Changes to Florida Statute 718.111 (11) and Addition of FL Statute 627.714

In Florida Law Changes by PStaebler24 Comments

For the convenience of my clients the entire chapter of Florida Statute 718.111(11) is shown here, the most significant changes are in bold:

(a) Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal. The replacement cost must be determined at least once every 36 months.

1. An association or group of associations may provide adequate property insurance through a self-insurance fund that complies with the requirements of ss. 624.460-624.488.

2. The association may also provide adequate property insurance coverage for a group of at least three communities created and operating under this chapter, chapter 719, chapter 720, or chapter 721 by obtaining and maintaining for such communities insurance coverage sufficient to cover an amount equal to the probable maximum loss for the communities for a 250-year windstorm event. Such probable maximum loss must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. A policy or program providing such coverage may not be issued or renewed after July 1, 2008, unless it has been reviewed and approved by the Office of Insurance Regulation. The review and approval must include approval of the policy and related forms pursuant to ss. 627.410 and 627.411, approval of the rates pursuant to s. 627.062, a determination that the loss model approved by the commission was accurately and appropriately applied to the insured structures to determine the 250-year probable maximum loss, and a determination that complete and accurate disclosure of all material provisions is provided to condominium unit owners before execution of the agreement by a condominium association.

3. When determining the adequate amount of property insurance coverage, the association may consider deductibles as determined by this subsection.

(b) If an association is a developer-controlled association, the association shall exercise its best efforts to obtain and maintain insurance as described in paragraph (a). Failure to obtain and maintain adequate property insurance during any period of developer control constitutes a breach of fiduciary responsibility by the developer-appointed members of the board of directors of the association, unless the members can show that despite such failure, they have made their best efforts to maintain the required coverage.

(c) Policies may include deductibles as determined by the board.

1.The deductibles must be consistent with industry standards and prevailing practice for communities of similar size and age, and having similar construction and facilities in the locale where the condominium property is situated.

2.The deductibles may be based upon available funds, including reserve accounts, or predetermined assessment authority at the time the insurance is obtained.

3.The board shall establish the amount of deductibles based upon the level of available funds and predetermined assessment authority at a meeting of the board in the manner set forth in s. 718.112(2)(e).

(d) An association controlled by unit owners operating as a residential condominium shall use its best efforts to obtain and maintain adequate property insurance to protect the association, the association property, the common elements, and the condominium property that must be insured by the association pursuant to this subsection.

(e) The declaration of condominium as originally recorded, or as amended pursuant to procedures provided therein, may provide that condominium property consisting of freestanding buildings comprised of no more than one building in or on such unit need not be insured by the association if the declaration requires the unit owner to obtain adequate insurance for the condominium property. An association may also obtain and maintain liability insurance for directors and officers, insurance for the benefit of association employees, and flood insurance for common elements, association property, and units.

(f) Every property insurance policy issued or renewed on or after January 1, 2009, for the purpose of protecting the condominium must provide primary coverage for:
1. All portions of the condominium property as originally installed or replacement of like kind and quality, in accordance with the original plans and specifications.

2. All alterations or additions made to the condominium property or association property pursuant to s. 718.113(2).

3. The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.

(g) A condominium unit owner’s policy must conform to the requirements of s. 627.714.
1. All reconstruction work after a property loss must be undertaken by the association except as otherwise authorized in this section. A unit owner may undertake reconstruction work on portions of the unit with the prior written consent of the board of administration. However, such work may be conditioned upon the approval of the repair methods, the qualifications of the proposed contractor, or the contract that is used for that purpose. A unit owner must obtain all required governmental permits and approvals before commencing reconstruction.

2. Unit owners are responsible for the cost of reconstruction of any portions of the condominium property for which the unit owner is required to carry property insurance, and any such reconstruction work undertaken by the association is chargeable to the unit owner and enforceable as an assessment pursuant to s. 718.116.

3. A multicondominium association may elect, by a majority vote of the collective members of the condominiums operated by the association, to operate the condominiums as a single condominium for purposes of insurance matters, including, but not limited to, the purchase of the property insurance required by this section and the apportionment of deductibles and damages in excess of coverage. The election to aggregate the treatment of insurance premiums, deductibles, and excess damages constitutes an amendment to the declaration of all condominiums operated by the association, and the costs of insurance must be stated in the association budget. The amendments must be recorded as required by s. 718.110.

(h) The association shall maintain insurance or fidelity bonding of all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any such bonding.

(i) The association may amend the declaration of condominium without regard to any requirement for approval by mortgagees of amendments affecting insurance requirements for the purpose of conforming the declaration of condominium to the coverage requirements of this subsection.

(j) Any portion of the condominium property that must be insured by the association against property loss pursuant to paragraph (f) which is damaged shall be reconstructed, repaired, or replaced as necessary by the association as a common expense. All property insurance deductibles, uninsured losses, and other damages in excess of property insurance coverage under the property insurance policies maintained by the association are a common expense of the condominium, except that:

1. A unit owner is responsible for the costs of repair or replacement of any portion of the condominium property not paid by insurance proceeds if such damage is caused by intentional conduct, negligence, or failure to comply with the terms of the declaration or the rules of the association by a unit owner, the members of his or her family, unit occupants, tenants, guests, or invitees, without compromise of the subrogation rights of the insurer.

2. The provisions of subparagraph 1. regarding the financial responsibility of a unit owner for the costs of repairing or replacing other portions of the condominium property also apply to the costs of repair or replacement of personal property of other unit owners or the association, as well as other property, whether real or personal, which the unit owners are required to insure.

3. To the extent the cost of repair or reconstruction for which the unit owner is responsible under this paragraph is reimbursed to the association by insurance proceeds, and the association has collected the cost of such repair or reconstruction from the unit owner, the association shall reimburse the unit owner without the waiver of any rights of subrogation.

4. The association is not obligated to pay for reconstruction or repairs of property losses as a common expense if the property losses were known or should have been known to a unit owner and were not reported to the association until after the insurance claim of the association for that property was settled or resolved with finality, or denied because it was untimely filed.

(k) An association may, upon the approval of a majority of the total voting interests in the association, opt out of the provisions of paragraph (j) for the allocation of repair or reconstruction expenses and allocate repair or reconstruction expenses in the manner provided in the declaration as originally recorded or as amended. Such vote may be approved by the voting interests of the association without regard to any mortgagee consent requirements.

(l)In a multicondominium association that has not consolidated its financial operations under subsection (6), any condominium operated by the association may opt out of the provisions of paragraph (j) with the approval of a majority of the total voting interests in that condominium. Such vote may be approved by the voting interests without regard to any mortgagee consent requirements.

(m)Any association or condominium voting to opt out of the guidelines for repair or reconstruction expenses as described in paragraph (j) must record a notice setting forth the date of the opt-out vote and the page of the official records book on which the declaration is recorded. The decision to opt out is effective upon the date of recording of the notice in the public records by the association. An association that has voted to opt out of paragraph (j) may reverse that decision by the same vote required in paragraphs (k) and (l), and notice thereof shall be recorded in the official records.

(n)The association is not obligated to pay for any reconstruction or repair expenses due to property loss to any improvements installed by a current or former owner of the unit or by the developer if the improvement benefits only the unit for which it was installed and is not part of the standard improvements installed by the developer on all units as part of original construction, whether or not such improvement is located within the unit. This paragraph does not relieve any party of its obligations regarding recovery due under any insurance implemented specifically for such improvements.

(o)The provisions of this subsection shall not apply to timeshare condominium associations. Insurance for timeshare condominium associations shall be maintained pursuant to s. 721.165.

627.714 Residential condominium unit owner coverage; loss assessment coverage required.—
(1)For policies issued or renewed on or after July 1, 2010, coverage under a unit owner’s residential property policy must include at least $2,000 in property loss assessment coverage for all assessments made as a result of the same direct loss to the property, regardless of the number of assessments, owned by all members of the association collectively if such loss is of the type of loss covered by the unit owner’s residential property insurance policy, to which a deductible of no more than $250 per direct property loss applies. If a deductible was or will be applied to other property loss sustained by the unit owner resulting from the same direct loss to the property, no deductible applies to the loss assessment coverage.

(2)The maximum amount of any unit owner’s loss assessment coverage that can be assessed for any loss shall be an amount equal to that unit owner’s loss assessment coverage limit in effect 1 day before the date of the occurrence. Any changes to the limits of a unit owner’s coverage for loss assessments made on or after the day before the date of the occurrence are not applicable to such loss.

(3)Regardless of the number of assessments, an insurer providing loss assessment coverage to a unit owner is not required to pay more than an amount equal to that unit owner’s loss assessment coverage limit as a result of the same direct loss to property.

(4)Every individual unit owner’s residential property policy must contain a provision stating that the coverage afforded by such policy is excess coverage over the amount recoverable under any other policy covering the same property.

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  1. As a owner of a condominium in the state of Florida do I have the right to see employees contracts–or was that
    right amended on July 1, 2010. I asked to see our Managers Contract and the response was.

    With the Governors’ signing of SB 1196, on July 1, 2010 the ammendment to FL 718.111(2) went in effect and it states “Personnel records (disiplinary, payroll, health, and insurance records) are no longer subject to inspection by unit owners.

    Thanks Valerie

  2. I am confused about the new law. I have a tenant who has his own renters insurance. Why do I as unit owner have to get additional property insurance. The rates seem to have skyrocketed.

    1. Author

      If you made significant changes to your condo unit, for example converted the screened porch to enclosed living space under air you are responsible to insure this part yourself. The same is true, if you changed the flooring from cheap carpet to an expensive tile. The condo association insures the build-out up to an amount which covers the original quality of the build-out.

  3. Our condo was damaged from water leaking from the condo above ours. Our contractor said that according to statute 718.111, the condo assn is responsible for replacing the drywall. Our condo assn says no, we have to work that out with the insurance and the owner of that condo. Please advise. Thanks.

    1. Author

      Although I would love to provide you with an answer, I cannot do that. First of all, I do not know enough about your case, secondly in cases like this it is always advisable to consult an attorney. If you are already in negotiations with the insurance, you could also consult a public adjuster.

  4. Would you happen to know when Florida statute 718.111 (11) (a) was enacted? I am in a battle with my bank to refinance and my condo had not does this mandatory appraisal of the building (although they have since complied). I am simply wondering when this requirement was enacted. Thank you.

  5. I had flooding from my toilet hose, and major flooding happened to my kitchen. My drywall needed replaced among many other things. My insurance company paid for everything except for the drywall. They claim that FL Statute 718.111 states that the condo association is responsible for replacing any drywall that needed replaced. The condo association states that the damages are the responsibility of the unit owner in the event that it was due to the toilet and not from a common area. I have looked at the statute, and I need other opinions as to who would be responsible for the coverage. Any help would be greatly appreciated. Thank you!

  6. Anything outward from your coat of paint on the dry-wall, tile, glass, wood, and carpet is the association’s responsibility. Usually, because it has an inadequate insurance deductible and it’s
    going to cost them money, they are reluctant to admit responsibility. They try to bluff the owner
    with letters alluding to the Declaration of Condominum, threats of legal action, liens, and even eviction, anything to make your resolve melt. Historically, the owner has seldom retained counsel or gone to court. even though he, the owner, is right and would probably win. All boards of directors know this and they rely on the unit owner to eventually ‘throw in the towel’.
    You might be the exception. If you have the courage, time, and money, go for it! It’ll cost
    you $200.00 to file in Small Claims Court, but you’ll get it back if you win, and your attorney’s
    fees if you retain one. Good luck!

  7. We have an issue with who is responsible for replacing windows in our condo. Our Doc’s indicate that the Condo owner is responsible, but we have been told that Statue 718 was recently changed and now the Condo Association is responsible for replacing a unit owners windows. Can you clarify this issue. Thank You.

    1. Author

      This would definitely be a question for an attorney. Even if chapter 718 put in some changes you still should check with an attorney if it would apply to your association as well.

    1. Author

      Fl Statutes Chapter 718.111 describes insurance for condo associations.

  8. I am having the same issue as noted above re who is responsible for drywall replacement caused by a toilet pipe breaking, the condo assoc or my homeowners ins? My reading of the statute seems to indicate that the drywall is the original construction and therefore is the responsibility of the condo association, has anybody had any decisions re this? Thank you

  9. What about an ac. It seems to me a few years ago the ac became the responsibility of the association. I can not find the wording but I thought it went like original and constant in all units when built. Meaning that anything that was in all of the condos would be taken care of by the association.


    1. Author

      AC condenser units are in fact the responsibility of the association (in the wind/casualty insurance). The law changed in 2009. There is no wordage in the Statutes per se because the inclusion became law my implied language.

  10. A friend has a condo unit that the drain line for the AC unit was apparently installed incorrectly and over the past 20 years the water has dispersed to some degree inside of the exterior wall and rotted the 2 x 4s as well as the beams above, etc. There is also mold present. The question is (1) who is responsible for the internal repairs of the wood rot, beams, etc. and (2) who is responsible for the replacement of the drywall? and (3) could you site the applicable 718 statute that would cover these questions? Thanks for your response.

  11. Can a Condo. Association amend their Docs to delete flood insurance from the insurance provided by the Association and still conform to the laws of 718.111 Thank you Brad

  12. My son’s condo was recently flooded by the condo above his due to a broken valve on a hot water heater. The condo owner says it’s the responsibility of my son’s insurance carrier to cover the drywall. The adjuster said it is the condo association’s responsibility. The condo association says the responsibility falls to the unit owner above my son. Who’s is right? I don’t think my son should have to foot the bill for this! Help.

    1. Author

      Hello Debbie,

      The adjuster is right. The condo association is responsible to replace the drywall in your son’s condo unit. The insurance of the association will take care of the damage, the association will have to notify them. The condo association’s insurance carrier will have the right to subrogate their cost to the insurance carrier of the condo unit above. Sounds complicated, but is easier than you might think. The association just has to make a phone call to their insurance agent to notify them about the damage. Everything else will work automatically, if all the right policies are in place.

      Hope that helps,

  13. Are florida condo owners and renters required to have homeowners insurance. 718 really does not say this or am I reading the law wrong?

  14. great discussion . I Appreciate the details – Does anyone know if my assistant might be able to acquire a blank a form form to type on ?

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