Is Florida’s SB 596 a good bill? YES! Part 2

This post takes a closer look at some of the provisions of SB 596 with its intent “that the powers and authority granted to homeowners’ associations . . .  conform to a system of checks and balances in order to prevent abuses by these governing authorities.”  At the request of then Rep. Julio Robaina I testified at the Feb. 23, 2008 all-day legislative HOA hearing in Tampa, FL.  Public domain clips from this hearing, several of which can be found at the HOAGOV YouTube website, clearly show why checks and balances are sorely needed.

Aside from the introduction of effective enforcement provisions, the other changes of substance deal with regulating the conduct of what the HOA “can and can’t do.”  They are the payment of assessments, elections and proxies voting, and transfer of declarant control.

These substantive changes take the first 17 pages of the bill and is followed by non-substantive changes to 720.3024 creating the Ombudsman office and election monitoring, and HOA Study Council (720.3025). The other substantial changes include:  Section 720.3085, the “pay or die” section (my words), Section 720.306 dealing with meetings and substantial revisions to the elections and proxy voting processes, and changes to 720.307 relating to the transfer of power from the declarant that takes us to page 40 and the subsequent technical changes.

First, I will look at what I call the “pay or die” statutes regarding the continued payment of assessments even when payments are being disputed (720.3085(9)).  “Pay or die” meaning that if any homeowner doesn’t pay his assessments in a timely manner the HOA will die mentality.  I find this reprehensible, approaching an indentured servitude condition, and demonstrating a “close nexus” and a “symbiotic relationship” between the HOA and state, a “You do for me and I will do for you” relationship.  This statutory requirement to pay or else is sufficient alone to have the HOA declared a state actor!  Especially when the statutes also permit the HOA to deprive is member-residents of their rights, freedoms, privileges and immunities as citizens under the 14th Amendment.

However, the bill at least moves forward with checks on the unilateral foreclosure powers of the HOA.  It forces the HOA to prove the correctness of its claim, allowing the court to issue equity judgments that the HOA can’t add right, had sent the notices to the wrong address, refused to cash checks and/or held them past the deadline before cashing in order to demand late fees, just to name a few of the abusive practices.

Read the new subsection 720.3085(9) carefully.  A dispute of the amount would only require deposits of assessments during the legal action, and not the disputed amounts. The term “disputed” needs to be clarified to include abuse by the HOA as mentioned above and not limited to just amounts.  Of course, the justification for clauses (d) and (e), the HOA will die clauses, can be debated.

There are some issues with proxy voting (720.306), but the changes in the bill will serve the homeowners well. Subsection (9) deals with board elections and restricts members who are in arrears to the HOA cannot run for office.  That’s fair.  If a member cannot vote if he is in arrears, a member in arrears should not be allowed to hold office. Co-owners cannot both serve on the board, which give that unit excessive power.  I find the requirement to certify knowledge of the governing documents 90 after an election as preposterous and pro-HOA.  Want to be on the board?  Get educated first!

In regard to the transfer of power changes added in the bill serve to benefit the homeowner.  While not completely airtight, the term “in the ordinary course of business” would restrict the declarant from sitting on lots in order to retain control.  What is missing, as just occurred in Arizona, is the declarant’s modification of the governing documents before turning over its power to lock him in place for all practical purposes.  The usual introductory phrase, “notwithstanding anything in the governing documents to the contrary” should be added to the bill.

As for my views, the inclusion of effective enforcement authority overwhelming outweighs any concerns that I have mentioned above.

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