Appellate Ruling and New Florida Laws Stress Open Records in Community Associations

The firm’s latest Miami Herald “Real Estate Counselor” column was authored by Michael Toback.  The article, which is titled “Appellate Ruling and New Florida Laws Stress Open Records in Community Associations,” discusses the new laws bolstering the criminal penalties for infractions in condominium associations involving official records. Michael’s column also focuses on a recent appellate ruling that reinforces how the state’s courts will hold associations accountable for any noncompliance with the statutory requirements pertaining to requests for records by owners. His article reads:

. . .The ruling was issued by Florida’s Fifth District Court of Appeal in a lawsuit filed by owners against their homeowners’ association, the Wayside Estates Homeowners Association located near Orlando in Sanford. The suit, which was brought by owners and association members William Pecchia and Kathleen Porter, stemmed from a formal request they issued to the HOA in 2019 for it to make certain records available to them for inspection as required by law.

The state’s laws for both homeowners associations and condominium associations require them to make their official records available to owners for inspection within 10 business days receipt of a written request. Trial testimony revealed the HOA had failed to respond within the requisite timeframe and, while it did eventually provide the owners with documents, they were produced several weeks past the deadline and incomplete.

After negotiations surrounding the production of the missing records ensued for months without resolution, the owners ultimately filed a lawsuit seeking an injunction requiring the HOA to produce all the official records requested. Specifically, the lawsuit alleged the HOA  failed to maintain and/or produce the requested insurance policies, financial statements, canceled checks, and bank statements showing payments for maintenance and repairs.

Even though the HOA had still not provided or made available all the requested documents at the start the trial, the court denied the requested injunctive relief and ruled that the HOA had provided adequate documents, thereby rendering the issue moot. As such, the trial court found no violation of the statutory 10-day timeframe, concluding “sufficient” documents were provided.

In the subsequent appeal, the Fifth DCA panel found that Florida law clearly requires associations to maintain their official records and provide them to owners upon request, and it specifically enumerates an extensive list of documents that constitute official records. These include “[a]ccurate, itemized, and detailed records of all receipts and expenditures . . . [a]ll tax returns, financial statements, and financial reports of the association . . . any other records that identify, measure, record, or communicate financial information . . . [and a]ll of the association’s insurance policies or a copy thereof, which policies must be retained for at least 7 years.”

The appellate panel concluded that if an association fails to provide access to its records within 10 business days following the submission of a written request, Florida law calls for a rebuttable presumption that it “willfully failed to comply.” Such willful failures subject associations to paying damages that are statutorily set at a minimum of $50 per calendar day for up to 10 days.

The Fifth DCA disagreed with the lower court’s finding that there was sufficient compliance by the HOA and the records request had become moot. The panel unanimously reversed the portion of the judgment finding sufficient compliance with the recordkeeping and inspection requirements, and it remanded the case back to the trial for further proceedings.

The appellate judges concluded that the repeated usage of the word “shall” in the statutes signifies there is no statutory flexibility, as does the implementation of a specific financial penalty for associations that do not meet the deadline. They specified that state law does not provide for substantial compliance, so at a minimum the trial court should have imposed the statutory penalty because the HOA had violated the timing requirement. Moreover, the panel found that the injunction should have been issued requiring the HOA to provide the requested insurance policies and missing bank statements, which are indeed part of the official records. . .

Michael concludes his article by noting how this ruling and the newly enacted changes to the state’s laws illustrate that the requirements for HOAs and condominium associations to comply with Florida’s laws on the inspection of official records by unit owners are non-negotiable. He writes that the statutes are very clear, and this recent appellate opinion reinforces prior rulings demonstrating that it is critical for associations to comply with properly issued requests for records inspections.

Our firm salutes Michael for sharing his insights into the takeaways for Florida community associations from this recent appellate decision and this year’s changes to the state’s laws involving records infractions. We write about important matters for community associations in our Miami Herald column, which appears every two weeks on Sundays, and we encourage association directors, members and property managers to click below and subscribe to our newsletter in order to automatically receive our future articles.