Thursday, June 3, 2010

The Governor signed SB 1196….now what?

You can’t open a newspaper or go online without reading about the Governor signing the 103-page association bill, SB 1196. Why is this bill big news?

First, the bill was the culmination of years of work on the part of advocates and groups that sought more sensitive treatment for existing buildings in terms of expensive Building Code upgrades and retrofits. Governor Crist vetoed a bill last year (714) which contained retrofit relief language so this year’s signature is all the more rewarding especially in light of the fact that the retrofit relief contained in SB 1196 goes far beyond what was contained in last year’s bill which he vetoed.

Second, the bill contains a provision that requires lenders foreclosing on units in condominiums to pay the lesser of 12 months past due assessments or 1% of the original mortgage debt. Currently, Chapter 718 provides for the lesser of 6 months or 1%. To all the naysayers out there complaining that this does nothing, I say do the math. An association cannot do worse under this change and some will do significantly better. Yes, it would have been wonderful to increase the 1% cap to 2% or more in addition to increasing the number of months owed but legislation is an incremental process. Small bites at the apple are better than no bites.

Third, the bill would allow both HOA’s and condominiums to collect rent from tenants in delinquent properties. This is not an area where a board should plunge blindly ahead. A clear strategy needs to be created as to how this will be handled and by whom. The new statutory provision does NOT allow an association to rent out abandoned units if the association does not have title to them. An association with a large number of abandoned units can attempt to rent those out prior to taking title through the use of a Court-appointed Receiver. The provisions in 1196 do not address that problem. They do address the issue of units with tenants already in them where the owners are not paying maintenance.

Many of you are already asking questions about this law and its real-life impact on your communities. The bill bears an effective date of July 1st. My Firm is doing a bullet point guidebook for our clients as to the best way to implement these changes to maximize benefit to their communities. Now is the time to get with your association counsel and ask them to help you map out precise implementation plans for the many changes this bill brings.

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