Throughout HB 1203, which goes into effect on July 1, several very small changes could have large implications on how any association governs itself and its community.
Of course, most association management companies and law firms should be able to guide board members on these small changes – like the attorneys at The Orlando Law Group can.
Still, it is important associations and their volunteer members understand these small changes, which include things like kickbacks, compound interest, handling subpoenas and more.
The attorneys at The Orlando Law Group represent more than 100 communities in Central Florida. If you live in Orlando, Winter Garden, Altamonte Springs, Kissimmee or anywhere throughout Central Florida, The Orlando Law Group is ready to help you.
Kickbacks Now Have Criminal Implications
In most cases, directors and managers of associations would never consider taking a kickback, defined as taking a good or service that benefits the director or manager, or their families, that is not listed in a contract.
In the past, the association could remove a director who took at kickback. But doing so now is now a third-degree felony, punishable with up to five years in prison and/or a $5,000 fine. Plus, convicted felons cannot vote, cannot own a gun, and cannot serve on the HOA board anymore.
It sounds simple, but what happens when your landscape company invites a director to join them at a concert or a Magic game? Many people would not consider that a kickback, but the law would.
The only exception to this rule is “food to be consumed at a business meeting with a value of less than $25 per individual or a service or a good received in connection with trade fairs or education programs.”
The best advice: Don’t take anything from a vendor!
Only simple interest is allowed for past-due assessments
One line in HB 1203 could impact the finances of associations if they were collecting compound interest on late assessments.
Specifically, the law now says, “compound interest may not accrue on assessments and installments on assessments that are not paid when due.”
The legislature reiterated this elsewhere, adding the word “simple” to this line of Florida statute: “If no rate is provided in the declaration or bylaws, simple interest accrues at the rate of 18 percent per year.”
The difference can be substantial. For $100, simple interest charges 18 percent on that $100. After a few interest charges, compound interest would charge interest on $136, whereas simple interest charges 18 percent on the $100 due.
Compound interest can become very costly for a homeowner, very quickly.
Of course, this should be handled by the association’s management company, but directors must understand if they have been charging compound interest and the financial implications of the new law.
First Responders not just law enforcement for parking issues
In another article found here, The Orlando Law Group discussed one of the biggest impacts of the new law – the inability of associations to prevent commercial vehicles.
The law has always said any covenants that restricted commercial vehicles could not apply to law enforcement.
The new law includes all first responders, not just law enforcement. Starting July 1, you can not prevent any type of first responder vehicle.
To be clear, Florida Statutes define first responders as: “a law enforcement officer, a firefighter or an emergency medical technician or paramedic employed by state or local government.” This includes both paid and volunteer first responders.
You must obey subpoenas quickly
If an association thinks they can stonewall law enforcement when they subpoena records, the association needs to think again.
Now it is officially in statute that an association has five business days to provide any information requested through a subpoena issued by law enforcement.
In addition, the association is now required to “assist a law enforcement agency in its investigation to the extent permissible by law.”
The Orlando Law Group would hope that all associations already did this, but now it is required by law starting July 1.
New audit requirements for large associations
Before HB 1203, the types of financial statements required for community associations were based entirely on the revenues of the association, with greater financial reviews required for larger associations.
Specifically, the law required:
- An association with total annual revenues of $150,000 or more, but less than $300,000, shall prepare compiled financial statements.
- An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare reviewed financial statements.
- An association with total annual revenues of $500,000 or more shall prepare audited financial statements.
HB 1203 added a fourth category based on the number of parcels in the community.
Now, regardless of the association’s revenues, if there are 1,000 or more parcels in the community, an association will be required to prepare audited financial statements.
The attorneys at The Orlando Law Group can help association board members and managers in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on June 17, 2024 by The Orlando Law Group