SB 714 To Require Residential Condo Policies To Include $2,000 For Certain Loss Assessment Coverage, Upon Governor’s OK

Before its final passage in the Florida House of Representatives on April 29, 2009, by a vote of 114 to 2, the language of Senate Bill 714 relating to Condominiums was substituted by that of House Bill 419 on April 28.  One day prior to that, SB 714 had passed unanimously and unrevised in the Senate after previously being amended as a committee substitute by the Senate General Government Appropriations and Regulated Industries Committees.

Originally sponsored by Senator Dennis L. Jones (R-Seminole), SB 714 revises and clarifies the property insurance requirements of condominium associations and condominium unit owners under Chapter 718, Florida Statutes, which is also known as the Condominium Act. The bill also corrects inconsistencies with terms used under the Florida Insurance Code. 

SB 714 repeals certain requirements placed on condominium unit owners, including the mandate to maintain property insurance coverage, and the requirement that the condominium association must be a named insured and loss payee on policies issued to unit owners.  SB 714 also repeals the provision that a condominium association may purchase property insurance at the expense of a unit owner who does not provide proof of insurance. 

This bill, which takes effect upon signature into law by Florida Governor Charlie Crist, substantially amends s. 718.111, F.S, and creates s. 627.714, F.S.

 

Analysis of SB 714 by Section

 

Section 1

• Creates s. 627.714, F.S., pertaining to condominium unit owner coverage and loss assessment coverage.  For policies issued or renewed on, or after July 1, 2009, a unit owner’s policy must include loss assessment coverage of at least $2,000 for all assessments made as a result of the same loss to the property, regardless of the number of assessments, and when the assessment is made as a result of direct loss to the property owned by all members collectively and caused by an insured peril.
• States that the loss must be of the type covered by the unit owner’s residential property insurance policy.
• Authorizes insurers to apply a deductible of no more than $250 per direct property loss.
• Provides that a deductible does not apply if it has already been applied to other property damaged by the same direct loss.
• States that every property insurance policy issued or renewed to an individual unit owner must contain a provision stating that it affords excess coverage over the amount recoverable under any other policy covering the same property.

 

Section 2

• Amends s. 633.0125, F.S., governing the Florida Fire Prevention Code, and provides an exemption from installing manual fire alarm systems as required in the Life Safety Code for condominiums that are one or two stories in height and have an exterior means of exit.

 

Section 3

• Amends section 718.11, F.S. that governs condominium associations by deleting the terms “hazard” and “casualty” in reference to insurance throughout the subsection and replaces those terms with “property.” 
• Clarifies that adequate property insurance shall not be based upon the “full insurable value” of the property, but on the “replacement cost” of the property to be insured, which must be determined at least once every 36 months.
• Provides that a property insurance policy or program originally issued before January 1, 2000 that has provided uninterrupted property insurance coverage and provided coverage for a group of no fewer than three communities, is not subject to review and approval by the Florida Office of Insurance Regulation (“OIR”) until renewed after July 1, 2009.  Such coverage or program may not exist beyond July 1, 2010.
• Deletes the requirement in s.718.111(11)(c)(3), F.S., that a condominium Board meeting notice relating to insurance policies and rates must state the proposed deductible and the available funds, the assessment authority relied upon by the Board, and the estimate of the potential assessment amount against each unit, if any.  The bill also removes the provision that previously permitted Board meetings to be held in conjunction with a meeting to consider a proposed budget or budget amendment.
• Clarifies in s. 718.111(11)(f)(3), F.S., that property excluded from a condominium association’s insurance coverage (i.e., the personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, built-in cabinets and countertops, and window treatments) is located within the boundaries of the unit and is the responsibility of the unit owner.
• Amends s. 718.111(11)(g), F.S., to provide that the unit owner’s insurance policy must conform to the requirements of s. 627.714, F.S.
• Deletes the following provisions from s. 718.111(11)(g), F.S.:
  • A unit owner’s hazard insurance policy, issued or renewed on or after January 1, 2009, must contain a provision stating that the policy is excess coverage over the amount recoverable under any other policy covering the same property.
  • A unit owner’s hazard insurance policy must include special assessment coverage of $2,000 per occurrence.
  • A unit owner’s hazard insurance policy does not provide the right of subrogation against the unit owner’s condominium association.
  • All improvements or additions to the condominium property that do not benefit all unit owners must be insured by the unit owners having the use thereof, or by the association at the cost and expense of the unit owners having such use.
  • The association may require each owner to provide evidence of a hazard and liability insurance upon request, but not more than once per year.
  • Should the unit owner fail to provide hazard and liability insurance upon written request within 30 days, the association may purchase a policy on the owner’s behalf and the unit owner is responsible for the cost of the policy and for any reconstruction costs incurred by the association; such costs may be collected as assessments under s. 718.116, F.S.
  • The association must be an additional named insured and loss payee on all casualty insurance policies issued to condominium unit owners.

 

Section 4

• Amends s. 718.112(2), F.S., governing required provisions in condominium association bylaws to exempt timeshare condominiums from the requirement that the terms of all board members will expire at the annual meeting, and that those board members may stand for reelection unless otherwise permitted by the bylaws
• Revises a provision permitting an automatic reappointment to a board of administration, if no one demonstrates an intention to run for the position of a board member whose term has expired, to:  “[i]f the number of board members whose terms have expired according to the provisions of this subparagraph exceeds the number of eligible members showing interest in or demonstrating an intention to run for the vacant positions, each board member whose term has expired shall become eligible for reappointment to the board of administration and need not stand for reelection.”
• Provides that, for condominium associations of more than 10 units, or those that do not include timeshare units, co-owners of a unit may not serve as members of the board of directors at the same time unless they own more than one unit and are not co-occupants of a unit.
• Provides that any unit owner who is delinquent in a fine, fee, or special regular assessment is not eligible for board membership.
• Deletes a requirement that an association deliver  a certification form provided by the division attesting that he or she has read and understands the provisions of this chapter to each qualified voting unit owner (only a copy of the notice of the date of election is required to be included)
• Requires within 90 days after being elected to the board, each newly-elected director must certify in writing to the secretary of the association that he or she has read the association’s declarations of covenants and restrictions, articles of incorporation, bylaws, and current written policies, will work to uphold such documents and policies, and will faithfully discharge his or her fiduciary responsibility to the association’s members.  In lieu of this written certification, a new director may submit a certificate of satisfactory completion of the educational curriculum administered by a division-approved condominium education provider. Failure to file the written certification or educational certificate in a reasonable time limit automatically disqualifies the director from service on the board.  The association must retain a director’s written certification or educational certificate for five years after election.

 

Section 5

• Repeals subsection (2) of s. 553.509, F.S., requiring at least one public elevator under certain requirements.

 

Section 6

• SB 714 will take effect upon becoming a law.

 

 

Should you have any questions or comments, please contact Colodny Fass.

 

To unsubscribe from this newsletter, please send an email to ccochran@cftlaw.com.