Florida Puts Condo Boards On Notice: Accepting Or Soliciting 'Kickbacks' Is A Felony
In the aftermath of the Surfside condo collapse, the Florida Legislature has made a number of changes to the state's condo law in 2024. This is one of the changes.
It looks like it just got easier for board member and manager at Florida condo associations to be charged with a felony for accepting or soliciting “kickbacks.”
During the 2024 Florida legislative session, the law was broadened - by deleting specific language - to allow condo board directors, officers and managers to be charged with third-degree felonies for “knowingly” soliciting, offering to accept or accepting “kickbacks.”
The move is part of an ongoing effort by the Florida legislature in the aftermath of the Champlain Towers South condo collapse in Surfside to bring more transparency to condo associations, which have a reputation for being shrouded in secrecy, intimidation and corruption.
Board members - who are usually volunteers and responsible for deciding which vendors to hire and fire - have increasingly been in the news in South Florida. Many of the allegations are related to purportedly accepting a variety of perks and benefits, including free renovations to the interior of their units.
Any such perks or benefits could be viewed as breaching the “fiduciary relationship” that board members have to the units owners of their respective condo associations.
This is the revised legislation that captures the 2024 changes. Additions are noted by bolding the new words. Deletions are noted by striking the words that have been removed from the previous version of the law.
“718.111 The association.— (1) CORPORATE ENTITY.— (a) The operation of the condominium shall be by the association, which must be a Florida corporation for profit or a Florida corporation not for profit.
“However, any association which was in existence on January 1, 1977, need not be incorporated. The owners of units shall be shareholders or members of the association. The officers and directors of the association have a fiduciary relationship to the unit owners.
“It is the intent of the Legislature that nothing in this paragraph shall be construed as providing for or removing a requirement of a fiduciary relationship between any manager employed by the association and the unit owners.
“An officer, a director, or a manager may not solicit, offer to accept, or accept a any thing or service of value or kickback for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association.
“Any such officer, director, or manager who knowingly so solicits, offers to accept, or accepts a any thing or service of value or kickback commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, is subject to a civil penalty pursuant to s. 718.501(1)(e), and must be removed from office and a vacancy declared s. 718.501(1)(d) and, if applicable, a criminal penalty as provided in paragraph (d).
“However, this paragraph does not prohibit an officer, a director, or a manager from accepting services or items received in connection with trade fairs or education programs.”
We are not attorneys and only attempting to understand the law. If you have any questions, please consult your attorney.
That being said, here are some details about the possible punishments as spelled out in Florida law.
The punishment for s. 775.082 is “a term of imprisonment not exceeding 5 years.”
The punishment for s. 775.083 is “$5,000, when the conviction is of a felony of the third degree.”
The punishment for s. 775.084 can vary based on a prior record. An individual who is a “habitual felony offender” faces a sentence as long as “a term of years not exceeding 15, with a mandatory minimum term of 10 years’ imprisonment.”
The civil punishment for s.718.501(1)(e) is as follows: “The division may prepare and disseminate a prospectus and other information to assist prospective owners, purchasers, lessees, and developers of residential condominiums in assessing the rights, privileges, and duties pertaining thereto.”
If you want to read the updated legislation that is in the video, please visit: https://laws.flrules.org/2024/244
Watch and/or listen to the four-part narration of the 2024 revisions to the Florida Condo Law by going to: https://peterzalewski.substack.com/p/video-listen-to-the-florida-condo-ef0
Some three years ago on on June 24, 2021, the Champlain Towers South on the barrier island in Miami-Dade County collapsed.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until now, the state’s measures were being implemented slowly but that all changes in 2025.
As part of the changes, condo boards are preparing for a recently passed Florida law that goes into effect in January that requires associations to hire experts to conduct structural integrity studies of their respective buildings and then begin funding the necessary work in or before 2025. Associations can no longer defer the work and the cost.
People are dubbing this moment as the 2025 Condo Association Financial Cliff.
Some industry watchers have compared it to an inflection point on par with the Category 5 Hurricane Andrew that devastated South Miami-Dade County in August 1992.
Since the 2021 collapse, older units are said to be tougher to sell, insurance prices are spiking year-over-year and association maintenance fees and special assessments are squeezing owners to the brink.
Given that we are about six months out from the Condo Association Financial Cliff, we at the Condo Ratings Agency™ plan to spend a total of five weeks doing a deep dive into the South Florida stats, state laws and outlook for condo towers in Miami-Dade, Broward and Palm Beach counties.
This is the fourth week of our five-part series.
All of the reports and accompanying charts are based on research we conducted using our proprietary information, private records and government statistics.
It is worth noting that we are sharing a portion of our research for free with subscribers to our newsletter and readers of CondoVultures.com. If you want access to all of our published information and charts, we would encourage you to join the newly launched Miami Condo Market Investing Club™.
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