Understanding Florida’s Latest Community Association Bill (HB 1021): Compliance Tips for Homeowners’ Associations and Community Managers

Introduction

As of July 1, 2024, Florida’s community associations are governed by new regulations introduced by HB 1021. This comprehensive bill includes several changes aimed at enhancing transparency, accountability, and operational standards for community associations, community association managers (CAMs), and CAM firms. Compliance with these new requirements is crucial for avoiding legal pitfalls and ensuring smooth operations. Here are some practical compliance tips to help associations and CAMs adhere to the new regulations.

Community Association Managers (CAMs) and Firms

HB 1021 imposes several new legal requirements on CAMs and CAM firms aimed at improving transparency and accountability. Key provisions include:

• Annual Meeting Attendance:
• Tip: Schedule and plan to attend at least one member or board meeting annually. Keep a log of meetings attended to ensure compliance.
• Action: Integrate this requirement into your annual calendar and set reminders to prepare and attend these meetings.
• Information Disclosure:
• Tip: Create a standardized information sheet including contact details, hours of availability, and the designated contact person. Update this sheet regularly.
• Action: Distribute this information sheet to all community members and ensure it is prominently displayed on the association’s website.
• Contract Transparency:
• Tip: Maintain a readily accessible copy of the contract between the association and the CAM or CAM firm. Ensure it is available upon request.
• Action: Implement a system for tracking and fulfilling these requests promptly.
• Continuing Education:
• Tip: Enroll in continuing education courses annually. Keep detailed records of completed courses and hours.
• Action: Set aside specific times each year to complete the required 10 hours of continuing education and the additional biennial 5 hours focused on homeowners’ associations and recordkeeping.

Official Records

HB 1021 introduces stringent requirements for the maintenance and accessibility of official records within homeowners’ associations:

• Digital Records:
• Tip: Invest in a secure digital platform for storing and managing official records. Ensure the platform is accessible via the association’s website or a mobile application by January 1, 2026.
• Action: Begin digitizing records now to ensure a smooth transition. Regularly update and audit the digital records to ensure accuracy and completeness.
• Subpoena Compliance:
• Tip: Establish a clear protocol for responding to subpoenas within the five-business-day requirement. Designate a compliance officer to handle these requests.
• Action: Train staff on the protocol and conduct regular drills to ensure preparedness.
• Record Retention:
• Tip: Create a comprehensive record retention policy that aligns with the seven-year minimum requirement, or longer if specified in the governing documents.
• Action: Audit your current records to ensure compliance and securely store records according to the policy.

Criminal Violations

HB 1021 introduces severe penalties for criminal violations related to homeowners’ associations:

• Ethical Conduct:
• Tip: Develop and implement a robust ethics training program for all directors, officers, and managers. Emphasize the legal consequences of violations.
• Action: Require annual ethics certifications from all board members and staff.
• Transparency and Accountability:
• Tip: Maintain meticulous records of all financial transactions and decisions. Implement regular internal audits to ensure compliance.
• Action: Use accounting software that provides audit trails and secure record-keeping.

Assisting Law Enforcement

Associations are required to provide requested records within five business days of receiving a subpoena and assist law enforcement in investigations:

• Subpoena Response Protocol:
• Tip: Develop a quick response protocol for subpoenas and ensure all staff are familiar with it.
• Action: Assign a legal liaison within the association to handle all law enforcement interactions.

Financial Reporting

HB 1021 mandates rigorous financial reporting standards for large associations:

• Audited Financial Statement:
• Tip: Engage a reputable audit firm to conduct annual audits if your association has 1,000 or more parcels.
• Action: Schedule annual audits well in advance and review the findings with the board.
• Consistent Reporting Standards:
• Tip: Adhere to the required type of financial statement without reduction for consecutive years. Monitor compliance through internal checks.
• Action: Use a financial management system that ensures compliance with reporting standards.

Requirement to Provide Accounting

The bill empowers parcel owners to request detailed accountings of amounts owed to the association:

• Timely Response:
• Tip: Establish a procedure for responding to accounting requests within 15 business days.
• Action: Implement an automated system to track and fulfill these requests, ensuring no delays.

Education for Officers and Director

HB 1021 revises the education requirements for homeowners’ association directors:

• Educational Curriculum:
• Tip: Offer onboarding and ongoing training programs that cover financial literacy, transparency, recordkeeping, and other key governance topics.
• Action: Partner with educational institutions or online platforms to provide these training programs.
• Continuing Education:
• Tip: Schedule continuing education sessions annually and track completion for all directors.
• Action: Maintain a compliance log to ensure all directors meet the annual education requirements.

Enforcement of Covenants and Rules

The bill stipulates that associations must provide written notice to parcel owners when denying requests for construction or improvements:

• Clear Communication:
• Tip: Develop standardized forms for communicating decisions regarding construction or improvement requests.
• Action: Ensure all communications are documented and saved in the association’s records.

Fines, Suspensions, and Liens

HB 1021 introduces new procedures for issuing fines and suspensions:

• Fair Hearing Procedures:
• Tip: Develop a fair and transparent hearing process, including written notices and documented findings.
• Action: Create templates for hearing notices and decision documents to ensure consistency and compliance.

Electronic Voting

HB 1021 permits homeowners’ association members to consent to electronic voting:

• Modern Voting Systems:
• Tip: Implement a secure electronic voting system and provide training for members on how to use it.
• Action: Regularly update the system to maintain security and compliance with legal standards.

Assessments

The bill restricts interest accrual on unpaid assessments to simple interest:

• Fair Financial Practices:
• Tip: Update your financial policies to ensure only simple interest is applied to unpaid assessments.
• Action: Review and revise assessment notices and documentation to reflect this change.

Conclusion

Florida’s HB 1021 represents a significant advancement in the governance and management of community associations. By adhering to these compliance tips, associations and CAMs can ensure they meet the new legal requirements and maintain a high standard of transparency and accountability. The law firm is dedicated to assisting clients in navigating these changes and ensuring compliance with the new legal framework, reinforcing our commitment to excellence in legal practice and client service.