Florida Realtors 2013 Legislative Priorities 

Commercial Rental Tax
Florida is the only state that taxes commercial rents. Commercial tenants pay a 6 percent sales tax on rent, and local governments may charge an additional discretionary sales surtax. The sales tax applies to the “total rent charged,” which covers a wide range of lease-related charges. Businesses often pay sales tax on insurance premiums, property taxes and common area maintenance fees such as landscaping, janitorial services and building repairs.

State sales tax revenues from commercial rents and related fees have ranged from $1.3 billion to $1.5 billion. State budget projections are looking better than in previous years, but rescinding the entire tax this session is unlikely. Another proposal is to lower the applicable sales tax rate to commercial leases over a number of years.

Florida Realtors is watching the Florida Department of Revenue closely as they develop rules to declassify leasehold improvements (painting, flooring, partitions, custom light fixtures and other temporary alterations made by a tenant) as rent. The key issues are the exceptions when a landlord reduces the lease amount so the tenant can make leasehold improvements to avoid sales tax. Of course, if leases are not ultimately taxable, this issue takes care of itself.

In addition, Florida Realtors is seeking legislation specifying that the pass-through charges are not taxable as rent if the landlord does not mark them up. In 2001, Florida Realtors proposed legislation to exempt all pass-through charges. At that time, the fiscal impact was approximately $238 million.

Affordable Housing Trust Funds
As in previous years, Florida Realtors asks once again that all monies generated by documentary stamp taxes specifically for affordable housing programs be used for that purpose — not to make up for deficits in general revenue. The Sadowski Trust Funds are supported entirely by a portion of documentary stamp taxes. The beneficiaries are teachers, firefighters, senior citizens and low-income families who are loaned the funds to purchase a home or for rental assistance. In the next fiscal year, there will be $193.8 million available for Florida families. However, they’re not the only ones who benefit. When legislators allocate the $193.8 million available in the next fiscal year for housing programs, more than 13,400 Floridians will have work. And $1.4 billion will flow into the Florida economy.

The faster Florida’s housing market recovers, the faster Florida’s economy recovers.  Housing dollars can put Florida’s out-of-work housing industry back to work repairing homes and improving the real estate market, and reduce state budget deficits in the future.

It’s the gift that keeps on giving.

Property Insurance
If Florida’s property insurance market were a Hollywood movie, it would undoubtedly be titled, “It’s Complicated.”

Here’s where we’re at in 2013:
Florida’s largest property insurer — taxpayer-owned Citizens Property Insurance Corporation — is financially unsound and growing by approximately 8,000 new policies each week. As a result, Governor Scott asked the Citizens Board of Directors to do anything and everything possible outside the legislative arena to reduce exposure to loss. Citizens responded with cuts to coverage and a plan to subsidize low-interest loans for any private insurer that takes over a Citizens policy.

It’s unlikely these solutions will erase Citizens’ deficits.

What’s more likely is that the 73 percent of policyholders not insured by Citizens will be assessed to keep the state’s “insurer of last resort” afloat in the aftermath of a big storm.

Florida Realtors’ efforts to create an affordable and sustainable property insurance market continue. In this complicated and complex business environment, a reasonable next step is to review the manner in which Citizens eligibility requirements are enforced. Citizens may be able to reduce its explosive growth by only writing policies for property owners who are truly eligible, as opposed to those who have other choices but choose Citizens to save money.  We also expect to see a greater focus in the 2013 legislative session on incentives to property owners who mitigate.

Estoppel Fees
Legislators may be considering a bill this session that would cap Estoppel fees for condominium associations.

An Estoppel is essentially a request for payoff amounts. A title company will request an Estoppel prior to closing to determine if homeowners’ association and condo association fees are current, if there are any special assessments due and/or pending, violations against the subject property, pending litigation, etc.

Florida law allows homeowners’ and condo associations to charge a fee for Estoppel, but doesn’t specify amounts. In many parts of the state, these fees are high — upwards of $500 — resulting in a call for reform from Realtors on behalf of sellers, from title companies and from transaction attorneys.

At its February meeting, the Real Property, Probate and Trust Law Section of the Florida Bar will likely vote on draft legislation that establishes a three-tiered financial approach for condo associations.

The first tier applies to unit owners who are current in their fees. Condo associations could not charge these owners more than $100 for an Estoppel letter.

The second tier relates to unit owners who are delinquent in their financial responsibilities to the association. Attorneys often prepare Estoppel letters for these unit owners, and in these cases, the attorney fees would have to be “reasonable.”

The third tier is reserved for bulk buyers. Estoppel fees would be based on the number of units being purchased and how much money unit owners owe.  

Judicial Foreclosure
The foreclosure crisis has impacted Florida’s economy and impacted funding and caseload of the courts.

Foreclosing on a mortgage in Florida is a long process. The average length of time between the first foreclosure filing and bank repossession is 676 days; the national average is 318 days.

Due in part to constitutional and statutory requirements to provide speedy trials to criminal defendants, civil cases are delayed. Backlogs are especially heavy in circuit courts in South Florida because of a higher volume of foreclosures compared to other parts of the state.

Rep. Kathleen Passidomo (R-Naples), whose foreclosure measure died in committee last year, filed HB 87 in early January. It reduces the time a lender may ask for a deficiency judgment from five years to one year. It also imposes strict paperwork requirements on lenders. For instance, lenders must certify they possess the note that allows them to foreclose. HB 87 also allows condo associations to expedite the foreclosure process when a lender is delaying the process.

Florida Realtors wants to ensure that any alternative procedures designed to speed up the foreclosure process in uncontested or meritless cases have safeguards that protect all parties. Florida Realtors is also working with legislators regarding the appropriate time limits for the statute of limitations for deficiency judgments on a foreclosure action, among other issues.