The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Regulated Industries
BILL: CS/SB 426
INTRODUCER: Regulated Industries Committee and Senators Garcia and Jones
SUBJECT: Community Associations
DATE: January 5 , 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Oxamendi Imhof RI Fav/CS
2. AEG
3. FP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 426 establishes a Condominium and Homeowners’ Association Economic Crime, Fraud,
and Corruption Investigation Pilot Program (pilot program) within the Department of Legal
Affairs, Office of the Attorney General, for the purpose of investigating condominium and
homeowners’ association-related economic crime, fraud, and corruption in Florida.
The bill authorizes the Department of Legal Affairs to contract with a private entity that employs
retired law enforcement officers who have subject matter expertise in financial fraud or,
alternatively, to hire a suitable number of financial investigators, investigators with previous law
enforcement experience, and clerical employees to staff the pilot program. The pilot program’s
primary office must be located in Miami-Dade County.
The bill renames the Office of Condominium Ombudsman within the Department of Business
and Professional Regulation to the Office of the Condominium and Homeowners’ Ombudsman
(ombudsman), and expands the powers and duties of the ombudsman to include ch. 720, F.S.,
relating to homeowners’ associations, in addition to ch. 718, F.S, relating to condominium
associations.
The bill provides that a person may submit a complaint to the ombudsman, who must review all
submitted complaints and determine which complaints to forward to the Department of Legal
Affairs, which may issue subpoenas and conduct audits for investigations, and may administer
oaths, subpoena witnesses, and compel the production of books, papers, or other records relevant
BILL: CS/SB 426 Page 2
to such investigations. If the Department of Legal Affairs finds sufficient evidence for criminal
prosecution, it must refer the case to the appropriate state attorney for prosecution.
The bill provides that the Department of Legal Affairs must fund the pilot program from the
Division of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund as specifically
appropriated annually in the General Appropriations Act. The authority for the pilot program is
repealed October 2, 2029, unless reviewed and saved from repeal through reenactment by the
Legislature.
The bill also:
Exempts the Division of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund,
from the eight percent service charge required by s. 215.20(1), F.S.
Requires the Division of Florida Condominiums, Timeshares, and Mobile Homes (division)
to monitor associations’ compliance with the requirement in this paragraph that associations
must maintain insurance or fidelity bonding of all persons who control or disburse funds of
the association, and to issue fines and establish penalties for failure to maintain the required
insurance policy or fidelity bond.
Requires the division to establish, by July 1, 2026, a searchable cloud-based database that
contains specified information and documentation regarding each condominium association
operating within Florida, which must allow a user to search the name by which a
condominium property is identified to find the association that governs such property.
Requires the division to forward complaints that allege economic crimes, fraud, or corruption
to the ombudsman for review pursuant to pilot program requirements in the bill, and for the
ombudsman to refer complaints alleging economic crimes, fraud, or corruption to the pilot
program.
Expands the duties and powers of the ombudsman by authorizing the condominium
ombudsman to void an election in a condominium or homeowners’ association if he or she
determines violations have occurred, to petition the court to appoint a receiver if the
appointment of a receiver is in the best interests of the association or owners, and to issue
subpoenas and conduct audits for investigations for the purposes of the pilot program.
The bill takes effect July 1, 2024.
II. Present Situation:
The Division of Florida Condominiums, Timeshares, and Mobile Homes (division) within the
Department of Business and Professional Regulation (DBPR) administers the provisions of
chs. 718, F.S., for condominium associations.
Section 718.501, F.S., provides the investigative and enforcement authority of the division. The
division may enforce and ensure compliance with ch. 718, F.S., and rules relating to the
development, construction, sale, lease, ownership, operation, and management of residential
condominium units and complaints related to the procedural completion of milestone inspections
under s. 553.899, F.S. The division may investigate complaints and enforce compliance with
ch. 718, F.S., for associations that are still under developer control, including investigating
complaints against developers involving improper turnover or failure to transfer control to the
BILL: CS/SB 426 Page 3
association.1 After control of the condominium is transferred from the developer to the unit
owners, the division only has jurisdiction to investigate complaints related to financial issues,
elections, and maintenance of and unit owner access to association records.2
Fees and Trust Fund
The Division of Florida Condominiums, Timeshares, and Mobile Homes Trust Fund (trust fund)
is used for administration and operation of ch. 718, F.S., relating to condominium associations,
ch. 719, F.S., relating to cooperative associations, s. 721, F.S., relating to vacation and timeshare
plans, and ch. 723, F.S., relating to mobile homes, by the division. All moneys collected by the
division from fees, fines, penalties, or from costs awarded to the division by a court or
administrative final order must be deposited in the trust fund.3
The operation of the trust fund is subject to s. 215.20, F.S., which provides an eight percent
service charge from all income of a revenue nature deposited in all trust funds except those
which are exempted in s. 215.22, F.S.
Each condominium association which operates more than two units is required to pay to the
division an annual fee in the amount of $4 for each residential unit in condominiums operated by
the association. If the fee is not paid by March 1, the association is assessed a penalty of 10
percent of the amount due, and the association will not have standing to maintain or defend any
action in the courts of this state until the amount due, plus any penalty, is paid. These fees must
be deposited in the trust fund.
Condominiums
A condominium is a “form of ownership of real property created under ch. 718, F.S,”4 the
“Condominium Act.” Condominium unit owners are in a unique legal position because they are
exclusive owners of property within a community, joint owners of community common
elements, and members of the condominium association.5 For unit owners, membership in the
association is an unalienable right and required condition of unit ownership.6 Condominiums are
created by recording a declaration in the public records of the county where the land is located,
executed and acknowledged with the requirements for a deed.7
The term “condominium” is defined in the Condominium Act to mean:8
…that form of ownership of real property created pursuant to this chapter,
which is comprised entirely of units that may be owned by one or more
1
Id.
2
Section 718.501(1), F.S.
3
Section 718.509, F.S.
4
Section 718.103(11), F.S.
5
See s. 718.103, F.S., for the terms used in the Condominium Act.
6
Id.
7
Section 718.104(2), F.S.
8
Section 718.103(12), F.S.
BILL: CS/SB 426 Page 4
persons, and in which there is, appurtenant to each unit, an undivided
share in common elements.
Condominium Ombudsman
The Office of the Ombudsman (condominium ombudsman) within the division is an attorney
appointed by the Governor to be a neutral resource for unit owners and condominium
associations. The ombudsman is authorized to prepare and issue reports and recommendations to
the Governor, the division, and the Legislature on any matter or subject within the jurisdiction of
the division. In addition, the condominium ombudsman may make recommendations to the
division for changes in rules and procedures for the filing, investigation, and resolution of
complaints.9
The condominium ombudsman also acts as a liaison among the division, unit owners, and
condominium associations and is responsible for developing policies and procedures to help
affected parties understand their rights and responsibilities.10
Homeowners’ Associations
Chapter 720, F.S., provides statutory recognition to corporations that operate residential
communities in Florida as well as procedures for operating homeowners’ associations. These
laws protect the rights of association members without unduly impairing the ability of such
associations to perform their functions.11
A “homeowners’ association” is defined as a:12
Florida corporation responsible for the operation of a community or a
mobile home subdivision in which the voting membership is made up of
parcel owners or their agents, or a combination thereof, and in which
membership is a mandatory condition of parcel ownership, and which is
authorized to impose assessments that, if unpaid, may become a lien on
the parcel.
Unless specifically stated to the contrary in the articles of incorporation, homeowners’
associations are also governed by ch. 607, F.S., relating to for-profit corporations, or by
ch. 617, F.S., relating to not-for-profit corporations.13
Homeowners’ associations are administered by a board of directors that is elected by the
members of the association.14 The powers and duties of homeowners’ associations include the
powers and duties provided in ch. 720, F.S., and in the governing documents of the association,
which include a recorded declaration of covenants, bylaws, articles of incorporation, and duly-
9 Sections 718.5011 and 718.5012, F.S.
10 Id.
11
See s. 720.302(1), F.S.
12
Section 720.301(9), F.S.
13
Section 720.302(5), F.S.
14
See ss. 720.303 and 720.307, F.S.
BILL: CS/SB 426 Page 5
adopted amendments to these documents.15 The officers and members of a homeowners’
association have a fiduciary relationship to the members who are served by the association.16
Unlike condominium associations, homeowners’ associations are not regulated by a state agency.
Section 720.302(2), F.S., expresses the legislative intent regarding the regulation of
homeowners’ associations:
The Legislature recognizes that it is not in the best interest of
homeowners’ associations or the individual association members thereof
to create or impose a bureau or other agency of state government to
regulate the affairs of homeowners’ associations. However, in accordance
with s. 720.311, [F.S.,] the Legislature finds that homeowners’
associations and their individual members will benefit from an expedited
alternative process for resolution of election and recall disputes and presuit
mediation of other disputes involving covenant enforcement and
authorizes the department to hear, administer, and determine these
disputes as more fully set forth in this chapter. Further, the Legislature
recognizes that certain contract rights have been created for the benefit of
homeowners’ associations and members thereof before the effective date
of this act and that ss. 720.301-720.407[, F.S.], are not intended to impair
such contract rights, including, but not limited to, the rights of the
developer to complete the community as initially contemplated.
The division has limited regulatory authority over homeowners’ associations. The division’s
authority is limited to the arbitration of recall election disputes.17
Department of Legal Affairs
The Department of Legal Affairs (DLA) within the Office of the Attorney General provides a
wide variety of legal services. The DLA defends the state in civil litigation cases, represents the
people of Florida in criminal appeals in state and federal courts, operates consumer protection
programs and victim service programs, prosecutes some criminal offenses, and investigates
Medicaid fraud.18
III. Effect of Proposed Changes:
Condominium Fraud Investigation Pilot Program
Section 1 of the bill creates s. 16.0151, F.S., to establish the Condominium and Homeowners’
Association Economic Crime, Fraud, and Corruption Investigation Pilot Program (pilot program)
within the DLA.
15
See ss. 720.301 and 720.303, F.S.
16
Section 720.303(1), F.S.
17
Section 720.306(9)(c), F.S.
18
Office of Program Policy Analysis and Government Accountability, Office of the Attorney General (Department of Legal
Affairs), at: https://oppaga.fl.gov/ProgramSummary/ProgramDetail?programNumber=1026 (last visited January 31, 2024).
BILL: CS/SB 426 Page 6
The term “corruption” is defined in the bill as the act of an “official or fiduciary person who
unlawfully and wrongfully uses his or her position to procure some benefit for himself or herself
or for another per, contrary to the duty and rights of others.”
Section 16.0151(1), F.S., provides that the purpose of the pilot program is to investigate
condominium-related and homeowners’ association-related economic crime, fraud, and
corruption in Florida.
The bill authorizes the DLA to contract with a private entity that employs retired law
enforcement officers who have subject matter expertise in financial fraud. If the DLA does not
contract with a private entity, the DLA must hire a suitable number of financial investigators,
investigators with previous law enforcement experience, and clerical employees to staff the pilot
program.
Section 16.0151(2), F.S., provides that a person may submit a complaint to the Office of the
Condominium and Homeowners’ Association Ombudsman (ombudsman), as created by the bill,
who must review all submitted complaints and determine which complaints to forward the
complaint to the DLA for additional analysis and investigation under the pilot program.
If a complaint submitted to the pilot program does not contain allegations of economic crime,
fraud, or corruption, the “task force” must forward the complaint to the division, which must
investigate the complaint pursuant to its duties and powers set forth in s. 718.501, F.S., relating
to the powers and duties of the division.
Section 16.0151(3), F.S., provides that the DLA has the power to issue subpoenas and conduct
audits for investigations, and may administer oaths, subpoena witnesses, and compel the
production of books, papers, or other records relevant to such investigations. If, after reviewing a
complaint filed under the pilot program, the DLA finds sufficient evidence for criminal
prosecution, it must refer the case to the appropriate state attorney for prosecution.
Section 16.0151(4), F.S., provides the DLA shall fund the pilot program from the trust fund as
specifically appropriated annually in the General Appropriations Act.
Section 16.0151(5), F.S., requires the pilot program’s primary office to be located in Miami-
Dade County.
Section 16.0151(6), F.S., provides that this section is repealed October 2, 2029, unless reviewed
and saved from repeal through reenactment by the Legislature.
Trust Funds
Section 2 of the bill revises s. 215.22, F.S., to exempt the trust fund, from the appropriation
required by s. 215.20(1), F.S., which provides an eight percent service charge f