Florida Legislators Finish Session. How do New Measures Affect Real Estate?
End of session report from the Florida Association of Realtors®
|Florida Senate Sends Tougher Mortgage Fraud Bill to Governor Charlie Crist|
May 3, 2008 – Palm Coast, FL – The Florida Legislature has finished its current session. Many measures were adopted that affect the real estate industry, the housing market, and Florida property owners. Here is a summary report provided by the Florida Association of Realtors®.
End of Session Report
More property tax reforms: Commercial property owners will be pleased to learn that legislation passed requiring property appraisers to consider zoning and permits before applying the "highest and best use" valuation standard. FAR has long maintained that businesses should be assessed for current use, not for best "possible" use, and HB 909 by Rep. Peter Nehr (R-Tarpon Springs) will go a long way to help local businesses who are feeling the impact of extraordinary property tax increases. HB 909 also changes the makeup of the value adjustment board in each county to include property owners in addition to local government officials. This will give citizens more say in challenges to property assessments.
The tax benefits set forth in HB 909 complement three constitutional amendments approved last week by members of the Tax and Budget Reform Commission, a powerful group that meets every 20 years and whose members included attorneys, executives, tax collectors and real estate professionals (including 2007 FAR President Nancy Riley). One amendment would cut property taxes by at least 25 percent and cap annual assessments on non-homestead property at 5 percent; a second amendment would give marinas, commercial fishing facilities and other "working waterfront" businesses a possible tax break by setting tax assessments according to current use rather than "highest and best use;" and the third amendment would exempt land held in perpetuity for conservation from property taxes. Other conservation lands would be taxed based on their current use rather than "highest and best" use.
More property insurance reforms: The so-called Homeowners' Bill of Rights (SB 2860 by Sen. Jeff Atwater, R-N. Palm Beach) seeks to improve upon the property insurance reforms enacted in 2007 by:
Extending the rate freeze for Citizens Property Insurance Corp., the state's insurer of last resort, to January 2010. The freeze was set to expire in January 2009;
Allowing single-family residential properties and condos with a replacement value of up to $2 million into the Citizens insurance pool (up from $1 million, which was set to begin Jan. 1, 2009);
Requiring Citizens' policyholders of property located in wind-borne regions and with an insured value of $500,000 or more to disclose the property's windstorm mitigation rating to prospective buyer. Language in an earlier version of the bill would have required all sellers to provide their property's windstorm rating);
Increasing fines for violations of the insurance code and for unfair trade practices by private insurers;
Extending by one year to January 2010 a provision from last year's insurance bill that requires insurers to get state approval before raising property insurance rates;
Requiring insurers to notify state regulators 90 days before dropping more than 10,000 homeowners' policies in one year;
Requiring insurers to use state-approved methods to predict the risk of hurricanes, a key factor in setting rates.
Affordable health insurance for nearly 4 million Floridians: It was one of the last bills to pass this session but perhaps the most important one, especially to Realtors who are uninsured. FAR lobbyists worked hard convincing legislators to support SB 2534 by Sen. Durell Peaden (R-Crestview), which changes current law to allow insurers to offer no-frills insurance coverage for as little as $150 a month. The legislation allows small businesses with up to 50 employees to participate in a cafeteria-like plan that gives consumers a choice in the type and amount of health care coverage they can afford. Individuals will also be able to purchase basic health coverage.
Affordable housing funding: A good news/bad news story. First the good news: Lawmakers allocated $303 million from the Sadowski Affordable Housing Trust Funds to fund housing assistance programs for moderate- and low-income Floridians. This is $60 million more than the spending cap imposed by lawmakers in 2005. Unfortunately, lawmakers also swept $250 million from housing trust fund reserves to make up for shortfalls in the state budget.
Help for victims of foreclosure fraud: The meteoric rise in foreclosures has spawned a number of foreclosure rescue scams. So-called "foreclosure rescue companies" charge an upfront fee, usually $1,000 or more, to solve a homeowners' foreclosure problems, and then does little or nothing, pocketing the money. HB 643 by Rep. Clay Ford (R-Pensacola) requires foreclosure rescue companies to enter into a written contract with consumers that spells out services provided, payment terms and total charges, and provides a three-day right of cancellation period. The bill also bans foreclosure consultants from demanding payment before promised services are delivered.
Crackdown on mortgage fraud: Last year, 70-80 percent of the almost 300,000 foreclosures in Florida involved mortgage fraud. HB 743 by Rep. Carlos Lopez-Cantera (R-Miami) raises the penalty for involvement in a mortgage fraud scheme from a third degree felony to a second-degree felony. Those found guilty could now face up to 15 years in prison. The legislation also requires law enforcement agencies to promptly notify county property appraisers when the agency finds probable cause that mortgage fraud or other fraud has inflated or could artificially inflate the value of the property. Based upon a conviction of mortgage fraud or other fraud affecting the value, the property appraiser will now have the ability to reassess all the properties affected by the fraud.
Prohibition of private transfer fees: SB 464 by Sen. Dave Aronberg (D-Greenacres) and HB 391 by Rep. Charles McBurney (R-Jacksonville) outlaw the practice of private transfer fees, a costly problem for future homebuyers. Here's how the scheme works: In a property's covenants, codes and restrictions, a property owner reserves the right to receive a percentage of all future sales -- usually 1-2 percent. But buyers and sellers are often unaware of this fee until they've entered into a purchase contract. The practice artificially devalues property and impedes the sales process.
Renewal of the Florida Forever conservation program: Florida Forever was slated to expire in 2010, but SB 542 by Sen. Burt Saunders (R-Naples) extends the state land-buying program to 2020, with $5.3 billion in bonding authority over that 10-year period. In this year's budget, the Florida Forever program has $300 million to spend on land acquisition. The bill includes a few new twists, including money to buy conservation easements on agricultural land (rather than fee simple title) and more money to purchase and conserve working waterfronts, like historic fishing docks. Since the beginning of Florida Forever, the state has purchased more than 600,000 acres of environmentally sensitive land.
Additionally: The state budget provides funding for Everglades restoration ($50 million), two new appraiser positions within the Division of Real Estate to ensure Florida appraisers meet federal guidelines, and combating unlicensed activity ($400,000).
The state budget raises the filing fee for evictions from $75 to $265, the first increase in 20 years. And SB 482 by Sen. Rudy Garcia (R-Hialeah), an effort strongly pushed by Rep. Gary Aubuchon (R-Cape Coral) via HB 699 to prevent the Legislature to divert more than $7 million in trust funds to general revenue next year, got derailed by an amendment in the final two hours of the session.
Source: Florida Association of Realtors®