Florida Amends Homeowners´ Associations Laws

Provisions Become Effective July 1, 2007

On June 19, 2007, Florida Governor Crist signed Senate Bill 902 (the "Bill"). The Bill changes many provisions of existing law that affect homeowners' associations. The new provisions become effective July 1, 2007. In particular, changes to Chapter 720 of the Florida Statutes include the following:

Section 720.303(2) - Board Meetings This Section was amended to provide that the requirements relating to board of director meetings also apply to (a) meetings of any committee or other similar body when a final decision will be made regarding expenditure of association funds and (b) meetings of architectural review committees. As revised, meetings of such committees require a quorum and must be open to all members of the association.

Section 720.303(6) - Budgets This Section was amended to provide that if the developer establishes reserve accounts or the membership of the association affirmatively elects to provide reserve accounts, then the reserve accounts shall be noted on the association's budget and the amount to be reserved must be computed using a formula that is based on the estimated remaining useful life and estimated replacement costs of each reserve item. If reserve accounts are not initially provided by a developer, they can be established upon approval of not less than a majority of all voting interests of the association, and once established, reserve accounts must be maintained and waived as provided in the statute. If reserve accounts are not established, then the annual financial reports of the association must provide the following disclosure 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 THE PROVISIONS OF SECTION 720.303(6), FLORIDA STATUTES, UPON THE APPROVAL OF NOT LESS THAN A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION.

A developer-controlled association may not use reserve funds for any other purpose unless approved by a majority of all non-developer voting interests.

Section 720.303(7) - Financial Reporting This Section was amended to require that within ninety (90) days after the end of the fiscal year, or annually as provided in the bylaws, the association must prepare and complete a financial report for the preceding fiscal year. This changes the current requirement that...

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