforceable and may virtually extinguish the association. The process to renew the governing documents is relatively simple and inexpensive on its face; however, if the documents are allowed to expire, the cost and process for reform would increase ten-fold in both difficulty and expense.

Staying informed; being preparedThere is little worse than attending a meeting as a board member and finding that important information was not provided to all board members and that the attendees appear to be unprepared. This has the potential to anger the board members and the owners, as well. The patterns of some association boards include one or two members that usurp the power of others, step outside of their roles, make decisions on their own, or gather information without informing other members. They may be the only ones willing to make decisions or get frustrated with the lack of motivation or speed by other members and believe they must take action.

Other members may follow a pattern of simply going along with the decisions of others in order to avoid conflict. This can occur due to intimidation or the feeling that they have nothing to contribute. Taking steps to ensure that all board members are prepared well in advance of


the meetings will encourage participation and avoid the embarrassment of unprepared board members who feel that they are unable to contribute.

Information packets to address all agenda items should be developed and given to all board members with adequate time for review. This will also allow time to seek clarification before the meeting so that decisions can be made during meetings, rather than tabling the issues for further consideration.

Knowing the agenda in advance and addressing all items will increase the efficiency of the board and keep off-topic discussions or comments by the board and/or the audience to a minimum.

Director and officer liability insurance and fidelity bond protectionIn order to participate fully without reservation, the board must have liability insurance protection. Liability insurance is required by the Florida Statues and should cover all volunteers that serve - that, if sued, can open them up to personal liability. The association board should consult a law firm that specializes in community associations to be sure that the documents are in accordance with the law and include clauses that ensure that the board is fully protected.

Director and officer liability insurance of at least a million dollars is standard; larger associations may want to carry larger amounts. A licensed insurance agent should be consulted to ensure that there are no exclusions or gaps in the policy. Umbrella policy provisions and individual insurance policies should also be reviewed to see how liability insurance pertains to volunteer activities as an unpaid board member (Adams, 2004).

It is important that board members understand that certain types of malicious, intentional, or fraudulent actions which violate statutes or bylaws and may result in legal action might fall outside the limits of coverage. Board members must be educated on this coverage and remember that all actions should reflect their fiduciary duty under the law, as well as discern the types of conduct that can lead to personal liability.

Foster participation, level the playing fieldAs discussed, the position on the board carries a fiduciary responsibility, according to the Florida Statutes. This means that members must fulfill their roles on the board and participate in the best interest of the owners. Open communication must be encouraged and all members should feel free to express their opinions and take risks to participate, without fear of ridicule or criticism. The board members must realize that they will not be able to please all owners, or each other. Some of their decisions may even anger some owners. Additionally, directors must understand that they are obligated to vote on every issue, unless there is a conflict of interest that requires them to abstain.

If there are board members who bully, ridicule, disrupt, or dominate other members or owners, this must be addressed and corrected. These behaviors will negatively affect the effectiveness of the board and have a damaging effect on the association. The board must also understand and accept that they share power equally and work to guard against special interests and unequal distribution of power and influence among board members. The board’s failure to fulfill their fiduciary responsibility can result in legal action by the owners, including personal liability.

This course will address the “bully on the board” in subsequent sections.

Establishing rules of order and conductAssociations are urged to follow Robert’s Rules of Order (2005) and receive training on this parliamentary procedure to provide structure to effectively establish an orderly flow to their meetings.

Beyond Robert’s Rules of Order, however, the board should establish ground rules for conduct. Adherence to the rules of order can help to

ensure that all board members and owners will participate: It provides the structure that levels the playing fields and may encourage weaker members to engage, as well as prevent stronger personalities from dominating the meeting (Russell, 2007).

Jim Slaughter (2016), association attorney and former president of the American College of Parliamentary Lawyers, explains:

The problem of overzealous leaders isn’t confined to homeowners associations. The most recent edition of Robert’s Rules of Order (2005) features a section entitled “The Problem Chair” and notes that there are procedures for “handling an out-of-control presiding officer” on any board. Robert’s says that a board member may raise a “point of order” in response to an apparently improper action by the meeting chair. In homeowners associations, the president acts as the chair. If the chair ignores a point of order, the board member who raised it has the right to demand a vote and to appeal certain actions (Slaughter, 2016).

P.M Forni (2012) offers the following twenty five rules for considerate conduct that can be extended to owners during association meetings. Although these rules may seem simple, think of negative board interactions from the past: Was the offending action the result of not demonstrating one of these following rules? These simple statements are easily understood and are universally accepted as appropriate conduct.

“The 25 Rules of Considerate Conduct”1. Pay attention. 2. Acknowledge others. 3. Think the best. 4. Listen. 5. Be inclusive. 6. Speak kindly. 7. Don’t speak ill. 8. Accept and give praise.9. Respect even a subtle “no.” 10. Respect others’ opinions.11. Mind your body language.12. Be agreeable.13. Keep it down (and rediscover silence). 14. Respect other people’s time. 15. Respect other people’s space. 16. Apologize earnestly and thoughtfully. 17. Assert yourself. 18. Avoid personal questions. 19. Care for other feelings (empathy). 20. Show patience.21. Think twice before asking for favors. (Is it in the best interest of

the association or does it border on a conflict of interest?) 22. Refrain from idle complaints. 23. Give constructive criticism. 24. Respect the environment. 25. Don’t shift responsibility and blame from choosing civility.

To set the tone for conduct, these rules may even be used as part of the training for a new board. Most professional meetings usually set ground rules for members and have no more than five rules that are posted for all to see. The board may want to compose five rules to post that will address the unique needs of their board and association members.

Dealing with difficult peopleAll the education, training, preparation, and planning cannot ensure that the CAM and board will not encounter members with negative personalities. It is no one’s job to try to change the behavior of these individuals; however, there are laws, rules, procedures and strategies to address them and keep the board moving forward to achieve association goals.


Working in community association management means working with a variety of people every day, all day - this includes many different personality types. The skilled CAM will learn about the board personalities and develop strategies to work effectively with them.

In Hirsch De Haan’s work with community boards, she identified six types of difficult people (Hirsch De Haan, 2002):1. Hostile/angry people

○ Are tyrants, verbally abusive, bullies, dictators, control by hate and fear, are confrontational, and may attack in front of an audience or “undercover.”

2. Pushy/presumptuous people ○ Come on strong, even if you are not the enemy. They often

barge in and try to take over.3. Shrewd/manipulative people

○ Imply consent and then blame others when the wrongful act backfires. They often have hidden agendas, tell half-truths, omit necessary facts, and may be so busy plotting and planning that they fail to carry out their tasks.

4. Rude/abrasive people ○ Rudeness develops into a vicious cycle and can be contagious.

Do not respond with rudeness. These individuals belittle with taunting wit or sarcasm to thinly veil their criticism. Their comments are personal attacks, particularly in front of other people. Interrupters may interfere with the board’s work, disrupt meetings, and waste time by getting the discussion off track. They do not let anyone finish their point.

5. Rigid/obstinate people ○ This may be a cover-up to mask fear, anger, or embarrassment.

These individuals do not listen and stick to their original ideas, holding to a course of action stubbornly and blindly. They are ruled by preconceived, unreasonable judgments made before they fully understand the situation. They do not care about the facts, are rigid, obstinate and inflexible, refuse to change, and seek to preserve the status quo, whatever the cost. They need help but are too proud or stubborn to ask.

6. Complaining/critical people ○ These individuals have no intention of fixing what is wrong

and relieve themselves of responsibility by making it the board or the CAM’s problem. Behaviors may be predictable, so plan ahead to deal with it. Pick battles carefully; not every issue is worth a fight. They control by making others feel guilty for their hurt feelings and shift the blame for their poor judgment or insecurity. The “nitpicker” finds fault with inconsequential matters and may be a hard worker who finds it difficult to delegate responsibility. The “wet blanket” throws cold water on any idea, convinced it will not work - even before exploring the possibilities. There is also the “martyr” who gripes about being overworked, but will not accept any help.

Think about the board members that may have exhibited these behaviors. It is important to identify their behavior patterns to better prepare strategies when addressing them. Understanding the behavior patterns can also improve the interactions and function of the board members and owners. Remember, it is in everyone’s best interest, and is legally required, to have an effective board that can fulfill its duties for the betterment of the community association.

There are strategies for dealing with these types of difficult people, although it can be challenging to stay above the fray and maintain composure. Hirsch de Haan (2010) provides the following advice:

● Keep problem people in perspective, do not to take their antics personally, and know that they treat everyone the same way. Figure out how to break free from their control. Remember that everyone has days when they are the difficult, too.

● Everyone has the choice to react positively or negatively. Concentrate on constructive and creative alternatives, not negative

feelings. Take time to cool off, vent emotions appropriately, let go of the hurt, and think about results that are possible to achieve. Be careful which approach to take and be ready to live with the consequences.

● Do not expect difficult people to change; they rarely do. Since their behavior is often predictable, plan ahead and choose a better approach to change the outcome of the next meeting.

● It is important to let them vent and express themselves. Listen and try to find some positive idea hidden in the message.

● Stay on course and continue the plan. Turn the discussion from personal attacks back to the issues. If interrupted, regain control by finishing the point. If the individual is a chronic interrupter, be straightforward: Explain that you cannot be interrupted due to deadlines, work to be done, or calls that must be returned, for example. Suggest a time that would be convenient for further discussion and encourage appointments of a specific time and duration.

● Learn to respond as well as to listen: No one is a mind reader. The offense may be unintentional and resolved - if faced and addressed together. Instead of making accusations, ask questions. Do not back people into corners in which they have little room to change their minds. Acknowledge good ideas, celebrate achievement, and be willing to change and incorporate new aspects into the plan.

● Deal with people directly and discretely. Choose to talk face-to-face, rather than in written communications or by relaying information through others. Personal disagreements should be handled quietly and privately; however, have another person as a “witness” to the conversation. Do not become the third point on a triangle involving a dispute between two other people. Offer to act as a mediator, or refer them to each other in order to work out the problem.

● Obtain written documentation for self-protection. Put agreements in writing. Keep the other person informed with periodic progress reports and send copies to all relevant people.

● Be straightforward and unemotional. Remain calm and always tell the truth to build trust. Maintain self-respect by refusing to continue a conversation with anyone who refuses to be courteous.

● Be prepared. Anticipate objections, obstructions, and questions. Have data and evidence ready to counter arguments. Stay optimistic and upbeat during presentations and discussions. Line up support from board members or owners. Do not be afraid to say, “Well, it might not work, but let’s try it anyway.”

● Redirect anger and try to relax and reflect. Step back, take a deep breath, regain composure, and channel energy into problem solving.

● Keep a sense of humor. ● Use questions to defuse anger and aggressive behavior or to give a

person time to cool down a little. ● Keep your word. Call back at the agreed time. If you do not have

the information yet, call back and let the person know why there is a delay, provide a progress report, and set a new response date.

● Be gracious. Someone else’s rudeness is not excuse to be rude in return.

Think about a recent example of a board member who behaved inappropriately. Which of the strategies above could have been used to improve the situation for a more effective outcome?

Strategies for the board or association meetingHirsh de Haan (2010) proposes these simple strategies. Not every strategy will be appropriate for every situation and they can be modified as needed.

Kitchen timersThis is a simple tool that can increase civility and give everyone the same amount of time to speak, after which the board can politely move on. A set time can prevent one person from monopolizing the meeting.


Remember, the Florida Statutes gives the members at least three minutes to speak. Check the association documents/bylaws for any specific time requirements.

Do not relinquish the microphoneIf there is a contentious group or a controversial topic to address, it may be wise to simply not give the audience a microphone; however, this does not mean depriving them of a voice. If they are allowed to write down their questions or concerns, a board member can read them to the group.

Follow rules of orderKeep the tone of meetings as formal and as polite as possible, running them in strict accordance with Robert’s Rules of Order (2005). If the board is not comfortable running a formal meeting, consider bringing in a professional to assist in training the board on these procedures.

Stay neutral and calm Board members must not allow themselves to be drawn into angry confrontations, no matter how tempting. If the board refuses to react to someone’s bad behavior, it is much easier to defuse a tense situation. “If somebody’s yelling and you speak quietly, it tends to calm them down,” said Hirsch de Haan (2002).

Stay on the agenda and keep the meeting going Andy Ashwal, the executive director of a property management & consulting firm in Florida, notes that the agenda is the key to keeping a meeting on track and constructive (Ashwal, 2015). Ashwal believes meetings should be held to one hour; anything beyond 90 minutes is too long. “Board members are volunteers, with their neighbors, for their neighbors, and spending time catching up is often the cause for a delayed start,” he said (Ashwal, 2015).

Ashwal suggests that CAMs provide advanced information on agenda items to help meetings progress smoothly and efficiently:

We attach related documents so they can catch up on the topics and let us know if they would like anything else included. The meetings run more efficiently when the board lets the property manager know if they want to discuss a new topic or one not included. We put a time frame on the agenda and set aside 5-10 minutes for new business.

Alan Pearlstein, a general manager at a nationwide management firm with offices throughout South Florida, agrees that personal comments, discussions, and time for socialization should occur at the end of the meeting and it is important not to put too many items in the agenda (Pearlstein, 2015). He suggests the following:

● Not keeping to the agenda and spending too much time on the minutes are common distractions.

● An overloaded agenda can bog down a meeting. ● Break meetings into segments with a board-only meeting

preceding an open meeting for the residents. ● Send out a board packet at least a week in advance of a meeting to

include: the agenda, minutes, financials, management reports and any proposals. Each proposal should have a spreadsheet analysis summary for comparison with at least two other proposals so the board can make quick, educated decisions.

● Use an approach that he calls a “hard stop time.” Clarify that time at the beginning of the meeting and refer back to it if the meeting veers off topic. For example, “I have a hard stop at 8:00 p.m. so

let’s get back to agenda item _______, and you can discuss_____ later.”

● If controversial or topics of conflict arise, table those discussions until later in the meeting, or relegate them to a future meeting. Stick to the agenda’s issues that must be addressed at the current meeting; confrontational items can possibly be discussed in another setting or at a future meeting.

Again, it is important to remember that the Florida Statutes allow three minutes for each association member in the audience to speak. This is when the timer might be applied to enforce the time limit.

Some associations can allow exceptions to this rule. However, some associations must follow that rule, and go a step further to post rules of conduct and guidelines to follow when speaking to the board. These rules should establish that negative comments will not be tolerated, and that statements and complaints not related to agenda items will not be allowed.

Some associations have a suggestion box for owners to report issues they see or experience, as well as complaints, new ideas, or comments which relate to association business or maintenance. This is an important part of risk management - especially if the reports concern potential safety risks. The board or CAM should address these promptly so that they can be repaired.

Other boards select both board and association members for dispute resolution committees to formerly address complaints and conflicts from owners. This can ease the workload of the CAM and the board, and allow for peers to review the merits of the issue before passing it on to the board and to the CAM.

No matter what, make sure business carries on as usual. “What you don’t want to do is adjourn the meeting,” says Hirsch de Haan (2010). By adjourning the meeting, “you have rewarded their bad behavior. They’ve won and they’ll do it again. Plus, you don’t get your business done, and that’s what you are there for to begin with.”

Some boards that are dealing with long-running and/or especially divisive issues have even gone so far as to hire outside security for meetings that they feel may become explosive - although this practice is extremely rare. “If you’ve got an extreme situation, you can hire an off-duty police officer or sheriff’s deputy,” advises Hirsch de Haan (2010). She goes on to explain that up until two years ago, she’d only had to hire outside security just three times in 25 years. However, “Last year, I had a sheriff’s deputy at five meetings,” she says, “and one time, he actually had to intervene.”

A word about behavior managementA final concept to note is that the person behaving badly may be reinforced by the attention and the power s/he feels when s/he can interrupt the meeting or cause angry reactions. If the individual does not get the reaction that reinforces the bad behavior, the behavior will eventually stop. Look for what is reinforcing the behavior - eliciting a reaction for example. Not reacting to it will remove the behavior’s reinforcement. People do things because they get something they want; if they do not get what they want, the behavior will cease over time. Normally, the behavior escalates when this strategy is first applied. However, if this strategy is used consistently it decreases the bad behavior.

Common problems among board members: The uneducated board memberOne common problem is the abuse of power by the board member who acts as a bully, makes decisions without consulting others, and generally ignores the law.

This can have extreme and negative consequences for association owners. It can also bring personal and/or legal liability suits against the board for mismanagement.

In some cases, the president may not understand his/her role or the law, and believes that s/he is acting in the best interest of the association. For example, the president may see a problem on a stairway to a building so s/he hires a company to fix the damage and pays them with association funds. Unfortunately, the president did not consult with the CAM or board before doing so, and did not follow the proper association documents and Florida Statutes procedures. This case shows the importance of required education and training.


720.3033: Officers and directors1a. Within 90 days after being elected or appointed to the board, each

director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of covenants, articles of incorporation, bylaws, and current written rules and policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. Within 90 days after being elected or appointed to the board, in lieu of such written certification, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved education provider within 1 year before or 90 days after the date of election or appointment.

b. The written certification or educational certificate is valid for the uninterrupted tenure of the director on the board. A director who does not timely file the written certification or educational certificate shall be suspended from the board until he or she complies with the requirement. The board may temporarily fill the vacancy during the period of suspension.

c. The association shall retain each director’s written certification or educational certificate for inspection by the members for 5 years after the director’s election. However, the failure to have the written certification or educational certificate on file does not affect the validity of any board action.

Additional personality types and strategiesSteven Weil, Ph.D., EA, LCAM, and president of a management firm in Fort Lauderdale, has worked with many dysfunctional boards - to the point that he has grouped them into categories according to personality types. These types will be summarized as follows (Weil, 2013):The Ghost

● Shows a complete lack of involvement or interest. When communication is sent to the board, it is never really known whether or not he actually got it because he never sends a response. No matter when a board meeting is scheduled, he’s never there. “We kind of think of those guys as the ones that wanted their name on the letterhead,” says Weil (2013). “It’s an issue when you’ve got a board that’s split, and the guy in the middle just doesn’t show up ever to break the tie.”

The Friendly ● While friendliness is always an added bonus, it shouldn’t get in

the way of making decisions. Explaining the inner thoughts of “The Friendly,” Weil says, “There’s the split board. We’re five members, and two on the left, two on the right, and one who wants to be everybody’s friend and hence never makes a decision with either side. ‘I’m friendly with everybody. I don’t want to *** anybody off. And I can see it from both sides, but because I’m not willing to take a side, a decision never happens.’ And we just go on discussing the same thing meeting after meeting until hell freezes over.”

The King ● With his or her god complex, as Weil explains, the “King”

maintains the belief that, “‘I’m the president, which makes me God, and I get to decide when the meetings are. I get to decide who speaks at the meetings.’” In many cases, these are people with strong personalities that, whether the rules are with them or against them, can run over everybody else in the room, including their fellow board members. Sometimes just their presence is intimidating - sometimes intended, sometimes not.

The Pleaser ● Compromise is essential in every relationship, boards included.

But there’s a limit. Trying to please everyone is a fruitless pursuit that will only limit decision-making. The “Pleaser” operates under the idea that, “Every time something comes up, ‘we should poll the

unit owners, we should see what the unit owners think. Let’s see if we can get everybody on our side before we do anything.’ That often means that you don’t get stuff done that needs to be done. Unit owners aren’t in the same position necessarily as a board member. They’re not required to take the time to learn all the facts that go with an issue, and to make the informed decision based on the material that board members are presented with.”

Dysfunctional boards can negatively impact the community they are supposed to be governing, Weil warns (2014):

“The dissension then flows outward from the board. If you’re going live in a condo, especially if you’re going to be on a board, you need to learn how to disagree without becoming disagreeable,” Weil says. “The trouble is, when you have a disagreeable board, where it’s name-calling, they’re just nonfunctional. That flows out to the community and everybody is gathering their troops. So, you now have a community that becomes dysfunctional because, not only is the board not getting stuff done, it just breeds this mistrust in the community, and nastiness in some instances.”

The Egocentric ● This person loves their title and the prestige it affords them within

the association, especially if s/he is the president. This individual puts his/her own interests and ego first and may break the rules if it is beneficial to him/her. The “Egocentric” may use parking or storage spaces that are not theirs, or may break the rules by renting their unit for a week, when three months is the minimum, for example.

This type of board member may also try to interact and win favor with the staff throughout the building to achieve his/her personal goals. The staff may feel anxious and pressured because it is being asked to do things that is outside of its responsibility to the owners. Staff members may fear that if they do not do what the board member demands (especially in the case of a bully), they may receive a poor evaluation or lose their jobs.

If the board member brags about the relationship or favors he/she has with the staff, it may cause issues with the CAM, other board members, owners, and other employees. This erodes authority of the CAM, disrupts the chain of command, and may cause serious problems for the employee and board member, particularly if this individual has violated the board processes, bylaws, and/or statutes - depending on the seriousness of the situation.

Patti (2014) notes:“Having a board member who is self-serving is detrimental to the entire process,” says Patti, a property manager. “There are times when you know it’s going to be a lost cause. Certain people have special attitudes, and a lot of the time those attitudes are about wanting personal favors. They want landscaping handled differently on their property. And sometimes you have to find a way of showing them that everybody is supposed to get equal treatment. A hard lesson for some board members is that the rules also apply to them. One board president had a late fee, and he told me that because of all the hours he put in on the board, he shouldn’t have to pay it,” Patti recalls. “So I told him to bring that up at the next board meeting, that anyone who was on the board shouldn’t have to pay a late fee. And then he understood, and he paid the fee.”

Of course, these actions do not reflect their compliance with the fiduciary duty and can lead to problems throughout the association.

These ego-involved members may derail meetings to monopolize the discussion or address their personal agendas.

Again, the offense will need to be addressed by the board with references to the association documents and the Florida Statutes. The board has an obligation to address these infractions and cannot ignore these issues - or be intimidated into apathy.


The Miserly There may be a board member who will never vote to spend money, even if the majority of the board understands that the expenditure is important for the benefit of the association. This member may exhibit the following characteristics:

● Holds to preconceived ideas and opinions. Is never open to discussion or change.

● Disregards the needs of the association: The goal is to NOT to spend funds.

● Disagreeable: Refuses to agree, especially if money is involved and will not listen to reason or evidence.

● Considers costs only: Will always take the lowest bid or cheapest way - even regarding safety issues.

● Lack business decision making skills. ● Rude and overbearing: Lacks courtesy and manners, interrupts,

will not listen to others. ● Apathetic: Withdraws if they do not get their way. ● Bullies: Tries to intimidate others and ridicule them. ● Avoids budgeting and planning for the future. ● Reactive instead of proactive: Does not believe in preventive

maintenance and wait until something breaks to fix it.

Strategies to deal with the “Miserly” memberThe following suggestions may help the board to work with this member (Hignell, 2015).

● Help the person understand the primary responsibility of the board: To protect, maintain, and enhance the asset, which is the homeowners association. Engage in a discussion about why s/he chose to be on the board and review their specific role with him/her.

● The CAM can step up and help board members understand the significance of an issue, deal with any difficulties, and get things done in the best interest of the homeowner’s association.

● Encourage this person to share his/her viewpoint and provide their rationale; however, have other board members ready to step up and move to accept whatever is being proposed so the meeting can progress.

● Communicate well: Do not get lost in emotions and personalities. Make sure there is a good leader in place – the board president (or manager, if there is one) needs to lead in the right direction.

● Provide training days - or even online training: Most people do not know about how to be a board member or about their fiduciary responsibility to the association.

● If the operating rules and expectations that were set and signed by all board members are being violated and a board member is committing gross negligence, then it’s possible this board member may be removed by following the Florida Statutes, as well as the association’s bylaws and documents.

The “Bully” board member who acts aloneThe previous sections have described difficult board members who show characteristics of bullies: They are aggressive, intimidating, and attempt to control others through ridicule - often instilling fear in other members to vote their way. Many articles and blogs have been written to address this behavior. In most cases, the strategies are focused on strengthening the other board members’ resolve to stand up to the bully, do what is best for the association, and focus on their fiduciary duty.

Strategies to handle the “Bully” or “Rogue” board member:A “Sergeant-at-Arms”Paul Patti (2014) advises his boards as follows:

When someone is troublesome, sometimes we suggest that one of the board members become a sergeant-at-arms, so he or she can speak up when someone is out of order. Someone who can act as the muscleman at the door who can stop the behavior before it gets out of hand.

Open communication with rules of orderJames Donnelly (2016), a property management CEO, suggests:

When matters get that out of control, one way to combat that situation is to be both more open, and more formal. I think most boards get along well, and because of this, they can get a little less formal in process than is usually allowed because they’re all agreeing and there’s no controversy. But when this is not the case, and when difficulties arise, the boards should stick strictly to protocol, including running the meeting by Robert’s Rules of Order (2005), and making sure no decision get made without the agreement of the board.

Get residents involvedAs previously mentioned, bullies and rogue members obtain their power by dominating and intimidating. Apathy among residents can contribute to the bully’s ability to get away with domineering and abusive behavior. Residents often do not participate in board meetings regularly and many owners reside out of town, which limits participation. Donnelly (2016) notes:

When people complain about a board of directors, I remind them that the owners voted them in, so, for the most part, there’s one chance per year to correct the problem. Most documents have a recall provision. Often, if you can get ten percent of owners to agree to recall a certain director, it then goes to the board for certification, and there’s a vote. Florida statutes are fairly expansive and do include language about recalls, as do almost all documents.

The nominating committee solutionOne way in the past to address the problem of negative personalities on the board was to keep them off the board in the first place. This was accomplished by establishing a nominating committee that can interview and screen potential board candidates - prior to putting them through as nominees.

This practice has now been prohibited by updates to the Florida Administrative code.

Additional optionAccording to Lisa Magill, Florida association attorney:

In Florida, the board of directors determines who serves as officers. If you have a president, treasurer, or other officers who are going rogue, you can always remove them from office. They’d be removed from office but still remain a director. So if they’re signing contracts or issuing purchase orders, they won’t have that authority (Magill, 2010).

Magill notes that stripping an officer of his title may not resolve the problem. She explains other possible courses of action:

That helps, but it doesn’t help all the way if the board member has relationships in the community and the ability to convince people he has authority. In Florida you can recall board members, but that requires action by the majority of membership. If you have a lot of absentee owners, it could be difficult. Generally the association has a specific list of vendors it deals with, she explains. If we have a problem with one board member taking unauthorized actions, I have the board adopt a resolution stating who’s authorized to act on behalf of the corporation and that no other board member has any authority to act on that issue. That resolution doesn’t have to be negative. You’re not saying, ‘John Jones isn’t authorized.’ You’re saying, ‘No one but this person has the authorization.’ Then I send that resolution to the vendors we deal with on a regular basis and tell them, ‘If John calls you, tell him you need to speak to Tom.’ That’s pretty harsh, but you have to control the conduct of your board because you’re going to be responsible, and the association is going to be responsible.

Attorney Kristen L. Rosenbeck addresses a strategy for board members who are discussing confidential association business in public:


If they’re out talking about for-board-ears-only matters, consider creating a confidentially agreement that puts their fiduciary duties and what’s required of them in writing. You’re essentially saying, ‘You’re a board member and have duties, and we’ll put those in writing so they’re not just a figment of the law.’ Some boards also ask their attorney to talk to the board about their duties and obligations. Sometimes having that professional role put in front of them is enough (Rosenbeck, 2009).

Attorney James R. McCormick, Jr. suggests the following advice to deal with the rogue board president:

You can isolate her, remove her from her president post, or make it impossible for her to be reelected. Start with a code of ethics. I tell boards, ‘I can draft a code of ethics that’s very comprehensive. Present it to the board and have the board vote on it.’ Either she’s going to say it’s a good idea and sign it, which means she’s agreeing to comply or voluntarily resign, and you have an agreement you can enforce (McCormick, 2015).

However, bullies often won’t sign. McCormick (2015) continues:“Then take this document and send a letter to the membership stating, ‘The board reviewed this code of ethics that will apply to all directors and all were asked to sign it. Four signed it, and Director Difficult didn’t,’” says McCormick. “Owners will look at it and say, ‘Why didn’t this director sign it? Why wouldn’t she sign it?’ That should be your first shot across the bow,” says McCormick. “If the behavior doesn’t stop, consider recalling the director and tie the refusal to sign the code of ethics into all the board member’s actions that violate your governing documents. Don’t slander anyone, but throw the issue to your owners by stating, ‘This person isn’t acting in the best interest of the

association, and we support the recall,’” says McCormick. “Or if the member is up for reelection, state, ‘Please don’t vote for this person because we believe she’s not acting in the best interest of the association.’”

Finally, the board must stand up to the bully and do what is best for the association. Rosenbeck (2009) advises boards in this situation as follows:

If you’re being pushed around, remember that you have just as much authority as the pusher. Most often, it’s the president doing this. My first response is, ‘The president is a board member like anybody else. Your vote is equal to the president’s vote.’ Board members really need to stand up and communicate and put that board member back into place.

Magill (2010) adds:Being a board member is sometimes very difficult. You have to make difficult decisions, levy assessments, and deal with confrontations with vendors, other board members, and owners. It’s difficult for board members to address powerful board members. But if you can get together and try to do things in a way that you’re not singling one person out, you’re in a little better position.

Hopefully, board members will feel confident through their knowledge and training to uphold the fiduciary duty as a board and work together as a cohesive team.

If there are not remedies under the law and association bylaws that can be applied in the worst-case scenario, then the CAM should be ready to assist the board and suggest that it contacts the association legal counsel, if unsure how to proceed.

The role of the CAMA dysfunctional board can lead to wasted time, delayed projects, and unhappy, apathetic, or disgruntled owners who cannot enjoy the property to its fullest. Worst-case scenarios include loss of property values due to delayed or incomplete maintenance and restoration projects as well as breach of fiduciary duty. They can also lead to loss due to inadequate insurance to cover property damage or liability, or litigation against the association, the board, and CAM due to violations of the Florida Statutes, bylaws, or federal laws with allegations of criminal behavior. Defending a lawsuit has financial ramifications that may affect all owners.

In order to assist the dysfunctional board, if asked, the CAM might attend meetings and serve as a temporary chair to run the meeting according to Robert’s Rules of Order(2005), making sure agenda items are covered, providing explanations on projects, assisting with planning, scheduling, and redirecting if conflicts arise.

Kirk Bliss, the president and CEO of a Florida management company, explains what management can do to help (Bliss, 2013):

If they’re a board that’s under a management company, what we do is bring them in and have board orientations and we sit down with the board and walk them through [topics such as] what’s the role of president? What’s the role of vice president? What’s the role of the secretary or treasurer? We’ll bring them up to speed as to the state statutes. You help them understand their documents. If they are self-managed, they can go the organizations like Community Association Institute (CAI) and there are a lot of places where they can go to get education (Bliss, 2013).

Because education and training are the foundations of an effective board, the lack of either can be the root of the dysfunction and should be addressed.

Weil (2013) provides one-on-one assistance if needed:

If somebody says, ‘We’re doing a concrete restoration project, and I really don’t understand what the heck we’re talking about’, great, why don’t you make an appointment and come into the office, and we’ll talk about it. If there’s somebody else, maybe we have to bring in an engineer or somebody that’s working on the project to go through, and do a one-on-one explanation because, the problem is that same person is not going to sit up in front of a group and say, ‘I got this contract, but I don’t understand a word of what’s going on here, or why we have to do this’ (Weil, 2013).

Sometimes the board will have to reach its lowest point where it realizes it cannot function due to personality conflicts, frustration, confusion, or lack of understanding of content and procedures. The board will hopefully seek assistance before the dysfunction causes serious consequences for the association. The CAM must be vigilant to assist and intervene before that point.

Sam Irlander, an association educator, underscores the idea that board members - not managers - should solve board problems. “If a problem persists, it’s up to the board to decide how to take care of it, not the manager,” he says (Irlander, 2007).

In extreme cases, the CAM or management may quit or be fired. Weil (2014) explains:

In the end, we work for the board of directors, that’s who hires us and that’s who fires us. So, we can try to lead them to calmer pastures. We can certainly offer to help out but when and where help is wanted, it’s great. It works well. They let us do it. But, in many cases, the sad thing is, sometimes as a manager, you have to walk away because the board is so dysfunctional that they, in effect, put your license at risk. If you, the board, who’s in charge, are not willing to make the changes necessary to become functional, we can’t put ourselves at risk by continuing to act as your manager, and we have to give you notice.


Removal and recallAssociation attorneys and association management professionals agree that the rogue, bully, or dictator on the board can be removed. Both boards and owners have the power to stand up to this individual - even if it is the president - and remove him/her as a last resort. Manyassociations do not realize that they can do this or, through fear of theconflict that will result, avoid this option.

The board president has some additional powers to call meetings and sign certain documents, but generally this person has the same powers as the other board members.

If attempts to change the bully’s behavior have failed and s/he is not fulfilling his/her fiduciary duty or violates the law or bylaws, removal or recall based on state statutes and bylaw procedures may be only course of action.

DisciplineThe board has the duty to self -govern, except in the case of criminal action. In addition, the association bylaws may contain disciplinary measures that can be taken by the board.

Florida Attorney Matthew Zifrony advises homeowners and condo associations, and has served as the president of a 3,000 member home association. If a board member commits an infraction that does not fall within the Florida Statute’s penalties, Zifrony (2013) advises:

Another way to discipline board members involves the board deciding who the officers will be. The board can vote to remove the president as president, the treasurer as treasurer, and so on. They cannot remove them from the board altogether, but they can remove them from officer positions. They can also remove them from committees or reprimand them saying publicly in the minutes that they do not agree with what the board members are doing.

Confidentiality is important in all board discussions to protect personal information. The board members may want to initially take the offending member aside and speak to him/her as a board in a private setting. Unless the discussion occurs in a meeting and is recorded in the official minutes, the board may want to discuss the issue as a board to seek clarification or to suggest remediation. This will preserve the members’ privacy. Additionally, the board’s suggestions may be better accepted if the offending member does not feel embarrassed or threatened in public. After that attempt, the board may address the issue through an official recorder of association business.

When meeting with the board member about the offense, it is important to always have the association rule documents and the Florida Statutes as evidence. It may be wise to adopt an “Association Code of Ethics” based on the law and the association’s documents. Many professional organizations have developed ethics codes which are part of the education and certification process.

As a last resort, other options include consulting legal counsel, taking steps to recall or remove the board member, and/or ensuring that the individual is not allowed to run again, following the Florida Statutes procedures. These actions may be in order if the board member does not voluntarily correct the violation or voluntarily resign.

If the board member does decide to resign, be sure ask for a written resignation. The resignation should be added to the meeting agenda and recorded in the minutes for the permanent record.

The Florida Statutes also allow a board member to be removed if he/she does not pay maintenance fees in a timely manner, as dictated in the association documents.

The 2016 Florida Statutes Title XL Real and Personal Property: Chapter 720 10. Recall of Directors.

a1. Regardless of any provision to the contrary contained in thegoverning documents, subject to the provisions of s. 720.307 regarding transition of association control, any member of the board of directors may be recalled and removed from office with or without cause by a majority of the total voting interests.

2. When the governing documents, including the declaration,articles of incorporation, or bylaws, provide that only aspecific class of members is entitled to elect a board director ordirectors, only that class of members may vote to recall thoseboard directors so elected.

b1. Board directors may be recalled by an agreement in writing or by written ballot without a membership meeting. The agreement in writing or the written ballots, or a copy thereof, shall be served on the association by certified mail or by personal service in the manner authorized by chapter 48 and the Florida Rules of Civil Procedure.

2. The board shall duly notice and hold a meeting of the boardwithin 5 full business days after receipt of the agreement inwriting or written ballots. At the meeting, the board shall eithercertify the written ballots or written agreement to recall adirector or directors of the board, in which case such directoror directors shall be recalled effective immediately and shallturn over to the board within 5 full business days any and allrecords and property of the association in their possession, orproceed as described in paragraph (d).

3. When it is determined by the department pursuant to bindingarbitration proceedings that an initial recall effort wasdefective, written recall agreements or written ballots usedin the first recall effort and not found to be defective may bereused in one subsequent recall effort. However, in no event is

a written agreement or written ballot valid for more than 120 days after it has been signed by the member.

4. Any rescission or revocation of a member’s written recallballot or agreement must be in writing and, in order to beeffective, must be delivered to the association before theassociation is served with the written recall agreements orballots.

5. The agreement in writing or ballot shall list at least as manypossible replacement directors as there are directors subjectto the recall, when at least a majority of the board is soughtto be recalled; the person executing the recall instrument mayvote for as many replacement candidates as there are directorssubject to the recall.

c1. If the declaration, articles of incorporation, or bylaws specifically provide, the members may also recall and remove a board director or directors by a vote taken at a meeting. If so provided in the governing documents, a special meeting of the members to recall a director or directors of the board of administration may be called by 10 percent of the voting interests giving notice of the meeting as required for a meeting of members, and the notice shall state the purpose of the meeting. Electronic transmission may not be used as a method of giving notice of a meeting called in whole or in part for this purpose.

2. The board shall duly notice and hold a board meeting within5 full business days after the adjournment of the membermeeting to recall one or more directors. At the meeting, theboard shall certify the recall, in which case such member ormembers shall be recalled effective immediately and shallturn over to the board within 5 full business days any and allrecords and property of the association in their possession, orshall proceed as set forth in subparagraph (d).


d. If the board determines not to certify the written agreementor written ballots to recall a director or directors of the boardor does not certify the recall by a vote at a meeting, the boardshall, within 5 full business days after the meeting, file withthe department a petition for binding arbitration pursuant to theapplicable procedures in ss. 718.112(2)(j) and 718.1255 andthe rules adopted there under. For the purposes of this section,the members who voted at the meeting or who executed theagreement in writing shall constitute one party under thepetition for arbitration. If the arbitrator certifies the recall asto any director or directors of the board, the recall will beeffective upon mailing of the final order of arbitration to theassociation. The director or directors so recalled shall deliverto the board any and all records of the association in theirpossession within 5 full business days after the effective dateof the recall.

e. If a vacancy occurs on the board as a result of a recall andless than a majority of the board directors are removed, thevacancy may be filled by the affirmative vote of a majorityof the remaining directors, notwithstanding any provision tothe contrary contained in this subsection or in the associationdocuments. If vacancies occur on the board as a result ofa recall and a majority or more of the board directors areremoved, the vacancies shall be filled by members voting infavor of the recall; if removal is at a meeting, any vacanciesshall be filled by the members at the meeting. If the recalloccurred by agreement in writing or by written ballot,members may vote for replacement directors in the sameinstrument in accordance with procedural rules adopted bythe division, which rules need not be consistent with thissubsection.

f. If the board fails to duly notice and hold a board meetingwithin 5 full business days after service of an agreement inwriting or within 5 full business days after the adjournment ofthe member recall meeting, the recall shall be deemed effectiveand the board directors so recalled shall immediately turn overto the board all records and property of the association.

g. If the board fails to duly notice and hold the requiredmeeting or fails to file the required petition, the unit owner

representative may file a petition pursuant to s. 718.1255 challenging the board’s failure to act. The petition must be filed within 60 days after the expiration of the applicable 5-full-business-day period. The review of a petition under thisparagraph is limited to the sufficiency of service on the boardand the facial validity of the written agreement or ballots filed.

h. If a director who is removed fails to relinquish his or heroffice or turn over records as required under this section, thecircuit court in the county where the association maintainsits principal office may, upon the petition of the association,summarily order the director to relinquish his or her officeand turn over all association records upon application of theassociation.

i. The minutes of the board meeting at which the board decideswhether to certify the recall are an official association record.The minutes must record the date and time of the meeting,the decision of the board, and the vote count taken on eachboard member subject to the recall. In addition, when theboard decides not to certify the recall, as to each vote rejected,the minutes must identify the parcel number and the specificreason for each such rejection.

j. When the recall of more than one board director is sought, thewritten agreement, ballot, or vote at a meeting shall provide fora separate vote for each board director sought to be recalled.

k. A board member who has been recalled may file a petitionpursuant to ss. 718.112(2)(j) and 718.1255 and the rulesadopted challenging the validity of the recall. The petitionmust be filed within 60 days after the recall is deemedcertified. The association and the unit owner representativeshall be named as respondents.

l. The division may not accept for filing a recall petition, whetherfiled pursuant to paragraph (b), paragraph (c), paragraph (g),or paragraph (k) and regardless of whether the recall wascertified, when there are 60 or fewer days until the scheduledreelection of the board member sought to be recalled or when60 or fewer days have not elapsed since the election of theboard member sought to be recalled.

ConclusionThere are a number of factors that can lead to conflicts which can cause dysfunction among board members. Some are more easily addressed through education and training; however, the most challenging conflicts involve pervasive, negative personality traits exhibited by members.

A number of strategies can be used to intervene and redirect the board, depending upon the type of conflict. It is important to understand that trying to change the behavior of an adult is not within the realm of the role of the CAM or the board members. This is a futile exercise.

Focusing on the Florida Statutes and association bylaws, including the fiduciary duty of the board, is the first step in bringing the board to a consensus to focus on their individual roles.

Robert’s Rules of Order (2005) should be followed during all meetings to limit distractions, manage time, follow agendas, and maintain order.

Ground rules for effective communication and acceptable conduct should be established by the board and posted to keep the meeting moving in a positive direction and to encourage all association members to participate.

A “Code of Ethics” for board conduct may be developed and signed by all members.

This Code can be incorporated into the association documents as another strategy to build a consensus and a positive interaction among the board’s members.

If specific conflicts arise, applicable strategies and procedures should be reviewed and applied by the board to intervene, redirect, and correct the problem. These strategies and procedures should work toward fulfilling the association’s goals in a manner that is in the best interest of the owners.

If the board member is unwilling or unable to complete their fiduciary duty according to Florida and association laws, remedies are provided in the Florida Statutes and association bylaws to address removal or recall.

The board must realize the complexity of their tasks as elected board members and must understand that disagreements may occur. Appropriate ways to handle these conflicts should be reviewed and implemented.

Above all, the board must focus of its commitment to fulfill its responsibility to act in good faith, in the best interest of the association at all times.

Board members must also realize that when confronted with difficulties in their role on the board, these challenges must be handled in a way that preserves the well-being, the integrity, as well as the rights of the board members, the association, and the owners.


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� Slaughter, J. (2016). Does Your Board President Rule With an Iron FIST? You Don’t Have to Put Up With It. Dictators Can Be Toppled. http://communityassociationmanagement.com/c41-governance/c42-board-of-directors/end-reign/

� Shyman, M. (2007). Dealing with Disruptive Board Members: Rambo at the Reigns. Liz Lent Author. Retrieved May 14, 2017 from https://cooperator.com/article/dealing-with-disruptive-board-members

� Wahl, H.C. (2015) Florida Community Associations: Board Member Conflict of Interest. Retrieved May 17, 2017 from

� http://www.jimersoncobb.com/blog/2015/02/florida-community-associations-board-member-conflict-interest/

� Weil, S. (2013). Annual Meetings. Retrieved May 15, 2017 from. http://royalmanagement.com/annual-meetings

� Weil, S. (2014). A Guide to Being Politically Smart for Board Members. Retrieved May 11, 2017 from http://royalemanagement.com/being-politically-smart/

� Zifroney, M. (2013). The Shame List. Retrieved May 15, 2017 from http://pubs.royle.com/article/A_Lawyer_in_Time_Saves_Nine.../1569209/185962/article.html


EFFECTIVE COMMUNITY ASSOCIATION BOARDS: ADDRESSING CONFLICT AND LIABILITY

Final Examination QuestionsSelect the best answer for each question and mark your answers on the answer sheet found on page 92 or

complete your test online at CAMS.EliteCME.com21. Volunteer board members normally do not have the training,

education, preparation or experience in business, governance, orcommunity association backgrounds when they are elected.

¨ True ¨ False

22. Only officers of an association have a fiduciary relationship to themembers who are served by the association.

¨ True ¨ False

23. A conflict-of-interest transaction is authorized, approved, orratified if it receives the affirmative vote of a majority of thedirectors on the board of directors, or on the committee, who haveno relationship or interest in the transaction.

¨ True ¨ False

24. The 2016 Florida Statute 673 defines a breach of fiduciaryresponsibility. Since 1972, courts have condemned three categoriesof misconduct which included personal vendettas against particularshareholders or unit owners, and manifestation of favoritismamong shareholders or unit owners.

¨ True ¨ False

25. Complaining/critical people want to fix what is wrong, and that iswhy they go to the board or to CAMs with the problems they see.

¨ True ¨ False

26. One way in the past to address the problem of negativepersonalities on the board was to keep them off the board in thefirst place. This was accomplished by establishing a nominatingcommittee that can interview and screen potential candidates.

¨ True ¨ False

27. In Florida, the board of directors cannot decide who serves asofficers, so they cannot remove the rogue officer.

¨ True ¨ False

28. The CAM might attend meetings and serve as a temporary chairto run the meeting according to Robert's Rules of Order (2005),making sure agenda items are covered, providing explanations onprojects, assisting with planning, scheduling, and redirecting ifconflicts arise.

¨ True ¨ False

29. The board president, who has additional powers to call meetingsand sign certain documents, also has superior powers to the otherboard members.

¨ True ¨ False

30. The director, or directors, so recalled shall deliver to the board anyand all records of the association in their possession within 5 fullbusiness days after the effective date of the recall.

¨ True ¨ False

CAMFL04ECE18


Chapter 4: Hurricane Preparation and Restoration for Community Association Management

4 CE Hours


Objectives � Define the differences between tropical storms and hurricane

watches and warnings; explain directions for hurricane preparation.

� Explain the classification of a hurricane’s wind speed and its potential effect on property.

� Identify the components of a hurricane preparation emergency plan for community associations.

� Explain the forces of hurricane wind; discuss the effects of water intrusion on roofs, walls, windows, and equipment.

� Identify the steps to prepare elevators before - and after - a hurricane.

� Explain the powers of the board, as detailed by the Florida Statutes.

� Define the directives for hurricane insurance and deductibles, as provided in the Florida Statutes.

� List and explain the steps to prepare a property before a hurricane. � Identify areas to inspect, as well as methods to retrofit a property,

to mitigate potential damage from a hurricane. � Identify the CAM and board duties during an evacuation to

prepare both the building and the residents. � List and explain the duties of the board and the CAM following a

hurricane.

OverviewThis course will explore the necessary components to include in a community association’s hurricane preparation and restoration plan. Applicable Florida Statutes will be discussed which overview the duties of the board and the CAM during hurricane preparation, as well as safety during the storm and restoration after the storm. Sections of this course will be devoted to relevant information which is offered by various federal and emergency organizations. This course will also provide helpful instructions and guidelines to observe when assisting owners in the preparation, the evacuation, and the subsequent restoration of their units. The safety, security, and the well-being of

a community’s residents are of the utmost importance in a hurricane preparation and restoration plan, followed by the integrity of the property.

Elements of this course can be adapted to the specific types of property and construction styles found in Florida communities. Community association management includes condominiums, row houses, co-ops, vacation and timeshare properties, townhouses, and individual homes; these structures may be high or low rise, attached or unattached. Each housing type requires a specific hurricane preparation and restoration plan to meet the unique needs of its community.

IntroductionCommunity associations in Florida face a daunting reality every year from June 1st to November 1st: the official hurricane season. Methods for predicting hurricanes, as well as tracking and warning systems, have improved in the past decade; however, the actual path that the storm takes remains elusive.

All community association properties - especially those adjacent to a body of water, a flood zone, or an evacuation area - must plan and prepare the property and the owners for the possibility of a deadly storm.

Each association will need to tailor their plan to the specific needs of their property, geography, and residents’ demographics. An association must ask itself the following questions:

● Are the residents elderly, disabled, or homebound? Do they require direct assistance to evacuate the building?

● Are many owners out of town and unable to prepare their unit or home?

● Is it a high-rise facility with elevators that may lose power and therefore may trap residents in their units?

● If the elevators become inoperable, what are ADA accommodations that must be made?

● Is the property on the coast and subject to rising tides, flooding or storm surges?

● What retrofitting could be performed to strengthen resistance to wind forces and water intrusion?

● Is hurricane insurance coverage adequate enough to cover major damage from wind and flooding?

● Do the owners have insurance for the interiors of their homes and the contents?

These are only a few of the issues that must be addressed when planning for hurricane preparation, as well as for the community’s restoration after a storm passes.

Board members and management must draft a detailed and comprehensive plan that includes the roles that each will assume before, during, and after the storm to protect and preserve the property quickly and efficiently.

Additionally, boards may want to consult their local county emergency management teams, insurance agents, attorneys, and community fire and police departments, as well as emergency management personnel to assist in developing a plan to prepare for natural disasters.

The hurricane preparedness and restoration plan should be revisited, updated, and approved annually by the board prior to hurricane season. Because they are revised annually, the Florida Statutes should be reviewed as well: these statutes cover insurance requirements, as well as board powers and directives in the event of emergencies that are due to natural disasters - including hurricanes.

Florida Statute 718.111 establishes that officers and directors have a fiduciary responsibility to the owners. This means that they must act with good faith and in the best interest of the owners.


Effective leadership and action from the CAM and from the board of directors can prepare the property and its residents in the event of a hurricane, help mitigate damage, and protect the property values

and the safety of all residents, as well as the return to their Florida community association lifestyle as soon as possible.

Hurricane knowledgeStorm conditions can vary in the intensity, size, and angle of approach. These variables are all factors that determine the degree of damage to the property.

The following section is from the National Oceanic Atmospheric Administration (NOAA, 2017):

Tropical depressions are cyclones with winds of 38 mph. Tropical storms vary in wind speeds from 39-73 mph while hurricanes have winds 74 mph and greater. Typically the upper right quadrant of the storm, the center wrapping around the eye, is the most intense portion of the storm. The greatest threats are damaging winds, storm surge and flooding. This is in part why Hurricane Katrina was so catastrophic when bringing up to 28-foot storm surges onto the Louisiana and Mississippi coastlines.

Here are some important terms: ● Tropical storm watch: Tropical storm conditions are possible in

the area. ● Hurricane watch: Hurricane conditions are possible in the area.

Watches are issued 48 hours in advance of the anticipated onset of tropical storm force winds.

● Tropical storm warning: Tropical storm conditions are expected in the area.

● Hurricane warning: Hurricane conditions are expected in the area. Warnings are issued 36 hours in advance of tropical storm force winds.

● Eye: Clear, sometimes well-defined center of the storm with calmer conditions.

● Eye wall: Surrounding the eye, contains some of the most severe weather of the storm with the highest wind speed and largest precipitation.

● Rain bands: Bands coming off the cyclone that produce severe weather conditions such as heavy rain, wind and tornadoes.

● Storm surge: An often underestimated and deadly result of ocean water swelling as a result of a land falling storm, and quickly flooding coastal and sometimes areas further inland.

During a watch, prepare the property and evacuation plan in case a warning is issued. During a warning, carefully follow the directions of officials; residents should immediately leave the area if it is advised.

In the event of an Extreme Wind Warning/Advisory (which means that extreme, sustained winds of 115 mph or greater are expected to begin within an hour), residents should immediately take shelter in the interior portion of a well-built structure.

Hurricane forecasts (NOAA, 2017)Predicting a tropical cyclone’s path can be challenging; there are many global and local factors that come into play. The storm’s size and path can directly influence what sort of wind patterns guide, enhance or hinder its growth, and vice versa. Forecasters use computers that analyze large amounts of data that attempt to predict where a storm will go. These computer programs can usually calculate storm activity two to three days out fairly accurately and apply computer models and spaghetti models to predict the storm’s direction. Generally, the forecasted track or path is provided with the average consensus of these models. The National Hurricane Center has the most up-to-date information on tropical cyclone developments, forecasts and weather alerts, as well as discussions analyzing the data. This website can be accessed at: http://www.nhc.noaa.gov/

Understanding the power of the hurricaneThe Florida Division of Emergency Management (FDEM, 2016) offers a number of guides and resources to explain the damage that results from hurricanes, how to retrofit a structure, as well as how to repair it after the storm.

The power of the windFDEM (2016) provides the following guidelines to explain the power of the wind’s effects on building structures.

Over-hanging eaves, extended awnings, open porches, and other features that tend to trap air beneath them are particularly susceptible to being damaged - or torn off the building - during a hurricane. Wind-borne debris from neighboring buildings, including shingles and tiles, can break windows and damage roof coverings and walls. With (or without) the help of wind-blown objects, the wind can push in a garage door, window, or exterior door on the windward side of the house and move inside, increasing uplift forces on the roof - in some cases even doubling them. In fact, these powerful forces can literally lift the roof right off of the building. Older, less wind resistant properties have tended to regularly break open in high wind events: much of the focus and efforts over the past two decades has been on strengthening structures and load-resisting connections in buildings.

Pervasive waterFDEM (2016) explains that water intrusion is often overlooked as a major cause of damage from a hurricane and provides the following information.

At nearly the same level of importance as direct wind damage is the issue of water intrusion. Direct wind damage to the structural elements of properties built to high-wind standards has been reduced; however, it has become clear that just improving the structural integrity is not enough. Wind-driven water intrusion can cause catastrophic damage to walls, ceilings, and interiors.

Water intrusion can be of particular importance because some insurance policies do not cover water intrusion unless it originates from damage to the roof, walls, windows or doors. When wind speeds reach 60 mph or more, rainwater is driven against the exterior with great force. Whenever water builds up on the exterior wall surface and there is lower pressure on the inside, the water can penetrate in large quantities - often gallons - through cracks, holes and gaps in the siding and around windows and doors. When this happens for hours at a time (and when there is no electricity available to dry out homes through the use of air conditioning or dehumidifiers), the resulting damage and mold can be as devastating as wind damage.

Roof damage is the greatest risk from a hurricane; the second greatest risk is wind and water entering through damaged or leaking doors and windows. The highest priority should be placed on reinforcing, protecting, or replacing garage doors (probably the largest and one of the most vulnerable openings), double entry doors (such as French doors), and large windows - and then work down to smaller units (FDEM, 2010). Failure of the larger units can allow pressures that would have built up on the doors or windows to enter the structure and dramatically increase the loading on the roof structure, interior walls, and other exterior walls.

FDEM (2010) reports that leaks can occur from cracks around windows and doors and even without structural failures, large amounts of water can enter. Potential leak areas include attics, roofs, and soffit


vents, small holes and cracks, as well as areas where pipes or cables enter the wall.

Assessing the risksDesign wind speed is the difference in the averaging times used to describe the winds. At a sustained one-minute wind speed of 74 mph, it takes 49 seconds for one mile of wind to pass a location; therefore the one-minute and fastest mile speeds are approximately the same value (FLASH, 2016). Design wind speed can also be used to translate the risk for damage from hurricane wind and water on a building. If the design wind speed in the area is (FLASH, 2016):

● 120 mph or higher there is a high risk for hurricane wind damage and water intrusion.

● Between 100 and 120 mph there is a moderate risk for hurricane wind damage and a high risk for water intrusion.

● Between 90 and 100 mph there is a low risk for hurricane wind damage, but a moderate risk for water intrusion (or a high risk of water intrusion in slow-moving hurricanes).

● In addition to risk based on design wind speed, terrain conditions in inland locations can have a dramatic effect on the risk of hurricane damage. In an area with few trees and large, open spaces there is a much greater risk of wind-borne debris impact than in areas with trees.

● In an area with even light to moderate tree coverage (which reduces the risk of wind-borne debris impact), there is an increased risk associated with trees potentially falling and damaging the structure.

Additionally, the FDEM (2016) describes the power of the wind to drive rain through cracks or openings in the roof or walls.

● Wind pressures created by a 100 mph winds will drive water about 3-1/2 inches up through any cracks or openings anywhere on the roof, gable wall, or soffit.

● Wind pressures created by a 130 mph winds will drive water about 6 inches up through any cracks or openings anywhere on the roof, gable wall, or soffit.

● Wind pressures created by a 150 mph winds will drive water about 8 inches up through any cracks or openings anywhere on the roof, gable wall, or soffit.

Consider the entire surface area on a large, older, coastal construction: the magnitude of possible water intrusion over a 24-hour storm can be quite devastating.

FDEM notes that structures are particularly vulnerable to having unprotected windows broken by windborne debris if:

● The design wind speed for an area is 130 mph or greater, regardless of tree cover or surroundings.

● The design wind speed for an area is 120 mph or greater, and in an area with moderate tree cover.

● The neighborhood has few trees, and the design wind speed for an area is 110 mph or greater.

Preparing the community association for a hurricaneBefore the hurricane season arrives, the board should meet to discuss hurricane preparation and planning for restoration after a storm. Some boards form committees to address these issues, and include owners who volunteer to plan, prepare, and assist before, during, and after the storm event. Other associations appoint a chairman or a coordinator to lead in the case of an emergency. The problem with a volunteer committee is that many board members and residents choose to leave when a hurricane is approaching - whether or not there is a mandatory evacuation. A better approach would be to inform all board members, volunteers, and interested residents through information and training sessions - before hurricane season begins. This meeting should include the operation of all of the community’s systems, including a written guide with instructions, diagrams, maps, first aid, emergency, and evacuation procedures.

Because they may be compromised by a storm, it is important that the following systems are covered:

● The generator; ● The elevator(s); ● The security system; ● The fire and smoke alarms; ● The swimming pool and spa; ● The irrigation system; ● The water, electric, and gas meters (and shut off valves); ● The emergency lighting; ● Electrical panels; ● Computers/computer systems; ● The security cameras; ● As well as any other systems that may be compromised by the

storm.

The CAM or management company should also hold additional meetings and seminars on procedures and hurricane preparation for both board members as well as residents who may have further questions about procedures. Be sure to include information on evacuation kits, routes, shelters, and transportation, as well as how to secure individual units and what emergency supplies to have on hand if the residents stay in their units. Depending upon the type and needs of the community association, the CAM and board may want to conduct evacuation drills for the safety of the residents to help prepare them for an actual emergency to help reduce the panic and chaos during those situations where residents may be stressed.

A decision should also be made about where the CAM and the board of directors should meet in a worst-case scenario (e.g. if the storm destroys the building), in order to conduct business. That location will hopefully never be used.

Review insurance coverage The board should review the insurance policy annually to be sure that it would adequately cover the total replacement cost for a complete rebuild of the property in the case it is declared a total loss. This review should also include the hurricane deductibles, which may be 2%, 5% or 10% of the insured value of the property (Shaw & Koski, 2014). For example, if the total property value was $5,000,000, with a hurricane deductible of 5%, the deductible would be $250,000 in case the damage resulted in a total property loss. If these funds are not readily available in an operating or a reserve account, the board should have a plan in place to secure the funds for the deductible. Different insurance companies offer various options for paying these deductibles; some of these options will be reviewed in subsequent sections.

The policy should be written specifically for the type of construction, value, age, geographic location, number of units, size, and the phases of development.

Review the property and the policy for any possible additions or riders that should be added. Have there been improvements or new amenities added? Did the association purchase new equipment, vehicles, or make major renovations or improvements?

Are all board officers and directors covered by the liability and fidelity bond? Has the association begun a business that sells food, liquor or gasoline, or other supplies to owners or the public? Look for any changes that would increase the replacement cost of the building or affect the risk and/or liability coverage.


Florida Chapter 718.111: Hurricane insurance718.111(11): Windstorm insuranceWindstorm insurance coverage for a group of no fewer than three communities created and operating under chapter 718, chapter 719, or chapter 721, may be obtained and maintained for the communities if the insurance coverage is sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology.

Homeowner’s insuranceAll unit owners should consider homeowner’s insurance (generally called a HO-6 policy) for their condominium (Shaw & Koski, 2014). Florida Statutes Chapter 718.111(11)(f) state that in the event of a casualty to the condominium property, unit owners are responsible for repairing or replacing:

● All personal property; ● Floor, wall and ceiling coverings; ● Electrical fixtures; ● Appliances; ● Water heaters; ● Water filters; ● Built-in cabinets and countertops; and ● Window treatments including curtains, drapes, blinds, hardware.

Shaw and Koski (2014) explain:If there were a total loss, the association’s insurance would rebuild the building and unit. However, the unit would have only sub-flooring, no carpet, tile or wood floors; would have no electrical fixtures; no cabinets, countertops or sinks; and no water heater or other appliances. The insurance statute only requires that the association’s insurance rebuild the property with products similar to those that were originally installed not improvements. Replacing these items can create a major out-of-pocket expense for unit owners. Every unit owner or resident should photograph their condominium to capture on film all of the structures and personal property within a unit to make processing insurance claims easier. It is prudent to contact the insurance company and ask them what type of documentation they would like to see in the event of a major claim.

Gather information from local and state authoritiesThe State of Florida’s 67 counties all have extensive hurricane preparation plans and guides that include evacuation plans, routes and schedules, shelter locations, emergency contact numbers, tips for securing the property, gathering supplies, and other important information. These guides should be available for the board and residents to review before the threat of a storm approaches. Contact information for these agencies should also be included.

Emergency resources from FEMA (2016)The Emergency Information Document should include the following sites to allow for quick access to them from any computer or smart phone.

● Download the FEMA app to access disaster preparedness tips, build an emergency kit, and look for open shelters that are available after the storm, as well as for open Disaster Recovery Centers for survivors needing assistance. Stay informed with the FEMA blog.

● Local emergency management officials often have notification systems. Opt-in to a distribution center for the community. To find out if the community offers such services, contact the local Office of Emergency Management.

● Sign up to receive a monthly preparedness tip from FEMA’s text messages program.

● Bookmark these important mobile sites: ○ Center for Diseases Control: http://m.cdc.gov/

○ American Red Cross: www.redcross.org/mobile ○ FEMA/Ready: m.fema.gov ○ National Hurricane Center: www.nhc.noaa.gov/mobile ○ Bookmark important online sites:

• The local emergency management agency, such as Ready.gov’s State and Local Information page, to locate your community’s direct information.

• National Weather Service: www.weather.gov• American Red Cross Safe and Well: www.redcross.org/

safeandwell ○ Save locations on your phone’s mapping device.

• Google Crisis Response.• Facebook Disaster Relief: www.facebook.com/

disasterrelief ○ Follow FEMA and Ready.gov online:

• FEMA blog: https://www.fema.gov/blog• Acting Administrator Bob Fenton on Twitter.• FEMA on Twitter/Ready on Twitter.• FEMA on Facebook.• FEMA on YouTube.

● In addition to using a cell phone and other technology, tune into broadcast television and radio for important news alerts. If applicable, know how to activate the closed captioning or video description on the television.

● Important: In an emergency, remember to call 9-1-1 for help: text service for 9-1-1 may not be available in the area. Unless it is an emergency, do not call 9-1-1. If the area offers 3-1-1 service or another information system, call that number for non-emergencies.

Update contact information for staff and residents Prior to the storm event, board members’, staff, owners’ and tenants’ contact information should be updated for accuracy, including absentee owner information. Owners who are evacuating should notify the management and a list should be developed of all residents who plan to stay on the property. All forms of contact, including social media, should be gathered and copied for board members.

Vulnerable populationsAny residents that would require assistance in the event of an evacuation should inform the association; these residents should also reach out to their city and/or county to sign up for emergency aid.

The board should maintain a list of residents who may need assistance to provide to emergency responders. At the beginning of hurricane season, both the board and residents should identify special needs shelters and medical facilities in their area, as well as develop plans for transportation to these facilities. Residents should contact medical supply companies to ensure they have extra supplies delivered to them prior to the storm. FEMA and the FDEM websites include detailed information for specific categories of disabled individuals to assist them in hurricane planning, preparation, and evacuation.

Unit accessFor the safety of owners and the security of the property, the CAM and board should take an inventory and check all keys and security codes to make sure that they are able to access all units.

Access for emergency personnelIn addition, all association property should have special access systems for emergency and law enforcement agencies that must quickly and easily respond in emergencies. If these systems are electric, there must be a manual override system or keys for access.

There is technology that uses radio frequency and is operated by a hand-held radio system: it requires no key or access code and can be used by any local, county, and state-authorized emergency personnel. Many first responders in Florida already use this system for immediate emergency access.


Order supplies before the storm in case they are unavailable immediately after, or cannot be accessed.The association may want to identify additional sources and phone numbers of back up suppliers for needed materials and items that may be depleted from normal suppliers after the storm.

Update contact information for vendors, insurance agents, repair contractors, disaster cleaning and restoration companies.This contact information should be copied and given to board members. Prior to hurricane season, associations in hurricane and flood zones may want to consult firms that specialize in storm clean up, restoration, and repair for their type of property and arrange an inspection. This will assist in preparing for the storm because they may spot areas that are particularly vulnerable and suggest remediation.

In addition, the board may want to consider contracting with those firms: in case of severe damage, the company will be there to start water extraction, mold preventing, clearing debris, or repairing generators or elevators that must begin working immediately in the hot Florida weather. Setting up a contract in advance guarantees that the property will be inspected shortly after the storm to prepare a report of the damage, present estimates, as well as offer bids and timelines for repair. This will ensure that the board is ready to begin mitigation after the storm (an action that is required by Florida Statute 718) when there is a high demand for repair and clean up services. This step will also assist in documentation for insurance.

Have all of the information and contact numbers ready to reach the insurance agent immediately for a prompt visit by the adjuster.

Building maps and facility information These should be accessible for staff, emergency personnel, utility and repair contractors, as well as insurance adjusters during and after a storm. Copies can be kept in the maintenance office or shop, with board members, or with the safety coordinator.

Banking issues As soon as the threat of a major storm is identified, pay bills and invoices to take care of all association payments for at least two weeks beyond the potential date of impact. Prepare a list of account numbers, ATMs, bank locations, and phone numbers for automated banking services or live assistance. For large nationwide banks, the resources for assistance may continue uninterrupted because they are not in Florida, or are located in an area outside of the storm zone.

Some associations provide checks or association credit/debit cards and access or PIN codes to board members so that emergency funds are available during and after the storm for association purchases. Be sure signature cards have been signed in order to give board members the authority to access accounts. Have some petty cash available that can be accessed by board members in case it is impossible to get to an ATM or banking systems are down. This is important if board members evacuate; some may not be able to immediately return. Those board members who stay in the immediate area should be given the authority to access funds.

Unplug all electronic equipment and appliances in offices, kitchens, social rooms and fitness areas. Be sure electronic items are high enough off of the floor to avoid flooding. Cover valuable equipment with plastic bags, tarps or store them offsite. Secure large outdoor items with straps to keep them from being blown over, or from causing additional damage.

Security and storage of official recordsThe hard copies of records should be stored in a hurricane-resistant facility; electronic records should be stored in a web-based, portable system and backed up weekly on an external hard drive or web-based storage system. Make sure board members have passwords and access codes during and after the storm. They should also be familiar with basic operations of the server. If the documents remain in the building,

be sure that they are in waterproof containers or taped in heavy-duty plastic bags or tarps.

Photograph the property Do this before the storm hits for documentation of exterior and interior conditions, equipment, improvements, and storm preparations. This documentation will be important for comparison of any damage after the storm for insurance purposes.

Emergency generators, lighting systems, alarms, and suppliesMake sure emergency generators work properly and that there is adequate fuel to last at least a week. Exit signs and back-up lighting, especially in stairways and hallways, should be checked as well. Be sure that an emergency supply room is well-stocked for the board and staff who may be working during and after the storm. An emergency supply kit should be prepared for staff that is on duty after the storm has passed. This kit should include radios, flashlights, batteries, fuel supplies, food, water and first aid supplies, and emergency contact numbers. Review the section on emergency kits in this course for additional items to include.

ElevatorsConsult the elevator service contractor for ways to avoid water intrusion. Additionally, make sure that the elevator is secured, and that emergency or alarm systems are operating; arrange for repairs in case of a breakdown.

Miami Dade County (2016) provides the following information for elevator hurricane preparation and restoration, and includes the ADA regulations for people with disabilities. The following information is extremely detailed and important:

Prior to hurricane season (April and May)Check the operation of all vents and openings in the machine room and hoistway walls to insure proper operation and prevent water leakage.

This should be a part of the regular routine maintenance to ensure that vents operate properly to achieve designed ventilation, and that they do not permit driving rain to blow through the vents. Ensure that the doors, vents and other openings are properly caulked and sealed so as to prevent water leakage. Fire rated metal doors that are corroded should be replaced: in addition to losing their fire resistance, a corroded door may not possess the structural integrity necessary to withstand gale force, or higher, winds. Check all sump pumps, float switches and alarms to ensure proper operation.

This process ought to be part of a regular preventive maintenance (P.M.) schedule. Not every elevator pit is equipped with float switches, which are usually located in elevators where the buildings are located within a flood zone. This essential device prevents the elevator from operating and sustaining damage in the event of a pump failure and the flooding of the pit. If unsure whether or not an elevator has a float switch installed, contact the elevator contractor.

Preparing for the hurricaneCheck all sump pumps, float switches, and alarms in elevator pits when a hurricane warning has been declared.

Close all vents and openings in the top of the hoistway and machine room to prevent water intrusion. Although this procedure appears obvious, it should be noted that adequate ventilation for the elevator machinery is necessary. Vents should not be in the machine room if this room is air-conditioned, other than for emergencies. If the system depends on ambient ventilation (powered or passive), this should be done at the very last stages of the facility’s preparation, as the equipment can heat up much faster than expected. Hoistway ventilation is not as critical, and can be secured early on in the preparation. Because this is a risk for fire protection, this should not be done semi-permanently. Put it on before a storm and take it down after the storm has passed. It is preferable to have a permanent means installed to prevent water from intruding into this space in such a manner that it will still allow for ventilation - such as a hood over


the exterior vent grilles. Please note that not all hoistway vents may be readily accessible, and that permanent covers or hoods should be designed and installed prior to hurricane season to prevent driving rain from entry. Since hoistway vents are at the top of the shaft, they may be readily accessible from the roof of the building. If not, a cover may be installed from the inside, either by the elevator contractor or other properly-qualified building maintenance personnel.

Elevators that open to the outside should have sandbags placed all along the bottom of the hoistway doors.

Since this procedure would effectively render the elevator unusable, it is recommended that this is the last preparatory act, just prior to shutting the elevator off. This action is necessary where the elevator entrances open to the atmosphere - such as in parking garages, housing facilities with open breezeways, and pedestrian bridges.

During the hurricaneRun the elevator to the center of the hoistway and pull the main breaker in machine room - not the main breaker located elsewhere. This should be the very last thing done during the warning phase, just before the building’s evacuation. Buildings designated as “hurricane safe” and which will house personnel during a storm, should perform this just before the winds strengthen to 45 mph.

The best location is just below the top landing for most traction elevators - to protect both the elevator, as well as the counterweight equipment. If there is a basement, the traction elevator should be parked two floors below the top.

Hydraulic elevators should be parked at the top floor to minimize damage to the car equipment, unless the elevator entrances open to the outside in unenclosed elevator lobbies. In that case, the best place is the middle landing to best protect the piston.

Disconnecting the power serves three purposes: ● It prevents an unauthorized person from otherwise taking the

elevator away from the parking area. ● It prevents severe damage to equipment caused by short circuits

from wet circuitry. Once the equipment is dried out it can usually be quickly cleared and restarted by a competent mechanic, with little or no damage.

● The equipment will be saved from damage caused by voltage surges, spikes and dips that may result from lightning strikes or power line shorts due to wind.

Park elevators with doors closed Although this is fairly self-explanatory, there are several reasons for this:

● If windows break on the floor where the elevator is parked it will prevent debris from entering the hoistway.

● On hydraulic elevators, it is normal to have some oil leakage around the jack packing. An elevator that sits for 24 or more hours may settle as much as a couple of inches, or more.

● It will prevent persons from entering the elevator and manually closing the doors, becoming inadvertently trapped.

Do not run the elevator during hurricane. Again, although this should be self-evident, we occasionally hear about people who were trapped during the storm. These are usually due to building management not properly securing the elevator, or building management trying to complete emergency repairs to the building using the elevator.

A case in point: During Hurricane Andrew, one of our county building managers was riding the service elevator up to a floor with a load of plywood to secure some broken windows in one of our high rise facilities. Even though this was in the downtown Miami area, there were significantly high winds. The wind force coming down the elevator shaft was so strong that it stalled the elevator motor and blew a circuit breaker. Had the elevator not been near a floor where the trapped persons could have extricated themselves, they would have been trapped for at least 12 hours. It could have been longer because

service personnel were unavailable to begin repairs until 3:00 p.m., a full 18 hours after the incident.

After the hurricaneInspect the elevator pit, cab, and machine room for indication of water. Do not energize main line breaker if water is found.

If water is found, call the elevator contractor. Do not energize the main line power until it can be determined whether or not the water will pose a hazard to life or equipment. This is an instance that obviously requires good judgment on the part of building management. If there is any doubt, contact the elevator contractor.

If the water in the pit is minimal and is not near any equipment in the pit, the elevator generally may be operated.

If water leaked under the door or through a vent in the elevator machine room and there is no water on the equipment (or signs of water having been on the equipment), then it may be safe to run the elevator. If water is in the cab and it did not come in from above, the elevator may be run. If water conditions appear above the cab, or on any part of the equipment, do not run it until it has been properly evaluated.

Buildings with basements need to take special precautions. Do not run the elevator at all until the basement has been checked.

A case in point: Two police officers in Coral Gables almost lost their lives during an emergency call when they entered an elevator at the ground floor to go up into a building. The electrical system shorted out, and the elevator was automatically recalled to the basement. The doors automatically opened and flooded the car. The officers were luckily able to swim to safety. Emergency personnel have drowned in elevators all over the world; the victims are helpless once the elevator hits the water.

Do not attempt to start an elevator if power is out: service cannot start until normal power is restored.

If the building has a generator and some of the elevators are not connected to the generator, do not call until the generator shuts off and all normal power is restored.

There may be a condition where some lights are on in the building and some are not. This may be caused by power loss in one or more phases - or “legs” - of three-phase power.

In our commercial buildings, the elevators will not run without all three phases. Some elevators may not be equipped with a phase or voltage monitor: attempting to start it will result in damage to the equipment; this would not be covered in maintenance agreements.

Special considerations Be sure to warn residents if the elevators shut down so that they can plan accordingly. Residents should be notified in advance regarding the policy to shut down the elevators prior to the storm, and then informed of the actual time the elevator will be shut down as the storm approaches.

If the storm is eminent and there is the potential for a power outage, it may be prudent to have elderly or disabled residents in high-rise buildings plan for the potential of elevator failure. It may also be wise for them to shelter in place with a friend, relative, or medical assistant - or plan to evacuate to a shelter.

The ADA requires reasonable accommodations* for people with disabilities. These accommodations might include:

● Giving people who cannot climb stairs the opportunity to register with building management to ensure that they are notified before the elevators are shut down.

● Providing residents with disabilities information about county special-needs shelters.


● Informing them in advance to plan when to leave the building to be sure that they would have elevator service to the ground floor in order to get to an appropriately designated shelter.

*Reasonable accommodation would not include operating the elevator at a time when it is not safe to do so.

It is important to coordinate any elevator closures with the special needs shelter openings, if possible. Determining when to shut down elevator equipment before a storm is a judgment call that involves accommodating residents with disabilities, addressing safety concerns for all, and preserving the equipment so that it will be available after the storm. It is not safe to use an elevator during a hurricane - such use should not be allowed for anyone. After the storm, elevator service should be restored as quickly, and as safely, as possible.

FEMA tips for developing technology skills during disastersThe following advice from FEMA (2017) can assist the CAM, the board, and the residents to prepare, stay informed and remain in contact during an emergency through technology.

Through everyday technology, the CAM, board, residents, responders and organizations can successfully prepare for, adapt to, and recover from, disruptions brought on by emergencies and/or disasters. This information should be part of the guide that is provided to board members and residents.

FEMA text messagesUse your cell phone’s text messaging capability to receive text message updates from FEMA (standard message and data rates apply).

Here are basic commands to get started: ● To sign up to receive monthly preparedness tips: Text PREPARE

to 43362 (4FEMA). ● To unsubscribe (at any time): Text STOP to 43362 (4FEMA).

Keep contacts updated across all channels - including phone, email, and social media. This will make it easy to quickly reach out to the right people to get information and supply updates. Consider creating a group list serve of your top contacts.

● Learn how to send updates via text and Internet from mobile phones to contacts and social channels, in case voice communications are not available. Text messages and the Internet often have the ability to work in the event of a phone service disruption.

● Keep extra batteries for phones in a safe place or purchase a solar-powered or hand-crank charger. These chargers are good emergency tools to keep laptops and other small electronics working in the event of a power outage. Purchase a car phone charger to charge the phone if power is out.

● Program “In Case of Emergency” (ICE) contacts into cell phones so emergency personnel can contact those people. Let ICE contacts know that they are programmed into the phone and inform them of any medical issues or other special needs.

● For a traditional landline (non-broadband or VOIP) phone, keep at least one non-cordless receiver: cordless phones’ batteries will not charge during a power outage.

● If evacuated and call-forwarding is available on the home phone, forward home phone numbers to your cell phone number.

● If you do not have a cell phone, keep a prepaid phone card to use, if needed, during or after a disaster.

● Prepare a family contact sheet. This should include at least one out-of-town contact that may be better able to reach family members in an emergency.

● Have a battery-powered or hand-cranked radio or television available (with spare batteries).

The following are additional tips for making phone calls and using smartphones during - or after - a disaster:

● Keep all phone calls brief. Convey only vital information to emergency personnel and/or family.

● If a call cannot be completed using a cell phone, wait ten seconds before redialing to help reduce network congestion.

● Conserve the cell phone battery by reducing the brightness of the screen, placing the phone in airplane mode, and closing apps that draw power.

● Charge cell phones in the car - just be sure that the car is in a well-ventilated place (remove it from the garage) and do not go to the car until any danger has passed.

● Use a hands-free device in the car or stop driving and pull over to the side of the road before making a call. Do not text on a cell phone, talk, or “tweet” without a hands-free device while driving.

● Immediately following a disaster, resist using a mobile device to watch streaming videos, download music or videos, or play video games - all actions that can add to network congestion. Limiting use of these services can allow potentially life-saving emergency calls to get through to 9-1-1.

● For non-emergency communications, use text messaging, e-mail, or social media instead of making voice calls on the cell phone to avoid tying up voice networks. Data-based services (such as texts and emails) are less likely to experience network congestion. Use social media to let family and friends know individuals are safe. In addition to Facebook and Twitter, you can use resources such as the American Red Cross’s Safe and Well program.

Store important documents (such as personal and financial records) in a password-protected area in the Cloud, or on a secure flash or jump drive and keep it readily available. This flash drive can be kept on a key ring so that it can be accessed from any computer, anytime, anywhere.

Remember important documents, such as: ● Personal and property insurance; ● Identification: Driver’s license/passport (for family members, as

well); and ● Banking information.

For pets and service animals: ● Store the pet’s veterinary medical records documents online. ● Consider an information digital implant. ● Keep a photo of the pet in an online kit to aid in identification, if

separated.

Families may not be together when disaster strikes, so it is important to plan in advance (FEMA, 2013). Create an “Emergency Information Document” (use Google Chrome) or a “Family Communication Plan for Parents and Kids” (PDF - 1.2 Mb) to record how to contact one another, how to get back together, and what to do in different situations.

● Make sure to share this document with family members, friends and co-workers who will also need to access it in an emergency or crisis.

● When handling personal and sensitive information, always keep data private and share it only with those who will need access in case of emergency.

Sign up for direct deposit and electronic banking through financial institutions to access payroll funds and make electronic payments regardless of location.

Hurricane shuttersThe Florida Statute Chapter 718.113(5) requires every condominium association to adopt hurricane shutter specifications. Owners who wish to install shutters must follow these specifications and the board must allow owners to install them if they comply with the specifications.

718.113(5)5. Each board of administration of a residential condominium shall

adopt hurricane shutter specifications for each building within each condominium operated by the association, which shall include color, style, and other factors deemed relevant by the board.


All specifications adopted by the board must comply with the applicable building code.a. The board may, subject to s. 718.3026 and the approval of a

majority of voting interests of the residential condominium, install hurricane shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection that comply with or exceed the applicable building code. However, a vote of the owners is not required if the maintenance, repair, and replacement of hurricane shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection are the responsibility of the association pursuant to the declaration of condominium. If hurricane protection or laminated glass or window film architecturally designed to function as hurricane protection that complies with or exceeds the current applicable building code has been previously installed, the board may not install hurricane shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection except upon approval by a majority vote of the voting interests.

b. The association is responsible for the maintenance, repair, and replacement of the hurricane shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection authorized by this subsection if such property is the responsibility of the association pursuant to the declaration of condominium. If the hurricane shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection are the responsibility of the unit owners pursuant to the declaration of condominium, the maintenance, repair, and replacement of such items are the responsibility of the unit owner.

c. The board may operate shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection installed pursuant to this subsection without permission of the unit owners only if such operation is necessary to preserve and protect the condominium property and association property. The installation, replacement, operation, repair, and maintenance of such shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection in accordance with the procedures set forth in this paragraph are not a material alteration to the common elements or association property within the meaning of this section.

d. Notwithstanding any other provision in the residential condominium documents, if approval is required by the documents, a board may not refuse to approve the installation or replacement of hurricane shutters, impact glass, code-compliant windows or doors, or other types of code-compliant hurricane protection by a unit owner conforming to the specifications adopted by the board.

Windows and doors The FDEM has done extensive research into hurricane damage and retrofitting to mitigate damage (FDEM, 2010). For example, a bedroom window that is 3’ wide by 5’ long, when subjected to a 100 mph wind, has between 300 to 420 pounds of force applied to the window and the frame. That is the equivalent of two men or three women sitting on the window. Most windows simply are not designed for those kinds of conditions, and traditionally have not been installed to withstand them, either.

Window and door failures from wind pressure tend to be most frequent in older units that are not pressure rated, or in units that have been poorly installed. Some important considerations for replacing windows and adding shutters are included below (FDEM, 2010). Vulnerability increases significantly if:

● Properties have a tile roof - or if one or more of the neighbors has a tile roof, a flat roof with gravel ballast, or old shingles that are starting to curl.

● The property is exposed to the wind because its location is near a large open area - such as a field, a body of water, a golf course fairway, or is on the slope or top of a hill or escarpment.

● In areas where gust wind speeds have exceeded 120 mph, tiles from surrounding roofs have dented the shutters but they remained intact.

● Thirty-three percent of the homes have unprotected windows, or they have had at least one broken window.

● Where wind gust speeds exceeded 155 mph, 64 percent of the structures with unprotected windows had at least one broken window.

Note: Taping windows is ineffective against hurricanes.

The following information about window protection is included if the association does not have windows that are rated to withstand hurricane force winds. For absentee owners, plans should be in place to secure these units for the integrity of the property as a whole. Owners will need to make arrangements for this with staff or outside contractors. The following information is provided by the National Association of Realtors (2017):

Hurricane filmNational Association of Realtors (2017):

Clear plastic film is popular because it is unobtrusive and can be left in place year-round. The film blocks ultraviolet light that can fade carpets and fabric. There is peel-and-stick hurricane film that can be installed for about $25/linear foot by owners or staff. The downside to film is that while it may keep glass shards from becoming dangerous missiles, it does nothing to prevent wind from blowing in the entire window frame. This is the reason that most insurance companies do not offer discounts for hurricane film.

Plywood National Association of Realtors (2017):

[Plywood is] an effective and inexpensive option for covering at $1-$2/sq. ft. for materials. A contractor might charge between $3-$5/sq. ft. Select boards that are 5/8-inch thick and approximately eight inches larger on each side than the opening being covered. Use heavy-duty screws and anchors in wood or expansion bolts in masonry to attach the plywood to the walls not the window frames. The downside to plywood is that it must be put up at the last minute when a hurricane is approaching. Plywood blocks light coming into a home, so it will be very dark inside if power is lost. Pre-installing screw anchors around openings speeds up installation. More expensive than plywood are panels made from steel, aluminum, plastic, reinforced fabric, or composite materials.

Storm shuttersNational Association of Realtors (2017):

Roll-up or accordion shutters are permanently attached to a house, which makes them easier to deploy than plywood. All you have to do is pull the shutters into place before a storm. Some shutters use perforation or translucent material to let in light.

Storm shutters are expensive, depending on styles and materials. Expect to spend anywhere from $10-$50/sq. ft. for professional installation. Aluminum shutters are common, but also look for shutters made of reinforced fabric or aluminum-wrapped foam.

FDEM (2016) reported that installing shutters over windows and doors can protect them from the impacts of windborne debris and can keep wind pressures from building up in structures to the point where it significantly increases the uplift forces on the roof. However, it probably will not keep the doors and windows from bursting open from wind pressure if they are weak or poorly anchored to the walls.


High-impact glassThe National Association of Realtors (2016) continues:

Expect to pay as much as $50/sq. ft. for single-glazed impact glass and $70/sq. ft. for tempered glass separated by a plastic film. These look like standard windows so they do not affect appearance and they are always in place. Other than cost, the downside to single-glazed glass is that it is not very energy efficient. While the glass is impact resistant, water is still likely to penetrate the interior in a hurricane. High-impact glass windows usually qualify for discounts on homeowner’s insurance policies.

Exterior doorsFDEM (2010) advises to protect glass doors or wood doors that have large glass panes with the same methods as windows. Check all doors, including solid wood exterior doors, for loose or missing screws. Strong winds can buckle any door that is not properly protected and secured.

Inspect exterior doors; pay attention to hinges and look for missing screws. How many hinges are there? Having three hinges on outside doors, rather than two, adds strength. Replace existing hinge screws with longer ones to anchor the door to the wall structure. Be sure the door threshold is tightly screwed into the structure, not just into the door frame. Adding a one-inch deadbolt to a door also makes it more wind resistant. For double doors, be sure the barrel bolt that holds the second door in place penetrates the floor.

Because garage doors cover a large area, they are particularly vulnerable to wind gusts. Be sure that the track of the garage door is of at least 14-gauge weight and securely mounted with several screws.

Electric garage doors for properties with multiple units are put in the open position in case of a power outage - unless it has a manual override for opening. Of course, this is a security issue since the parking area is exposed. Building security is hopefully adequate to keep trespassers out.

To strengthen a garage door against high winds, brace it with vertical and horizontal 2-by-4 boards anchored into the walls. A wind retrofit kit for garage doors includes braces and hardware.

A more expensive option is replacing garage doors with impact-resistant models made of steel. Be sure that the door meets local building codes for wind resistance.

FDEM (2010) provides the following tips to assess the property for additional risk and retrofit to address problems.

Check outdoor equipmentAir conditioner compressors, satellite dishes, solar water heater elements and other roof-top equipment can be blown off their pads or supports. Outbuildings, barns, fences, and storage sheds can fail. All parts of these structures – as well as their contents – can produce wind-borne debris that can break windows and sometimes tear openings into the structure, letting in damaging rain and wind (FDEM, 2010).

● Be sure all propane tanks are turned off and valves are closed. ● Turn off all pumps to the pool, hot tub, fountains, and irrigation

systems. (This will help protect the motors.) ● Clear balconies, lanais, porches, and decks of all items: Move

items inside or throw them away if they are not part of the structure; they will become airborne and may damage the property or surrounding area.

HVAC equipment (FDEM, 2010)HVAC and other equipment outdoors or in a carport (such as air conditioning compressors, water conditioners, water heaters, pool equipment, or washing machines) may become airborne in a hurricane. While they may not get blown very far, it may be far enough to cause damage to the equipment. Damage to electrical hookups and condenser lines may be difficult to have repaired after a hurricane. It is important to anchor all equipment with a few right angle brackets to connect it to a concrete slab, or to a wood porch.

There needs to be enough brackets to resist wind forces from all directions. Brackets need to be able to restrain about 50 pounds of wind force for each square foot of the largest face of the equipment. For example, a 3’ x 3’ air conditioning compressor would need to be well secured enough to resist about 450 pounds. Large generators, such as those installed on slabs, may be heavy enough to stay in place.

Tree trimming and landscaping issuesTrim and check palms and trees for diseased or dead limbs that should be removed before the hurricane season. Be sure trees are free from power lines; if necessary, contact the utility company for any needed removal of limbs. Trees limbs that are near the roof lines should be carefully checked. Remove decorative planters or pots, benches, and other items that may become airborne.

Yard structures (FDEM, 2010)Storage sheds, pump houses, playground equipment, grills, tables, umbrellas, chairs, garbage cans, decorations, pump houses, hoses, car wash stations, or anything not tied down can pose a real threat by contributing wind-borne debris to a neighborhood because they are not built to the same standards as regular buildings. Some of these structures have large doorways that consume nearly all of the face of one wall. This means that this one wall has almost no strength to resist wind, and may allow air to flow into the building.

Sheds must be anchored to the ground or to a foundation to withstand the wind. If applicable, secure straps or clips to securely fasten the structure.

The horizontal force applied by a 130 mph wind to a shed that is 8’ wide by 8’ high is about 2,100 pounds: the weight of a small sports car. Inspect the shed by pushing on any corner of the shed to see if it wiggles - at all four corners and in both directions. See if the corners of the building can be lifted off the ground. Check to see if the shed is rated, designed, and properly anchored for the wind zone in the area. If there is any movement, corrective measures must be taken.

Anchoring the structure to a concrete slab would help it act more like a structural box. If a slab is not an option, install screw anchors into the ground near the corners and use ratchet straps, crisscrossed over the top and pulled tight, to anchor the shed to the ground. Securing only the floor of a shed may hold the floor down, but unless the walls are well attached to the floor, the building may still come apart. Connecting the walls to a well-anchored floor can make a difference. Tying the straps off with a rope that is wrapped around the building at mid-height would help create a net-like system for restraining the shed and would help hold the door shut.

For plastic sheds, attach them to a concrete slab or install four screw anchors in the ground to strap the shed down, as described above. This may be the only realistic option for keeping a plastic shed from flying in the storm.

A well-made wood shed can be anchored to the ground or a concrete slab. A good connection to a slab would help hold the building box. Strengthen the building itself by the using metal straps. If a slab is not an option, using screw anchors and strapping it down may be the only other option. Be sure that walls are well connected to the floor, and the roof to the tops of the walls.

Clear storm drains, gutters, and other drainage systems of debris Check all drainage systems around the property, including underground and above ground parking deck areas, to ensure that they are clear in order to reduce flooding. Contact the city or county public works department if gutters or drainage systems on the street are blocked.


Antennae, satellite dishes, and solar panels (FDEM, 2010)If an antenna or satellite dish is torn off a roof what happens to the roof surface or fascia? If an antenna has guy wires, what happens when extra force is applied to them? Would they pull off a chimney? Where does an antenna or satellite dish go when it is torn off? Does it tumble down the roof tearing off roof covering? Might it blow into a window or door? If the satellite dish is 5’ in diameter, it can easily have 1,000 pounds of wind force applied to it.

Satellite dishes should only be installed using code-approved support systems, and should be removed when a hurricane threatens.

Photovoltaic and solar collector panels on a roof are subject to being blown off or torn apart by winds in a hurricane. These are especially risky if they are pitched at an angle that is different from the roof slope. This is usually done in order to improve their efficiency during the winter when the sun is lower on the horizon. When these panels experience high wind loads, they can impose loads that most roofs are not designed to withstand, and the connections themselves are unable to handle.

The industry is currently struggling to better define these loads and develop robust support systems. It is not just the panels themselves

that are at risk. In addition, the roof covering membrane may be damaged as panels tumble across a roof, creating holes in the roof covering; holes may be left in the roof where the panels were pulled away from the roof structure.

The safest installations are those where the panels are installed at least 3’ to 4’ away from any roof edge and the panels are installed parallel to, and a few inches above, the roof surface. Wind pressures will tend to equalize very quickly on the top and bottom surfaces of these panels so forces will be lower.

The riskiest installations are those where the panels are installed at a different angle than the roof slope and near an edge of the roof. As the flow spills and accelerates around the corners and around the edges of the roof, these panels are exposed to increased wind speeds. Check to make sure that the installation meets building code approval for the area.

If the system is installed at a different angle than the roof slope, check to see if it would work efficiently if the angle were changed to match the roof, or whether or not the angle may be temporarily changed during a hurricane. If it is close to the edge of the roof, see if it can be moved it away from the edge.

Hurricane kitsThe preparation guide for board members and residents should include instructions on preparing a hurricane kit of supplies and information. During an association meeting, owners can be advised about items to collect for hurricane preparation; additionally, the preparation of a survival kit should be part of the guide that the owners are given prior to the season. Documents – such as identification, driver’s licenses, medical insurance cards, birth certificates, social security cards, insurance policies, proof of property ownership, credit and ATM cards, cash, checks, medications, medical information, family contacts, board, and CAM contact, numbers, and emergency contact information – should be collected and kept safely with owners. Waterproof container should secure cash and important documents.

Kits are important to provide supplies for board members, staff, and volunteers who plan to stay at the property. Some counties do not enforce mandatory evacuations; however, it is important to leave if an evacuation is mandated.

FEMA advises (2014):For survival after a severe storm food, water and other supplies must be sufficient to last for at least 72 hours. Local officials and relief workers will be on the scene after a disaster but they cannot reach everyone immediately. Help might arrive in hours or it might take days. Additionally, basic services such as electricity, gas, water, sewage treatment and telephones may be cut off for days or even a week, or longer. Supply kits should contain items to manage during these outages.

It is important to create a kit of supplies in case of evacuation. This kit will also be useful if residents are able to stay in the building, but who still may be affected by the storm and by any loss of power. It is important to prepare well in advance of the storm to avoid the last-minute rush when items become scarce or depleted.

Have two kits: 1. A large kit with three days’ worth of supplies. 2. A smaller kit, if you must evacuate. This should be easily

transported.

Some recommended items to include are: ● One gallon of water for each person, per day. Have enough water

for at least three days. ● Canned and dried food – Should be easy to prepare, not need

refrigeration, and be enough for three days. ● Manual can opener. ● Sleeping bags or cots.

● Flashlights or lanterns with batteries. ● First-aid kit. ● Bathroom supplies. ● Medicines, including prescription drugs. ● Serial numbers for medical equipment, such as pacemakers. ● Emergency contact list. ● Soap and hand sanitizer. ● Moist toilettes. ● Face masks. ● NOAA All-Hazards Weather Radio or a battery-powered radio. ● Cell phones: Charge cell phones and limit use after power is out. ● Gasoline. Make sure the car is full, far in advance of an

approaching storm. Do not wait until the last minute to get extra gas for cars and generators: gas stations can run out early. Perform a basic auto safety check to be sure you are ready to evacuate.

● Personal hygiene items and sanitation items. ● Duct tape. ● Heavy garbage bags or tarps. ● Fire extinguisher. ● Lighter or matches. ● Whistle or air horn. ● Tools. ● Extra eyeglasses. ● Hearing aid batteries. ● Special equipment for physically challenged. ● Diabetic supplies ● Pet supplies such as a cage, leash, food and vaccination papers. ● Books, magazines, games for recreation. ● Special-needs items and baby supplies, if applicable. ● Cooler and ice pack. ● A plan for evacuation and, if family members are separated, a plan

about how you will get together in different situations.

The Department of Homeland Security and FEMA advise everyone to think about a plan for communication. Families and individuals may not be together if a disaster strikes, so it is important to think about the following situations and plan, just in case. Consider the following questions when making a plan:1. How will the board, staff, or residents receive emergency alerts

and warnings?2. How will they get to safe locations for relevant emergencies?3. How they stay in touch if cell phone, Internet, or landline does not

work?


4. How will they communicate that they are safe?5. How will they get to a meeting place after the emergency?6. Look online or call local emergency or media contacts for

community text or email alert systems for emergency notifications. Use the name of the town, city, county names or key words (such as emergency or hurricane alerts).

○ Discuss what to do if the community is ordered to evacuate; practice a plan. Know the evacuation routes and available shelters that are able to accommodate individuals who are disabled or medically fragile, or for those who have pets, for example.

○ Have a contact list. If phones are down, pick two meeting places: 1. Near the home; or 2. Somewhere outside the neighborhood.

Examples of meeting places: ○ In the neighborhood: A mailbox at the end of the driveway, or

a neighbor’s house. ○ Outside of the neighborhood: A library, community center,

place of worship, or a family friend’s home. ○ Outside of the town or city: Home of a relative or family

friend. Make sure everyone knows the address of the meeting place and discuss ways to would get there.1. Share information. Make sure everyone carries a copy

in his or her backpack, purse, or wallet. Post a copy in a central location – such as a bulletin board, door, or by an elevator or stairway. Practice the plan. Have regular meetings to review emergency plans, communication plans, and meeting places after a disaster. Conduct drills.

Other important steps for preparation: ● Test smoke/carbon monoxide detectors monthly.

● Learn how to turn off gas, electric, water, and heater systems at main breaker switches.

● Learn first-aid and CPR. ● Discuss basic safety rules. ● Designate a safe room that is away from glass windows and doors;

move valuables away from these areas. ● Keep towels on hand to soak up water and to place in sliding door

tracks. ● Fill the bathtub with water. This water should be used for washing

and flushing toilets only. ● Set the freezer and refrigerator to the coldest setting to maintain

food safety. ● Identify safety exits out of the building that may be dark and

obscured during power outages. ● Make sure children know what to do if they are home alone. ● Plan for elderly or disabled residents and neighbors. Include pets

in the emergency plan. ● Monitor TV weather channels, radio, or Internet sites for

emergency information. ● Set the freezer and refrigerator to the coldest settings to protect

food for as long as possible in the event that the power is out. ● Protect personal property: Residents should move valuable items

away from windows and doors. A supply of towels should be kept near these areas to address any water entry during the storm.

● Stay calm, have plans ready, and listen for instructions from local officials.

● For questions, call the county emergency management office. ● Be informed about different threats; educate the board and

residents about the seriousness of following procedures indicated by severe weather warnings and building alarms.

● For kid-friendly information and activities, visit www.KidsGetAPlan.com.

● Visit www.FloridaDisaster.org.

If evacuation is called: Community association tipsGiven that property managers and association employees/contractors will likely need to tend to their own homes and families immediately preceding a storm, it is wise to assign these tasks to board members or other resident volunteers. These guidelines are a general outline: specific details should be developed for individual properties (Shaw & Korski, 2014):

● Communicate the evacuation: Send an email about the evacuation requirement to the community and post notices in common areas.

● Disabled residents: Provide evacuation assistance to any disabled residents.

● Check each unit: Knock on the door of each unit, if possible, to ensure all residents have evacuated.

● Disable access systems: Unlock (or open) any entrance gates or doors so that residents may flow freely in and out of the property. To deter possible post storm looting, association may consider reactivating these systems after all residents have evacuated.

● Disable elevators: After all residents have evacuated, disable all elevators on the top floor of the building. (Refer to the previous section for details on elevator preparation.)

Although access in and out of security gates is possible, the building entry doors should be locked and accessible with a key for owners and tenants, if electronic access systems are down. If this is not possible, security guards should be hired to protect residents, board, and staff who choose to stay, as well as the property of those that evacuate.

If an evacuation order is given and residents decide to leave, homeowners tips

● Take valuables and important documents; ● Secure and lock all doors and windows; ● Remove all animals and take them to a secure location;

● Shut the water shut off (some units do not have a shut off valve in the unit);

● Unplug all electronic equipment. Move items off the floor and away from windows;

● Cover large electronics such as televisions or art work with tarp or other protective materials, in case of water intrusion from blowing rain;

● Monitor local media to check traffic reports and evacuation routes. Traffic will increase, bridges may close, or traffic routes may be closed or altered as the storm approaches;

● Recheck the travel emergency kit for critical items; ● Check the location of shelters, hotels, safe areas for refuge, and

contact the CAM, a board member, relatives or friends to inform them of the plan to leave and the destination;

● Clean and dispose of perishable items in the refrigerator, if time allows; and

● Turn off electricity at the breaker panel.

Power outages: Food safetyThis information should be included in the preparation guide for residents who choose to stay on the property, or for when they return to their properties.

The CDC (2014) has provides this safety guide in the event of a power outage:

If the power is out for less than four hours, then the food in the refrigerator and freezer will be safe to consume. While the power is out, keep the refrigerator and freezer doors closed as much as possible to keep food cold for longer.


If the power is out for longer than four hours, follow the guidelines below:

● For the freezer section: A freezer that is half full will hold food safely for up to 24 hours. A full freezer will hold food safely for 48 hours. Do not open the freezer door if you can avoid it.

● For the refrigerator section: Pack milk, other dairy products, meat, fish, eggs, gravy, and spoilable leftovers into a cooler surrounded by ice. Inexpensive Styrofoam coolers are fine for this purpose.

● Use a food thermometer to check the temperature of your food right before you cook or eat it. Throw away any food that has a temperature of more than 40 degrees Fahrenheit.

For guidelines on refreezing food when the power comes back on, visit https://www.fsis.usda.gov/wps/portal/fsis/topics/food- safety-education/get-answers/food-safety-fact-sheets/emergency-preparedness/keeping-food-safe-during-an-emergency/CT_Index

Safe drinking water (CDC, 2014)Fill a bathtub and large containers with water for washing and flushing only.

When the power goes out, water purification systems may not be functioning fully. Safe water for drinking, cooking, and personal hygiene includes bottled, boiled, or treated water. Your state, local, or tribal health departments can make specific recommendations for boiling or treating water in your area. Here are some general rules concerning water for drinking, cooking, and personal hygiene. Remember:

● Do not use contaminated water to wash dishes, brush teeth, wash and prepare food, wash your hands, make ice, or make baby formula. If possible, use baby formula that does not require added water.

● Be sure that bottled water comes from a safe source. If the origin of the water is unknown, boil or treat it before use. Use only bottled, boiled, or treated water until the supply is tested and deemed safe.

● Boiling water, when practical, is the preferred way to kill harmful bacteria and parasites. Bringing water to a rolling boil for 1 minute will kill most organisms.

● The CDC (2014) site provides instructions for disinfecting water with iodine or bleach as well.

Other safety tips: ● Use generators, pressure washers, grills, and similar items

outdoors only to prevent carbon monoxide poisoning. ● In hot weather, stay cool and drink plenty of fluids to prevent heat-

related illness. ● Avoid downed power lines: If a power line falls on the car, stay

inside the vehicle. ● Avoid flood water: It may be electrically charged from

underground or downed power lines and may hide dangerous debris or places where the ground is washed away.

● Avoid walking or driving through standing or rushing water.

According to the National Weather Service (NWS, 2013):Each year, more deaths occur due to flooding than from any other thunderstorm-related hazard. Over half of all flood-related drownings occur when a vehicle is driven into hazardous flood water. The next highest percentage of flood-related deaths is due to walking into, or near, flood waters. People underestimate the force and power of water. Many of the deaths occur in automobiles, as they are swept downstream. Of these drownings, many are preventable; however, too many people continue to drive around the barriers that warn that the road is flooded. A mere six inches of fast-moving flood water can knock over an adult. It takes just 12 inches of rushing water to carry

away a small car, while two feet of rushing water can carry away most vehicles. It is NEVER safe to drive or walk into floodwaters.

Extreme heat (CDC, 2014)The loss of air conditioning can be the most uncomfortable side effect of losing power during a storm. Acquire a back-up or a battery-operated fan, but do not run them unattended. Fans create a difference in perceived temperature, but do not cool the room; instead, they create a cooling effect by dispersing the heat off the skin. They can actually add heat to a room just by operating. Anyone working in the building during a power outage during and after the hurricane will be subjected to intense heat: these warning signs and tips for first aid are important to know. Emergency personnel may not be readily available to clear blocked roads or attend to the abundance of calls in a severe storm.Be aware of the risk for heat stroke, heat exhaustion, heat cramps, and fainting. To avoid heat stress:

● Drink a glass of fluid every 15 to 20 minutes, and at least one gallon each day. Avoid alcohol and caffeine: they both dehydrate the body.

● Wear light-colored, loose-fitting clothing. Work during cooler hours of the day when possible, or distribute the workload evenly throughout the day.

● If someone becomes dizzy, weak or overheated, s/he should go to a cool place. Sit or lie down, drink water, and wash the face with cool water. Seek medical help quickly if the symptoms do not improve.

Heat stroke is the most serious heat illness. This happens when the body is not able to control its own temperature, and therefore its temperature rises rapidly. Sweating fails and the body cannot cool down. Body temperatures can rise to 106°F, or higher, within 10 to 15 minutes. Heat stroke can cause death or permanent disability if emergency care is not given.

Warning signs of heat stroke vary but can include: ● Red, hot, and dry skin (no sweating); ● Rapid, strong pulse; ● Throbbing headache; ● Dizziness, nausea, confusion, or unconsciousness; and ● An extremely high body temperature (above 103°F).

If you suspect someone has heat stroke, follow these instructions: ● Immediately call for medical attention; ● Get the person to a cooler area; ● Cool the person rapidly by immersing him/her cool water or a cool

shower, or spraying or sponging him/her with cool water. If the humidity is low, wrap the person in a cool, wet sheet and fan him/her vigorously;

● Monitor body temperature and continue cooling efforts until the body temperature drops to 101-102°F;

● Do not give the person alcohol to drink. Seek medical assistance as soon as possible; and

● If emergency medical personnel do not arrive quickly, call the hospital emergency room for further instructions.

For more information on heat-related illnesses and treatment, see the CDC’s Extreme Heat Web site. Information for workers can be found on the NIOSH web page, Protecting Workers from Heat Illness.

These resources also provide information about extreme heat: ● Heat Stress National Institute for Occupational Safety and Health

(NIOSH, 2013).

This site provides comprehensive heat-induced occupational illness and injury information.


After the hurricane passes: Association, CAM, and board dutiesOften, the board members and CAM may have evacuated and either cannot return immediately due to mandatory road and/or bridge closures by emergency personnel, or they are dealing with losses at their property or assisting loved ones. If there is a safety committee of resident volunteers (or board member), and they are available and willing to assist, they may divide the tasks to begin restoration and clean up as soon as possible.

The CAM, board members, and volunteers should to check on all owners that remained in the building - especially the elderly or disabled - to be sure that they are safe. They will also want to check on all units to survey and record the damage in writing as well as though photographs.

The mitigation of damages must begin immediately, as stated in the Florida Statute 718.1265 below. This includes water extraction and the prevention of further water intrusion to prevent the growth of mold and permanent damage to walls and carpets.

Debris removal by maintenance and public works staff must begin immediately for safe access to the building and grounds as well as to expedite the return of utility services.

At this time, it is important to contact a qualified licensed restoration specialist or contractor (hopefully these individuals were secured ahead of the storm) because there may be damage that is difficult or impossible to see with the untrained eye. The insurance adjuster will be trained to spot these issues; some associations employ independent inspectors. In some cases, engineering firms may be consulted to determine major structural damage – such as coastal buildings – that may have shifted due to high winds and/or water, or damage to the concrete exterior and parking structures, as well as unseen damage to roof structures.

There are steps that can be taken immediately as the CAM and board wait for these professionals to arrive.

The insurance company can reimburse essential temporary labor and supplies to mitigate damage and ensure safety; it is important to keep receipts and document the damage and repairs that are addressed during this time.

The cleanup process must begin within the first 24 hours, if possible, and maintenance staff should check for visible damage to the structure, missing structures and equipment, foundation problems, cracks, warped or loose materials, holes, or areas damaged by water intrusion or actual floods.

The CAM or board members should inspect utility equipment for water, gas, electric, or sewer lines and immediately report damage and take safety precautions to shut off utilities and restrict access if necessary: any suspected damage to utilities should be reported and safety guidelines must be followed.

If the power is still out, the staff will have to keep the generator supplied with fuel and keep it operating safely.

Shaw & Korski (2014) advise the following: ● Photograph the property: Board members or managers should

return to the property, when possible, to survey the damage and photograph the property for insurance purposes.

● Communicate with residents: Associations should be sure to communicate routinely with residents via email or via the community’s website. Residents should be informed of the status of the property, the actions the board is taking, and when they will be able to come back. The association should identify any areas of the property that are off-limits due to extensive damage and communicate these areas to residents.

● Hold a board meeting: Boards should hold a meeting as soon as possible (even if via phone) to discuss its next steps.

● File insurance claims: Associations should begin filing claims immediately. Insurance companies are often swamped with claims after a storm; the longer the association waits to file a claim, the longer it will likely take for the claim to be processed and payment to be received. Note: This is the time to review the chosen options for payment of the deductible once the amount is determined. Lines of credit or procedures for special assessments may begin. Notify the owners that they should check their individual insurance policies to obtain reimbursement for loss assessment, if a special assessment is levied.

● Contact appropriate vendors: Associations should immediately contact their preferred vendors to begin cleanup and to obtain bids for repairs. Landscaping companies typically offer a cleanup service to remove plant debris from the community. Further, the association’s fire safety system vendor should complete a full inspection of the community’s system immediately to ensure it is up and running.

● Repair list: Boards or property managers, in coordination with hurricane disaster specialists, restoration specialists or other vendors, should create a full list of necessary repairs by their order of priority. The cost of each item should be included.

● Power & water: Reestablish power and water, when feasible. ● Access systems: Reactivate property access systems. ● Window boards/ hurricane shutters: In situations where window

glass is not broken, remove individual window boards and lift hurricane shutters.

● Elevators: Reactivate elevators. ● Association property: Return all association property to standard

locations.

At this stressful time, there should be a board member(s) - as well as the CAM - available to answer any questions and to provide assistance to residents. They may also want to ensure that residents who remained on the property, and those returning, have basic supplies if the power is still out, which will mean that there is no running water.

At this time, the CAM and board should be checking to ensure that all hard copy and electronic files are intact and secure, and that they can begin to return items to their proper location.

Fraudulent activityIt is also important for the CAM and the board to help residents and owners identify scams and to avoid fraudulent contractors who often operate after major storms.

The CAM and board must insist that no work is performed unless the contractor can prove that his/her business is licensed, can provide legitimate references, and currently carries insurance – including provide proof of workers’ compensation to cover their workers. Due to the demand, contractors from out-of-the-area will appear overnight; the bona fide ones will have the proper documentation to verify their stated credentials.

They should also warn residents against taking monetary settlements with insurance companies in lieu of their benefits from coverage, or signing an assignment of benefits clause.

Atlas Insurance explains why signing an assignment of benefits clause is not a good idea, and has led to fraudulent activity and lawsuits. According to Atlas (2015):

When you sign one of these contracts, the contractor may contend that you have agreed to allow them to “stand in your shoes” for the purposes of your insurance claim. In most instances, Policyholders are not aware that they may have allegedly just signed away control of their own claim.


Atlas outlines some problems for associations and owners if they sign this clause:

● The contractor can charge whatever he or she chooses to do the work with no input or agreement from the owner or insurance carrier.

● The agreement is typically signed before the full scope of work is determined; the contractor dictates what work will be completed under the agreement.

● Contractors may contend that owners should not be named as a payee on the insurance proceeds checks. The owner may lose any leverage to ensure that the job is completed and completed to their satisfaction.

● The contractor may claim they can sue the insurance carrier directly, just as if they were the owner but without the owner’s further consent. Owners may be subject giving a statement under oath, to produce documents and to appear in court for a lawsuit over which they have no control.

● If the insurance carrier prevails in court, or ends up being obligated to pay less than the total amount claimed by the contractor, the contractor can then turn around and pursue payment directly from the owner.

● The contractor can even place a lien on the home for such amounts: contractor liens in Florida can be enforced by foreclosure.

Inferior work done in units can affect the integrity of the building and safety of the residents; therefore, the CAM and the board have an obligation to ensure that quality work is performed.

If individual owners have not yet returned and all security systems are not in working order, then CAMs and board members must be especially diligent to check credentials and record all contractors entering and leaving the building each day to guard against theft. Security personal may need to be hired to keep the building’s common areas, individual units, and parking areas safe from theft and vandalism during this time when there are a lot of outsiders on the property.

Paying for repairs while waiting for insuranceAs previously discussed, the association must move forward on emergency, temporary repairs and then file claims for reimbursement. However, funds for major damage can take four months, or longer, to receive. Coastal community associations will face large deductibles. In addition, deductible buy down insurance carries a high premium; however, the association may want to obtain a quote anyway.

The lack of merit for assignment of benefits clauses has been covered.

Chip Merlin (2015) presents the following strategies for community associations to pay for repairs that must be down prior to receiving insurance payouts. Following is a summary; association attorneys that specialize in association insurance and law should be consulted:

Reserves Associations could consider using reserves. For example, if the association has half of a roof replacement already reserved, why shouldn’t it be able to tap into those reserves to finance the repair or the replacement? Donna DiMaggio Berger of Becker Poliakoff stated that, in Florida, the emergency powers of the association president and board are very broad following a catastrophe and during an emergency situation - so long as the Governor has stated that an emergency exists. During such times, they may authorize, without prior association member vote, the use of reserve funds for emergency repairs. The warning is that there needs to be an emergency and an order in place at the time. Otherwise, using reserve funds usually requires member approval through a vote pursuant to association by-laws. Mistakes in this area can lead to fines and personal liability.

Credit lines for emergency constructionCredit lines are an excellent avenue for most associations, but the credit line should be obtained in advance to speed up the process.

Special assessmentsSpecial assessments can be made by association members to cover the shortfall of deductibles. These assessments can also provide interim funding of repairs caused by non-paying and slow paying insurance companies.

Merlin closes by noting:Getting repairs completed, even when insurance companies do not pay, helps put rental income into the pockets of apartment and commercial building owners and prevents many tenants from cancelling leases resulting in lost revenues once the repairs are completed (Merlin,2015).

Florida owners will now be able to recoup $2,000 toward special loss assessments, as listed in the following law.

Florida Statute Chapter 627.714: Residential condominium unit owner coverage; loss assessment coverage required.

1. For policies issued or renewed on or after July 1, 2010, coverage under a unit owner’s residential property policy must include at least $2,000 in property loss assessment coverage for all assessments made as a result of the same direct loss to the property, regardless of the number of assessments, owned by all members of the association collectively if such loss is of the type of loss covered by the unit owner’s residential property insurance

policy, to which a deductible of no more than $250 per direct property loss applies. If a deductible was or will be applied to other property loss sustained by the unit owner resulting from the same direct loss to the property, no deductible applies to the loss assessment coverage.

2. The maximum amount of any unit owner’s loss assessment coverage that can be assessed for any loss shall be an amount equal to that unit owner’s loss assessment coverage limit in effect 1 day before the date of the occurrence. Any changes to the limits of a unit owner’s coverage for loss assessments made on or after the day before the date of the occurrence are not applicable to such loss.

3. Regardless of the number of assessments, an insurer providing loss assessment coverage to a unit owner is not required to pay more than an amount equal to that unit owner’s loss assessment coverage limit as a result of the same direct loss to property.

4. Every individual unit owner’s residential property policy must contain a provision stating that the coverage afforded by such policy is excess coverage over the amount recoverable under any other policy covering the same property.

The Florida Statutes provide additional guidelines and powers to the board following an emergency.

Florida Statute Chapter 718.1265: Association emergency powers.

1. To the extent allowed by law and unless specifically prohibited by the declaration of condominium, the articles, or the bylaws of an association, and consistent with the provisions of s.617.0830, the board of administration, in response to damage caused by an event for which a state of emergency is declared pursuant to s. 252.36 in the locale in which the condominium is located, may, but is not required to, exercise the following powers:a. Conduct board meetings and membership meetings with

notice given as is practicable. Such notice may be given in any practicable manner, including publication, radio, United States mail, the Internet, public service announcements, and conspicuous posting on the condominium property or any other means the board deems reasonable under the circumstances. Notice of board decisions may be communicated as provided in this paragraph.

b. Cancel and reschedule any association meeting.


c. Name as assistant officers persons who are not directors, which assistant officers shall have the same authority as the executive officers to whom they are assistants during the state of emergency to accommodate the incapacity or unavailability of any officer of the association.

d. Relocate the association’s principal office or designate alternative principal offices.

e. Enter into agreements with local counties and municipalities to assist counties and municipalities with debris removal.

f. Implement a disaster plan before or immediately following the event for which a state of emergency is declared that may include, but is not limited to, shutting down or off elevators; electricity; water, sewer, or security systems; or air conditioners.

g. Based upon advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine any portion of the condominium property unavailable for entry or occupancy by unit owners, family members, tenants, guests, agents, or invitees to protect the health, safety, or welfare of such persons.

h. Require the evacuation of the condominium property in the event of a mandatory evacuation order in the locale in which the condominium is located. Should any unit owner or other occupant of a condominium fail or refuse to evacuate the condominium property where the board has required evacuation, the association shall be immune from liability or injury to persons or property arising from such failure or refusal.

i. Based upon advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine whether the condominium property can be safely inhabited or occupied. However, such determination is not conclusive as to any determination of habitability pursuant to the declaration.

j. Mitigate further damage, including taking action to contract for the removal of debris and to prevent or mitigate the spread

of fungus, including, but not limited to, mold or mildew, by removing and disposing of wet drywall, insulation, carpet, cabinetry, or other fixtures on or within the condominium property, even if the unit owner is obligated by the declaration or law to insure or replace those fixtures and to remove personal property from a unit.

k. Contract, on behalf of any unit owner or owners, for items or services for which the owners are otherwise individually responsible, but which are necessary to prevent further damage to the condominium property. In such event, the unit owner or owners on whose behalf the board has contracted are responsible for reimbursing the association for the actual costs of the items or services, and the association may use its lien authority provided by s. 718.116 to enforce collection of the charges. Without limitation, such items or services may include the drying of units, the boarding of broken windows or doors, and the replacement of damaged air conditioners or air handlers to provide climate control in the units or other portions of the property.

l. Regardless of any provision to the contrary and even if such authority does not specifically appear in the declaration of condominium, articles, or bylaws of the association, levy special assessments without a vote of the owners.

m. Without unit owners’ approval, borrow money and pledge association assets as collateral to fund emergency repairs and carry out the duties of the association when operating funds are insufficient. This paragraph does not limit the general authority of the association to borrow money, subject to such restrictions as are contained in the declaration of condominium, articles, or bylaws of the association.

2. The special powers authorized under subsection (1) shall be limited to that time reasonably necessary to protect the health, safety, and welfare of the association and the unit owners and the unit owners’ family members, tenants, guests, agents, or invitees and shall be reasonably necessary to mitigate further damage and make emergency repairs.

ConclusionCommunity associations are varied and complex; therefore, hurricane preparation and restoration is a complex task that the CAM cannot complete without organization, detailed planning, and help from the board and professional consultants. In addition to securing and managing the physical property, the needs of the residents must be a priority.

Assisting the board and the residents in understanding the power and risks posed by the impending hurricane, as well as the importance of preparation, will help them function independently so that the CAM can focus on managing the business preparing and restoring the physical property.

Establishing a timeline for preparation before and during, as well as relegating immediate mitigation of damages after, must be a priority. Preventive maintenance can make the job of hurricane preparation and restoration much easier. Is it important to conduct annual property inspections, including a review of insurance coverage.

Actual preparation should begin well before the beginning of hurricane season on June 1(at least in April), to accomplish the many tasks involved. Of course, the size and complexity of the property will determine the timelines and magnitude of the preparation and restoration at hand.

Consulting professional restoration and repair contractors, community association attorneys, and insurance specialists, safety consultants, and local emergency personnel can help the CAM prepare the board and residents, as well as inform them of their role in the preparation and restoration after a storm.

The Florida CAM and board have a fiduciary duty to act in good faith and in the best interest of the association owners. Planning and preparation for hurricanes adds to this responsibility; the Florida Statutes give directives on insurance coverage, reserves, loss assessment, owners’ rights, duties of the officers and directors, and emergency powers given to the board. The board and CAM should review these Statutes annually.

Local, state, and federal resources are available to assist the CAM and the board as well as to provide a wealth of information on all topics related to hurricane preparation, retrofitting, and restoration. The information and resources provided by these agencies should be utilized to educate the community association management staff, personnel, residents, and owners – well in advance of the start of hurricane season.


Resources ● Florida Division of Emergency Management: http://www.

floridadisaster.org/. ● Federal Emergency Management Agency: http://www.fema.gov/. ● National Oceanographic and Atmospheric Administration: http://

www.nhc.noaa.gov/.

● State of Florida: http://www.stateofflorida.com/articles/hurricane-preparedness-guide.aspx/.

● Homeland Security/ FEMA on Hurricane: http://www.ready.gov/hurricanes.

● Add the county of employment or residence for local information.

References � Atlas Insurance. (2015). What Does Assignment of Benefits Means to You. Retrieved May 17, 2017

from http://www.atlasinsuranceagency.com/what-does-assignment-of-benefits-mean-to-you/ � Center For Disease Control. (2014). What You Need to Know When the Power Goes Out

Unexpectedly. Retrieved May 20, 2017 from https://www.cdc.gov/disasters/poweroutage/needtoknow.html

� Dimaggio-Berger, D. In C. Merlin. (2015). (Author). Property Managers’ and Condominium Association Leaders’ Hurricane Matthew Dilemma - Financing the Repair Before the Insurance Company Pays

� Retrieved May 16, 2017 from http://www.condominiuminsurancelaw.com/2016/10/articles/condominium-associations/property-managers-and-condominium-association-leaders-hurricane-matthew-dilemma-financing-the-repair-before-the-insurance-company-pays/

� Federal Alliance for Safe Homes. (2016). Design Wind Speed - Blueprint for Safety Retrieved May, 17, 2017 from www.blueprintforsafety.org/doc.php?d=Design_Wind_Speed

� Federal Emergency Management Agency. (2013). Family Communication Plan for Parents and Kids-Ready Kid. Retrieved May 20, 2017 from shttps://www.fema.gov/media-library/assets/documents/34330

� Federal Emergency Management Agency. (2014). Emergency Supply Kit. Retrieved May, 19, 2017 from https://www.fema.gov/media-library-data/1390846764394-dc08e309debe561d866b05ac84daf1ee/checklist_2014.pdf

� Federal Emergency Management Agency. (2016). https://www.fema.gov/news-release/2016/06/01/fema-encourages-preparedness-2016-hurricane-season

� Federal Emergency Management Agency. (2017). Get Tech Ready. Retrieved https://www.ready.gov/get-tech-ready

� Florida Emergency Management Division. (2010). Hurricane Retrofit Guide. Retrieved May 20, 2017 from http://www.floridadisaster.org/hrg/

� Florida Emergency Management Division. (2016). Get A Plan. Retrieved May 19, 2017 from http://www.floridadisaster.org/getaplan/

� Florida Legislature. (2016).Florida Statutes Chapter 718: Condominiums. Retrieved May 20, 2017 from http://Www.Leg.State.Fl.Us/Statutes/Index.Cfm?App_Mode=Display_Statute&Url=0700-0799/0718/0718contentsindex.Html

� Florida Legislature. (2016). Florida Statutes Chapter 627: Insurance Rates and Contracts � Retrieved May 17, 2017 from http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_

Statute&URL=0600-0699/0627/0627ContentsIndex.html � Merlin, C. (2016). Property Managers’ and Condominium Association Leaders’ Hurricane Matthew

Dilemma - Financing the Repair Before the Insurance Company Pays � Retrieved May 16, 2017 from http://www.condominiuminsurancelaw.com/2016/10/articles/

condominium-associations/property-managers-and-condominium-association-leaders-hurricane-matthew-dilemma-financing-the-repair-before-the-insurance-company-pays/

� Miami Dade County. (2016). Elevator Hurricane Preparedness. Retrieved May 18, 2017 from http://www.miamidade.gov/facilities/elevator-hurricane-preparedness.asp

� National Association of Realtors. (2017). How to Hurricane Proof Windows. Retrieved May 20,2017 from https://www.houselogic.com/remodel/windows-doors-and-floors/how-hurricane-proof-windows/

� National Institute for Occupational Safety and Health. (2016). Heat Stress. Retrieved May 21, 2017 from https://www.cdc.gov/niosh/topics/heatstress/

� National Oceanographic Atmospheric Administration. (2013).Turn Around Don’t Drown. Retrieved May 22, 2017 from http://www.nws.noaa.gov/os/water/tadd

� National Oceanic and Atmospheric Administration. (2017). National Hurricane Center Glossary.Retrieved May 19, 2017 from http://www.nhc.noaa.gov/aboutgloss.shtm

� Shaw, E & Koski, R. (2014).Your Florida Condominium Association Hurricane Preparedness Plan Preparedness Guide. Retrieved May 17, 2017 from http://www.flcondoassociationadvisor.com/florida-condominium-association-hurricane-preparedness-plan/


HURRICANE PREPARATION AND RESTORATION FOR COMMUNITY ASSOCIATION MANAGEMENT

Final Examination QuestionsSelect the best answer for each question and mark your answers on the answer sheet found on page 92 or

complete your test online at CAMS.EliteCME.com

31. During a hurricane watch, prepare the property and prepare an evacuation plan, in case a warning is issued.

¨ True ¨ False

32. Between wind speeds of 100 and 120 mph, there is a high risk for hurricane wind damage and a high risk for water intrusion.

¨ True ¨ False

33. The Florida Statutes state that insurance coverage is sufficient enough to cover an amount equal to the probable maximum loss for communities during a 250-year windstorm event.

¨ True ¨ False

34. Elevators are equipped with a phase or voltage monitor so that they can be started safely if there is no water present, and without causing damage.

¨ True ¨ False

35. The Florida Statute Chapter 718.113(5) requires that every condominium association adopt hurricane shutter specifications. Owners who wish to install shutters must follow these specifications, and the board must allow owners to install them if they comply with the specifications.

¨ True ¨ False

36. The horizontal force applied by a wind speed of 130 mph to a shed that is 8’ wide by 8’ high is about 2,100 pounds.

¨ True ¨ False

37. For survival after a severe storm, food, water and other supplies must be sufficient enough to last for at least 72 hours.

¨ True ¨ False

38. The assignment of benefits clause is a good idea: it can help the board restore the property if they have confidence in the contractor and insurance company.

¨ True ¨ False

39. There is no circumstance where the board may authorize, without prior association member vote, the use of reserve funds for emergency repairs.

¨ True ¨ False

40. The board may, based upon the advice of emergency management officials or upon the advice of licensed professionals retained by the board, determine any portion of the condominium property unavailable for entry or occupancy by unit owners.

¨ True ¨ False

CAMFL04HPE18


Chapter 5: Insurance for Florida Community Associations4 CE Hours


Objectives � Identify the role of the community association manager related to

association insurance coverage. � List and explain the Florida Statutes and Administrative Codes that

govern community association insurance coverage. � Define the types of insurance coverage for Florida community

associations. � Identify the coverage provided by the National Flood Insurance

Program (NFIP) and the role of the Federal Emergency Management Administration (FEMA).

� List the eligibility requirements and coverage in the Residential Condominium Building Association Property (RCBAP).

� Explain the purpose of “director and officer” (D&O) insurance coverage for community associations.

� Identify common exclusions to the “master” policy. � Define fidelity insurance coverage protections for community

associations. � List the requirements for windstorm and hurricane insurance. � Identify the purpose of coverage provided by an umbrella policy. � Explain five ways to manage risk in a community association.

OverviewThis course provides a review of the types of insurance coverage that Florida community associations should consider when acquiring insurance. It also provides an overview of relevant Florida State

Statutes and Administrative Codes that govern community association insurance coverage.

IntroductionAn effective community association manager (CAM) must have current knowledge of insurance issues that impact his/her condominium or homeowners’ association. This includes having a comprehensive master policy, property insurance coverage for replacement value, general liability, boiler/mechanical, casualty, director and officer, and fidelity bonds - to name a few. In addition, the CAM must regularly review the Florida State Statutes and Administrative Codes that may be amended each year during Florida Legislative sessions.

The experienced CAM understands that effective maintenance can improve the function and life of equipment and materials in the common areas and will help prevent property damage and loss.

In addition to understanding insurance policies and forms, responsibilities include assisting with budgeting, controlling and dispersing funds, enforcing rules, preparing documents in a timely manner, coordination maintenance and staff duties, notice meeting coordination, emergency preparation, and recovery if disaster strikes.

GlossaryThe following definitions are from A.M. Best (2017), unless otherwise noted: Casualty: Relates to liability or loss resulting from an accident.

Casualty insurance: Insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property. Casualty insurance protects the association through liability coverage for negligent acts, crime, or omissions if someone is injured, or has damage to their property and files a lawsuit. It also includes such diverse forms as plate glass, insurance against crime, such as comprehensive or all-risk coverage - comprehensive or all-risk coverage is sometimes called extended coverage or special form coverage. “All risk” is insurance coverage for all types of physical property loss, though there may be specific exclusions in all policies. Fire, theft and vandalism are normally included in an all risk or a comprehensive policy.

Coverage: The scope of protection provided under an insurance policy. In property insurance, coverage lists perils that are insured against, properties covered, locations covered, individuals insured, and the limits of indemnification.

Damages for tort liability (Quizlet, 2017):1. Compensatory: Money paid to injured party, pays actual

damages, monetary payments for medical expenses for example.2. General: Pays for non-economic losses such as pain and suffering.

3. Punitive: Court awards for money to punish individuals or group due to actions that caused harm. This type is thought to be greater than simple negligence.

Development to policyholder surplus (IRIS): The ratio that measures reserve deficiency or redundancy in relation to policyholder surplus. This ratio reflects the degree to which year-end surplus was either overstated (+) or understated (-) in each of the past several years, if original reserves had been restated to reflect subsequent development through year end.

Estoppels (Merriam-Webster, 2017): A legal restraint preventing a person from contradicting his own previous statement.

Exclusions: Items and/or conditions that are not covered by the general insurance contract.

General liability insurance: Insurance designed to protect business owners and operators from a wide variety of liability exposures. Exposures could include liability arising from accidents resulting from the insured’s premises or operations, products sold by the insured, operations completed by the insured, and contractual liability.

Liability: Any legally enforceable obligation.

Liability insurance: Insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility, due to negligence, to others imposed by law or assumed by contract.


Liability insurance provides coverage for damage or injuries caused by negligence or other human acts.

Loss valuation (Quizlet, 2017): The process of determining the value of the loss.

Replacement cost: Today’s cost to fully replace the lost or damaged property with like kind or quality property “without deduction for depreciation”.

Actual cash value (ACV): Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence.

Functional replacement cost: Cost to repair or replace with functionally equivalent materials.

Market value: The price a buyer would pay and a seller would accept in a competitive market.

Agreed value: The value of the described property agreed on by both insurer and insured.

Stated amount: An amendment to the valuation provision of a policy that provides a stated maximum amount for payment of any loss.

Valued policy: Valued policy is an exception to the principle of indemnity. Under this provision, the insurer is liable for the full amount of damages up to the policy value.

Named perils: Perils specifically covered under the insured’s property.

Occurrence: An event that results in an insured loss. In some lines of business, such as liability, an occurrence is distinguished from an accident in that the loss doesn’t have to be sudden and fortuitous, and can result from continuous or repeated exposure which results in bodily injury or property damage, neither expected nor intended by the insured.

Partial vs. total loss (Quizlet, 2017) Determining whether a loss is a partial or total loss is critical in the claim settlement process.

Total loss: A total loss is one where the damage is so extensive that it would cost more to repair or replace than the normal market value of the undamaged home.Partial loss: Any loss that is not determined to be a total loss.

Perils (Quizlet, 2017): The causes of a loss. Common causes of loss include fire, wind & lightning. A policy can be written in one of two forms: 1. Specified (named): Perils covered specifically listed in policy. 2. Open peril (all risk): Specifically lists exclusions; everything else

is covered.

Property insurance: Property insurance is a policy that provides coverage for loss of the structure and contents, due to damage or theft. Fire, flood, and windstorm insurance are the major components of this type.

Replacement cost: The dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation, but limited by the maximum dollar amount shown on the declarations page of the policy.

Reserve: An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. A reserve is usually treated as a liability.

Risk management: Management of the pure risks to which a company might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through practices such as avoiding the risk, retaining the risk, reducing the risk, or transferring the risk, usually by insurance.

Self-insurance: Self-insurance includes any plan, fund, or program which is communicated, or the benefits of which are described in writing, to employees and which has heretofore been - or is hereafter established - by or on behalf of any individual, partnership, association, corporation, trustee, governmental unit, employer, or employee organization, or any other organized group, for the purpose of providing for employees or their beneficiaries through such individual, partnership, association, corporation, trustee, governmental unit, employer, or employee organization, or any other group, benefits in the event of sickness, accident, disability, or death. Self-insurance does not include:1. Any plan with respect to which benefits are insured or reinsured

by an insurance company or are provided by a health maintenance organization;

2. Any plan covering fewer than 10 employees in this state;3. Any plan established and maintained as a pension or profit-sharing

plan for the exclusive benefit of employees and their beneficiaries;4. Any plan established and maintained for the purpose of complying

with any workers’ compensation law;5. Any plan administered by or for the federal government;6. Any plan with respect to payments by an employer continuing an

employee’s regular compensation, or part thereof, during an illness or disability;

7. Any plan which is primarily for the purpose of providing first aid care and treatment, at a dispensary of an employer, for injury or sickness of employees while engaged in their employment;

8. Any plan established and maintained for the purpose of providing malpractice coverage or professional liability coverage (FL.SS. 624.031,2016).

Subrogation (Quizlet, 2017): According to the terms of property and casualty contracts, the insureds are required to assign their rights to recovery after a loss to the insurance company. Insurers then have legal right to recover the amount paid for the loss from the at-fault party and take any further legal action necessary. The deductible is returned to the insured when or if the loss payment is recovered.

Tort (Cornell, 2017): A tort is an act or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability. In the context of torts, “injury” describes the invasion of any legal right, whereas “harm” describes a loss or detriment in fact that an individual suffers.

Umbrella policy: Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying policies.

2016 Florida Statutes Chapter 468 Title XXXII, Part VIII: Community Association ManagementIt is important to begin with some basic definitions of community associations and the role of the community association manager, as defined by the Florida Statutes and Administrative Code.

Florida Statutes Chapter 468, Part VIII: Community Association Management (2016c)468.431. Definitions. As used in this part:1. “Community association” means a residential homeowners’

association in which membership is a condition of ownership of a unit in a planned unit development, or of a lot for a home or a

mobile home, or of a townhouse, villa, condominium, cooperative, or other residential unit which is part of a residential development scheme and which is authorized to impose a fee which may become a lien on the parcel. Each of these types have different insurance needs and are guided by different Fl. Statutes.

2. “Community association management” means any of the following practices requiring substantial specialized knowledge, judgment, and managerial skill when done for remuneration and when the association or associations served contain more than 10 units


or have an annual budget or budgets in excess of $100,000: controlling or disbursing funds of a community association, preparing budgets or other financial documents for a community association, assisting in the noticing or conduct of community association meetings, determining the number of days required for statutory notices, determining amounts due to the association, collecting amounts due to the association before the filing of a civil action, calculating the votes required for a quorum or to approve a proposition or amendment, completing forms related to the management of a community association that have been created by statute or by a state agency, drafting meeting notices and agendas, calculating and preparing certificates of assessment and estoppel certificates, responding to requests for certificates of assessment

and estoppel certificates, negotiating monetary or performance terms of a contract subject to approval by an association, drafting prearbitration demands, coordinating or performing maintenance for real or personal property and other related routine services involved in the operation of a community association, and complying with the association’s governing documents and the requirements of law as necessary to perform such practices. A person who performs clerical or ministerial functions under the direct supervision and control of a licensed manager or who is charged only with performing the maintenance of a community association and who does not assist in any of the management services described in this subsection is not required to be licensed under this part.

The professional community association manager: Practice standards and professional conduct2016 Florida Statute Chapter Title XXXII 468.4334: Professional practice standards; liability1. A community association manager or a community association




The Florida Administrative Code: Professional conductAs stated in the definition of community association management, the duties of a CAM require a substantial amount of specialized knowledge, judgment, and managerial skill. To underscore the importance of this role of a community association manger, it is important to include information about professional conduct. The duties of the CAM to assist the board in order to identify insurance needs, assess value, review quotes, select adequate coverage, and submit claims for reimbursement, demand the highest level knowledge, judgment and managerial skills. The Florida Administrative Code provides the following standards for professional conduct.

61E14-2.001: Standards of Professional Conduct.Licensees shall adhere to the following provisions, standards of professional conduct, and such provisions and standards shall be deemed automatically incorporated, as duties of all licensees, into any written or oral agreement for the rendition of community association management services.1. Definitions. As used in this rule, the following definitions apply:

a. “Licensee” means a person licensed pursuant to Sections 468.432(1) and (2), F.S.

b. “Community Association Management Services” means performing any of the practices requiring specialized knowledge, judgment, and management skill as defined in Section 468.431(2), F.S.

c. “Funds” as used in this rule includes money and negotiable instruments including checks, notes and securities.

2. Professional Standards. During the performance of community association management services, a licensee shall do the following:a. Comply with the requirements of the governing documents by

which a community association is created or operated.b. Only deposit or disburse funds received by the community

association manager or management firm on behalf of the association for the specific purpose or purposes designated by the board of directors, community association management contract or the governing documents of the association.

c. Perform all community association management services required by the licensee’s contract to professional standards and to the standards established by Section 468.4334(1), F.S.

d. In the event of a potential conflict of interest, provide full disclosure to the association and obtain authorization or approval.

e. Respond to, or refer to the appropriate responsible party, a Notice of Violation or any such similar notification from an agency seeking to impose a regulatory penalty upon the association within the time frame specified in the notification.

3. Records. During the performance of community association management services pursuant to a contract with a community association, a licensee shall not:a. Withhold possession of the association’s official records, in

violation of Sections 718.111(12), 719.104(2) or 720.303(5), F.S., or original books, records, accounts, funds, or other property of a community association when requested by the association to deliver the same to the association upon reasonable notice. Reasonable notice shall extend no later than 10 business days after termination of any management or employment agreement and receipt of a written request from the association. The manager may retain those records necessary for up to 20 days to complete an ending financial statement or report. Failure of the association to provide access or retention of accounting records to prepare the statement or report shall relieve the manager of any further responsibility or liability for preparation of the statement or report. The provisions of this rule apply regardless of any contractual or other dispute between the licensee and the association.

b. Deny or delay access to association official records to an owner or his or her authorized representative who is entitled to access within the time frame and under the procedures set out in Sections 718.111(12), 719.104(2) or 720.303(5), F.S.


c. Create false records or alter the official records of an association in violation of Sections 718.111(12), 719.104(2) or 720.303(4), F.S., or of the licensee except in such cases where an alteration is permitted by law (e.g., the correction of minutes per direction given at a meeting at which the minutes are submitted for approval).

d. Fail to maintain the records for a community association manager or management firm or the official records of any applicable association, as required by Sections 718.111(12), 719.104(2) or 720. 303(4), F.S.

Determining a community association’s insurance needs: Getting startedBegin by reviewing Florida’s State Statutes and its Administrative Code to determine insurance guidelines for community associations, for condominiums, and for other homeowners’ associations (HOAs). These statutes can be confusing, and the information regarding community association management is contained in numerous chapters. (These chapters will be further covered in this course.)

For example, Chapter 718 of the Florida Statutes covers condominiums; Chapter 719 covers cooperatives; 720 covers HOAs, and; Chapter 721 deals with timeshare and vacation communities. Chapter 468 also provides direction regarding community association management; Chapter 624: Insurance Code: Administration and General Provisions addresses other insurance issues - such as self-insurance.

When considering insurance requirements, for example, Chapter 718 takes precedence over many declarations in condominium association documents. This chapter states that associations must adequately insure property for its value, of which needs to be determined by a replacement cost appraisal every 36 months. Because Chapter 720 does not cover HOA insurance requirements, the governing documents of the association guide the board in required insurance issues.

The CAM must have thorough knowledge of the association’s governing documents as they relate to the Florida Statutes. The CAM must be able to assist the board in the review of governing documents and ensure that the association is fulfilling its responsibility in implementing these documents’ declarations in accordance with the law.

CAMs and board members must be clear, for example, about the areas of the property that are covered by the condominium association insurance, as well as the boundaries that determine where the unit property owner’s insurance takes effect.

CAMs and board members must also know the types of insurance needed based on the unique aspects of the property. For instance,

they may know about property insurance requirements but may not realize the importance of liability insurance that will cover errors and omissions by association directors and officers, volunteers, or vendors.

The CAM and the board must always consult a licensed insurance professional who specializes in coverage for their property type and understands specific flood districts, local geography and risk factors that may require additional insurance coverage. Different agents may specialize in commercial residential properties and HOAs that are high- or low-rise, cooperatives, timeshares, vacation or mobile home communities, for example.

Each property has different common-area amenities, equipment, and features which determine the value that must be considered when making insurance coverage decisions.

A condominium by the ocean would have different common area coverage needs than for a HOA with one hundred homes, lights, roads, golf courses and security gates. Pools, hot tubs, fire pits, barbeque grills, tennis courts, fitness rooms, golf courses, and playgrounds that are owned by the association may increase the casualty/liability risks over associations that do not have those amenities or facilities. Are there multiple buildings, vehicles, or heavy equipment, off-site parking, additional phases in development or other common areas that may present additional safety and security risk issues?

Determining the right amount of property insurance to purchase requires determining replacement cost in case the property is destroyed by fire, flood, wind, or other disasters. The appraisal should be done by a licensed contractor, or an architect, to obtain an accurate value amount. Current building codes may require upgrades to the property, in the case of the repair or replacement of older buildings, to bring them up to code. Insurance coverage is available to cover code upgrades that would be required in case of severe damage that required a tear down and a rebuilding of the property. That additional cost to bring the building up to current building code standards should be reflected in the replacement cost appraisal.

Florida StatutesThe Statutes below are from the 2016 edition. Although they have had annual reviews, there have been no major revisions since 2013 and 2014.

Florida Statute 718.111(2016b)The insurance section of 718.111 is included as follows:11. Insurance. In order to protect the safety, health, and welfare

of the people of the State of Florida and to ensure consistency in the provision of insurance coverage to condominiums and their unit owners, this subsection applies to every residential condominium in the state, regardless of the date of its declaration of condominium. It is the intent of the Legislature to encourage lower or stable insurance premiums for associations described in this subsection.a. Adequate property insurance, regardless of any requirement

in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal. The replacement cost must be determined at least once every 36 months.

1. An association or group of associations may provide adequate property insurance through a self-insurance fund that complies with the requirements of ss. 624.460-624.488.

2. The association may also provide adequate property insurance coverage for a group of at least three communities created and operating under this chapter, chapter 719, chapter 720, or chapter 721 by obtaining and maintaining for such communities insurance coverage sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. A policy or program providing such coverage may not be issued or renewed after July 1, 2008, unless it has been reviewed and approved by the Office of Insurance Regulation. The review and approval must include approval of the policy and related forms pursuant to ss. 627.410 and 627.411, approval of the rates pursuant to s. 627.062,


a determination that the loss model approved by the commission was accurately and appropriately applied to the insured structures to determine the 250-year probable maximum loss, and a determination that complete and accurate disclosure of all material provisions is provided to condominium unit owners before execution of the agreement by a condominium association.

3. When determining the adequate amount of property insurance coverage, the association may consider deductibles as determined by this subsection.

b. If an association is a developer-controlled association, the association shall exercise its best efforts to obtain and maintain insurance as described in paragraph (a). Failure to obtain and maintain adequate property insurance during any period of developer control constitutes a breach of fiduciary responsibility by the developer-appointed members of the board of directors of the association, unless the members can show that despite such failure, they have made their best efforts to maintain the required coverage.

c. Policies may include deductibles as determined by the board.1. The deductibles must be consistent with industry standards

and prevailing practice for communities of similar size and age, and having similar construction and facilities in the locale where the condominium property is situated.

2. The deductibles may be based upon available funds, including reserve accounts, or predetermined assessment authority at the time the insurance is obtained.

3. The board shall establish the amount of deductibles based upon the level of available funds and predetermined assessment authority at a meeting of the board in the manner set forth in s.718.112(2)(e).

d. An association controlled by unit owners operating as a residential condominium shall use its best efforts to obtain and maintain adequate property insurance to protect the association, the association property, the common elements, and the condominium property that must be insured by the association pursuant to this subsection.

e. The declaration of condominium as originally recorded, or as amended pursuant to procedures provided therein, may provide that condominium property consisting of freestanding buildings comprised of no more than one building in or on such unit need not be insured by the association if the declaration requires the unit owner to obtain adequate insurance for the condominium property. An association may also obtain and maintain liability insurance for directors and officers, insurance for the benefit of association employees, and flood insurance for common elements, association property, and units.

f. Every property insurance policy issued or renewed on or after January 1, 2009, for the purpose of protecting the condominium must provide primary coverage for: 1. All portions of the condominium property as originally

installed or replacement of like kind and quality, in accordance with the original plans and specifications.

2. All alterations or additions made to the condominium property or association property pursuant to s. 718.113(2).

3. The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.

g. A condominium unit owner policy must conform to the requirements of s. 627.714.1. All reconstruction work after a property loss must

be undertaken by the association except as otherwise authorized in this section. A unit owner may undertake reconstruction work on portions of the unit with the prior written consent of the board of administration. However, such work may be conditioned upon the approval of the repair methods, the qualifications of the proposed contractor, or the contract that is used for that purpose. A unit owner must obtain all required governmental permits and approvals before commencing reconstruction.

2. Unit owners are responsible for the cost of reconstruction of any portions of the condominium property for which the unit owner is required to carry property insurance, or for which the unit owner is responsible under paragraph (j), and the cost of any such reconstruction work undertaken by the association is chargeable to the unit owner and enforceable as an assessment and may be collected in the manner provided for the collection of assessments pursuant to s. 718.116.

3. A multi-condominium association may elect, by a majority vote of the collective members of the condominiums operated by the association, to operate the condominiums as a single condominium for purposes of insurance matters, including, but not limited to, the purchase of the property insurance required by this section and the apportionment of deductibles and damages in excess of coverage. The election to aggregate the treatment of insurance premiums, deductibles, and excess damages constitutes an amendment to the declaration of all condominiums operated by the association, and the costs of insurance must be stated in the association budget. The amendments must be recorded as required by s. 718.110.

h. The association shall maintain insurance or fidelity bonding of all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any such bonding.

i. The association may amend the declaration of condominium without regard to any requirement for approval by mortgagees of amendments affecting insurance requirements for the purpose of conforming the declaration of condominium to the coverage requirements of this subsection.

j. Any portion of the condominium property that must be insured by the association against property loss pursuant to paragraph (f) which is damaged by an insurable event shall be reconstructed, repaired, or replaced as necessary by the association as a common expense. In the absence of an insurable event, the association or the unit owners shall be responsible for the reconstruction, repair, or replacement as determined by the maintenance provisions of the declaration or bylaws. All property insurance deductibles and other damages in excess of property insurance coverage under the property insurance policies maintained by the association are a common expense of the condominium. The Statute goes on to list the responsibility of individual unit owners at this point.

k. An association may, upon the approval of a majority of the total voting interests in the association, opt out of the provisions of paragraph (j) for the allocation of repair or reconstruction expenses and allocate repair or reconstruction expenses in the manner provided in the declaration as


originally recorded or as amended. Such vote may be approved by the voting interests of the association without regard to any mortgagee consent requirements.

l. In a multi condominium association that has not consolidated its financial operations under subsection (6), any condominium operated by the association may opt out of the provisions of paragraph (j) with the approval of a majority of the total voting interests in that condominium. Such vote may be approved by the voting interests without regard to any mortgagee consent requirements.

m. Any association or condominium voting to opt out of the guidelines for repair or reconstruction expenses as described in paragraph (j) must record a notice setting forth the date of the opt-out vote and the page of the official records book on which the declaration is recorded. The decision to opt out is effective upon the date of recording of the notice in the public records by the association. An association that has voted to opt out of paragraph (j) may reverse that decision by the same vote required in paragraphs (k) and (l), and notice thereof shall be recorded in the official records.

o. The provisions of this subsection shall not apply to timeshare condominium associations. Insurance for timeshare condominium associations shall be maintained pursuant to s. 721.165.

DiscussionAs previously discussed, the 2016 Florida Statute 718.111 covers property insurance requirements and takes precedence over any written and recorded condominium documents. Associations sometimes believe that the current statutes do not apply, and that the statutes from the recorded date of the documents are in force. Statute 718 explains that, “this subsection applies to every residential condominium in the state, regardless of the date of its declaration of condominium.”

However, 718.111 also notes that for insurance policies issued or renewed after January 1, 2009, the policies must provide primary coverage for the property as originally installed, in accordance with the original plans and specifications; replacement materials under the policy can be of like kind and quality.

The primary coverage must also include any alterations or additions made to the property pursuant to Section 718.113(2). This statute clearly delineates what is excluded from association insurance coverage. It is the responsibility of the owner to include portions of the condominium property in the owners’ property insurance for their unit.

Simply stated: The association’s insurance coverage does not extend to repair or replace any additions, improvements or installations by the owner - or the original developer - that are for the sole benefit of one unit.

The Statute states that adequate property insurance is based on the replacement cost of the property determined by an independent insurance appraisal, not the market value appraisal. Additionally, an independent appraisal must be performed, reviewed and/or updated at least once every 36 months, according to this Statute.

This Statute states that the association, or group of associations, may provide adequate property insurance through a self-insurance fund that complies with the requirements of Florida Statutes 624.460 through 624.488. Chapter 624 requirements include, “A not-for-profit group comprised of one or more community associations responsible for operating at least 50 residential parcels or units created and operating under Chapter 718, Chapter 719, Chapter 720, Chapter 721, or Chapter 723 which restricts its membership to community associations only, and which has been organized and maintained in good faith for the purpose of pooling and spreading the liabilities of its group members relating to property or casualty risk or surety insurance.”

Self-insuranceSelf-insurance is not common because it is very expensive to set up. A self-insurance fund must be secured by a surety bond, as well as have liquidity to pay out in the event of a total loss. Below are a few self-insurance details; however, buying insurance will often be more cost effective than self-insurance. The following is a summary of the basic points; the statute should be reviewed in its entirety.

624.466 (2016a): Certificate of Authority for Self-Insurance Florida Statute According to the Florida Department of Business and Professional Regulations: Division of Florida Condominiums, Timeshares, and Mobile Homes (2013):

A condominium association may provide adequate property insurance coverage through a self-insurance fund that complies with the requirements of Fl. S. Sections 624.460-624.488. A cooperative association may self-insure against claims against the association, the association property, and the cooperative property required to be insured by an association, upon compliance with the applicable provisions of sections 624.460-624.488.

Applications must include the name and address of each member applying for coverage, as well as a current financial statement of each member applying for coverage, showing the aggregate net worth of all members to be not less than $500,000. They must show a combined ratio of current assets to current liabilities of more than 1 to 1, and a combined working capital of an amount establishing financial strength and liquidity of the businesses to promptly provide for payment of the normal property or casualty claims proposed to be self-insured.

9a. An initial deposit of cash or securities of the type eligible for deposit by insurers under s. 625.52 in the amount of $100,000.

b. In lieu of the deposit of cash or securities, a fund may file with the office a surety bond in like amount. The bond shall be one issued

by an authorized surety insurer, shall be for the same purpose as the deposit in lieu of which it is filed, and shall be subject to the office’s approval.1. No bond shall be approved unless it covers liabilities arising

from all policies and contracts issued and entered into during the time the bond is in effect and unless the office is satisfied that the bond provides the same degree of security as would be provided by a deposit of securities.

2. No bond shall be canceled or subject to cancellation unless at least 60 days’ advance notice thereof in writing is filed with the office.

Setting deductiblesThe board has the power to set policy deductibles; however, Chapter 718 requires that “the deductibles must be consistent with industry standards and prevailing practice for communities of similar size and age, and having similar construction and facilities in the locale where the condominium property is situated.” The board may, “determine the deductible based upon available funds, including reserve accounts, or predetermined assessment authority at the time the insurance is obtained, and this determination must be made at a meeting scheduled in accordance with Section 718.112(2)(e).”

According to Chapter 718, deductibles, uninsured losses, or payments to cover damages which are in excess of the association’s insurance coverage are considered as common expenses of the condominium. The association’s responsibility to repair the common property extends only to damage caused by an insurable event as detailed in the insurance policy.


Florida Statute Chapter 719. Real and Personal Property: CooperativesInsurance 719.104-7(3)(2016b)3. Insurance. The association shall use its best efforts to obtain and

maintain adequate insurance to protect the association property. The association may also obtain and maintain liability insurance for directors and officers, insurance for the benefit of association employees, and flood insurance. A copy of each policy of insurance in effect shall be made available for inspection by unit owners at reasonable times.a. Windstorm insurance coverage for a group of no fewer than

three communities created and operating under Chapter 718, this chapter, Chapter 720, or Chapter 721 may be obtained and maintained for the communities if the insurance coverage is sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. Such

insurance coverage is deemed adequate windstorm insurance for the purposes of this section.

b. An association or group of associations may self-insure against claims against the association, the association property, and the cooperative property required to be insured by an association, upon compliance with the applicable provisions of ss. 624.460-624.488, which shall be considered adequate insurance for purposes of this section.

Discussion“Association”, as in this statute, is defined as “the corporation for profit or not for profit that owns the record interest in the cooperative property or leasehold of the property of a cooperative and that is responsible for the operation of the cooperative.”

Most of this section regarding insurance refers to the other statutes covered in this course.

Liability insurance for directors and officers will be covered in the section on types of insurance.

Florida Statute Chapter 720. Homeowners’ Associations (2016b): Division of Florida Condominiums, Timeshares, and Mobile Homes720.303.h. All of the association’s insurance policies or a copy thereof, which

policies must be retained for at least 7 years.11. Windstorm Insurance. Windstorm insurance coverage for a group

of no fewer than three communities created and operating under chapter 718, chapter 719, this chapter, or chapter 721 may be obtained and maintained for the communities if the insurance coverage is sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. Such insurance coverage is deemed adequate windstorm coverage for purposes of this chapter.

720.3033. Officers and directors.5. The association shall maintain insurance or a fidelity bond for

all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this subsection, the term “persons who control or disburse funds of the association” includes, but is not limited to, persons authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any insurance or bond. If annually approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive the requirement of obtaining an insurance policy or fidelity bond for all persons who control or disburse funds of the association.

Again, related to insurance this statute refers to 718,719 and 721.

Florida Statute Chapter 721: Vacation and Timeshares 721.165 Insurance (2016b)1. Notwithstanding any provision contained in the timeshare

instrument or in this chapter, Chapter 718, or Chapter 719 to the contrary, the managing entity shall use due diligence to obtain adequate casualty insurance as a common expense of the timeshare plan to protect the timeshare property against all reasonably foreseeable perils, in such covered amounts and subject to such reasonable exclusions and reasonable deductibles as are consistent with the provisions of this section.

2. In making the determination as to whether the insurance obtained pursuant to subsection (1) is adequate, the managing entity shall take into account the following factors, among others as may be applicable: a. Available insurance coverages and related premiums in the

marketplace.b. Amounts of any related deductibles, types of exclusions,

and coverage limitations; provided that, for purposes of this paragraph, a deductible of 5 percent or less shall be deemed to be reasonable per se.

c. The probable maximum loss relating to the insured timeshare property during the policy term.

d. The extent to which a given peril is insurable under commercially reasonable terms.

e. Amounts of any deferred maintenance or replacement reserves on hand.

f. Geography and any special risks associated with the location of the timeshare property.

g. The age and type of construction of the timeshare property.3. Notwithstanding any provision contained in this section or in the

timeshare instrument to the contrary, insurance shall be procured and maintained by the managing entity for the timeshare property as a common expense of the timeshare plan against such perils, in such coverages, and subject to such reasonable deductions or reasonable exclusions as may be required by:a. An institutional lender to a developer, for so long as such

lender holds a mortgage encumbering any interest in or lien against a portion of the timeshare property; or

b. Any holder or pledgee of, or any institutional lender having a security interest in, a pool of promissory notes secured by mortgages or other security interests relating to the timeshare plan, executed by purchasers in connection with such purchasers’ acquisition of timeshare interests in such timeshare property, or any agent, underwriter, placement agent, trustee, servicer, custodian, or other portfolio manager acting on behalf of such holder, pledgee, or institutional lender, for so long as any such notes and mortgages or other security interests remain outstanding.


4. Notwithstanding any provision contained in the timeshare instrument or in this chapter, Chapter 718, or Chapter 719 to the contrary, the managing entity is authorized to apply any existing reserves for deferred maintenance and capital expenditures toward payment of insurance deductibles or the repair or replacement

of the timeshare property after a casualty without regard to the purposes for which such reserves were originally established.

5. A copy of each policy of insurance in effect shall be made available for reasonable inspection by purchasers and their authorized agents.

Florida Statute Chapter 723(2016b): Mobile Home Park Lot Tenancies723.079. Powers and duties of homeowners’ association.1. An association may contract, sue, or be sued with respect to the

exercise or non-exercise of its powers. For these purposes, the powers of the association include, but are not limited to, the maintenance, management, and operation of the park property.

4. The association shall maintain the following items, when applicable, which constitute the official records of the association:f. All of the association’s insurance policies or copies thereof,

which must be retained for at least 7 years.8. An association shall use its best efforts to obtain and maintain

adequate insurance to protect the association and the park property upon purchase of the mobile home park. A copy of each policy of insurance in effect shall be made available for inspection by owners at reasonable times.

The following section is included because the CAM and homeowners’ association at a mobile home community have, in some cases, a property owner to consider in addition to the individual owners of each mobile home.

723.022. Mobile home park owner’s general obligations. A mobile home park owner shall at all time: 1. Comply with the requirements of applicable building, housing, and

health codes. 2. Maintain buildings and improvements in common areas in a good

state of repair and maintenance and maintain the common areas in a good state of appearance, safety, and cleanliness.

3. Provide access to the common areas, including buildings and improvements thereto, at all reasonable times for the benefit of the park residents and their guests.

4. Maintain utility connections and systems for which the park owner is responsible in proper operating condition.

5. Comply with properly promulgated park rules and regulations and require other persons on the premises with his or her consent to comply therewith and conduct themselves in a manner that does not unreasonably disturb the park residents or constitute a breach of the peace.

The Florida Administrative Code (FAC, 2016): 61E14-2.001. Standards of Professional ConductLicensees shall adhere to the following provisions, standards of professional conduct, and such provisions and standards shall be deemed automatically incorporated, as duties of all licensees, into any written or oral agreement for the rendition of community association management services.1. Definitions. As used in this rule, the following definitions apply:

a. “Licensee” means a person licensed pursuant to Sections 468.432(1) and (2), F.S.

b. “Community Association Management Services” means performing any of the practices requiring specialized knowledge, judgment, and management skill as defined in Section 468.431(2), F.S.

c. “Funds” as used in this rule includes money and negotiable instruments including checks, notes and securities.

2. Professional Standards. During the performance of community association management services, a licensee shall do the following:a. Comply with the requirements of the governing documents by

which a community association is created or operated.b. Only deposit or disburse funds received by the community

association manager or management firm on behalf of the association for the specific purpose or purposes designated by the board of directors, community association management contract or the governing documents of the association.

c. Perform all community association management services required by the licensee’s contract to professional standards and to the standards established by Section 468.4334(1), F.S.

d. In the event of a potential conflict of interest, provide full disclosure to the association and obtain authorization or approval.

e. Respond to, or refer to the appropriate responsible party, a Notice of Violation or any such similar notification from an agency seeking to impose a regulatory penalty upon the association within the time frame specified in the notification.

3. Records. During the performance of community association management services pursuant to a contract with a community association, a licensee shall not:

a. Withhold possession of the association’s official records, in violation of Sections 718.111(12), 719.104(2) or 720.303(5), F.S., or original books, records, accounts, funds, or other property of a community association when requested by the association to deliver the same to the association upon reasonable notice. Reasonable notice shall extend no later than 10 business days after termination of any management or employment agreement and receipt of a written request from the association. The manager may retain those records necessary for up to 20 days to complete an ending financial statement or report. Failure of the association to provide access or retention of accounting records to prepare the statement or report shall relieve the manager of any further responsibility or liability for preparation of the statement or report. The provisions of this rule apply regardless of any contractual or other dispute between the licensee and the association.

b. Deny or delay access to association official records to an owner or his or her authorized representative who is entitled to access within the time frame and under the procedures set out in Sections 718.111(12), 719.104(2) or 720.303(5), F.S.

c. Create false records or alter the official records of an association in violation of Sections 718.111(12), 719.104(2) or 720.303(4), F.S., or of the licensee except in such cases where an alteration is permitted by law (e.g., the correction of minutes per direction given at a meeting at which the minutes are submitted for approval).

d. Fail to maintain the records for a community association manager or management firm or the official records of any applicable association, as required by Sections 718.111(12), 719.104(2) or 720. 303(4), F.S.

The fiduciary role of the community association manager (2016b)According to Section 718.111(a) of the Florida Statutes, officers and directors of a condominium association owe a fiduciary duty to their unit owners. The statute does not specify whether a community association manager or management company contracted by the board owes a fiduciary duty to the association, as well (Cole, 2015):

A fiduciary duty is a legal duty to act solely in another party’s interests. Parties owing this duty are called fiduciaries. The


individuals to whom they owe a duty are called principals. The legislature intended that the statute not “provide for or remove the fiduciary relationship between any manager employed by the association and the unit owners.”

The legislature addresses this topic in Chapter 468.4334 in a section titled, Professional Practice Standards, Liability. This section should be thoroughly reviewed by all CAMs, directors and board members. The 2016 Florida Statutory standard, Section 468.4334, outlines the role of the CAM and is discussed below: 1. A community association manager or a community association




This Statute was viewed as expanding the role of managers and their companies, with added fiduciary responsibilities (Cole, 2015). Management companies hired by any association should also have a fiduciary responsibility under the applicable sections of the Statute. With expanding legal theories and responsibilities, the claim that a manager is acting as a fiduciary is one that is highly dependent on the facts of that situation. It is important that both managers and associations understand the laws surrounding community association managers and their new responsibilities. If any questions arise about the scope of a manager’s responsibilities, consult an attorney experienced with community associations and their managers.

Cobb (2014) addresses the issue that Section 718.111(a) does not specify whether community association managers are contracted by the board, and therefore owe a fiduciary duty to the association, as well as to the owners. The fiduciary duty between a management company and an association may be implied within the law. Mariani, Kammerer, & Guffey-Landers (2010) state: “A fiduciary duty may be implied in law, regardless of whether contractual relations or formal writings exist or a statute imposes such a duty, when one party relies on another to act on the party’s behalf and to look out for its best interests.”

If managers are employed by associations as agents of the association hired to carry out the best interests of the association, then the fiduciary responsibility may be implied in law.

The case of La Costa Beach Club Resort Condominium Association, Inc. v. Carioti, 37 So.3d 303 (Fla. 4th DCA, 2010) ruled that a management company, hired by a timeshare association, owed a fiduciary relationship to that association and that a breach of fiduciary relationship constituted an intentional tort which called for joint and several liabilities, as per Florida Statute §721.13(1)(b) (Cole, 2015). This case dealt with mismanagement of invested funds. The question

was whether or not the manager and the board were complicit in (or were aware of) the investment fraud. It should be noted that the fiduciary responsibility depends on the specific facts and situations of the case. As stated previously, the CAM and the board must be aware of the Florida Statutes and standards, and should consult legal counsel before proceeding if there is any uncertainty about their role or in any decision that they are considering.

A distinction must be made between reviewing Florida Statutes that govern CAM roles and duties and the practice of law.

In 2015, the Florida Bar published an opinion that clarified the role of the community association manager in response to questions about specific duties. Fourteen functions* that had traditionally been part of the CAM’s role were questioned by some in the legal profession because they involved legal matters (Blount & Picker, 2015):

The Florida Bar Real Property, Probate, and Trust Law Section petitioned the Standing Committee on Unlicensed Practice of Law (Standing Committee) for an advisory opinion regarding certain activities when performed by non-lawyer community association managers. The petitioner asked the Standing Committee to examine a 1996 advisory opinion from this Court, Florida Bar Advisory Opinion Activities of Community Association Managers, 681 So.2d 1119, Fl. Bar, 1996, and advise whether the activities in the opinion that were found to be the unlicensed practice of law continue to constitute the unlicensed practice of law. Further, Petitioner asked whether fourteen additional activities, when performed by non-lawyer community association managers, constitute the unlicensed practice of law. As required under rule 10–9.1(f), the Standing Committee provided notice of and held a public hearing to address these issues where it considered written and live testimony.

*All fourteen of these functions in question will be covered in a subsequent course regarding legal issues in the practice of community association management.

The court’s opinion included the following clarifications:14. Any activity that requires statutory or case law analysis to reach

a legal conclusion (Blount &Picker, 2015). In the 1996 opinion, the Court found that it constituted the unlicensed practice of law for a CAM to respond to a community association’s questions concerning the application of law to specific matters being considered, or to advise community found that this amounted to non-lawyers giving legal advice and answering specific legal questions, which the court specifically prohibited in re: Joint Petition of The Florida Bar and Raymond James & Assoc., 215 So.2d 613 (Fla.1968) and Sperry (FL. Bar, 1963) (Soreide, 2016).The Court held that it constitutes the unlicensed practice of law for a non-lawyer to advise persons of their rights, duties, and responsibilities under Florida or federal law and to construe and interpret the legal effect of Florida law and Statutes for third parties. The Court found that it constitutes the unlicensed practice of law for a non-lawyer to interpret case law and statutes for others. Thus, it is the Standing Committee’s opinion that it would constitute the unlicensed practice of law for a CAM to engage in activity requiring statutory or case law analysis to reach a legal conclusion.

This ruling directs CAMs to avoid any activity that constitutes analysis, interpretation, or advice concerning the law in their management role.

How can the CAM determine what activities constitute the unlawful or unlicensed practice of law? The Florida Court found that setting forth a broad definition of the practice of law was “nigh onto impossible,” and instead developed the following test to determine whether an activity is the practice of law (Florida Supreme Court, 1980):

If the giving of (the) advice and performance of (the) services affect important rights of a person under the law, and if the


reasonable protection of the rights and property of those advised and served requires that the persons giving such advice possess legal skill and a knowledge of the law greater than that possessed

by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct constitute the practice of law.

Master policyThe Florida Statutes require the community association to carry a master policy to cover general liability and common area property which is shared by all owners. This policy covers damage from wind, hail, fire, flood, or damage caused by criminal behavior, liability, and several optional areas of risk (Bray, 2017).

Depending on the geographic area and policy details, it is important to look for exclusions that may require the association to procure additional insurance for flood and hurricane force winds.

General liabilityGeneral liability insurance covers bodily injury and property damage in the case of legal action against the association if an individual is injured on the common area of the property. Many policies cover personal injury, as well. Personal injury includes, slander, libel, defamation, advertising issues, wrongful arrest or wrongful eviction; however, these are often exclusions and must be added to the policy for coverage.

A master policy will have liability protection and the coverage amount for liability can typically range from $2-5 million dollars. Associations must carefully review the property and policy to be sure that no areas of risk are excluded from the master policy for liability. Examples of exclusions to general liability coverage may include:

● Injuries from boats, aircraft or other aerial attachments; ● Employee injury on the job; ● Automobiles and other vehicle accidents; ● Hazardous materials such as mold, asbestos, smoke, fumes,

chemicals, pollution, or other toxic agents; ● Damages attributed to false arrest, malicious prosecution; ● Wrongful entry, eviction, invasion of property; ● Libel, slander; ● Breach of contract; or ● Liability related to hosts providing liquor.

Some of the most frequent claims are slip and fall - or trip and fall - accidents where water is tracked into the building, and/or sidewalks are not properly maintained.

The association must have adequate coverage for medical bills in case of a lawsuit for accidental injury on the property - including extended medical testing, treatment, as well as therapy and rehabilitation for the injured party.

Director’s and officer’s (D&O) master policy liabilityAccording to the Florida Department of Business and Professional Regulations (2013):

The association may obtain liability insurance for its officers and directors. And, the association must maintain insurance or fidelity bonding of all persons who control or disburse funds of the association; this includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. This insurance is a common expense of the association.

A director’s and officer’s (D&O) master liability policy covers the board members from being personally liable for most decisions recorded in association documents Officers and directors of an association may be held as personally liable for suits brought against them by owners or by third parties. This insurance coverage helps to protect the community association’s board members from legal action brought against them for alleged wrongful acts, errors, or omissions while they are acting on behalf of the association. Even though they are unpaid volunteers, board members may be vulnerable to lawsuits and may be personally sued.

The association should be authorized to obtain this coverage to protect the board. This coverage may not cover liability for intentional acts, civil rights violations or other actionable conduct. It is important for associations to carry this coverage because board members who serve often perform duties that have the potential for personal liability.

Some D&O liability policies may be written two different ways: 1. A “claims made” basis provides coverage for protection claims

made during the policy period and based on actions that took place only when the policy was in effect.

2. The second type of “occurrence” policy protects the board members if claims are made during the policy period, regardless of when the action took place.

It is important to determine if the policy will cover actions of the board if the claim is made at the time that the individual is no longer a board member. The coverage should be written to cover full prior acts so that there would be coverage gaps if a decision to file a suit is made within one year after the occurrence and the claim is brought during the next year. Some policies are written for specific time periods, such as coverage for full prior acts extending back five years.

Another aspect of D&O coverage is Employment Practices Liability coverage (EPLI). This coverage protects the association against claims by employees on the property for employment-related issues such as wrongful termination, harassment, retaliation, discrimination or other labor related issues (IRMI, 2016). This insurance can be written to cover claims made by volunteers, contractors, vendors, or any worker that comes onto the property. It is possible for the association to purchase a workers’ compensation policy that will cover any independent workers who get hurt on the property and do not have workers’ compensation coverage. Exclusions to general liability and D&O policies include (Adams, 2016):

● Breach of contract; ● Underinsured or failure to insure; ● Election challenges; ● Dishonesty, criminal acts, fraud; ● Embezzlement (HOA can be covered by fidelity bond but not the

embezzler); ● Discrimination; ● Sexual misconduct; ● Employment claims (HOA can be covered by EPL insurance); ● Punitive damages, fines, penalties; or ● Injunctions.

A crime policy or fidelity bondThe Florida Statutes require a crime policy or a fidelity bond for the maximum amount of funds the association may handle at any one time for the year. The coverage amount must be equal to or greater than the amount in the operation and reserve accounts at the maximum level for the year. These amounts may fluctuate from year to year; to be in compliance with the statute, however, the highest amount within the year must be used to determine the level of coverage. Crime and fidelity policies provide coverage for protection from theft or financial misconduct by an association member.

Inflation guard endorsementThe inflation guard endorsement provides for an automatic increase in the amount of insurance by a specified percentage every year by the amount of the increase in the cost of living index, or with another cost estimation. During times of escalating inflation, this coverage is an important safeguard to ensure adequate replacement value.


Waiver of subrogationAccording to HindmanSanchez (2017):

In a standard insurance policy the insurance company has paid for damage to the property, the company has a legal right to recover its loss from the parties who were negligent and caused the loss. The association’s policy should contain a waiver of this right of subrogation against the individual owners so that the insurance company does not turn around and collect from the individual owners the amounts that the insurance company has paid. A typical waiver of subrogation clause includes statements that in the event any sums are paid by the insurance company to the insured under the policy, it will not exercise any legal right it may have as a result of the payment against any unit/lot owner, officer, the board of directors or the manager.

Cross liability coverage When an owner brings a claim and a lawsuit against another owner (or to the community association) for injuries due to an accident that occurred in a common area on the property, the cross liability coverage will take effect. Some master policies cover these types of claims under general liability which may include a cross liability endorsement. If not, it can be added to the coverage.

Umbrella liability insurance An umbrella liability insurance policy adds additional coverage when the limits of the general liability coverage for the association have been depleted. This policy should extend coverage over all the types of general liability policies for the association, including director and officer liability, automobile and vehicle, workers’ compensation, and all other areas of risk liability coverage held by the association. This type of coverage can be especially important in Florida where extreme weather events – such as hurricane and flooding – may result in losses that exceed coverage limits.

Hired and non-association owned auto coverageThis auto liability policy covers accidents that might occur when an individual is using a personal vehicle to conduct association business. Anyone driving his/her own vehicle while on association business that has an accident may not be covered by their personal insurance policy if the accident occurred while doing association business. This additional coverage would be in effect to cover the association’s liability for the accident, as well. Associations can add an endorsement to their general liability policy to cover this type of auto accident.

Automobile insuranceIn the event that the association owns any vehicles, it should carry adequate automobile insurance, including personal injury, liability and

property damage, medical and comprehensive - including fire, theft and vandalism on the vehicle (HindmanSanchez, 2017).

Title insuranceTitle insurance would be appropriate when there is a transfer of deed and operations from the developer to the board of the association. If the developer had title insurance, it initially would protect the association against future title problems. If a property is being completed in phases, the board needs to be sure that the common areas in all additional phases are covered.

Volunteer accident insurance Because volunteers are not covered under workers’ compensation coverage, volunteer accident insurance covers any possible coverage gaps in the master policy. If a group of owners volunteer to serve on a decorating or gardening committee and become injured, this policy would cover the volunteer who is not an employee.

Workers’ compensation Coverage should be reviewed to be sure that it will cover contractors and workers who may become injured on the property, but who have allowed their workers’ compensation policy premiums to lapse. Associations should ask for documentation of workers’ compensation insurance that will cover any worker that comes on the property.

Auxiliary structuresMaster policies must be reviewed to ensure that they cover all structures on the property owned by the association that may not have been part of the original structure. These structures may include:

● Signs; ● Fences; ● Shuffle board courts; ● Equipment or storage sheds; ● Pools, hot tubs; ● Fire pits; ● Grill areas; ● Playgrounds; ● Tennis courts; ● Fitness centers; ● Club houses; and/or ● Gazebos.

Standard policies may not cover these structures unless they are listed. It is important to include these areas when determining value and adequate coverage.

PropertyThis provides coverage for all the common areas of the property and coverage limits that are based on the value of the building at the full replacement cost – despite depreciation.

Policy exclusionsInsurance policies may be written using terms like “comprehensive” or “all risk,” but it is important to look for coverage exclusions. Damage caused in these cases will not be covered unless a specific rider or additional endorsement (or policy) is written. Common exclusions are listed below for damage related to:

● Termites or other insects, animals, birds, pets; ● Dry rot, fungus, mold; ● Pollution; ● Underground water; ● Rust, corrosion; ● Settling and damage to foundations; ● Electrical shorts or power failures that do not result in a fire; ● Explosions from steam boilers; ● Latent defects or defects in construction or design; ● Signs; ● Glass;

● Floods, damage from water weight, water damage to interior walls unless wind damaged the wall and drove in the rain, water damage from exposure over time;

● War, nuclear hazard; ● Neglect, defective maintenance; ● Ordinary wear and tear; ● Intentional acts; and/or ● Landslides, sink holes, earthquakes, or other earth movement.

Demolition and increased cost of constructionIf a building is severely damaged, collapses, or results in a total loss and must be taken down, a portion may need to be demolished and removed. This coverage would cover the expenses of demolition and debris removal.

Along these lines, the 2014 Florida Statutes, which were not amended in 2016, state that if a building has sustained damage over fifty percent, as determined by the state licensed building inspector, it must be torn down and rebuilt with all systems and components brought


up to code. In this scenario, the association will incur demolition costs and possible removal of hazardous materials – such as mold or asbestos – that should be included in the coverage. Also, consider that the insurer in this case may only cover fifty percent of the building, because that was the percentage of damage determined by the building inspector. This gap in coverage can be avoided with a policy that covers the diminished value; thus, requires the insurer to cover the full replacement cost of the property.

Increased cost of constructionIncreased cost of construction coverage will cover the costs of rebuilding the property to bring it into compliance with current building codes. For example: If the property was constructed according to 1980 statutes and building codes covering fire safety exits, emergency lighting, handicap access, or sprinkler systems, then rebuilding the structure in 2017 would require compliance with today’s codes. The components of the damaged property, if declared a loss, may now be obsolete and may require costly retrofitting with new materials and systems to bring the building into compliance with 2017 building codes and standards.

Ordinance or law insuranceThis terminology is sometimes used to define coverage needed to build a building back up to current code specifications after a major damage event.

Backup of a sewer and drainOne area that is often overlooked and that may not be covered in the master policy is damage that results from the backup of a sewer and/or a drain. In a condominium (or other attached structure) with connected plumbing, this can cause extensive damage to many units. Coverage for these problems can be added to the master policy.

The master policies offered by individual companies may differ drastically in terms of covered and excluded components. It is important for the CAM to assist the board when studying policy coverage and quotes, carefully considering the association’s insurance needs to adequately protect the interests of the owners. The board and the CAM have a fiduciary responsibility to act in good faith. Obtaining adequate insurance coverage requires:

● Time for thorough investigation of insurance needs and potential risks;

● Securing and considering multiple quotes from licensed agencies; and

● Consultations with objective professionals including legal counsel in some cases.

There are a number of factors that impact insurance coverage. These factors include:

● Date of construction; ● Type of association; ● Type of construction; ● Loss history of the property; ● Square footage; ● Number of buildings; ● Past history of insurance claims for property or liability; ● Property updates - For example, recent updates, renovation, or

additions to exterior walls, roof, porches, lanais, pools, parking areas, windows, elevators, plumbing, heating, HVAC, fire safety systems, electrical systems, and the dates these were completed;

● Total number of units in the building; ● Number of floors or stories; ● Additional risks that may increase liability such as vehicles,

recreational areas, or geographic features such as a lake or pond on the property;

● Flood zones designation; ● Business or commercial activity such as food, liquor, gift, or

gasoline sales; ● Replacement value; ● Amount of coverage the association is seeking; and ● Type of premium payment required - There are a number of ways

to pay for the premium that may be offered to make it easier for the association to purchase adequate coverage.

Wind and hurricane wind coverageThe Office of the Florida Insurance Consumer Advocate provides the following information (FICA, 2016):

Hurricane insurance pays for losses caused by the peril of windstorm during a hurricane. [Hurricane] Windstorm means wind, wind gusts, rain, hail, tornadoes, or cyclones caused by or resulting from a hurricane (s. 627.4025, Florida Statutes).

A commercial residential policy: ● Is issued to a single association. ● After payment of a deductible, the association’s property insurance

policy covers loss from a hurricane/hurricane windstorm. ● The policy provides coverage for losses up to the policy limits in

the event of a total loss. ● Generally those limits are set at the replacement cost of the

building, other wise known as “insured to value”.

Chapter 627: Under this Section, a residential property insurance policy must include windstorm coverageInsurance rates and contracts627.712. Residential windstorm coverage required; availability of exclusions for windstorm or contents. 1. An insurer issuing a residential property insurance policy must

provide windstorm coverage.

627.4025. Residential coverage and hurricane coverage defined.1. Residential coverage includes both personal lines residential

coverage, which consists of the type of coverage provided by homeowner, mobile home owner, dwelling, tenant, condominium unit owner, cooperative unit owner, and similar policies, and commercial lines residential coverage, which consists of the type of coverage provided by condominium association, cooperative association, apartment building, and similar policies, including policies covering the common elements of a homeowners’ association. Residential coverage for personal lines and commercial lines as set forth in this section includes policies that provide coverage for particular perils such as windstorm and hurricane or coverage for insurer insolvency or deductibles.

2. As used in policies providing residential coverage:

a. “Hurricane coverage” is coverage for loss or damage caused by the peril of windstorm during a hurricane. The term includes ensuing damage to the interior of a building, or to property inside a building, caused by rain, snow, sleet, hail, sand, or dust if the direct force of the windstorm first damages the building, causing an opening through which rain, snow, sleet, hail, sand, or dust enters and causes damage.

b. “Windstorm” for purposes of paragraph (a) means wind, wind gusts, hail, rain, tornadoes, or cyclones caused by or resulting from a hurricane which results in direct physical loss or damage to property.

c. “Hurricane” for purposes of paragraphs (a) and (b) means a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service. The duration of the hurricane includes the time period, in Florida:1. Beginning at the time a hurricane watch or hurricane warning

is issued for any part of Florida by the National Hurricane Center of the National Weather Service;


2. Continuing for the time period during which the hurricane conditions exist anywhere in Florida; and

3. Ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida by the National Hurricane Center of the National Weather Service.

Standard residential master policies may include windstorm coverage up to hurricane force winds. It is important to determine if additional insurance is needed beyond the standard wind coverage in a master policy for hurricanes that are declared and named. A separate deductible will be added for hurricane coverage. Condominium and HOA wind insurance policies may differ due to construction type and proximity to the water. The master policy wind coverage and the additional hurricane layer of coverage should be designed in a seamless coverage so as to avoid gaps, overlaps, or duplications that will not add additional premiums and provide complete coverage.

Florida Statutes Chapter 627: Insurance Rates and Contracts, covers cancellation or nonrenewal of insurance policies following a hurricane or an “Act of God,” as follows:3. If the insurer elects to not renew a policy covering a property that

has been damaged, the insurer shall provide at least 90 days’ notice to the insured that the insurer intends to not renew the policy 90 days after the dwelling or residential property has been repaired. Nothing in this paragraph shall prevent the insurer from canceling or nonrenewing the policy 90 days after the repairs are complete for the same reasons the insurer would otherwise have canceled or nonrenewed the policy but for the limitations of subparagraph 1. The Financial Services Commission may adopt rules, and the Commissioner of Insurance Regulation may issue orders, necessary to implement this paragraph.

4. This paragraph shall also apply to personal residential and commercial residential policies covering property that was damaged as the result of Tropical Storm Bonnie, Hurricane Charley, Hurricane Frances, Hurricane Ivan, or Hurricane Jeanne.e. If any cancellation or nonrenewal of a policy subject to this

subsection is to take effect during the duration of a hurricane as defined in s. 627.4025(2)(c), the effective date of such cancellation or nonrenewal is extended until the end of the duration of such hurricane. The insurer may collect premium at the prior rates or the rates then in effect for the period of time for which coverage is extended. This paragraph does not apply to any property with respect to which replacement coverage has been obtained and which is in effect for a claim occurring during the duration of the hurricane.

3. Claims on property insurance policies that are the result of an act of God may not be used as a cause for cancellation or nonrenewal, unless the insurer can demonstrate, by claims frequency or otherwise, that the insured has failed to take action reasonably.

Boiler and machineryIf the property has a steam boiler (or other major equipment), this policy will cover damage to the boiler and surrounding structures in case of an explosion. Master policy protection typically will not include this coverage that may include failure of pumps, compressors, and motors and the resulting damage to adjacent areas.

Equipment breakdown Equipment breakdown coverage is important, especially if the property has an elevator or other major mechanical or electrical devices that may be damaged by a peril (such as a lightning strike, for example) that may not be otherwise covered by property insurance. This coverage is not used for maintenance or air conditioning replacement; additionally, normal wear is not covered by insurance. Reserve funds would be used for covering the maintenance and the replacement of expensive equipment. For this reason, the association – or HOA board

– must research and develop a plan and a budget for maintenance and replacement of these large items.

SinkholesFlorida often has catastrophic ground collapses, or sinkholes, that can swallow up buildings, roads, homes, or vehicles. The association policies should include additional coverage for this type of loss, as it may be excluded in a standard policy.

Flood insuranceFlood is defined as (FEMA, 2017):

● A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder’s property) from: Overflow of inland or tidal waters; unusual and rapid accumulation/ runoff of surface waters from any source; mud flow; or

● Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

Most of Florida has the potential to sustain damage from flooding. Even if a property is not in a designated flood zone, it may be susceptible to flooding in cases of extreme weather. The geography of Florida – with its low-lying areas, barrier islands, peninsulas, and abundant bodies of water affected by tidal zones – makes the state vulnerable to flooding.

The Federal Emergency Management Association (FEMA) administers the National Flood Insurance Program (NFIP). This program provides insurance for residential condominium associations through the Residential Condominium Building Association Policy (RCBAP) (FEMA, 2014).

Concerning condominiums, FEMA notes:Boards of directors of condominium associations typically are responsible under their by-laws for maintaining all forms of property insurance necessary to protect the common property of the association against all hazards to which that property is exposed for the insurable value/replacement cost of those common elements. This responsibility would typically include providing adequate flood insurance protection for all common property located in Special Flood Hazard Areas (SFHAs). Such by-law requirements could make the individual members of the boards of directors of such associations personally liable for insurance errors or omissions, including those relating to flood insurance.

Properties with residential, condominium ownership are eligible for this coverage. Condominium buildings included in this type of coverage may be high- or low-rise, garden apartment-type construction, townhouses, row houses, single-family detached buildings owned by the association, as well as fee-interest timeshare buildings. The RCBAP is required for all buildings owned by a condominium association containing one or more residential units, and in which at least 75 percent of the total floor area within the building is residential – without regard to the number of units or the number of floors. Residential condominium buildings that are currently being used as hotels or motels, or which are being rented out (either short or long term) must be insured under the RCBAP.

Unlike regular property insurance, RCBAP covers damage to the foundation as well as to the building. The following information concerning RCBAP is provided by FEMA (2014):

Residential condominium: Association coverage on building and contents: A condominium association may purchase insurance coverage for a residential building and its contents under the RCBAP. If the named insured is listed as other than a condominium association, the agent/producer must


provide legal documentation to confirm that the insured is a condominium association. This documentation may be a copy of the condominium association by-laws, or a statement signed by an officer or representative of the condominium association confirming that the building is held in a condominium form of ownership.

Eligibility requirements (FEMA, 2014)A. General Building EligibilityIn order for a condominium building to be eligible under the RCBAP form, the building must be owned by a condominium association. The NFIP defines this type of ownership as an entity made up of the units’ owners responsible for the maintenance and operation of:1. Common elements owned in undivided shares by unit owners; and2. Other real property in which the unit owners have use rights where

membership in the entity is a required condition of unit ownership.

A homeowners’ association (HOA) may differ from a condominium association and is generally ineligible for the RCBAP, unless the HOA meets the definition of a condominium association, as defined in the policy. Cooperative ownership buildings are not eligible. Timeshare buildings in a condominium form of ownership within jurisdictions where title is vested in individual unit owners are eligible, provided that all other criteria are met. If, during a policy term, the risk fails

to meet the eligibility requirements due to a change in the form of ownership, it will be ineligible for coverage under the RCBAP. The policy will then be canceled and rewritten using the correct Standard Flood Insurance Policy (SFIP) form.

The NFIP has grouped condominium buildings into two different types, low-rise and high-rise, because of the difference in the exposures to the risks that typically exist. Low-rise buildings generally have a greater percentage of the building’s value at risk than do high-rise buildings, thus requiring higher premiums for the first dollars of coverage. The availability of the optional deductibles for the low-rise buildings, however, allow the association to buy back some of the risk, thereby reducing the overall cost of the coverage. For rating purposes:

● High-rise buildings contain five or more units and at least three floors excluding enclosure, even if it is the lowest floor for rating.

● Low-rise buildings have fewer than five units regardless of the number of floors, or five or more units with fewer than three floors, including the basement.

● Townhouse/row house buildings are always considered low-rise buildings for rating purposes, no matter how many units or floors they have. A townhouse/row house is a multi-floor unit divided from similar units by solid, vertical, load-bearing walls, having no openings in the walls between units and with no horizontal divisions between any of the units.

Coverage A. Property Covered

The entire building is covered under one policy, including both the common as well as individually owned building elements within the units, improvements within the units, and contents owned in common. Contents owned by individual unit owners should be insured under an individual unit owner’s Dwelling Form.

B. Coverage Limits Building coverage purchased under the RCBAP will be on a Replacement Cost basis. The maximum amount of building coverage that can be purchased on a high-rise or low-rise condominium is the Replacement Cost Value (RCV) of the building or the total number of units in the condominium building times $250,000, whichever is less. The maximum allowable contents coverage is the Actual Cash Value (ACV) of the commonly owned contents up to a maximum of $100,000 per building.

Basic limit amount 1. The building basic limit amount of insurance for a detached

building housing a single-family unit owned by the condominium association is $60,000.

2. For residential townhouse/rowhouse and low-rise condominiums, the building basic limit amount of insurance is $60,000 multiplied by the number of units in the building.

3. For high-rise condominiums, the building basic amount of insurance is $175,000.

4. The contents basic limit amount of insurance is $25,000.5. For condominium unit owners who have insured their personal

property under the Dwelling Form or General Property Form, coverage extends to interior walls, floor, and ceiling, if not covered under the condominium association’s insurance, up to 10% of the personal property limit of liability. Use of this coverage is at the option of the insured and reduces the personal property limit of liability.

Replacement costThe RCBAP’s building coverage is on a replacement cost valuation (RCV) basis. “RCV” means the cost to replace property with the same kind of material and construction, without deduction for depreciation. A condominium unit owner’s Dwelling Form policy provides Replacement Cost coverage on the building if eligibility requirements are met.

CoinsuranceThe RCBAP’s coinsurance penalty is applied to building coverage only. To the extent that the insured has not purchased insurance in an amount equal to the lesser of 80% or more of the full replacement cost of the building at the time of loss, or the maximum amount of insurance under the NFIP, the insured will not be reimbursed fully for a loss. Building coverage purchased under individual Dwelling Forms cannot be added to RCBAP coverage in order to avoid the coinsurance penalty. The amount of loss in this case will be determined by using the following formula:

Insurance carriedInsurance Required × Amount of Loss = Limit of Recovery

Where the penalty applies, building loss under the RCBAP will be adjusted based on the replacement cost coverage with a coinsurance penalty. Building loss under the Dwelling Form will be adjusted on an actual cash value (ACV) basis if the Replacement Cost provision is not met. The cost of bringing the building into compliance with local codes, law and ordinance, is not included in the calculation of replacement cost.

Assessment coverageThe RCBAP Form and General Property Form do not provide assessment coverage.

Determining the right coverageThe board should study the policy and understand the coverage limits and exclusions. The size, risk factors, location, and type of property are factors that impact the value and the insurance needs. The higher the value of the property and level of risk to cover, the higher the premium to pay. The value for replacement should be the priority when making insurance decisions rather than the premium price.

Insurance companies often require that the building be insured for casualty insurance at 80% or more of the value of the building insurance. The association should carry insurance to cover 100% of the current replacement value, including improvements, for full coverage in case of a major loss.


Making decisionsMany community association boards organize an insurance committee to determine the types of insurance required for their type of property after reviewing all the factors. They research, investigate and contact insurance brokers that specialize in the type of insurance that meets the needs of their property.

The insurance committee, or board members, then work with several community association insurance brokers that are familiar with the Florida Statute requirements and understand the specific needs of the type of property and factors related to the geographic location. For example, Florida properties are often adjacent to bodies of water - ocean, rivers, or lakes, man-made or natural. This presents a variety of different factors that must be considered. Statistically, some areas are more prone to flooding and high winds; although no part of Florida is outside of these potential risks.

For comparison, the committee may want to obtain several quotes to present to the board and the owners for review and consideration. It is important that all of the board members and owners have a thorough understanding of what is covered and what is excluded before any decisions are made. It is also critical to select companies that have been vetted to be sure that they are experienced, financially stable, and have a history and reputation of excellence in the community. Even though it is important to listen to the owners and take their input into consideration (since they are paying assessments to cover insurance), it is the responsibility of the board to analyze the needs, risks, values, and costs to make sure that the insurance plan it chooses provides complete coverage at the best value.

It is important that the proposals offered are based on the same specifications and coverage to make an effective comparison among the proposed insurance policies. The goal is to look for the policy with the most comprehensive coverage to meet the association’s specific needs at the best premium price.

The following check list can be used as a guide (HindmanSanchez, 2017): Checklist of specifications for insurance coverage1. Blanket, comprehensive, all-risk protection on improvements

including buildings, pools, fences and auxiliary structures and “all risk” contents coverage, including theft. $____coverage to include:1. All improvements; 2. Stipulated amount clause. This specifies the amount of money

the association will receive from the insurer in case of a loss due to a covered event specified in the policy;

3. Inflation guard endorsement;4. Waiver of subrogation clause;5. Appropriate deductible;6. All losses payable to association as trustee for owners;7. Replacement cost endorsement;8. Additional owner coverage will not reduce master policy

coverage.

2. $ ___liability protection including:1. Personal injury with no exclusion relating to employees.2. Non-owned automobiles.3. Comprehensive general liability endorsement.4. Severability of interest clause. Note: This is a policy

component that states, except with respect to the coverage limits, insurance applies to each insured as though a separate policy were issued to each. Thus, a policy containing such a clause will cover a claim made by one insured against another insured (IRMI, 2017).

5. Business products and host food and liquor liability.6. Owners as additional insured (for common area).7. Contractual liability.8. Minimum amount per person guest medical payments (for

example, $1,000.00).9. Cross liability endorsement.10. Personal injury rider to cover slander, libel and related claims.11. Automobile insurance for employees.

3. $ ____ directors’ and officers’ liability insurance; specify deductible and participation. Policy must be on a “claims made” basis, and should include protection for prior officers.

4. $ ____ blanket bond to cover directors, officers and employees.5. $ ____ umbrella coverage.6. Workers’ compensation.7. Title insurance on association real property.8. Common charges insurance where one owner defaults and the

others have to pay their share to make up the default.9. Clause prohibiting cancellation without 30 days’ notice from the

insurance company.10. Flood insurance.11. Water damage coverage.12. Watercraft liability (where applicable).13. Garage keepers’ liability (where applicable).14. Golf cart coverage (where applicable).15. Machinery and equipment (owned or leased) located in the

common area.

Note: The association’s documents should contain language that requires unit owners to inform the manager and the board of any improvements or alterations made to their units – including the value and significant changes to the original installations. These changes and improvements should be made by licensed, bonded professionals and according to code, to ensure the quality and integrity of the building. This is especially important in condominiums and attached units such as townhouses or row houses.

The master policy may have a coinsurance clause; it should reflect the value of all projects completed by the association. This is necessary to ensure that coverage is up to the required coinsurance percentage so the association will receive the correct replacement funds due in the event of a loss. Again, it is important to insure the replacement cost to 100%, ideally.

Reviewing coverageThe following types of coverage and specifications should be considered when reviewing the policy to be sure it is adequate for the needs of the association (HindmanSanchez, 2017).

Type of coverage: ● Casualty (“all risk”, “comprehensive”); ● Liability insurance; ● Flood insurance; ● Workers’ compensation; ● Automobile; ● Directors and officers (D & O); ● Boiler and machinery; ● Title insurance.

Endorsements to policy:1. Replacement cost endorsement;2. Inflation guard endorsement;3. Nonconforming building endorsement;4. Cross liability endorsement.

Additional insurance provisions:1. Policy exclusions;2. Waiver of subrogation;3. Coinsurance;4. Deductible.


Managing riskThe community association should take every step to manage potential risks on the property. The board may appoint a safety committee to develop and implement a risk management plan with the goal of controlling and protecting against risk. Part of the risk protection is the insurance policy; however, a carefully-devised plan for risk control can help prevent property loss and personal injury from occurring. If accidents and damage do not occur, then insurance claims are not made in the first place. This will result in lower insurance premium costs.

Controlling risk ● Are there rules and steps taken to address safety issues in the

association documents? Are they enforced? ● Are owners encouraged to report conditions of risk or unsafe

behavior that they may observe? If they make reports, is action taken to address and resolve the risk?

● Are there frequent, scheduled, and documented safety and insurance reviews of the property by the board, manager, maintenance, and professionals in order to identify risk and safety hazards in all areas of the property?

● Are fire and health department safety inspections performed frequently?

● Are plumbing, HVAC, electric, boiler, or other equipment systems inspected and maintained frequently?

● Are all employees trained in safety procedures – such as the newly-revised CPR classes?

● Does the association have an emergency plan to cover fires, floods, windstorms, power failures, or other disastrous events? This

should include notification and evacuation plans for elderly, ill, or disabled residents.

● Are there required warning and/or regulatory signs by the swimming pools, hot tubs, fitness rooms, grills, fire pits, parking areas, elevators, stairs and other areas of possible risk? Are these regulations enforced?

● Does the association fill out accident reports, keep records, review accident rates and take steps to prevent them from re-occurring?

● Are all common access areas – such as such as roofs, gutters, laundry rooms, kitchen, fitness rooms, storage areas, garages, automatic gates, garbage disposal areas, parking decks, driveways, fences, gates, pools, hot tubs, grills, fire pits, golf or tennis facilities, and sidewalks – regularly maintained and inspected for damage?

● Does the association follow and comply with local fire, health department, building, and OSHA safety codes?

● Are there amenities owned and operated by the association that are run like a business for profit– such as a snack bar that sells food or liquor, a gift shop, or a marina where gasoline and supplies are sold? Are there common areas that are rented out for functions, such as social halls or ballrooms?

A regular part of the CAMs job should be frequently inspecting and maintaining the property, and making safety and security a top priority to avoid risks that may result in insurance claims. This includes developing a strong, working relationship with the board, staff, safety, and insurance professionals to avoid the need for insurance claims. It is equally important to be prepared to promptly address any emergency and to secure the property for the safety and the well-being of its occupants.

ConclusionThe Florida Statutes provide guidelines about the general requirements for the major required insurance coverages of the community homeowners’ associations. Familiarity with the Statutes and Codes will help the CAM to assist the board in obtaining adequate insurance. The CAM must have an effective, working relationship with the board and staff to help identify and minimize risks. The CAM must understand his/her role and observe the boundaries set by law when consulting with the board and owners to avoid legal improprieties.

Due to the diversity in the types of construction, amenities, and geography which influence the level of risk, the community association properties will have varying insurance needs: no single policy will work for all associations. Similarly, replacement costs may change as improvements are made. Building codes may change, materials may become obsolete and inflation may or may not affect these costs.

Whether the fiduciary duty is stated or implied by law, the CAM must be prepared at all times to be prepared for extreme weather conditions.

The CAM must be ready to secure his/her properties and to ensure the safety of the owners, as well as to contact insurers, provide accurate documents to demonstrate loss and value, and complete claims processes in the case of a disaster.

Florida offers unique challenges to the CAM, not only due to flooding and windstorms, but due to of the abundance of condominiums, mobile homes, vacation/timeshare properties, manufactured, and retirement properties with homeowners’ associations. Within each of these property types there is a considerable variety of insurance needs that present challenges to the CAM. In all cases, it is critical to consult a certified insurance agent and a legal counselor that specializes in the property type being managed.

In addition, the CAM must continue to develop his/her knowledge of the Florida Statutes and Administrative Codes that are updated annually.

References � Adams, A. (2016). Insurance Exclusions. Retrieved April 30, 2017 from http://www.davis-stirling.

com/Main-Index/Insurance-Exclusions � A.M. Best, (2017). Glossary of Insurance Terms. Retrieved April 19, 2017 from http://www.Ambest.

Com/Home/Default.Aspx � Blount, N. & Picker, T. (2015). The Florida Bar Re Advisory Opinion—Activities of

Community Association Managers. No. SC13–889. Retrieved May 6, 2017 from http://www.Floridasupremecourt.Org/Decisions/2015/Sc13-889.Pdf.

� Bray, I. (2017). What Your Homeowners’ Association (HOA) Insurance Covers; And What It Leaves Uninsured. Retrieved May, 2, 2017 from http://real-estate.lawyers.com/homeowners-association-law/hoa-insurance.html

� Cobb, C. (2014). Community Association Managers’ Duty to the Association. Retrieved May 6, 2017 from http://www.Jimersoncobb.Com/Blog/2014/08/Community-Association-Managers-Duty-Association/

� Coles, D. (2015). A Community Association Manager’s Fiduciary Duty. Retrieved May 7, 2017 from www.Tannenbaumlawgroup.Com/.../A-Community-Association-Managers-Fiduciary-Duty.

� Cornell Law Library. (2017). Definition of Tort. Retrieved May 10, 2017 from https://www.law.cornell.edu/wex/tort.

� Federal Emergency Management Association. (2014). Condominiums. Retrieved May 7, 2017 from https://www.fema.gov/media-library-data/1397157263727-9472660324719d0465d3ebe300f4f192/06_condo_508_june2014.pdf.

� Florida Department of Business and Professional Regulations: Division of Florida Condominiums, Timeshares, and Mobile Homes. (2013). Property Insurance for Residential Condominiums. Retrieved May 5, 2017 from http://ww.Myfloridalicense.Com/Dbpr/Lsc/Condominiums/Lscmhcondominiumsfaqassociation.Html#A19.

� Florida Administrative Code and Florida Admnistrative Register. (2016). Standards of Professional Conduct. Retrieved May 1, 2017 from https://www.flrules.org/gateway/ruleNo.asp?id=61E14-2.001

� Florida 4th District Court of Appeals. (2010). La Costa Beach Club Resort Condominium Ass’n, Inc. v. Carioti, 37 So.3d 303. Retrieved May 7, 2017 from https://casetext.com/case/wendt-v-la-costa-beach-resort-condo

� Florida Statutes. (2012). Title XXXII, Part VIII: Community Association Management Retrieved May 1, 2017 from http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0468/0468PartVIIIContentsIndex.html&StatuteYear=2012&Title=-%3E2012-%3EChapter%20468-%3EPart%20VIII

� Florida State Statutes. (2016a). Title XXXVII Insurance. Retrieved April 30, 2017 from http://www.Leg.State.Fl.Us/Statutes

� Florida State Statutes. (2016b). Title XL Real Property. Retrieved April 30, 2017 from http://www.Leg.State.Fl.Us/Statutes

� Florida State Statutes. (2016c). Title XXXII. Regulation of Professions and Occupations. Retrieved April 30, 2017 from http://www.Leg.State.Fl.Us/Statutes

� Florida Supreme Court. (1980). Florida Bar v. Moses, 380 So. 2d 412 (Fla. 1980). Retrieved May 10, 2017 from http://www.floridasupremecourt.org/clerk/comments/2014/14-2112_102814_Appendix%20D.pdf

� HindmanSanchez. (2017). Understanding Homeowner Association Insurance Master Policy. Retrieved May 6, 2017 from http://www.Hindmansanchez.Com/Resources/Article/Understanding-Homeowner-Association-Insurance/

� International Risk Management Institute, Inc. (2016). Insurance Glossary: Employment Practices Liability Insurance. Retrieved May 3, 2017 from https://www.irmi.com/online/insurance-glossary/terms/e/employment-practices-liability-insurance-epli.aspx


� International Risk Management Institute, Inc. (2017). Insurance Glossary: Severability of Interests Clause . Retrieved May 6, 2017 from https://www.irmi.com/online/insurance-glossary/.../severability-of-interests-clause.aspx

� Mariani, J.F., Kammerer, C.W. & Guffey-Landers, N. (2010). Understanding Fiduciary Duty. Retrieved May 10, 2017 from http://Law.Justia.Com/Cases/New-York/Other-Courts/2017/2017-Ny-Slip-Op-27074.Html.

� Merriam-Webster Dictionary. (2017). Definition of Estoppels. Retrieved May 11, 2017 from https://www.merriam-webster.com/dictionary/estoppel#legalDictionary

� National Association of Insurance Commissioners. (2016). � Insurance Regulatory Information Systems (IRIS) Manual IRIS Ratios Manual for Property/

Casualty, Life/Accident & Health, And Fraternal 2016 Edition. Retrieved May 6, 2017 From Www.Naic.Org/Documents/Prod_Serv_Fin_Receivership_Uir_Zb.Pdf

� Soreide Law Group. (2016). Are You Accused Of Practicing Law Without A License? Retrieved May 10, 2017 from http://Floridabarhearing.Com/Unauthorized-Practice-Of-Law/

INSURANCE FOR FLORIDA COMMUNITY ASSOCIATIONSFinal Examination Questions


41. Liability insurance provides coverage for damage or injuries caused by negligence or other human acts.

¨ True ¨ False

42. The actual value cost is the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation, but limited by the maximum dollar amount shown on the declarations page of the policy.

¨ True ¨ False

43. An umbrella policy is coverage for exclusions to the liability coverage.

¨ True ¨ False

44. The duties of the CAM in assisting the board to identify insurance needs, assess value, review quotes, select adequate coverage, and submit claims for reimbursement demand the highest level knowledge, judgment and managerial skill.

¨ True ¨ False

45. When considering insurance requirements, Florida Statute Chapter 718 takes precedence over many declarations in condominium association documents, and states that associations must adequately insure property for its value, which needs to be determined by a replacement cost appraisal every 36 months.

¨ True ¨ False

46. The association shall maintain insurance or fidelity bonding only for the treasurer who controls or disburses the funds of the association.

¨ True ¨ False

47. Windstorm insurance coverage is obtained and maintained as sufficient to cover an amount equal to the probable maximum loss for the communities for a 100-year windstorm event.

¨ True ¨ False

48. Exclusions to general liability and D&O policies include underinsured or failure to insure.

¨ True ¨ False

49. In order for a condominium building to be eligible under the RCBAP form, the building must be owned by a condominium association.

¨ True ¨ False

50. Frequent, scheduled and documented safety and insurance reviews of the property by the board, manager, maintenance and professionals in order to identify risk and safety hazards in all areas of the property will help to control risk.

¨ True ¨ False

CAMFL04IFE18


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