Legislature Adds Teeth to Florida’s Community Association Fraud Laws

Siegfried Rivera
March 31, 2024


The firm’s latest Miami Herald “Real Estate Counselor” column was authored by Michael L. Hyman and is titled “Legislature Adds Teeth to Florida’s Community Association Fraud Laws.” The article focuses on two bills to strengthen criminal penalties for association fraud and malfeasance that have been passed by the Florida Legislature with unanimous votes in both chambers. His article reads:

. . . Both bills impose the exact same strict criminal penalties for a number of violations. They make it a first-degree misdemeanor to intentionally deface and destroy accounting records, or to fail to create and maintain them with ill intent. They also call for second-degree misdemeanors for board members or property managers who fail to provide requested records or maintain them for seven years, and third-degree felonies for anyone who “willfully and knowingly refuses to release or otherwise produce association records with the intent to avoid or escape detection, arrest, trial, or punishment for the commission of a crime, or to assist another person with such avoidance.” Board members or property managers who solicit or accept a kickback also face a third-degree felony.

The new legislation mandates that homeowners associations furnish records that are under legal subpoena within five business days, and they must also assist law enforcement agencies in their investigations to the extent permissible by law.

HOA board members will be required to complete a state-approved educational course covering financial literacy and transparency, fines, recordkeeping and meeting notices. Directors of HOAs with fewer than 2,500 homes must complete four hours of continuing education annually, while those for communities with more than 2,500 homes must complete eight hours per year.

Homeowners associations must maintain their official records, including meeting minutes, vendor contracts, election ballots, financial/tax records and others for at least seven years. Those with at least 100 homes are required to post many of their records on a community website, which must also include meeting notices/agendas for all open board meetings at least 14 days in advance. Any contracts that are up for a vote at a meeting need to be posted at least seven days in advance.

HOAs will not be allowed to issue suspensions of voting rights or the use of community amenities for some minor types of rule violations. In addition, liens against homeowners involving relatively low fines will require the approval of 75 percent of all the owners, and some fines for certain traffic and landscaping infractions are precluded from becoming liens.

Regular assessments not including insurance can increase by only 10 percent over the prior year for HOAs, and special assessments are capped at five percent of the annual budgeted expenses unless 60 percent of the voting members approve a larger assessment. HOAs are also barred from charging compound interest on overdue assessments.

The new legislation also addresses election fraud in condominium associations. Those who prevent owners from voting, use threats to influence a vote, buy votes and aid in voter fraud will face first-degree misdemeanors.

Condominium association directors who are charged with such infractions as ballot forgery, embezzlement of association funds, obstruction of justice, and destruction of records must be removed from office. All condominium directors will need to complete a four-hour course that covers structural inspections, reserves, elections, recordkeeping, fines, meetings, budgets/financing, records transparency and other matters, plus they will be required to complete an hour of continuing education during every year of service.

Condominium association property managers or management firms that are terminated by a client association are required to turn over all of the records in their possession within 20 days. The failure to do so could lead to the loss of their state license and $1,000 daily fines.

By the start of 2025, the state’s Department of Business and Professional Regulation must create a database on its website of associations that have completed their newly mandated structural integrity reserve studies. Within 45 days of completing the study, associations have to provide a copy to each owner and also alert the DBPR that it was completed.

The new legislation allocates $7.4 million and 65 full-time employees, at a total salary of $3.2 million, in this year’s state budget for the DBPR to implement and enforce the new measures. . .

Michael concludes his article by noting that recent cases of alleged brazen thefts and fraud at Florida HOAs and condominium associations required a legislative fix, and the unanimous votes for both of these bills in both chambers is a clear signal that the problem has become a priority for the state’s lawmakers. He encourages Gov. DeSantis to sign the bills into law, which will then take effect on July 1.
Our firm salutes Michael for sharing his insights into these important legislative changes aimed at curbing association theft and fraud with the readers of the Miami Herald.