Knowledge Is Power

The Changing Landscape of Association Responsibility—New Crimes and Penalties

By Bryony G. Swift / Published May 2024

When the Florida legislature met in the first part of this year, they focused on community association reform to address unsavory allegations of association corruption which made headlines last year. As a result, this session resulted in significant new legislation on a broad range of topics impacting community association managers, condominiums, cooperatives, and homeowners’ associations. New legislation focuses on increased education requirements for board members, increased transparency in board operations, and the deterrence of corruption. This article addresses new crimes and penalties created by the legislature in House Bill 1021, the omnibus condominium bill, as well as this year’s homeowners’ association reform bill, House Bill 1203.

I. Managers

     House Bill 1021, also known as “Condo 3.0,” begins by adding to the community association manager Professional Practice Standards, Florida Statute 468.4334. Florida Statute 468.4334 will require a manager or management company to return association records to the association within 20 business days after termination of a management agreement, or after receipt of a written request for return of association records, whichever occurs first. The new paragraph also requires any notice of termination of the management contract to be provided by certified mail or as otherwise provided in the management contract.

     Penalties for failure to provide association records in a timely manner are steep. A community association manager or management company that fails to timely return association records within 20 business days is subject to suspension of its license and a civil penalty of $1,000 per day for up to ten business days, beginning on the 21st business day after the termination of management agreement or a written request for return of records. Moreover, failure to return association records within the 20 business days creates a rebuttable presumption that the management company willfully failed to comply. This willful failure to comply may lead to criminal penalties addressed below.

     Additionally, HB 1021 will create a new Conflict of Interest statute, §468.4335, establishing a new process for disclosure of any activity that may be reasonably construed as a conflict of interest for a manager or management company. This statute will create a rebuttable presumption of a conflict of interest for a manager’s failure to disclose any potential conflict in writing to the board. If the board finds that the manager has failed to properly disclose a potential conflict, their condominium community may cancel the management contract. Failure to disclose a conflict of interest will also be added to the statute governing community association manager Disciplinary Proceedings, Florida Statute 468.436.

Photo by iStockphoto.com/DigtialStorm

II. Condominiums

     House Bill 1021 adds kickback prohibitions to Florida Statute 718.111(1)(a) and makes the acceptance of a kickback by any officer, director, or manager a third-degree felony. It also creates records of access crimes, voting crimes, and voting conspiracy crimes. It provides that any board member charged with a crime set forth within the Condominium Act shall be removed from office and a replacement named by the board. A director removed from office may not have access to association records without a court order while such charges are pending. HB 1021 also grants the Division of Condominiums, Timeshares and Mobile Homes broad jurisdiction to investigate association actions, levy fines and other penalties, and also make referrals to law enforcement.

     House Bill 1021 makes any knowing, willful, and repeated failure to provide access to association records a second-degree misdemeanor and requires the offender be removed from office. A second-degree misdemeanor is punishable by up to 60 days in jail and a fine of up to $500. Knowingly or intentionally defacing or destroying accounting records, or knowingly or intentionally failing to create or maintain accounting reports, will be a first-degree misdemeanor. A first-degree misdemeanor is punishable by up to a year in jail and a fine of up to $1,000. A person who refuses to grant access to records to avoid detection of a crime or to help another avoid detection of a crime commits a third-degree felony. A third-degree felony is punishable by up to five years in prison and a fine of up to $5,000.

     HB 1021 covers fraudulent voting activities related to association elections in Florida Statute 718.112(2)(r)(1)(a)-(f), with each new voting crime a first-degree misdemeanor. Fraudulent voting crimes include the following:

1. Willfully and falsely swearing to or affirming an oath or affirmation, or willfully procuring another person to falsely swear to or affirm an oath or affirmation, in connection with or arising out of voting activities.
2. Perpetrating or attempting to perpetrate, or aiding in the perpetration of, fraud in connection with a vote cast, to be cast, or attempted to be cast.
3. Preventing a member from voting or preventing a member from voting as he or she intended by fraudulently changing or attempting to change a ballot, ballot envelope, vote, or voting certificate of the member.
4. Menacing, threatening, or using bribery or any other corruption to attempt, directly or indirectly, to influence, deceive, or deter a member when the member is voting.
5. Giving or promising, directly or indirectly, anything of value to another member with the intent to buy the vote of that member or another member or to corruptly influence that member or another member in casting his or her vote. This sub-subparagraph does not apply to any food served which is to be consumed at an election rally or a meeting or to any item of nominal value which is used as an election advertisement including a campaign message designed to be worn by a member.
6. Using or threatening to use, directly or indirectly, force, violence, or intimidation or any tactic of coercion or intimidation to induce or compel a member to vote or refrain from voting in an election or on a particular ballot measure.

     Additionally, HB 1021 adds conspiracy-type voting crimes to the statute. Aiding and abetting a voting crime, and conspiring to commit a voting crime, will also be first-degree misdemeanors. Having knowledge of a fraudulent voting action and assisting the offender to avoid detection will also be a first-degree misdemeanor.

III. Homeowners’ Associations

     Similarly, House Bill 1203 also contains a kickback prohibition, records-access crimes, and voting-conspiracy crimes. A board member or manager who knowingly, willfully, and repeatedly fails to retain or provide access to association records with the intent to cause harm to the association or its members commits a second-degree misdemeanor. Additionally, anyone who knowingly and intentionally defaces or destroys an accounting record, or who knowingly or intentionally fails to prepare a record, with the intent to cause harm to the association or one of its members, commits a first-degree misdemeanor. Any person who knowingly and intentionally refuses to release or otherwise produce an association record with the intention to avoid detection for the commission of a crime, or to assist another person with such avoidance or escape, commits a felony of the third degree.

     Under HB 1203, a homeowners’ association must respond to any law enforcement subpoena within five days, or as directed by the subpoena, and the association must assist the law enforcement agency in its investigation to the extent permissible by law. A director is removed from office and a vacancy declared if charged with any crime set forth in Chapter 720 of the Florida Statutes, as well as for any forgery of a ballot envelope or voting certificate, embezzlement or theft of association funds, or destruction of, or refusal to allow access to, association records in furtherance of a crime.

IV. Conclusion

     Those of us who work regularly with community associations know most volunteer board members and managers genuinely want to help their community thrive in accordance with the law and governing documents. However, recent headlines have shown that is not always the case. These two bills should help associations remove board members or managers seeking to wrongfully enrich themselves at the expense of a community.

Bryony G. Swift

Shareholder, Becker

Bryony (Brian-ee) Swift is a shareholder in the firm’s community association practice group. She focuses her practice in the areas of general representation and dispute resolution for condominium and homeowner associations. With a focus in community association general counsel work, Bryony assists her clients in navigating corporate governance issues, regulatory compliance issues, owner compliance issues, governing document revisions, and day-to-day operations. As a former litigator, she has significant practical experience with the legal process from intake to post-trial motions and has experience in handling class action litigation. Her courtroom experience helps her respond to violations within a community with practical solutions while also helping her guide her clients to the best possible outcomes. For more information, call 941-957-2991, email bswift@beckerlawyers.com, or visit www.beckerlawyers.com.