Insurance & Banking Subcommittee — Committee Meeting Notice, January 15, 2020

Summary

A meeting packet for the Insurance & Banking Subcommittee meeting on Wednesday, January 15, 2020, 3:30 pm to 5:30 pm at Sumner Hall, with Byron Donalds as Chair. The notice and agenda list PCS for HB 359 Insurance, HB 529 Insurance Guaranty Associations by Webb, HB 813 Protection of Vulnerable Investors by McClure and HB 6033 Rental Agreements upon Foreclosure by Sirois. The staff analysis of PCS for HB 359 summarizes changes on motor vehicle odometer disclosures, pre-suit notice for bad faith claims against insurers, insurer trade secrets, hurricane model rate filings and the time for filing property insurance claims. The packet also contains the text of HB 6033, which repeals Section 83.561, Florida Statutes, and takes effect July 1, 2020.

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Insurance & Banking
Subcommittee

VVednesday,January15,2020
3:30 pm - 5:30 pm
Sumner Hall (404 HOB)

Jose Oliva Byron Donalds
Speaker Chair
Committee Meeting Notice
HOUSE OF REPRESENTATIVES

Insurance & Banking Subcommittee

Start Date and Time: Wednesday, January 15, 2020 03:30 pm

End Date and Time: Wednesday, January 15, 2020 05:30 pm

Location: Sumner Hall (404 HOB)
Duration: 2.00 hrs

Consideration of the following bill(s} with proposed committee substitute(s}:

PCS for HB 359 -- Insurance

Consideration of the following bill(s}:

HB 529 Insurance Guaranty Associations by Webb
HB 813 Protection of Vulnerable Investors by McClure
HB 6033 Rental Agreements upon Foreclosure by Sirois

Pursuant to rule 7.11, the deadline for amendments to bills on the agenda by non-appointed members shall
be 6:00 p.m., Tuesday, January 14, 2020.

By Request of Chair Donalds, all Insurance & Banking Subcommittee members are asked to have
amendments to bills on the agenda submitted to staff by 6:00 p.m., Tuesday, January 14, 2020.

NOTICE FINALIZED on 01/13/2020 4:04PM by Harrell.Lindsey

Leagis ® Page 1 of 1
01/13/2020 4:04: 10PM
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee

Jose R. Oliva Byron Donalds
Speaker Chair

AGENDA
January 15, 2020
404 House Office Building
3:30 PM - 5:30 PM

I. Call to Order & Roll Call

II. Consideration of the following bills:

A. PCS for HB 359 Insurance

B. HB 529 Insurance Guaranty Associations by Webb

C. HB 813 Protection of Vulnerable Investors by McClure

D. HB 6033 Rental Agreements upon Foreclosure by Sirois

Ill. Adjournment

303 House Office Building, 402 South Monroe Street, Tallahassee, Florida 32399-1300
(850) 717-4871 Fax: (8.50) 413-0419
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HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL#: PCS for HB 359 Insurance
SPONSOR(S): Insurance & Banking Subcommittee
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

Orig. Comm.: Insurance & Banking Subcommittee Lloyd •• Coop

SUMMARY ANALYSIS
The bill makes the following changes regarding insurance:
• Motor Vehicle Salvage - Electronic signatures on motor vehicle odometer disclosures must meet certain
security requirements. Current Florida law exceeds the federal standard for these disclosures. The bill
conforms the electronic signature security requirements to the federal requirements.
• Civil Remedies Against Insurers - Florida law requires a pre-suit notice 60 days prior to suing on a bad faith
claim. The notice must go to both the Department of Financial Services (DFS) and the insurer, but no specific
insurer address is specified. The bill establishes a specific insurer name and address for notice delivery and
specifies that the 60 days starts from the day the insurer receives the notice. The bill also extends the statute
of limitation to file a bad faith law suit for 60 days, if the property appraisal process is invoked in the claim.
• Insurer Trade Secrets - Insurer trade secrets filed with the Office of Insurance Regulation (OIR) are
protected by law (but are not confidential and exempt public records). The bill prohibits DFS and OIR from
publishing or disseminating aggregate information that contains protected trade secret information when the
trade secret information can be extrapolated from the aggregate information.
• Extension of Deadlines for Insurance Ratemaking and Form Filings - Florida law provides certain
requirements regarding OIR's review and approval of property and casualty insurance rate and form filings,
but the law is presently silent on the applicable deadline should the closure of the review period fall on a
weekend or a holiday. The bill extends the closure of OIR's review period for property and casualty rate and
form filings to the close of the following business day if the deadline falls on a weekend or holiday.
• Rate Disapprovals Based Upon Hurricane Modeling - OIR may disapprove property and casualty
insurance rate filings based on specified criteria. Current law also establishes criteria for the Florida
Commission on Hurricane Loss Projection Methodology (Commission) to consider and approve hurricane loss
models and prescribes how approved models affect OIR's approval of rate filing. The bill establishes that OIR
may not disapprove a homeowner's insurance rate filing solely because the rate filing uses an average to two
or more hurricane models approved by the Commission.
• Time for Filing Property Insurance Claims - Generally, an insurer must receive a notice of a claim,
supplemental claim, or reopened claim within five years of a loss (exceptions: windstorm/hurricane claims -
three years; sinkhole loss claims - two years). The bill shortens the time to three years for all claims except
sinkhole loss claims, which remains two years.
• Property Insurance Mediation Notice Requirements - Insurers are required to provide property insurance
policyholders with notice of their right to participate in mediation administered by a DFS mediation program.
The bill establishes that, in addition to existing timeframes for providing notice, property insurers have the
option to provide a policyholder with notice of its right to mediate at the time the policyholder disputes a claim.
• Residential Condominium Loss Assessments - Property insurance policies held by condominium unit
owners must include a minimum property losses assessment coverage. The bill clarifies that the amount of
loss assessment coverage that can be assessed against a unit owner is based upon the coverage limit in
effect one day before the date of the occurrence that resulted in a loss for which the unit owner is assessed.
The bill has no impact on state or local government revenues or expenditures. It has no known positive or
negative economic impacts on the private sector.
The bill is effective upon becoming law.

This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
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FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Motor Vehicles - Salvage Certificates of Title and Certificates of Destruction

The owner of a motor vehicle or mobile home that is considered to be salvage 1 is required to forward
the title to the motor vehicle or mobile home to the Department of Highway Safety and Motor Vehicles
(DHSMV) for processing within 72 hours after the motor vehicle or mobile home becomes salvage. 2
However, an insurance company that pays money as compensation for the total loss of a motor vehicle
or mobile home must obtain the certificate of title for the motor vehicle or mobile home, make the
required notification to the National Motor Vehicle Title Information System, 3 and, within 72 hours after
receiving such certificate of title, forward such title to DHSMV for processing. The certificates of title
may be forwarded to DHSMV via electronic means, the United States Postal Service, or other
commercial delivery service (e.g., FedEx or UPS). The owner or insurance company may not dispose
of a vehicle or mobile home that is a total loss before it obtains from DHSMV a salvage certificate of
title or certificate of destruction.

To facilitate the issuance of salvage certificates of title and certificates of destruction when the insurer
has been unable to obtain the title from the insured so that it may be surrendered to DHSMV, effective
July 1, 2020:

• The insurer may receive a salvage certificate of title or certificate of destruction from DHSMV 30
days after paying the claim, if:
o There is no electronic lien on the motor vehicle or mobile home; and
o The insurer has:
• Obtained a release of all liens;
• Provided proof of payment of the total loss claim; and
• Provided an affidavit4 on letterhead signed by the insurance company or its
authorized agent stating the attempts 5 that have been made to obtain the title
from the owner or lienholder and further stating that all attempts are to no avail. 6

The "Electronic Signature Act of 1996"7 provides that unless otherwise provided by law, an electronic
signature 8 may be used to sign a writing and has the same force and effect as a written signature.

1
"Salvage" is defined as a motor vehicle or mobile home that is a total loss. S. 319.30(1 )(t), F.S. A motor vehicle is a "total loss:"
• When an insurance company pays the vehicle owner to replace the wrecked or damaged vehicle with one of like kind and quality or when
an insurance company pays the owner upon the theft of the motor vehicle or mobile home; or
• When an uninsured motor vehicle or mobile home is wrecked or damaged and the cost, at the time of loss, of repairing or rebuilding the
vehicle is 80 percent or more of the cost to the owner of replacing the wrecked or damaged motor vehicle or mobile home with one of like
kind and quality.
S. 3 l 9.30(3)(a), F.S.
2
S. 319.30(3)(b), F.S.
3
The National Motor Vehicle Title Information System (NMVTIS) is an electronic system that provides consumers with valuable information about
a vehicle's condition and history. NMVTIS allows consumers to find information on a vehicle's title, most recent odometer reading, brand history,
and, in some cases, historical theft data. https://www.vehiclehistory.gov/nmvtis consumers.html (Last visited Dec. 18, 2019).
4
The affidavit must include a request that the salvage certificate of title or certificate of destruction be issued in the insurance company's name due
to payment of a total loss claim to the owner or lienholder. S. 319.30(3)(b) 1.c., F.S.
5 The attempts to contact the owner may be by written request delivered in person or by first-class mail with a certificate of mailing to the owner's or

lienholder's last known address. S. 319.30(3)(b) I.e., F.S. If the owner or lienholder is notified of the request for title in person, the insurance
company must provide an affidavit attesting to the in-person request for a certificate of title. S. 319.30(3)(b) 1.c.2., F.S.
6
The request to the owner or lienholder for the certificate of title must include a complete description of the motor vehicle or mobile home and the
statement that a total loss claim has been paid on the motor vehicle or mobile home. S. 319 .30(3 )(b) l .c.3 ., F.S.
7
Ch. 668, part I, F.S.
8
Section 668.003(4), F.S., defines "electronic signature" as any letters, characters, or symbols, manifested by electronic or similar means, executed
or adopted by a party with an intent to authenticate a writing. A writing is electronically signed if an electronic signature is logically associated with
such writing.
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In 2019, the Legislature passed CS/CS/CS/HB 301, related to lnsurance. 9 Among other things, the bill
addressed the use of electronic signatures for automotive title transactions. It authorized an electronic
signature consistent with ch. 668, F.S., relating to electronic commerce, to be used to satisfy any
signature required related to the issuance of a salvage certificate of title or certificate of destruction
when this new process becomes effective. However, it required an electronic signature on an odometer
disclosure to meet specific security requirements.

For an odometer disclosure related to a certificate of destruction, the electronic signature must meet or
exceed Level 2 requirements for Identity Assurance Level, Authenticator Assurance Level, and
Federation Assurance Level, as described in the National Institute of Standards and Technology
Special Publication 800-63-3, as of December 1, 2017. For a salvage certificate of title, the electronic
signature must meet or exceed Level 3 requirements of this standard. While there are several
differences between Level 2 and Level 3 requirements that affect the relative security of the electronic
signature, one difference limits the use of electronic signatures when executing electronic signatures
for odometer disclosures related to salvage certificates of title. Level 3 requires in person identity
proofing, while Level 2 allows remote or in person identity proofing.

The security levels were chosen based on ongoing federal rule development that governs odometer
disclosures. The draft federal regulations included the use of Level 2 requirements in certain instances
and Level 3 requirements in others. HB 301 mirrored this structure; however, the final federal regulation
was published after the 2019 session with an unexpected change. Only Level 2 requirements were
implemented. So, the Level 3 requirement of s. 319.30(3)(d), F.S., applicable to odometer disclosures
for obtaining salvage certificates of title exceed the federal standard. 10

Effect of the Bill

The bill allows electronic signatures on odometer disclosures related to salvage certificates of title to
use Level 2 security requirements, consistent with the applicable federal standard. This applies the
same security requirements to electronic signatures on odometer disclosures for both certificates of
destruction and salvage certificates of title and allows certificate applicants to electronically sign
odometer disclosures remotely in both instances, rather than remotely when applying for a certificate of
destruction, but in person only for salvage certificates of title.

Civil Remedies against Insurers

Pre-Suit Notice and Tolling of the Statute of Limitation Following Issuance of Pre-Suit Notice

In 1982 the Legislature enacted s. 624.155, F.S., which provides that any person may bring a claim for
"bad faith" against an insurer for "not attempting in good faith to settle claims when, under all the
circumstances, it could and should have done so, had it acted fairly and honestly toward its insured
with due regard for her or his interests, " 11 the same as the common law standard. 12 Section 624.155,
F.S., codifies third-party claims for "bad faith," but does not preempt the common law remedy. 13

Additionally, s. 624.155, F.S., recognizes a claim for bad faith against an insurer not only in the
instance of settlement negotiations with a third party, but also for an insured seeking payment from his
or her own insurance company. Although Florida courts recognized a bad faith cause of action in the
context of liability policies at common law, they did not impose the same obligation in the context of
first-party insurance contracts, when the injured party was also the insured under the insurance

9
Ch. 2019-108. Laws ofFla.
10
84 Fed. Reg. 52664, at 52665 (Oct. 2, 2019).
11
S. 624.155(1 )(b ), F.S.
12
Fla. Standard Jury Instr. 404.4 (Civil).
13
S. 624.155(8), F.S.
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policy. 14 At common law, first-party insurance policies were enforced solely through traditional contract
remedies. 15

In a first-party action under s. 624.155, F.S., there is never a fiduciary relationship between the parties,
but an arm's length contractual one based on the insurance contract. A first-party claim against the
insurer does not accrue until the conclusion of the underlying litigation for contractual benefits or the
insured prevails in the appraisal process and coverage is otherwise established by acceptance or court
decision. 16 The underlying action against the insurer must be resolved in favor of the insured, because
the insured cannot allege bad faith if it is not shown that the insurer should have paid the claim.

In order to bring a bad faith claim under the statute, a plaintiff must first give the insurer and the
Department of Financial Services (DFS) 60 days' written notice of the alleged violation. 17 The 60-day
period begins on the date the notice is filed. While the notice is required to be provided to both DFS
and the insurer, 18 the statute is silent on what constitutes filing and whether the filing date is the date
the notice is received by DFS or the date it was received by the insurer. 19

The notice must include:

• The statutory provision which the insurer allegedly violated;
• The facts and circumstances giving rise to the violation;
• The name of any individual involved in the violation;
• Reference to specific policy language that is relevant to the violation, unless the person
bringing the civil action is a third party claimant; and
• A statement that the notice is given to perfect the right to pursue a civil remedy. 20

The statute of limitation for the filing of a lawsuit under s. 624.155, F .S., is tolled for 65 days following
the issuance of the notice described above. This extends the claimant's right to sue the insurer until
after the conclusion of the 60-day period following the notice within which the insurer may respond to
the notice by addressing the alleged violation.

In 2019, the Legislature revised s. 624.155, F.S., to prohibit the issuance of the notice when the insurer
invokes the appraisal process. However, the appraisal process, which can be invoked for the first time
following receipt of the pre-suit notice, 21 is unlikely to be completed within the 60-day cure period or the
65-day tolling of the applicable statute of limitations. If the appraisal process extends beyond the date
the statute of limitation expires following the current tolling period, then the right to sue the insurer in
civil court is lost.

14 Id.
1s Id.
16
Cammarata v. State Farm Florida Ins. Co., 152 So. 3d 606 (Fla. 4th DCA 2014).
17
S. 624.155(3)(a), F.S.
18 Filing of the notice with the correct insurer has been held to be a condition precedent to maintaining a bad faith suit against the insurer. Lopez v.

GEICO Casualty Co., 968 F.Supp. 2d 1202, at 1209 (S.D. Fla. 2013). In Lopez, the plaintiff filed the notice with Government Employees Insurance
Company, a similarly named sister company instead of the actual insurer, GEICO Casualty Company. Because the statute oflimitation had run out
following the flawed delivery of the notice, the Lopez case was dismissed with prejudice. However, the Second District Court of Appeal
19 Filing of the notice with DFS has been held to establish the date that starts the 60-day cure period. Harper v. GEICO Gen. Ins. Co., 272 So. 3d 448

(Fla. 2nd DCA 2019). In Harper, the plaintiff filed the notice with DFS electronically on Dec. 19, 2013, and mailed the notice to GEICO with it
being received by GEICO on Dec. 26, 2013. When GEICO later paid the claim on Feb. 21, 2014, the payment was 65 days from the date DFS
received the notice, but 57 days from the date GEICO received the notice. The trial court held that GEICO paid the claim within the 60-day cure
period. On appeal, the Second DCA held that the 60-day cure period ran from the date DFS received the notice. The result allowed the plaintiff to
pursue a bad faith claim against GEICO for untimely payment of the claim.
20
S. 624.155(3)(b), F.S.
21
Invoking the appraisal process along with timely payment, if required, can be used by the insurer to cure its claims handling violations and prevent
a bad faith claim. See Effect of the Bill, p. 5.
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Property Appraisal Process

Insurance companies often include an appraisal clause in property insurance policies. 22 The appraisal
clause provides a procedure to resolve disputes between the policyholder and the insurer concerning
the value of a covered loss. The appraisal clause is used only to determine disputed values. An
appraisal cannot be used to determine what is covered under an insurance policy. Coverage issues are
litigated and determined by the courts.

The appraisal process generally works as follows:

• The insurance company and the policyholder each appoint an independent, disinterested
appraiser.
• Each appraiser evaluates the loss independently.
• The appraisers negotiate and attempt to reach an agreed amount of the damages.
• If the appraisers agree as to the amount of the claim, the insurer pays the claim.
• If the appraisers cannot agree on the amount, they together choose a mutually acceptable
umpire.
• Once the umpire has been chosen, the appraisers each present their loss assessment to the
umpire.
• The umpire will subsequently provide a written decision to both appraisers. A decision agreed to
by any two of the three will set the amount of the loss.
• The insurance company or the policyholder may challenge the umpire's impartiality and
disqualify a proposed umpire based on criteria set forth in statute. 23

Effect of the Bill

The bill adds an additional tolling period to s. 624.155, F.S. It tolls the statute of limitation for 60 days
following the date appraisal is invoked in a residential property insurance claim. In combination with the
current 65-day tolling period resulting from the filing of the notice, the statute of limitation could be tolled
for up to 125 days to allow the insurer the 60-day cure period and also allow the parties to pursue the
appraisal process prior to expiration of the statute of limitation.

The bill also provides that the required pre-suit notice must be sent to the insurer at the insurer's name
and address designated by the insurer pursuant to statute for the purposes of receiving legal process
service via DFS. Additionally, the bill clarifies that the 60-day cure period runs from the date the insurer
receives the notice at the designated name and address, rather than following "filing," which is not
defined.

Insurer Trade Secrets

Public Records

Article I, s. 24(a) of the Florida Constitution sets forth the state's public policy regarding access to
government records. This section guarantees every person a right to inspect or copy any public record
of the legislative, executive, and judicial branches of government. The Legislature, however, may
provide by general law for the exemption of records from the requirements of Article I, s. 24(a) of the
Florida Constitution. 24 The general law must state with specificity the public necessity justifying the
exemption 25 and must be no more broad than necessary to accomplish its purpose. 26

22 Citizens Property Insurance Corporation v. Mango Hill Condominium Association 12 Inc., 54 So. 3d 578 (Fla. 3d DCA 2011) and lntracoastal
Ventures Corp. v. Safeco Ins. Co. ofAmerica, 540 So. 2d 162 (Fla. 3d DCA 1989), contain examples of appraisal clauses.
23
Sees. 627.70151, F.S.
24
FLA. CONST. art. I, s. 24(c).
25
This portion of a public record exemption is commonly referred to as a "public necessity statement."
26 FLA. CONST. art. I, s. 24(c).

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Public policy regarding access to government records is addressed further ins. 119.07(1 )(a), F.S.,
which guarantees every person a right to inspect and copy any state, county, or municipal record.
Furthermore, the Open Government Sunset Review Act27 provides that a public record exemption may
be created or maintained only if it serves an identifiable public purpose. In addition, it may be no more
broad than necessary to meet one of the following purposes: 28

• Allow the state or its political subdivisions to effectively and efficiently administer a
governmental program, which administration would be significantly impaired without the
exemption.
• Protect sensitive personal information that, if released, would be defamatory or would
jeopardize an individual's safety; however, only the identity of an individual may be exempted
under this provision.
• Protect trade or business secrets.

The Act also requires the automatic repeal of a public record exemption on October 2nd of the fifth year
after its creation or substantial amendment, unless the Legislature reenacts the exemption. 29 Specified
questions must be considered by the Legislature during the review process. 30

Trade Secrets

Florida law contains a variety of provisions that make trade secret information exempt or confidential
and exempt31 from public record requirements. Some exemptions only protect trade secrets, while
others protect "proprietary business information" and define that term to specifically include trade
secrets. Generally, trade secret32 information received by the Office of Insurance Regulation (OIR) or
DFS is not protected as confidential and exempt public record information, 33 but the insurer is given the
opportunity to receive notice of a public records request and a period of time to respond so that the
insurer can move to protect the trade secret through an action in circuit court, if they so desire. 34 When
an insurer submits trade secret information under the Florida Insurance Code 35 or OIR rules, the
insurer may file a Notice of Trade Secret and mark and segregate the trade secret information provided
to OIR. 36 This protection relates to public records requests from the public that would result in the
publication of materials covered under a Notice of Trade Secret. It does not expressly extend to
publication of aggregate information such as OIR's Annual Report or other OIR or DFS publications or
reports that are not done in response to a public records request.

27
S. 119.15, F.S.
28
S. l 19.15(6)(b), F.S.
29
S. 119.15(3), F.S.
30
Section l l 9.15(6)(a), F.S., requires the Legislature to consider the following questions as part of the review process: 1) What specific records or
meetings are affected by the exemption? 2) What specific parties does the exemption affect? 3) What is the public purpose of the exemption? 4) Can
the information contained in the records or meetings be readily obtained by alternative means? Ifso, how? 5) Is the record or meeting protected by
another exemption? 6) Are there multiple exemptions for the same type of record or meeting that it would be appropriate to merge?
31
There is a difference between records the Legislature designates as exempt from public record requirements and those the Legislature deems
confidential and exempt. A record classified as exempt from public disclosure may be disclosed under certain circumstances. See WFTV, Inc. v. The
School Board of Seminole, 874 So.2d 48, 53 (Fla. 5th DCA 2004), review denied 892 So.2d 1015 (Fla. 2004); City of Riviera Beach v. Barfield, 642
So.2d 1135 (Fla. 4th DCA 1994); Williams v. City of Minneola, 575 So.2d 687 (Fla. 5th DCA 1991 ). If the Legislature designates a record as
confidential and exempt from public disclosure, such record may not be released by the custodian of public records to anyone other than the persons
or entities specifically designated in statute. See Attorney General Opinion 85-62 (August 1, 1985).
32
"Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or use; and
(b) ls the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
S. 626.002(4), F.S.
33
Trade secret information contained in an insurance administrator's records that is obtained by OIR is confidential and exempt. S. 626.884(2), F.S.,
34
S. 624.4213(2), F.S.
35
The Florida Insurance Code is chapters 624-632, 634,635,636,641,642,648, and 651, F.S. S. 624.01, F.S.
36
S. 624.4213(1), F.S.
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Effect of the Bill

The bill limits the release of aggregate information by OIR and DFS if protected trade secret information
can be extrapolated from the aggregate information that OIR or DFS would otherwise release. This
could occur where aggregate information is reported on a line of insurance in which a small number of
companies participate such that one or more of the participating companies could back-out their own
data from the reported aggregate information and discern the trade secret information of their
competitor. The bill does not create a new public records exception, rather, it limits what OIR and DFS
may do with public record information that is protected as a trade secret, but is not confidential and
exempt public record information.

Extension of Deadlines in Insurance Rate and Form Filings

Florida law provides certain requirements regarding OIR's review and approval of property and casualty
insurance rate and form filings, including timeframes within which OIR must review these filings. 37
However, the law is presently silent on the applicable deadline should the closure of the review period
fall on a weekend or a holiday.

Effect of the Bill

The bill establishes that if the last day of the timeframe for OIR to review and approve or disapprove a
rate filing for property, casualty, or surety insurance, including motor vehicle insurance, or to review an
insurer's form filing, falls on a weekend or holiday recognized by Florida governmental agencies or
branches, then the closure of OIR's review period shall be extended until the conclusion of the next
business day.

Rate Disapprovals Based Upon Hurricane Modeling

The law governing OIR's review and approval of residential property insurance rate filings requires that
a rate filing account for mitigation measures that policyholders undertake to reduce hurricane losses. 38
It sets forth the criteria under which OIR may disapprove rate filings, including disapproval of rates that
are determined to be excessive, inadequate, or unfairly discriminatory. 39 Florida law also establishes
criteria for the Florida Commission on Hurricane Loss Projection Methodology's (Commission)
consideration and approval of hurricane loss models and prescribes how those models affect OIR's
approval of property insurance rate filings. 40

Effect of the Bill

The bill provides parameters for OIR's approval or disapproval of rate filings by establishing that OIR
may not disapprove a homeowner's insurance rate filing solely because the rate filing uses a modeling
indication that is the weighted or straight average of two or more models currently found to be accurate
or reliable by the Commission.

Time for Filing Property Insurance Claims

Since an insurance policy is a contract and no limitations on insurance claims existed in the Florida
Insurance Code, the five-year statute of limitation for a contract dispute was applied to insurance

37
S. 627.062, F.S. (which controls rating requirements for property and casualty insurance in general), s. 627.0651, F.S. (which controls rating
requirements for motor vehicle insurance), ands. 627.410 (which controls form filings in general). While the statutes differentiate between issuance
of a notice of intent to approve or disapprove a property and casualty rate filing, other than a motor vehicle rate filing, and simply approving or
disapproving a motor vehicle rate filing following review, the practical effect of the review process is the same.
38 S. 627.062(2)0), F.S.
39
S. 627.062, F.S.
40
Ss. 627.0628--627.06281, F.S.
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disputes. 41 However, in 2011 two types of claims were given a shorter statute of limitation. A notice of
any claim, supplemental claim, or reopened claim resulting from windstorm or a hurricane must be
provided to the policyholder's insurance company within three years after the windstorm caused the
covered damage or the hurricane first made landfall otherwise the claim is barred. 42 Additionally, those
claims related to a sinkhole loss are barred unless the notice of claim, including initial, supplemental,
and reopened claims, is properly filed within two years after the policyholder knew or should have
known about the sinkhole loss. 43

Effect of the Bill

The bill modifies the property insurance claim notice requirements to make them applicable to all
property insurance claims with the exception of sinkhole loss as defined ins. 627.706(2), F.S. Upon
passage of the bill, notice of all property insurance claims, supplemental claims, or reopened claims
must be provided to an insurer within three years after the date of loss or such claims will be barred.

Property Insurance Mediation Notice Requirements

DFS administers alternative dispute resolution programs for various types of insurance, including a
mediation program for property insurance claims. 44 For property insurance claims involving personal
lines and commercial residential claims, the policyholder, as a first-party claimant, a third-party, as an
assignee, or the insurer may request mediation under the DFS program; however, the insurer is not
required to participate in mediation requested by a third-party assignee. 45 Florida law requires that, at
either issuance or renewal of a property insurance policy, or at the time a first-party property insurance
claim is made, an insurer must provide a policyholder with notice of its right to participate in
mediation. 46

Effect of the Bill

The bill establishes that, in addition to having the option to provide a policyholder with notice of its right
to participate in mediation at policy issuance or renewal or at the filing of a first-party claim, an insurer
also has the option to provide a policyholder with such notice at the time that the policyholder disputes
a claim.

Residential Condominium Loss Assessments

Loss assessment coverage is insurance coverage for condominium unit owners that provides
protection for situations where the owner of a condominium unit, as the owner of shared property, is
held financially responsible for: deductibles owed when a claim is made under a condominium
association's property insurance policy; damage that occurs to the condominium building or the
common areas of a condominium property; or injuries that occur in the common areas of a
condominium property. 47 Florida law requires that property insurance policies held by condominium
unit owners include a minimum property loss assessment coverage of $2000 for all assessments made
as a result of the same direct loss to the condominium property. 48 The law further establishes that the
maximum amount of any unit owner's coverage that can be assessed for any loss is an amount equal

41
S. 95.11, F.S.
42
Ch. 2011-39, Laws of Fla. Current law also specifies that the three-year notice requirement does not affect any applicable limitations on civil
actions provided for claims, supplemental claims, or reopened claims timely filed. S. 627.70132, F.S. For example, policyholders still have five year
after breach ofan insurance contract by an insurer, which may include claim denial, to file suit for the breach.
43
S. 627.706(5), F.S.
44
S. 627.7015, F.S.
45
S. 627.7015(1), F.S.
46 S. 627.7015(2), F.S.
47
The Balance, Loss Assessment Explained for Condo Insurance, https://v.W\\. thebalance.com/loss-assessment-explained-for-condo-insurance-
4060435 (last visited Jan. 8, 2020).
48 S. 627.714(1), F.S.
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DATE: 1/13/2020
to the unit owner's loss assessment coverage limit in effect one day before the date of an occurrence,
but it does not specify exactly what occurrence is referenced. 50

Effect of the Bill

The bill clarifies that the amount of loss assessment coverage that can be assessed against a unit
owner is based upon the coverage limit for loss assessment that was in effect in the unit owner's policy
one day before the date of an occurrence that resulted in a loss for which the unit owner is being
assessed. Further, the bill establishes that the coverage in place at that time applies regardless of the
date on which the condominium association assesses the unit owner.

8. SECTION DIRECTORY:
Section 1: Amends s. 319.30, F.S., relating to definitions; dismantling, destruction, change of identity of
motor vehicle or mobile home; salvage.

Section 2: Amends s. 624.155, F.S., relating to civil remedy.

Section 3: Creating s. 624.307, F.S., relating to general powers; duties.

Section 4: Amends s. 624.315, F.S., relating to department; annual report.

Section 5: Amends s. 627.062, F.S., relating to rate standards.

Section 6: Amends s. 627.0651, F.S., relating to making and use of rates for motor vehicle insurance.

Section 7: Amends s. 627.410, F.S., relating to filing, approval of forms.

Section 8: Amends s. 627.70132, F.S., relating to notice of windstorm or hurricane claim.

Section 9: Amends s. 627.7015, F.S., relating to alternative procedure for resolution of disputed
property insurance claims.

Section 10: Amends s. 627.714, F.S., relating to residential condominium unit owner coverage; loss
assessment coverage required.

Section 11: Provides an effective date of upon becoming law.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:
None.

2. Expenditures:
None.

8. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

50
S. 627.714(2), F.S.
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DATE: 1/13/2020
2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None known.

D. FISCAL COMMENTS:
None.

Ill. COMMENTS

A CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county or municipal governments.

2. Other:
None.

B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES

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DATE: 1/13/2020
FLORIDA H O U S E 0 F REPRESENTATIVES

PCS for HB 359 2020

1 A bill to be entitled
2 An act relating to insurance; amending s. 319.30,
3 F.S.; revising the requirements for certain electronic
4 signatures submitted through insurance companies;
5 amending s. 624.155, F.S.; providing requirements for
6 the delivery of certain violation notices to insurers;
7 revising the circumstances under which an action may
8 not lie; revising the timeframe during which the
9 statute of limitations for certain actions for civil
10 remedy is tolled; amending ss. 624.307 and 624.315,
11 F.S.; authorizing the releases of specified
12 information obtained by the Department of Financial
13 Services and the office; providing an exception;
14 amending s. 627.062, F.S.; requiring an extension of
15 the office's review period of insurance rate standards
16 under certain circumstances; deleting obsolete
17 language; prohibiting the office from disapproving a
18 rate for homeowners' insurance under certain
19 circumstances; amending ss. 627.0651 and 627.410,
20 F.S.; requiring an extension of the office's review
21 period of insurance rate standards under certain
22 circumstances; amending s. 627.70132, F.S.; revising
23 the types of claims, supplemental claims, or reopened
24 claims under a property insurance policy that are
25 barred unless notice is given to the insurer within a

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PCS for HB 359 2020

26 specified timeframe; revising the timeframe of such
27 claims; revising the definition of the terms
28 "supplemental claim" and "reopened claim"; amending s.
29 627.7015, F.S.; revising the timeframe for insurers'
30 notification of certain mediation program; conforming
31 provisions to changes made by the act; amending s.
32 627.714, F.S.; specifying the maximum amount of loss
33 assessment coverage for certain unit owners; providing
34 an effective date.
35
36 Be It Enacted by the Legislature of the State of Florida:
37
38 Section 1. Paragraph (d) of subsection (3) of section
39 319.30, Florida Statutes, is amended to read:
40 319.30 Definitions; dismantling, destruction, change of
41 identity of motor vehicle or mobile home; salvage.-
42 (3)

43 (d) An electronic signature that is consistent with
44 chapter 668 satisfies any signature required under this
45 subsection, except that an electronic signature on an odometer
46 disclosure submitted through an insurance company must be
47 executed using an electronic signature, as defined ins.
48 668.003(4), that uses a system providing an Identity Assurance
49 Level, Authenticator Assurance Level, and Federation Assurance
50 Level, as described in the National Institute of Standards and

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PCS for HB 359 2020

51 Technology Special Publication 800-63-3, as of December 1, 2017,
52 that are equivalent to or greater than+
53 ±-. Level 2, for each level, for a certificate of
54 destruction or-.-
55 2. Level 2 3, for each level, for a salvage certificate of
56 title.
57 Section 2. Subsection (3) of section 624.155, Florida
58 Statutes, is amended to read:
59 624.155 Civil remedy.-
60 (3) (a) As a condition precedent to bringing an action
61 under this section, the department and the authorized insurer
62 must have been given 60 days' written notice of the violation.
63 Notice to the authorized insurer must be delivered to the name
64 and address designated by the insurer under s. 624.422(2).
65 (b) The notice shall be on a form provided by the
66 department and shall state with specificity the following
67 information, and such other information as the department may
68 require:
69 1. The statutory provision, including the specific
70 language of the statute, which the authorized insurer allegedly
71 violated.
72 2. The facts and circumstances giving rise to the
73 violation.
74 3. The name of any individual involved in the violation.
75 4. Reference to specific policy language that is relevant

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PCS for HB 359 2020

76 to the violation, if any. If the person bringing the civil
77 action is a third party claimant, she or he shall not be
78 required to reference the specific policy language if the
79 authorized insurer has not provided a copy of the policy to the
80 third party claimant pursuant to written request.
81 5. A statement that the notice is given in order to
82 perfect the right to pursue the civil remedy authorized by this
83 section.
84 (c) No action shall lie if, within 60 days after the
85 authorized insurer receives the filing notice pursuant to
86 paragraph (a), the damages are paid or the circumstances giving
87 rise to the violation are corrected.
88 (d) The authorized insurer that is the recipient of a
89 notice filed pursuant to this section shall report to the
90 department on the disposition of the alleged violation.
91 (e) The applicable statute of limitations for an action
92 under this section shall be tolled for a period of:
93 1. Sixty days after the date on which appraisal is invoked
94 by any party in a residential property insurance claim; and
95 2. Sixty-five -6.§- days after the date on which by the
96 fflailing of the notice required under ey this subsection or the
97 fflailing of a subsequent notice required under ey this subsection
98 is mailed.
99 (f) A notice required under this subsection may not be
100 filed within 60 days after appraisal is invoked by any party in

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101 a residential property insurance claim.
102 Section 3. Subsection (4) of section 624.307, Florida
103 Statutes, is amended to read:
104 624.307 General powers; duties.-
105 (4) The department and office may each collect, propose,
106 publish, and disseminate information relating to the subject
107 matter of any duties imposed upon it by law. Aggregate
108 information published or disseminated by the department or
109 office pursuant to the powers under this subsection may include
110 information covered by a notice of trade secret under subsection
111 624.4213(1), unless the information can be individually
112 extrapolated, in which case the information may not be published
113 or disseminated by the department or the office.
114 Section 4. Subsection (4) is added to section 624.315,
115 Florida Statutes, to read:
116 624.315 Department; annual report.-
117 (4) The office may include information covered by a notice
118 of trade secret under subsection 624.4213(1) in the report under
119 subsection (1) or make the information available under
120 subsection (2), unless the information can be individually
121 extrapolated, in which case the information may not be published
122 or disseminated by the department or the office.
123 Section 5. Paragraphs (a) and (j) of subsection (2) of
124 section 627.062, Florida Statutes, are amended to read:
125 627.062 Rate standards.-

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PCS for HB 359 2020

126 (2) As to all such classes of insurance:
127 (a) Insurers or rating organizations shall establish and
128 use rates, rating schedules, or rating manuals that allow the
129 insurer a reasonable rate of return on the classes of insurance
130 written in this state. A copy of rates, rating schedules, rating
131 manuals, premium credits or discount schedules, and surcharge
132 schedules, and changes thereto, must be filed with the office
133 under one of the following procedures:
134 1. If the filing is made at least 90 days before the
135 proposed effective date and is not implemented during the
136 office's review of the filing and any proceeding and judicial
137 review, such filing is considered a "file and use'' filing. In
138 such case, the office shall finalize its review by issuance of a
139 notice of intent to approve or a notice of intent to disapprove
140 within 90 days after receipt of the filing. The notice of intent
141 to approve and the notice of intent to disapprove constitute
142 agency action for purposes of the Administrative Procedure Act.
143 Requests for supporting information, requests for mathematical
144 or mechanical corrections, or notification to the insurer by the
145 office of its preliminary findings does not toll the 90-day
146 period during any such proceedings and subsequent judicial
147 review. The rate shall be deemed approved if the office does not
148 issue a notice of intent to approve or a notice of intent to
149 disapprove within 90 days after receipt of the filing.
150 2. If the filing is not made in accordance with

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151 subparagraph 1., such filing must be made as soon as
152 practicable, but within 30 days after the effective date, and is
153 considered a "use and file" filing. An insurer making a "use and
154 file" filing is potentially subject to an order by the office to
155 return to policyholders those portions of rates found to be
156 excessive, as provided in paragraph (h).
157 3. If the last day of the 90-day timeframe for the
158 issuance of a notice of intent under subparagraph 1. ends on a
159 weekend or a holiday specified ins. 110.117, the closure of the
160 office's review period shall be extended until the conclusion of
161 the next business day.
162 3. For all property insurance filings made or submitted
163 after January 25, 2007, but before May 1, 2012, an insurer
164 seeking a rate that is greater than the rate most recently
165 approved by the office shall malce a "file and use" filing. For
166 purposes of this subparagraph, motor vehicle collision and
167 comprehensive coverages are not considered property coverages.
168 (j) With respect to residential property insurance rate
169 filings _:_T
170 1. The rate filing must account for mitigation measures
171 undertaken by policyholders to reduce hurricane losses.
172 2. The office may not disapprove a rate for homeowners'
173 insurance solely because the rate filing uses a modeling
174 indication that is the weighted or straight average of two or
175 more models currently found to be accurate or reliable pursuant

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PCS for HB 359 2020

176 to s. 627.0628.
177
178 The provisions of this subsection do not apply to workers'
179 compensation, employer's liability insurance, and motor vehicle
180 insurance.
181 Section 6. Paragraph (a} of subsection (1) of section
182 627.0651, Florida Statutes, is amended to read:
183 627.0651 Making and use of rates for motor vehicle
184 insurance.-
185 ( 1} Insurers shall establish and use rates, rating
186 schedules, or rating manuals to allow the insurer a reasonable
187 rate of return on motor vehicle insurance written in this state.
188 A copy of rates, rating schedules, and rating manuals, and
189 changes therein, shall be filed with the office under one of the
190 following procedures:
191 (a)l..:_ If the filing is made at least 60 days before the
192 proposed effective date and the filing is not implemented during
193 the office's review of the filing and any proceeding and
194 judicial review, such filing shall be considered a "file and
195 use" filing. In such case, the office shall initiate proceedings
196 to disapprove the rate and so notify the insurer or shall
197 finalize its review within 60 days after receipt of the filing.
198 Notification to the insurer by the office of its preliminary
199 findings shall toll the 60-day period during any such
200 proceedings and subsequent judicial review. The rate shall be

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201 deemed approved if the office does not issue notice to the
202 insurer of its preliminary findings within 60 days after the
203 filing.
204 2. If the last day of the 60-day timeframe for the
205 office's notification or review finalization under subparagraph
206 1. ends on a weekend or a holiday specified ins. 110.117, the
207 closure of the office's review period shall be extended until
208 the conclusion of the next business day.
209 Section 7. Subsection (2) of section 627.410, Florida
210 Statutes, is amended to read:
211 627.410 Filing, approval of forms.-
212 (2)l§l Every such filing must be made at least 30 days in
213 advance of any such use or delivery. At the expiration of the 30
214 days, the form filed will be deemed approved unless prior
215 thereto it has been affirmatively approved or disapproved by
216 order of the office. The approval of such form by the office
217 constitutes a waiver of any unexpired portion of such waiting
218 period. The office may extend the period within which it may
219 affirmatively approve or disapprove such form by up to 15 days
220 by giving notice of such extension before expiration of the
221 initial 30-day period. At the expiration of such extended
222 period, and in the absence of prior affirmative approval or
223 disapproval, such form shall be deemed approved.
224 (b) If the last day of the initial 30-day period, or the
225 last day of the 15-day extension authorized by the office, under

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226 paragraph (a) ends on a weekend or a holiday specified ins.
227 110.117, the closure of the review period shall be extended
228 until the conclusion of the next business day.
229 Section 8. Section 627.70132, Florida Statutes, is amended
230 to read:
231 627.70132 Notice of property insurance windstorm or
232 hurricane claim.-Except for a sinkhole loss as defined in
233 627.706(2), a claim, supplemental claim, or reopened claim under
234 an insurance policy that provides property insurance, as defined
235 ins. 624.604, for loss or damage caused by the peril of
236 windstorm or hurricane is barred unless notice of the claim,
237 supplemental claim, or .reopened claim is wa-s- given to the
238 insurer in accordance with the terms of the policy within 3
239 years after the date of loss the hurricane first made landfall
240 or the windstorm caused the covered damage. For purposes of this
241 section, the term "supplemental claim" or "reopened claim" means
242 any additional claim for recovery from the insurer for losses
243 from the same hurricane or windstorm which the insurer has
244 previously adjusted pursuant to the initial claim. This section
245 does not affect any applicable limitation on civil actions
246 provided ins. 95.11 for claims, supplemental claims, or
247 reopened claims timely filed under this section.
248 Section 9. Subsection (2) and paragraph (e) of subsection
249 (9) of section 627.7015, Florida Statutes, are amended to read:
250 627.7015 Alternative procedure for resolution of disputed

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251 property insurance claims.-
252 (2) At the time of issuance and renewal of a policy or at
253 the time a first party claim within the scope of this section is
254 filed by the policyholder, The insurer shall notify the
255 policyholder of its right to participate in the mediation
256 program under this section and shall choose any of the following
257 times to provide the notification:
258 (a) Upon the issuance and renewal of a policy; or
259 (b) At the time the policyholder:
260 1. Disputes a claim; or
261 2. Files a first-party claim within the scope of this
262 section.
263
264 The department shall prepare a consumer information pamphlet for
265 distribution to persons participating in mediation.
266 (9) For purposes of this section, the term "claim" refers
267 to any dispute between an insurer and a policyholder relating to
268 a material issue of fact other than a dispute:
269 (e) With respect to a property windstorm or hurricane loss
270 that does not comply withs. 627.70132.
271 Section 10. Subsection (2) of section 627.714, Florida
272 Statutes, is amended to read:
273 627.714 Residential condominium unit owner coverage; loss
274 assessment coverage required.-
275 (2) The maximum amount of any unit owner's loss assessment

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276 coverage that can be assessed for any loss shall be an amount
277 equal to that unit owner's loss assessment coverage limit in
278 effect 1 day before the date of the occurrence that gave rise to
279 the loss. Such coverage applies to any loss assessment
280 regardless of the date of the assessment by the association. Any
281 changes to the limits of a unit owner's coverage for loss
282 assessments made on or after the day before the date of the
283 occurrence do a-re not apply applicable to such loss.
284 Section 11. This act shall take effect upon becoming a
285 law.

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INSURANCE & BANKING SUBCOMMITTEE

PCS for HB 359 by Rep. Santiago
Insurance

AMENDMENT SUMMARY
January 15, 2020

Amendment 1 by Rep. Santiago (Line 56): The amendment allows an employee who is
receiving workers' compensation payments to authorize a carrier to transmit compensation
payments to a money transmitter, and the amendment specifies that the carrier's transmission
of compensation to the employee's money transmitter account satisfies the carrier's obligation
to pay compensation directly to the employee.

Amendment 2 by Rep. Santiago (Line 228): The amendment provides that the American Law
lnstitute's Restatement of the Law, Liability Insurance, cannot be used as statement of Florida
law when it is inconsistent with, in conflict with, or not otherwise addressed by existing
constitutional law or Florida statutory law, case law, or common law.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 359 (2020)
Amendment No. 1

COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/0 OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER

1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Santiago offered the following:
4
5 .Amendment (with title am~ndment)
6 Between lines 56 and 57, insert:
7 Section 2. Paragraph (a) of subsection (1) of section
8 440.12, Florida Statutes, is amended to read:
9 440.12 Time for commencement and limits on weekly rate of
10 compensation.-
11 (1) Compensation is not allowed for the first 7 days of
12 the disability, except for benefits provided under s. 440.13.
13 However, if the injury results in more than 21 days of
14 disability, compensation is allowed from the commencement of the
15 disability.

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 359 (2020)
Amendment No. 1

16 (a) All weekly compensation payments, except for the first
17 payment, must be paid by check or, if authorized by the
18 employee, on a prepaid card pursuant to paragraph (b) or
19 deposited directly into the employee's account at a financial
20 institution as defined ins. 655.005 or transmitted to the
21 employee's account with a money transmitter licensed under part
22 II of chapter 560.
23 Section 3. Paragraph (a) of subsection (1) and paragraph
24 (a) of subsection (6) of section 440.20, Florida Statutes, are
25 amended to read:
26 440.20 Time for payment of compensation and medical bills;
27 penalties for late payment.-
28 (1) (a) Unless the carrier denies compensability or
29 entitlement to benefits, the carrier shall pay compensation
30 directly to the employee as required by ss. 440.14, 440.15, and
31 440.16, in accordance with those sections. Upon receipt of the
32 employee's authorization as provided for ins. 440.12(1) (a), the
33 carrier's obligation to pay compensation directly to the
34 employee is satisfied when the carrier directly deposits, by
35 electronic transfer or other means, compensation into the
36 employee's account at a financial institution as defined ins.
37 655.005 or onto a prepaid card in accordance withs. 440.12(1)
38 or transmits the employee's compensation to the employee's
39 account with a money transmitter licensed under part II of
40 chapter 560. Compensation by direct deposit or through the use
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 359 (2020)
Amendment No. 1

41 of a prepaid card or through transmission is considered paid on
42 the date the funds become available for withdrawal by the
43 employee.
44 (6) (a) If any installment of compensation for death or
45 dependency benefits, or compensation for disability benefits
46 payable without an award is not paid within 7 days after it
47 becomes due, as provided in subsection (2), subsection (3), or
48 subsection (4), there shall be added to such unpaid installment
49 a penalty of an amount equal to 20 percent of the unpaid
50 installment, which shall be paid at the same time as, but in
51 addition to, such installment of compensation. This penalty
52 shall not apply for late payments resulting from conditions over
53 which the employer or carrier had no control. When any
54 installment of compensation payable without an award has not
55 been paid within 7 days after it became due and the claimant
56 concludes the prosecution of the claim before a judge of
57 compensation claims without having specifically claimed
58 additional compensation in the nature of a penalty under this
59 section, the claimant will be deemed to have acknowledged that,
60 owing to conditions over which the employer or carrier had no
61 control, such installment could not be paid within the period
62 prescribed for payment and to have waived the right to claim
63 such penalty. However, during the course of a hearing, the judge
64 of compensation claims shall on her or his own motion raise the
65 question of whether such penalty should be awarded or excused.

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 359 (2020)
Amendment No. 1

66 The department may assess without a hearing the penalty against
67 either the employer or the carrier, depending upon who was at
68 fault in causing the delay. The insurance policy cannot provide
69 that this sum will be paid by the carrier if the department or
70 the judge of compensation claims determines that the penalty
71 should be paid by the employer rather than the carrier. Any
72 additional installment of compensation paid by the carrier
73 pursuant to this section shall be paid directly to the employee
74 by check or, if authorized by the employee, by direct deposit
75 into the employee's account at a financial institution or by
76 transmission to the employee's account with a money transmitter
77 licensed under part II of chapter 560.
78
79
80
81 T I T L E A ME N D ME N T
82 Between lines 4 and 5, insert:
83 amending s. 440.12, F.S.; providing that an employee
84 receiving workers' compensation payments may authorize
85 a carrier to transmit compensation payments to a money
86 transmitter; amending s. 440.20, F.S.; specifying that
87 the carrier's transmission of compensation to the
88 employee's money transmitter account satisfies the
89 carrier's obligation to pay compensation directly to
90 the employee;

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 359 (2020)
Amendment No. 2

COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/0 OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER

1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Santiago offered the following:
4
5 Amendment (with title amendment)
6 Between lines 228 and 229, insert:
7 Section 8. Subsection (10) is added to section 627.419,
8 Florida Statutes, to read:
9 627.419 Construction of policies.-
10 (10) A statement of the law in the American Law Institute's
11 Restatement of the Law, Liability Insurance does not constitute
12 the law or public policy of this state if the statement of the
13 law is inconsistent or in conflict with, or otherwise not
14 addressed by:
15 (a) The Constitution of the United States or of this state;
16 (b) A statute of this state;

PCS for HB 359 a2
Published On: 1/14/2020 7:01:00 PM
Page 1 of 2
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 359 (2020)
Amendment No. 2

17 (c) This state's case law precedent; or
18 (d) Other common law that may have been adopted by this
19 state.
20
21
22 T I T L E A ME N D ME N T
23 Remove line 22 and insert:
24 circumstances; amending s. 627.419, F.S.; limiting construction
25 of liability insurance law in certain circumstances; amending s.
26 627.70132, F.S.; revising

PCS for HB 359 a2
Published On: 1/14/2020 7:01:00 PM
Page 2 of 2
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 529 Insurance Guaranty Associations
SPONSOR(S): Webb
TIED BILLS: IDEN./SIM. BILLS: SB 898

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

1) Insurance & Banking Subcommittee

2) Ways & Means Committee

3) Commerce Committee

SUMMARY ANALYSIS
A condominium is a form of ownership of real property comprised of units along with an undivided right of
access to common elements. A condominium association is responsible for the operation and maintenance of
the common elements and all unit owners are members of the condominium association. A condominium
association must use its best efforts to maintain an insurance policy for the benefit of the association, the
association property, and the common elements belonging to all condominium unit owners.

Florida law provides for guaranty associations to ensure policyholders of insolvent insurers are protected with
respect to insurance premiums paid and settlement of outstanding claims. Insurers are required ~o participate
in the guaranty associations as a condition of transacting insurance business in Florida. Florida operates four
guaranty associations including the Florida Insurance Guaranty Association (FIGA).

FIGA issues guaranty fund payments for all lines of property and casualty insurance, including policies written
to condominium associations, with certain exceptions. FIGA maintains two accounts, including one for auto
insurers and one for all other property and casualty insurers that are covered by FIGA. Florida law provides
that FIGA is only obligated to pay the portions of claims, made to insolvent property and casualty insurers,
which are in excess of $100, and less than $300,000. For policies providing homeowner's insurance coverage,
FIGA shall provide for an additional $200,000 for the portion of a covered claim which related to the damage to
the structure and contents. However, for policies covering condominium associations FIGA is only obligated to
pay the amount of each property insurance claim which is less than $100,000 for each condominium unit.

If an insurer's assets are insufficient to pay all claims, FIGA can issue post-insolvency to obtain funds to pay
the remaining claims. The assessments levied against any insurer in a calendar year may not exceed more
than two percent of that insurer's net direct written premium in Florida for the kinds of insurance within an
account maintained by FIGA. In the event that these assessments are insufficient to cover claims of insurers
rendered insolvent by the effects of a hurricane, FIGA may levy emergency assessments, in an amount not to
exceed two percent of that insurer's net written premiums written in Florida for the kinds of insurance within an
account.

The bill changes the amount of coverage that FIGA must provide for each condominium unit within a
condominium association from $100,000 to $200,000, per condominium unit for property insurance claims
made under a condominium association policy and covered by FIGA. The bill also changes the amount of the
emergency assessments that FIGA is authorized to levy against any insurer from a maximum of two percent of
that insurer's net written premiums in Florida for the kinds of insurance within either the auto or all other
insurance accounts maintained by FIGA to a maximum of four percent of the same premiums.

This bill does not impact local or state government revenues or expenditures. It potentially has both positive
and negative direct economic impacts on the private sector.

This bill has an effective date of July 1, 2020.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0529.IBS.D0CX
DATE: 1/13/2020
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:

Condominiums and Condominium Associations

A condominium is a form of ownership of real property created pursuant to ch. 718, F.S., comprised of
units, which may be owned by one or more persons, along with an undivided right of access to common
elements. 1 Common elements are those portions of condominium property not located within the
boundaries of the individual condominium units2 and are considered jointly owned by all of the
condominium unit owners. Examples of common elements include roofs, heating and air conditioning
systems, exterior walls, pipes, and electrical systems.

A condominium is created by recording a declaration of condominium in the public records of the
county where the condominium is located. 3 The declaration governs the relationships among
condominium unit owners and a condominium association. The condominium association is an entity
responsible for the operation and maintenance of the common elements owned by the unit owners, and
all unit owners of condominiums are members of the condominium association. The condominium
association is overseen by an elected board of directors, commonly referred to as a board of
administration. 4 The board enacts bylaws, which government administration of the condominium
association. 5

Insurance Policies Held by Condominium Associations

A condominium association must use its best efforts to maintain an insurance policy for the benefit of
the association, the association property, and the common elements belonging to all condominium unit
owners. One of the most significant common elements typically covered by condominium association
insurance is roofs. Roofs are also some of the most likely elements to be severely damaged in a
windstorm or hurricane. Condominium association insurance coverage does not include personal
property within a unit or a unit's limited common elements, floor, wall, ceiling coverings, electrical
fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window
treatments. 6 Insurance coverage for such property is the responsibility of the unit owner. 7

Guaranty Associations

Under federal law, insurance companies cannot file for bankruptcy. 8 Instead, they are either
rehabilitated or liquidated by their state of domicile. Florida law establishes the system for the
treatment of impaired or insolvent insurers9 in Florida and sets up guaranty payments where
°
necessary. 1 Florida law provides for guaranty associations to ensure policyholders of insolvent
insurers are protected with respect to insurance premiums paid and settlement of outstanding claims,

1
S. 718.103(11), F.S.
2
S. 718.103(8), F.S.
3
S. 718.104(2), F.S.
4
S. 718.111, F.S.
5
S. 718.112, F.S.
6
S. 718.111, F.S.
7
Id
8
11 U.S.C. § I09(b)(2).
9
"An 'insolvent insurer' means an insurer that was authorized to transact insurance in this state, either at the time the policy was
issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by
a court of competent jurisdiction if such order has become final by the exhaustion of appellate review." S. 631.54(7), F.S.
1
°Ch. 631, F.S.
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DATE: 1/13/2020
up to limits provided by law. 11 A guaranty association is a not-for-profit corporation created by law and
directed to protect policyholders from financial losses and delays in claims payment and settlements
due to the insolvency of an insurer. 12 Insurers are required to participate in the guaranty associations
as a condition of transacting insurance business in Florida. Florida operates four guaranty associations
including the Florida Insurance Guaranty Association (FIGA) 13 .

Florida Insurance Guaranty Association

FIGA provides a "mechanism for the payment of covered claims under certain insurance policies to
avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of
the insolvency of an insurer." 14 It issues guaranty fund payments and provides related services for all
lines of property and casualty insurance, including policies written to condominium associations, with
certain exceptions. 15 When a Florida property and casualty insurer becomes insolvent, FIGA takes
over the claims of that insurer and pays the claims of its policyholders, ensuring that policyholders are
not left with unpaid claims. FIGA obtains funds to pay the claims of insolvent insurers located in Florida
from the liquidation of the assets of insolvent insurers by the Division of Rehabilitation and Liquidation
(the Division) in the Florida Department of Financial Services (DFS) and from the liquidation of assets
of insolvent insurers located outside Florida that transact insurance business in Florida. 16

Florida law provides that FIGA is only obligated to pay the portions of claims made to insolvent property
and casualty insurers, which are in excess of $100, and less than $300,000. 17 It further establishes that
for policies providing homeowner's insurance coverage, FIGA shall provide for an additional $200,000
for the portion of a covered claim which related to the damage to the structure and contents. 18
However, for policies covering condominium associations, which the condominium associations have a
responsibility to provide insurance coverage on residential units within the association, FIGA is only
obligated to pay the amount of each property insurance claim which is less than $100,000 for each
condominium unit. 19

When an insolvent insurer is liquidated in Florida, FIGA assumes the claims and is "deemed the insurer
to the extent of its obligation on ... covered claims, and, ... shall have all rights, duties, defenses, and
obligations of the insolvent insurer as if the insurer had not become insolvent." 20 If an insurer's assets
are insufficient to pay all claims, FIGA can also issue post-insolvency assessment to obtain funds to
pay the remaining claims. 21 Currently, the assessments levied against any insurer in a calendar year
may not exceed more than two percent of that insurer's net direct written premium in Florida for the
kinds of insurance within an account. 22

II fd
12
See e.g., ss. 631.51 and 631.902, F.S.
13
Ch. 631, part II, F.S.
14
S. 631.51, F.S.
15
S. 631.52, F.S.
16
Sees. 631.061, F.S. for grounds for liquidation. Sees. 631.025, F.S., for an overview of persons subject to proceedings initiated by
the Division.
17
S. 631.57(1 ), F.S.
1s Id.
19 Id.
20
S. 631.57, F.S.
21 Id.
22
S. 63 l.57(3)(a), F.S. As established in s. 632.52, F.S., FIGA covers "all kinds of direct insurance" with certain exceptions, such as
life, annuity, health, disability, workers' compensation, and surplus lines insurance. FIGA maintains two accounts, including one for
auto insurance and one for all other property and casualty insurance who are covered by FIGA. When an auto insurer's assets are
insufficient to pay claims, all auto insurers within the auto account are assessed. When another property and casualty insurer's assets
are insufficient to pay claims, all insurers within the all other account are assessed.
STORAGE NAME: h0529.1BS.DOCX PAGE: 3
DATE: 1/13/2020
In the event that these assessments are insufficient to cover claims of insurers rendered insolvent by
the effects of a hurricane, FIGA may levy emergency assessments. 23 The emergency assessments
levied against any insurer in any one calendar year may not exceed more than two percent of that
insurer's net written premiums written in Florida for the kinds of insurance within either the auto or all
other insurance accounts maintained by FIGA. 24

Effect of Bill

The bill also changes the amount of the emergency assessments that FIGA is authorized to levy
against any insurer from a maximum of two percent of that insurer's net written premiums in Florida for
the kinds of insurance within either the auto or all other insurance accounts maintained by FIGA to a
maximum of four percent of the same premiums.

8. SECTION DIRECTORY:
Section 1. Amends s. 631.57, F.S., relating to duties and powers of the association.

Section 2. Provides an effective date of July 1, 2020.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:
None.

2. Expenditures:
None.

8. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
This bill has a positive effect on the private sector by providing additional coverage for condominium
unit owners when claims on condominium association policies must be paid by FIGA. It also has the
potential to have a negative impact on the private sector if FIGA deems it necessary to exercise its
increased emergency assessment authority. However, the potential for FIGA to exercise its emergency
assessment authority is more remote than the potential exercise of the initial assessment authority.

23
S. 63 l.57(3)(e)l., F.S.
24 Id.
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DATE: 1/13/2020
D. FISCAL COMMENTS:

None.

Ill. COMMENTS

A. CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.

2. Other:
None.

B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES

STORAGE NAME: h0529.1BS.DOCX PAGE: 5
DATE: 1/13/2020
FLORIDA H O U S E 0 F REPRESENTATIVES

HB 529 2020

1 A bill to be entitled
2 An act relating to insurance guaranty associations;
3 amending s. 631.57, F.S.; revising the obligations of
4 the Florida Insurance Guaranty Association,
5 Incorporated, for policies covering condominium
6 associations and homeowners' associations; revising
7 the percentage limits on the emergency assessments
8 levied against insurers by the Office of Insurance
9 Regulation; providing an effective date.
10
11 Be It Enacted by the Legislature of the State of Florida:
12
13 Section 1. Paragraph (a) of subsection (1) and paragraph
14 (e) of subsection (3) of section 631.57, Florida Statutes, are
15 amended to read:
16 631.57 Powers and duties of the association.-
17 (1) The association shall:
18 (a)l. Be obligated to the extent of the covered claims
19 existing:
20 a. Prior to adjudication of insolvency and arising within
21 30 days after the determination of insolvency;
22 b. Before the policy expiration date if less than 30 days
23 after the determination; or
24 c. Before the insured replaces the policy or causes its
25 cancellation, if she or he does so within 30 days of the

Page 1 of 6

CODING: Words stricken are deletions; words underlined are additions.
hb0529-00
FLORIDA H O U S E 0 F REPRESENTATIVES

HB 529 2020

26 determination.
27 2. The obligation under subparagraph 1. includes only the
28 amount of each covered claim which is in excess of $100 and is
29 less than $300,000, except that policies providing coverage for
30 homeowner's insurance shall provide for an additional $200,000
31 for the portion of a covered claim which relates only to the
32 damage to the structure and contents.
33 3.a. Notwithstanding subparagraph 2., the obligation under
34 subparagraph 1. for policies covering condominium associations
35 or homeowners' associations, which associations have a
36 responsibility to provide insurance coverage on residential
37 units within the association, shall include that amount of each
38 covered property insurance claim which is less than $200,000
39 $100,000 multiplied by the number of condominium units or other
40 residential units; however, as to homeowners' associations, this
41 sub-subparagraph applies only to claims for damage or loss to
42 residential units and structures attached to residential units.
43 b. Notwithstanding sub-subparagraph a., the association
44 has no obligation to pay covered claims that are to be paid from
45 the proceeds of bonds issued under s. 631.695. However, the
46 association shall assign and pledge the first available moneys
47 from all or part of the assessments to be made under paragraph
48 ( 3) (a) to or on behalf of the issuer of such bonds for the
49 benefit of the holders of such bonds. The association shall
50 administer any such covered claims and present valid covered

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FLORIDA H O U S E 0 F REPRESENTATIVES

HB 529 2020

51 claims for payment in accordance with the provisions of the
52 assistance program in connection with which such bonds have been
53 issued.
54 4. In no event shall the association be obligated to a
55 policyholder or claimant in an amount in excess of the
56 obligation of the insolvent insurer under the policy from which
57 the claim arises.
58 (3)

59 (e)l. In addition to assessments authorized in paragraph
60 (a), and to the extent necessary to secure the funds for the
61 account specified ins. 631.55(2) (b) for the direct payment of
62 covered claims of insurers rendered insolvent by the effects of
63 a hurricane and to pay the reasonable costs to administer such
64 claims, or to retire indebtedness, including, without
65 limitation, the principal, redemption premium, if any, and
66 interest on, and related costs of issuance of, bonds issued
67 under s. 631.695 and the funding of any reserves and other
68 payments required under the bond resolution or trust indenture
69 pursuant to which such bonds have been issued, the office, upon
70 certification of the board of directors, shall levy emergency
71 assessments upon insurers holding a certificate of authority.
72 The emergency assessments levied against any insurer may not
73 exceed in any one calendar year more than i ~ percent of that
74 insurer's net written premiums in this state for the kinds of
75 insurance within the account specified in s. 631.55 (2) (b).

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FLORIDA H O U S E 0 F REPRESENTATIVES

HB 529 2020

76 2. Emergency assessments authorized under this paragraph
77 shall be levied by the office upon insurers in accordance with
78 paragraph (f), upon certification as to the need for such
79 assessments by the board of directors. If the board participates
80 in the issuance of bonds in accordance withs. 631.695,
81 emergency assessments shall be levied in each year that bonds
82 issued under s. 631.695 and secured by such emergency
83 assessments are outstanding in amounts up to such 2-percent
84 limit as required in order to provide for the full and timely
85 payment of the principal of, redemption premium, if any, and
86 interest on, and related costs of issuance of, such bonds. The
87 emergency assessments are assigned and pledged to the
88 municipality, county, or legal entity issuing bonds under s.
89 631.695 for the benefit of the holders of such bonds in order to
90 provide for the payment of the principal of, redemption premium,
91 if any, and interest on such bonds, the cost of issuance of such
92 bonds, and the funding of any reserves and other payments
93 required under the bond resolution or trust indenture pursuant
94 to which such bonds have been issued, without further action by
95 the association, the office, or any other party. If bonds are
96 issued under s. 631.695 and the association determines to secure
97 such bonds by a pledge of revenues received from the emergency
98 assessments, such bonds, upon such pledge of revenues, shall be
99 secured by and payable from the proceeds of such emergency
100 assessments, and the proceeds of emergency assessments levied

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FLORIDA H O U S E 0 F REPRESENTATIVES

HB529 2020

101 under this paragraph shall be remitted directly to and
102 administered by the trustee or custodian appointed for such
103 bonds.
104 3. Emergency assessments used to defease bonds issued
105 under this part may be payable in a single payment or, at the
106 option of the association, may be payable in 12 monthly
107 installments with the first installment being due and payable at
108 the end of the month after an emergency assessment is levied and
109 subsequent installments being due by the end of each succeeding
110 month.
111 4. If emergency assessments are imposed, the report
112 required bys. 631.695(7) must include an analysis of the
113 revenues generated from the emergency assessments imposed under
114 this paragraph.
115 5. If emergency assessments are imposed, the references in
116 sub-subparagraph (1) (a)3.b. ands. 631.695(2) and (7) to
117 assessments levied under paragraph (a) must include emergency
118 assessments imposed under this paragraph.
119 6. If the board of directors participates in the issuance
120 of bonds in accordance withs. 631.695, an annual assessment
121 under this paragraph shall continue while the bonds issued with
122 respect to which the assessment was imposed are outstanding,
123 including any bonds the proceeds of which were used to refund
124 bonds issued pursuant to s. 631.695, unless adequate provision
125 has been made for the payment of the bonds in the documents

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FLORIDA H O U S E 0 F REPRESENTATIVES

HB 529 2020

126 authorizing the issuance of such bonds.
127 Section 2. This act shall take effect July 1, 2020.

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hb0529-00
INSURANCE & BANKING SUBCOMMITTEE

HB 529 by Rep. Webb
Insurance Guaranty Associations

AMENDMENT SUMMARY
January 15, 2020

Amendment 1 by Rep. Webb (Line 83): The amendment makes a technical change to
conform Line 83 of the bill to Line 74 regarding the percentage of the emergency assessment.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 529 (2020)
Amendment No. 1

COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/0 OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER

1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Webb offered the following:
4
5 Amendment
6 Remove line 83 and insert:
7 assessments are outstanding in amounts up to such i~-percent

789673 - HB 529 Line 83.docx
Published On: 1/14/2020 6:15:59 PM
Page 1 of 1
:::c
0:,

...,.
00
w
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL#: HB 813 Protection of Vulnerable Investors
SPONSOR($): McClure
TIED BILLS: IDEN./SIM. BILLS: SB 1672

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

1) Insurance & Banking Subcommittee Hinshelwoo

2) Children, Families & Seniors Subcommittee

3) Commerce Committee

SUMMARY ANALYSIS
Although investment fraud is not a new occurrence in the financial marketplace, recent economic forces such as
the rise of technology and the information age have created an environment conducive to swindlers practicing
their craft. In an effort to address financial exploitation of seniors, the Financial Industry Regulatory Authority
(FINRA), of which most securities broker-dealers are members, implemented rules to provide its members with
the ability to place a hold on a disbursement of funds or securities from a customer's account if they have a
reasonable basis to believe that financial exploitation of a "specified adult" has occurred, is occurring, has been
attempted, or will be attempted. The term "specified adult" refers to a natural person age 65 and older; or a
natural person age 18 and older who the FINRA member reasonably believes has a mental or physical
impairment that renders the individual unable to protect his or her own interests. These rules took effect
February 5, 2018. However, they do not apply to broker-dealers and investment advisers who are not FINRA
members.

Similar to the FINRA rules, the bill allows a dealer or investment adviser to delay a transaction on, or
disbursement of funds or securities from, the account of a specified adult or an account for which a specified
adult is a beneficiary or beneficial owner if the dealer or investment adviser reasonably believes that financial
exploitation of the specified adult has occurred, is occurring, has been attempted, or will be attempted in
connection with the transaction or disbursement. A specified adult is an individual who is age 65 or older or who
meets the definition of "vulnerable adult" under Florida's Adult Protective Services Act.

The suspected exploitation must be immediately reported to the Florida Abuse Hotline if so required by the
Adult Protective Services Act. Within three business days of placing a delay, the dealer or investment adviser
must notify all parties authorized to transact business on the account as well as any designated trusted contact,
unless such person is believed to be engaged in the suspected exploitation. Within three business days of
placing or extending a delay, the dealer or investment adviser must notify the Office of Financial Regulation of
the delay or extension and the reason for it.

A delay expires in 15 business days but may be terminated sooner. The dealer or investment adviser may
extend the delay for up to an additional 10 business days. The length of the hold may be shortened or extended
by a court of competent jurisdiction. The bill requires a dealer or investment adviser to have training policies or
programs reasonably designed to educate associated persons on issues pertaining to exploitation. A dealer,
investment adviser, or associated person is presumed to be acting based upon a reasonable belief and is
immune from civil or administrative liability, unless lack of such reasonable belief is shown by a preponderance
of the evidence.

The bill has no fiscal impact on local governments, an indeterminate fiscal impact on state government, and an
indeterminate positive fiscal impact on the private sector.

The bill provides an effective date of July 1, 2020.

This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0813.IBS.D0CX
DATE: 1/10/2020
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Background

Federal Securities Regulation

The federal Securities Exchange Act of 1934 ('34 Act) requires registration of securities market
participants like broker-dealers and exchanges. 1 Generally, any person acting as "broker" or "dealer" as
defined in the '34 Act must be registered with the United States Securities and Exchange Commission
(SEC) and join a self-regulatory organization (SRO), like the Financial Industry Regulatory Authority
(FINRA) or a national securities exchange. The '34 Act broadly defines "broker'' as "any person
engaged in the business of effecting transactions in securities for the account of others," which the SEC
has interpreted to include involvement in any of the key aspects of a securities transaction, including
solicitation, negotiation, and execution. 2 A "dealer'' is "any person engaged in the business of buying and
selling securities ... for such person's own account through a broker or otherwise." 3 Certain entities in
the securities industry are often referred to as "broker-dealers" because the institution is a "broker'' when
executing trades on behalf of a customer, but is a "dealer'' when executing trades for its own account. In
addition to being registered with the SEC, broker-dealers must comply with state registration
requirements.

State Securities Regulation

In addition to federal securities laws, "Blue Sky Laws" are state laws designed to protect investors
against fraudulent sales practices and activities by requiring companies making offerings of securities to
register their offerings before they can be sold in that state and by requiring licensure for brokerage
firms, their brokers, and investment adviser representatives. 4

In Florida, the Office of Financial Regulation's (OFR's) Division of Securities oversees the Securities and
Investor Protection Act, ch. 517, F.S., which regulates the offer and sale of securities in, to, or from
Florida by firms, branch offices, and individuals affiliated with these firms.

The Securities and Investor Protection Act requires the following individuals or businesses to be
registered with OFR under s. 517.12, F.S., in order for such persons to sell or offer to sell any securities
in or from offices in this state, or to sell securities to persons in this state from offices outside this state: 5
• "Dealers," which include: 6
o Any person, other than an associated person registered under ch. 517, F.S., who
engages, either for all or part of her or his time, directly or indirectly, as broker or principal
in the business of offering, buying, selling, or otherwise dealing or trading in securities
issued by another person.
o Any issuer who through persons directly compensated or controlled by the issuer
engages, either for all or part of her or his time, directly or indirectly, in the business of
offering or selling securities which are issued or are proposed to be issued by the issuer.

1
15 U.S.C. §§ 78c(a)(4) and 780; U.S Securities and Exchange Commission, Guide to Broker-Dealer Registration,
http://www.sec.gov/divisions/marketreg/bdguide.htm#II (last visited Jan. 10, 2020).
21d.
3
15 U.S.C. §§ 78c(a)(5).
4
U.S Securities and Exchange Commission, Blue Sky Laws, http://www.sec.gov/answers/bluesky.htm (last visited Jan. 10,
2020).
5
S. 517.12(1), F.S.
6
S. 517.021(6)(a), F.S. The term "dealer'', as defined under Florida law, encompasses the definitions of "broker" and "dealer''
under federal law.
STORAGE NAME: h0813.18S.DOCX PAGE: 2
DATE: 1/10/2020
• "Investment advisers," which: 7
o Include any person who receives compensation, directly or indirectly, and engages for all
or part of her or his time, directly or indirectly, or through publications or writings, in the
business of advising others as to the value of securities or as to the advisability of
investments in, purchasing of, or selling of securities, except a dealer whose performance
of these services is solely incidental to the conduct of her or his business as a dealer and
who receives no special compensation for such services.
o Does not include a "federal covered adviser." 8
• "Associated persons," which include: 9
o With respect to a dealer or investment adviser, any of the following:
• Any partner, officer, director, or branch manager of a dealer or investment adviser
or any person occupying a similar status or performing similar functions;
• Any natural person directly or indirectly controlling or controlled by such dealer or
investment adviser, other than an employee whose function is only clerical or
ministerial; or
• Any natural person, other than a dealer, employed, appointed, or authorized by a
dealer, investment adviser, or issuer to sell securities in any manner or act as an
investment adviser as defined ins. 517.021, F.S.
o With respect to a federal covered adviser, any person who is an investment adviser
representative and who has a place of business in this state.

Vulnerability of Seniors to Investment Fraud

Although investment fraud is not a new occurrence in the financial marketplace, recent economic forces
have created an environment conducive to swindlers practicing their craft. 10 Such economic forces
include: 11
• The decline of traditional pensions, which has resulted in fewer Americans relying on expert
money managers to invest their retirement funds in a fast-moving and complex investment
market.
• The rise of technology, which has made it significantly easier for scammers to reach a broad set
of investors with sophisticated robotic and predictive telephone dialing, email, television, and
social media.
• The rise of the information age, which has given scammers unlimited access to personal
information about investors, making it easier for them to customize their messages and harder
for investors to discern who is truly on their side.

In recent years, financial research has focused on understanding the vulnerability of seniors to
investment fraud. In a 2012 study prepared for the FINRA Investor Education Foundation, adults 65 and
older were found to be more likely than those who are younger to receive solicitations in the mail and
over the telephone. 12 Survey respondents age 65 and older were also more likely to be solicited for
fraud, more likely to engage with potentially fraudulent financial opportunities, and more likely to have
lost money. 13

7
S. 517.021(14)(a), F.S.
8
S. 517.021 (9), (14)(b)9., F.S. A federal covered adviser must be registered under federal law and must provide a notice-filing to
OFR. Ss. 517.021 and 517.1201, F.S.
9
S. 517.021(2), F.S.
10
Doug Shadeland Karla Pak, AARP Investment Fraud Vulnerability Study, AARP (2017),
https://www.aarp.org/contenUdam/aarp/research/surveys_statistics/econ/2017/investment-fraud-
vulnerability.doi.10.26419%252Fres.00150.001.pdf (last visited Jan. 10, 2020).
11 Id.
12
FINRA Investor Education Foundation, Financial Fraud and Fraud Susceptibility in the United States: Research Report from a
2012 National Survey, 11 (Sept. 2013), https://www.finrafoundation.org/sites/finrafoundation/files/Financial-Fraud-And-Fraud-
Susceptibility-ln-The-United-States_O_O_O.pdf (last visited Jan. 10, 2020).
13
Id. at 17-18.
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A more recent study sponsored by AARP sought to identify psychological, behavioral, and demographic
risk factors that might make investors more vulnerable to investment fraud. 14 The study identified the
following psychological risk factors: 15
• Belief that accumulation of wealth is an important measure of success in life.
• Openness to new opportunities presented by salespersons.
• Belief that the most profitable investments are those not regulated by the government.
• Belief in taking chances with one's money if those chances are likely to pay off.

Many behavioral factors that put victims at risk flow directly from the psychological risk factors above. 16
The mindset of openness to sales pitches may result in signaling a desire to be pitched with investment
opportunities. 17 Compared to the general investor population, more fraud victims engaged in active
trading of five or more trades in a year, and the victims were more likely to make remote investments. 18
As for demographic risk factors, the study found that many more of the victims were older (age 70+},
male, married, and veterans. 19

In 2013, the Financial Crimes Enforcement Network (FinCEN}, which receives and maintains the
database of suspicious activity reports (SARs), 20 introduced electronic SAR filing with a designated
category for "elder financial exploitation". 21 Recent analysis of SARs related to elder financial
exploitation has revealed the following:
• Among the SARs that reported a loss to an older adult, the average amount lost was $34,200; in
7 percent of these SARs, the loss exceeded $100,000. 22
• One-third of the individuals who lost money were ages 80 and older, and adults ages 70 to 79
had the highest average monetary loss ($45,300). 23
• Where an individual has incurred an actual loss, the amount of loss reflects substantial financial
hardship for elders: The median suspicious activity amount from one sample of scam-related
SARs was $6,105, and for theft-related SARs it was $15,964. These amounts represent 16 and
41 percent, respectively, of the median income of $38,515 for households maintained by
individuals 65 and over in 2015 (as reported by the U.S. Census Bureau). 24
• The total number of SAR filings and total suspicious activity amounts increased 20 percent and
30 percent, respectively, each year during the period studied (October 2013 - August 2019). 25

FINRA Rules Relating to Financial Exploitation of Seniors

FINRA is an SRO regulated by the United States Security Exchange Commission. Most broker-dealers
in the United States are members of FINRA. As members, such broker-dealers are subject to FINRA
rules and examination by FINRA. In an effort to address financial exploitation of seniors, FINRA

14
Doug Shadeland Karla Pak, supra note 10, at 14.
15 Id.
16
Id. at 15.
11 Id.
1a Id.
19
Id. at 6 and 15.
20
A SAR "is a document that financial institutions, and those associated with their business, must file with the Financial Crimes
Enforcement Network (FinCEN) whenever there is a suspected case of money laundering or fraud. These reports are tools to
help monitor any activity within finance-related industries that is deemed out of the ordinary, a precursor of illegal activity, or might
threaten public safety." Thomson Reuters, What is a suspicious activity report?,
https://legal.thomsonreuters.com/en/insights/articles/what-is-a-suspicious-activity-report (last visited Jan. 10, 2020).
21
Consumer Financial Protection Bureau, Suspicious Activity Reports on Elder Financial Exploitation: Issues and Trends, 3 (Feb.
2019), https://fi les. consumerfi nance. gov/f/docu ments/cfpb_ suspicious-activity-reports-elder-financial-exploitation _report. pdf (last
visited Jan. 10, 2020).
22
Id. at 4.
23 Id.
24
FinCen, Financial Trend Analysis: Elders Face Increased Financial Threat from Domestic and Foreign Actors, 7 (Dec. 2019),
https://www.fincen.gov/sites/defaulUfiles/shared/FinCEN%20Financial%20Trend%20Analysis%20Elders_FI NAL%20508. pdf (last
visited Jan. 10, 2020).
25
Id. at 1.
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implemented rules to provide its members with a way to respond to situations in which they have a
reasonable basis to believe that financial exploitation of a "specified adult" has occurred, is occurring,
has been attempted, or will be attempted. 26

FINRA defines "specified adult" and "financial exploitation" as follows:
• "Specified adult" is a natural person age 65 and older; or ... a natural person age 18 and older
who the [FINRA] member reasonably believes has a mental or physical impairment that renders
the individual unable to protect his or her own interests. 27
• "Financial exploitation" means:
o The wrongful or unauthorized taking, withholding, appropriation, or use of a specified
adult's funds or securities; or
o Any act or omission by a person, including through the use of a power of attorney,
guardianship, or any other authority regarding a specified adult, to:
• Obtain control, through deception, intimidation or undue influence, over the
specified adult's money, assets, or property; or
• Convert the specified adult's money, assets, or property. 28

Under the new rules, FINRA members have the ability to contact a customer's designated trusted
contact person and, when appropriate, place a temporary hold on a disbursement of funds or securities
from a customer's account. 29 The temporary hold expires after 15 business days, but the FINRA
member may extend the hold by up to an additional 10 business days if the member's internal review of
facts and circumstances supports its reasonable belief that the financial exploitation has occurred, is
occurring, has been attempted, or will be attempted. 30

These rules took effect February 5, 2018. 31 However, they do not apply to broker-dealers and
investment advisers who are not FINRA members.

Mandatory Reporting for Abuse or Exploitation of Vulnerable Adults

The Florida Department of Children and Families (DCF) houses the Adult Protective Services Program
(APS). APS is responsible for preventing further harm to vulnerable adults who are victims of abuse,
neglect, exploitation, or self-neglect. 32 Florida law currently contains a mandatory reporting requirement
in ch. 415, F.S., the Adult Protective Services Act (APS Act}, which states that any person "who knows,
or has reasonable cause to suspect, that a vulnerable adult has been or is being abused, neglected, or
exploited shall immediately report such knowledge or suspicion to the Florida Abuse Hotline." 33

The APS Act defines "vulnerable adult" and "exploitation" as follows:
• "Vulnerable adult" is a person 18 years of age or older whose ability to perform the normal
activities of daily living or to provide for his or her own care or protection is impaired due to a
mental, emotional, sensory, long-term physical, or developmental disability or dysfunction, or
brain damage, or the infirmities of aging. 34

26
FINRA, Regulatory Notice 17-11 (Financial Exploitation of Seniors) (Mar. 2017),
https://www.finra.org/sites/defaulUfiles/Regulatory-Notice-17-11.pdf (last visited Jan. 10, 2020).
27
FINRA, Rule 2165. Financial Exploitation of Specified Adults, https://www.finra.org/rules-guidance/rulebooks/finra-rules/2165
(last visited Jan. 10, 2020).
2e Id.
2s Id.
30 Id.
31 Id.
32
Florida Department of Children and Families, Adult Protective Services: Protecting Vulnerable Adults,
https://www.myflfamilies.com/service-programs/adult-protective-services/protecting-vulnerable-adults.shtml (last visited Jan. 10,
2020).
33
S. 415.1034(1)(a), F.S.; Florida Department of Children and Families, Abuse Hotline: Report Abuse Online,
https://www.myflfamilies.com/service-programs/abuse-hotline/report-online.shtml (last visited Jan. 10, 2020).
34
S. 415.102(28), F.S.
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• "Exploitation" means a person who: 35
o Stands in a position of trust and confidence with a vulnerable adult and knowingly, by
deception or intimidation, obtains or uses, or endeavors to obtain or use, a vulnerable
adult's funds, assets, or property with the intent to temporarily or permanently deprive a
vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the
benefit of someone other than the vulnerable adult; or
o Knows or should know that the vulnerable adult lacks the capacity to consent, and
obtains or uses, or endeavors to obtain or use, the vulnerable adult's funds, assets, or
property with the intent to temporarily or permanently deprive the vulnerable adult of the
use, benefit, or possession of the funds, assets, or property for the benefit of someone
other than the vulnerable adult.
• "Exploitation" may include, but is not limited to: 36
o Breaches of fiduciary relationships, such as the misuse of a power of attorney or the
abuse of guardianship duties, resulting in the unauthorized appropriation, sale, or transfer
of property;
o Unauthorized taking of personal assets;
o Misappropriation, misuse, or transfer of moneys belonging to a vulnerable adult from a
personal or joint account; or
o Intentional or negligent failure to effectively use a vulnerable adult's income and assets
for the necessities required for that person's support and maintenance.

The Florida Abuse Hotline screens allegations of child and adult abuse and neglect to determine
whether the information meets the criteria of an abuse report. 37 If the criteria is met, a protective
investigation is initiated to confirm whether or not there is evidence that abuse, neglect, or exploitation
occurred; whether there is an immediate or long-term risk to the victim; and whether the victim needs
additional services to safeguard his or her well-being. 38 APS services include: 39
• On-site investigation of reports of alleged abuse, neglect, exploitation or self-neglect;
• Determination of immediate risk to the victim and provision of necessary emergency services;
• Evaluation of the need for and provision of protective supervision; and,
• Provision of on-going protective services.

A person who participates in making a report to the Florida Abuse Hotline or who participates in a
judicial proceeding resulting therefrom "is presumed to be acting in good faith and, unless lack of good
faith is shown by clear and convincing evidence, is immune from any liability, civil or criminal, that
otherwise might be incurred or imposed." 40

Effect of the Bill

The bill allows a dealer or investment adviser to delay a transaction on, or a disbursement of funds or
securities from, an account of a specified adult or an account for which a specified adult is a beneficiary
or beneficial owner if the dealer or investment adviser reasonably believes that financial exploitation of
the specified adult has occurred, is occurring, has been attempted, or will be attempted in connection
with the transaction or disbursement. The dealer's or investment adviser's reasonable belief may be
based on the facts and circumstances observed in such dealer's or investment adviser's, or an
associated person's, business relationship with the specified adult.

A "specified adult" is an individual who is age 65 or older or who meets the definition of "vulnerable
adult" under the APS Act.

35
S. 415.102(8), F.S.
36 Id.
37 Id.
38 Id.
39 Id.
40
S. 415.1036(1), F.S.
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The bill defines "exploitation" to mean:
• The wrongful or unauthorized taking, withholding, appropriation, or use of money, assets, or
property of a specified adult, or any act or omission by a person, including through the use of a
power of attorney, guardianship, or conservatorship of a specified adult, to:
o Obtain control over the specified adult's money, assets, or property through deception,
intimidation, or undue influence to deprive him or her of the ownership, use, benefit, or
possession of his or her money, assets, or property; or
o Convert the specified adult's money, assets, or property to deprive him or her of the
ownership, use, benefit, or possession of his or her money, assets, or property.

The bill adds dealers, investment advisers, and associated persons to the list of specified mandatory
reporters under the APS Act. If the exploitation involves a specified adult who meets the definition of a
"vulnerable adult" under the APS Act, the dealer, investment adviser, or associated person must
immediately notify DCF, via the Florida Abuse Hotline. 41 The bill allows DCF to share the status or result
of an investigation with the reporting dealer or investment adviser.

Additionally, within three business days after placing a delay, the dealer or investment adviser must:
• Provide written notice, which may be transmitted electronically, to all parties authorized to
transact business on the account as well as any designated trusted contact, 42 using the contact
information provided for the account, of the delay and the reason for the delay, unless the dealer
or investment adviser reasonably believes that any such party has engaged in, is engaging in,
has attempted to engage in, or will attempt to engage in the suspected exploitation of the
specified adult.
• Notify OFR either by telephone or in writing, which may be transmitted electronically, of the delay
and the reason for the delay.

A delay expires 15 business days after the date on which the delay was placed. The dealer or
investment adviser may extend the delay for up to 10 business days if its review of available facts and
circumstances continues to support its reasonable belief that exploitation of the specified adult has
occurred, is occurring, has been attempted, or will be attempted. Within three business days after an
extension, the dealer or investment adviser must notify OFR of the extension. The length of the delay
may be shortened or extended at any time by a court of competent jurisdiction. The bill does not prevent
a dealer or investment adviser from terminating a delay after communication with the parties authorized
to transact business on the account and any trusted contact on the account.

A dealer or investment adviser subject to the jurisdiction of OFR must make available to OFR, upon
request, all records relating to a delay or notification made by the dealer or investment adviser.

Before placing a delay on a transaction or disbursement, a dealer or investment adviser must have
training policies or programs reasonably designed to educate associated persons on issues pertaining
to exploitation, must develop and maintain written procedures regarding the manner in which suspected
exploitation is required to be reported to the supervisory personnel, when applicable, and must conduct
periodic training for all associated persons. The dealer or investment adviser must maintain a written
record of compliance with these training requirements.

Any dealer, investment adviser, or associated person who delays or participates in the delay of a
transaction or disbursement, who provides records to an agency of competent jurisdiction, or who
participates in a judicial or arbitration proceeding resulting therefrom is presumed to be acting based

41 Chapter 415, F.S., does not require a person to report suspected exploitation of an adult age 65 or older who does not meet

the definition of "vulnerable adult".
42
The bill defines "trusted contact" to mean "a natural person 18 years of age or older whom the account owner has expressly
identified and is recorded in a dealer's or investment adviser's books and records as a person who may be contacted about the
account."
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upon a reasonable belief of exploitation and is immune from any civil or administrative liability that
otherwise might be incurred or imposed, unless lack of such reasonable belief is shown by a
preponderance of the evidence. The bill does not create new rights or obligations of a dealer,
investment adviser, or associated person under other applicable laws or rules. In addition, the bill does
not limit the right of a dealer, investment adviser, or associated person to otherwise refuse or place a
delay on a transaction or disbursement under other applicable laws or rules or under an applicable
customer agreement. Absent a reasonable belief of exploitation, the bill does not alter a dealer's,
investment adviser's, or associated person's obligation to comply with instructions from a client to close
an account or transfer an account to another dealer, investment adviser, or associated person.

B. SECTION DIRECTORY:
Section 1. Amends s. 415.1034, F.S., relating to mandatory reporting of abuse, neglect, or exploitation
of vulnerable adults; mandatory reports of death.

Section 2. Creates s. 517.34, F.S., relating to protection of specified adults.

Section 3. Provides an effective date of July 1, 2020.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:
None.

2. Expenditures:
The fiscal impact to OFR is indeterminate and depends on the number of reports of delays or
extensions received from OFR licensees. 43 In the event that OFR receives a large number of reports,
OFR may need an additional FTE employee in the future to accommodate the new workload. 44 OFR
would also incur insignificant costs associated with rulemaking, which can be absorbed within its
current budget. 45 There is no fiscal impact to DCF because current law already mandates that any
person report suspected abuse, neglect, or exploitation of vulnerable adults to the Florida Abuse
Hotline; and investigation of such allegation is already a mandated function for the agency. 46

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
As permitted by the bill, the placement of a delay on a transaction or disbursement, may decrease
losses to investors who are financially preyed upon because such a delay may prevent the money from
ever getting into the hands of the bad actor. Once the bad actor receives the money, it is difficult, or in

43
Email from Alex Anderson, Director of Governmental Relations for OFR, Fiscal impact HB 813 (Jan. 10, 2020).
44
Id.
45 Id.
46
Florida Department of Children and Families, Agency Analysis of 2020 House Bill 813 (Jan 6, 2020).
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some cases impossible, to ever recover the money. Given the inability to quantify avoidance of future
losses to investors, the impact on the private sector is indeterminate.

D. FISCAL COMMENTS:
None.

111. COMMENTS

A. CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.

2. Other:
None.

B. RULE-MAKING AUTHORITY:
The bill does not mandate rulemaking. However, ch. 517, F.S., provides the Financial Services
Commission 47 authority to "adopt rules ... to implement the provisions of [the chapter] conferring
powers or duties upon [OFR], including, without limitation, adopting rules and forms governing reports."
S. 517.03(1), F.S.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES

47
The Financial Services Commission (commission) is composed of the Governor, Attorney General, Chief Financial Officer, and
Commissioner of Agriculture. S. 20.121 (3), F.S. The commission members are OFR's agency head for the purpose of
rulemaking. S. 20.121(3)(c), F.S.
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FLORIDA H O U S E 0 F REPRESENTATIVES

HB813 2020

1 A bill to be entitled
2 An act relating to the protection of vulnerable
3 investors; amending s. 415.1034, F.S.; requiring
4 securities dealers, investment advisers, and
5 associated persons to immediately report knowledge or
6 suspicion of abuse, neglect, or exploitation of
7 vulnerable adults to the Department of Children and
8 Families' central abuse hotline; creating s. 517.34,
9 F.S.; providing definitions; authorizing dealers and
10 investment advisers to delay certain transactions or
11 disbursements based on a reasonable belief of
12 exploitation of a specified adult; providing the basis
13 for such reasonable belief; requiring a dealer or
14 investment adviser to notify certain persons and the
15 Office of Financial Regulation of such delays within a
16 specified timeframe; authorizing the Department of
17 Children and Families to provide information to such
18 dealer or investment adviser regarding certain
19 investigations; specifying the expiration of such
20 delays; authorizing a dealer or investment adviser to
21 extend a delay under certain circumstances; requiring
22 a dealer or investment adviser to notify the office
23 within a specified timeframe after such extension
24 begins; providing that the length of such delays may
25 be shortened or extended by a court of competent

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26 jurisdiction; providing that delays may be terminated
27 by dealers or investment advisers under certain
28 circumstances; requiring that certain records be made
29 available to the office; providing immunity from civil
30 and administrative liability for dealers, investment
31 advisers, and associated persons for certain actions
32 based on a reasonable belief of exploitation;
33 requiring dealers and investment advisers to develop
34 and conduct periodic training for associated persons
35 and maintain written records of compliance with such
36 requirement; providing construction; providing an
37 effective date.
38
39 Be It Enacted by the Legislature of the State of Florida:
40
41 Section 1. Paragraph (a) of subsection (1) of section
42 415.1034, Florida Statutes, is amended to read:
43 415.1034 Mandatory reporting of abuse, neglect, or
44 exploitation of vulnerable adults; mandatory reports of death.-
45 (1) MANDATORY REPORTING.-
46 {a) Any person, including, but not limited to, any:
47 1. Physician, osteopathic physician, medical examiner,
48 chiropractic physician, nurse, paramedic, emergency medical
49 technician, or hospital personnel engaged in the admission,
50 examination, care, or treatment of vulnerable adults;

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51 2. Health professional or mental health professional other
52 than one listed in subparagraph 1.;
53 3. Practitioner who relies solely on spiritual means for
54 healing;
55 4. Nursing home staff; assisted living facility staff;
56 adult day care center staff; adult family-care home staff;
57 social worker; or other professional adult care, residential, or
58 institutional staff;
59 5. State, county, or municipal criminal justice employee
60 or law enforcement officer;
61 6. Employee of the Department of Business and Professional
62 Regulation conducting inspections of public lodging
63 establishments under s. 509.032;
64 7. Florida advocacy council or Disability Rights Florida
65 member or a representative of the State Long-Term Care Ombudsman
66 Program; er
67 8. Bank, savings and loan, or credit union officer,
68 trustee, or employee; or
69 9. Dealer, investment adviser, or associated person under
70 chapter 517,
71
72 who knows, or has reasonable cause to suspect, that a vulnerable
73 adult has been or is being abused, neglected, or exploited must
74 shall immediately report such knowledge or suspicion to the
75 central abuse hotline.

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76 Section 2. Section 517.34, Florida Statutes, is created to
77 read:
78 517.34 Protection of specified adults.-
79 (1) As used in this section, the term:
80 (a) "Exploitation" means the wrongful or unauthorized
81 taking, withholding, appropriation, or use of money, assets, or
82 property of a specified adult, or any act or omission by a
83 person, including through the use of a power of attorney,
84 guardianship, or conservatorship of a specified adult, to:
85 1. Obtain control over the specified adult's money,
86 assets, or property through deception, intimidation, or undue
87 influence to deprive him or her of the ownership, use, benefit,
88 or possession of his or her money, assets, or property; or
89 2. Convert the specified adult's money, assets, or
90 property to deprive him or her of the ownership, use, benefit,
91 or possession of his or her money, assets, or property.
92 (b) "Specified adult" means a natural person 65 years of
93 age or older or a vulnerable adult as defined ins. 415.102.
94 (c) "Trusted contact" means a natural person 18 years of
95 age or older whom the account owner has expressly identified and
96 is recorded in a dealer's or investment adviser's books and
97 records as the person who may be contacted about the account.
98 (2) A dealer or investment adviser may delay a transaction
99 on, or a disbursement of funds or securities from, an account of
100 a specified adult or an account for which a specified adult is a

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101 beneficiary or beneficial owner if the dealer or investment
102 adviser reasonably believes that exploitation of the specified
103 adult has occurred, is occurring, has been attempted, or will be
104 attempted in connection with the transaction or disbursement.
105 (a) The dealer's or investment adviser's reasonable belief
106 of exploitation may be based on the facts and circumstances
107 observed in such dealer's or investment adviser's, or an
108 associated person's, business relationship with the specified
109 adult.
110 (b)l. Within 3 business days after the date on which the
111 delay was first placed, the dealer or investment adviser must
112 provide written notice, which may be transmitted electronically,
113 to all parties authorized to transact business on the account
114 and any trusted contact on the account, using the contact
115 information provided for the account, of the delay and the
116 reason for the delay, unless the dealer or investment adviser
117 reasonably believes that any such party has engaged in, is
118 engaging in, has attempted to engage in, or will attempt to
119 engage in the suspected exploitation of the specified adult.
120 2. Within 3 business days after the date on which the
121 delay was first placed, the dealer or investment advisor must
122 notify the office by telephone using a number designated by the
123 office for such purpose, or in writing, which may be transmitted
124 electronically, of the delay and the reason for the delay.

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125 3. Notwithstanding any law to the contrary, the Department
126 of Children and Families may provide the status or result of any
127 investigation to a dealer or investment adviser who has made a
128 report to the central abuse hotline pursuant to s. 415.1034.
129 (3) A delay on a transaction or disbursement under
130 subsection (2) expires 15 business days after the date on which
131 the delay was first placed. However, the dealer or investment
132 adviser may extend the delay for up to 10 additional business
133 days if the dealer's or investment adviser's review of the
134 available facts and circumstances continues to support such
135 dealer's or investment adviser's reasonable belief that
136 exploitation of the specified adult has occurred, is occurring,
137 has been attempted, or will be attempted. A dealer or investment
138 adviser who extends a delay shall notify the office within 3
139 business days after the date on which such extension begins
140 using the method specified in subparagraph (2) (b)2. The length
141 of the delay may be shortened or extended at any time by a court
142 of competent jurisdiction. This subsection does not prevent a
143 dealer or investment adviser from terminating a delay after
144 communication with the parties authorized to transact business
145 on the account and any trusted contact on the account.
146 (4) A dealer or investment adviser subject to the
147 jurisdiction of the office must make available to the office,
148 upon request, all records relating to a delay or notification

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149 made by the dealer or investment adviser pursuant to this
150 section.
151 (5) A dealer, investment adviser, or associated person who
152 delays or participates in the delay of a transaction or
153 disbursement pursuant to this section, who provides records to
154 an agency of competent jurisdiction pursuant to this section, or
155 who participates in a judicial or arbitration proceeding
156 resulting therefrom is presumed to be acting based upon a
157 reasonable belief of exploitation and is immune from any civil
158 or administrative liability that otherwise might be incurred or
159 imposed, unless lack of such reasonable belief is shown by a
160 preponderance of the evidence. This subsection does not
161 supersede or diminish any immunity under chapter 415.
162 ( 6) (a) Before placing a delay on a transaction or
163 disbursement pursuant to this section, a dealer or investment
164 adviser must develop training policies or programs reasonably
165 designed to educate associated persons on issues pertaining to
166 exploitation, must develop and maintain written procedures
167 regarding the manner in which suspected exploitation is required
168 to be reported to supervisory personnel, when applicable, and
169 must conduct periodic training for all associated persons.
170 (b) The dealer or investment adviser must maintain a
171 written record of compliance with this subsection.
172 (7) This section does not create new rights or obligations
173 of a dealer, investment adviser, or associated person under

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hb0813-00
FLORIDA H O U S E 0 F REPRESENTATIVES

HB 813 2020

174 other applicable laws or rules. In addition, this section does
175 not limit the right of a dealer, investment adviser, or
176 associated person to otherwise refuse or place a delay on a
177 transaction or disbursement under other applicable laws or rules
178 or under an applicable customer agreement.
179 (8) Absent a reasonable belief of exploitation as provided
180 in this section, this section does not alter a dealer's,
181 investment adviser's, or associated person's obligation to
182 comply with instructions from a client to close an account or
183 transfer an account to another dealer, investment adviser, or
184 associated person.
185 Section 3. This act shall take effect July 1, 2020.

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hb0813-00
INSURANCE & BANKING SUBCOMMITTEE

HB 813 by Rep. McClure
Protection of Vulnerable Investors

AMENDMENT SUMMARY
January 15, 2020

Amendment 1 by Rep. McClure (Lines 76-184): The amendment:
• Adds legislative findings and intent.
• Removes language that expressly states what facts and circumstances may form the
basis of the dealer's or investment adviser's reasonable belief of financial exploitation.
• Requires the creation of a form by rule for the dealer or investment adviser to report a
delay to the Office of Financial Regulation (OFR).
• Amends the required content of the report to OFR to require the name of the investment
adviser and the date on which the delay was made, rather than the reason for the delay.
• Removes language that would have allowed the Department of Children and Families to
provide the status or result of any investigation to the reporting dealer or investment
adviser.
• Requires the dealer or investment adviser to immediately initiate an internal review of
the facts and circumstances that formed the basis of the reasonable belief of financial
exploitation.
• Specifies that the notification to OFR of any extension of the delay must contain the date
on which the delay was originally made.
• Requires rulemaking related to records that the dealer or investment adviser must make
available to the OFR upon request.
• Amends the provision that grants civil and administrative immunity to the dealer,
investment adviser, or associated person for placing a delay on a disbursement or
transaction.
• Requires dealers and investment advisers, before placing a hold, to:
o Develop and conduct annual training for associated persons and maintain written
records of compliance with such requirement; and
o Develop, maintain, and enforce written procedures regarding the manner in
which suspected financial exploitation is reviewed internally.
• Makes other technical changes.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/0 OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER

1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative McClure offered the following:
4
5 Amendment (with title amendment)
6 Remove lines 76-184 and insert:
7 Section 2. Section 517.34, Florida Statutes, is created to
8 read:
9 517.34 Protection of specified adults.-
10 (1) As used in this section, the term:
11 (a) "Financial exploitation" means the wrongful or
12 unauthorized taking, withholding, appropriation, or use of
13 money, assets, or property of a specified adult; or any act or
14 omission by a person, including through the use of a power of
15 attorney, guardianship, or conservatorship of a specified adult,
16 to:
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

17 1. Obtain control over the specified adult's money,
18 assets, or property through deception, intimidation, or undue
19 influence to deprive him or her of the ownership, use, benefit,
20 or possession of the money, assets, or property; or
21 2. Convert the specified adult's money, assets, or
22 property to deprive him or her of the ownership, use, benefit,
23 or possession of the money, assets, or property.
24 (b) "Specified adult" means a natural person 65 years of
25 age or older, or a vulnerable adult as defined ins. 415.102.
26 (c) "Trusted contact" means a natural person 18 years of
27 age or older who the account owner has expressly identified and
28 who is recorded in a dealer's or investment adviser's books and
29 records as the person who may be contacted about the account.
30 (2) The Legislature finds that many persons in this state,
31 because of age or disability, are at increased risk of financial
32 exploitation and loss of their assets, funds, investments, and
33 investment accounts. The Legislature further finds that senior
34 investors in this state are at a statistically higher risk of
35 being targeted for financial exploitation, regardless of
36 diminished capacity or other disability, because of their
37 accumulation of substantial assets and wealth compared to
38 younger age groups. In enacting this section, the Legislature
39 recognizes the freedom of specified adults to manage their
40 assets, make investment choices, and spend their funds, and
41 intends that such rights may not be infringed absent a

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

42 reasonable belief of financial exploitation as provided in this
43 section. The Legislature therefore intends to provide for the
44 prevention of financial exploitation of such persons. The
45 Legislature intends to encourage the constructive involvement of
46 securities dealers, investment advisers, and associated persons
47 who take action based upon the reasonable belief that specified
48 adults with investment accounts have been or are the subject of
49 financial exploitation, and to provide securities dealers,
50 investment advisers, and associated persons immunity from
51 liability for taking actions as authorized herein. The
52 Legislature intends to balance the rights of specified adults to
53 direct and control their assets, funds, and investments and
54 exercise their constitutional rights consistent with due process
55 with the need to provide securities dealers, investment
56 advisers, and associated persons the ability to place narrow,
57 time-limited restrictions on these rights in an effort to
58 decrease specified adults' risk of loss due to abuse, neglect,
59 or financial exploitation.
60 (3) A dealer or investment adviser may delay a
61 disbursement or transaction of funds or securities from an
62 account of a specified adult or an account for which a specified
63 adult is a beneficiary or beneficial owner if all of the
64 following apply:
65 (a) The dealer or investment adviser reasonably believes
66 that financial exploitation of the specified adult has occurred,

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

67 is occurring, has been attempted, or will be attempted in
68 connection with the disbursement or transaction.
69 (b) Not later than 3 business days after the date on which
70 the delay was first placed, the dealer or investment adviser
71 notifies in writing all parties authorized to transact business
72 on the account and any trusted contact on the account, using the
73 contact information provided for the account, with the exception
74 of any party the dealer or investment adviser reasonably
75 believes has engaged in, is engaging in, has attempted to engage
76 in, or will attempt to engage in the suspected financial
77 exploitation of the specified adult. The notice, which may be
78 provided electronically, must provide the reason for the delay.
79 (c) Not later than 3 business days after the date on which
80 the delay was first placed, the dealer or investment adviser
81 notifies the office of the delay by telephone using a number
82 designated by the office for such purpose or electronically on a
83 form prescribed by commission rule. The notice must identify the
84 dealer or investment adviser that made the delay, the name of
85 the person who authorized the delay, and the date on which the
86 delay was made.
87 (d) The dealer or investment adviser immediately initiates
88 an internal review of the facts and circumstances that caused
89 the dealer or investment adviser to reasonably believe that the
90 financial exploitation of the specified adult has occurred, is
91 occurring, has been attempted, or will be attempted.

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

92 (4) A delay on a disbursement or transaction under
93 subsection (3) expires 15 business days after the date on which
94 the delay was first placed. However, the dealer or investment
95 adviser may extend the delay for up to 10 additional business
96 days if the dealer's or investment adviser's review of the
97 available facts and circumstances continues to support such
98 dealer's or investment adviser's reasonable belief that
99 financial exploitation of the specified adult has occurred, is
100 occurring, has been attempted, or will be attempted. A dealer or
101 investment adviser who extends a delay shall notify the office
102 in accordance with paragraph (3) (c) not later than 3 business
103 days after the date on which the extension was applied. The
104 notice must identify the dealer or investment adviser that
105 extended the delay and the date on which the delay was
106 originally made. The length of the delay may be shortened or
107 extended at any time by a court of competent jurisdiction. This
108 subsection does not prevent a dealer or investment adviser from
109 terminating a delay after communication with the parties
110 authorized to transact business on the account and any trusted
111 contact on the account.
112 (5) A dealer or investment adviser must make available to
113 the office, upon request, all records relating to a delay made
114 by the dealer or investment adviser pursuant to this section, as
115 prescribed by commission rule.

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

116 (6) A dealer, an investment adviser, or an associated
117 person who in good faith and exercising reasonable care complies
118 with this section is immune from any administrative or civil
119 liability that might otherwise arise from such delay in a
120 disbursement or transaction in accordance with this section.
121 This subsection does not supersede or diminish any immunity
122 granted under chapter 415.
123 (7) Before placing a delay on a disbursement or
124 transaction pursuant to this section, a dealer or an investment
125 adviser shall do all of the following:
126 (a) Develop training policies or programs reasonably
127 designed to educate associated persons on issues pertaining to
128 financial exploitation.
129 (b) Conduct training for all associated persons at least
130 annually and maintain a written record of all trainings
131 conducted.
132 (c) Develop, maintain, and enforce written procedures
133 regarding the manner in which suspected financial exploitation
134 is reviewed internally, including, if applicable, the manner in
135 which suspected financial exploitation is required to be
136 reported to supervisory personnel.
137 (8) Absent a reasonable belief of financial exploitation
138 as provided in this section, this section does not alter a
139 dealer's, an investment adviser's, or an associated person's
140 obligation to comply with instructions from a client to buy or

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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

141 sell securities, disburse funds or transfer securities from an
142 account, close an account, or transfer an account to another
143 dealer, investment adviser, or associated person.
144 (9) This section does not create new rights for or impose
145 new obligations on a dealer, an investment adviser, or an
146 associated person under other applicable law. This section does
147 not limit the right of a dealer, an investment adviser, or an
148 associated person to otherwise refuse or place a delay on a
149 disbursement or transaction under other applicable law or under
150 an applicable customer agreement.
151
152 T I T L E A ME N D ME N T
153 Remove lines 9-36 and insert:
154 F.S.; providing definitions; providing legislative
155 intent; authorizing dealers and investment advisers to
156 delay certain disbursements or transactions based on a
157 reasonable belief of financial exploitation of a
158 specified adult; requiring a dealer or investment
159 adviser to notify certain persons and the Office of
160 Financial Regulation of such delays within a specified
161 timeframe; requiring a dealer or investment adviser to
162 review the basis for a reasonable belief of financial
163 exploitation of a specified adult; specifying the
164 expiration of such delays; authorizing a dealer or
165 investment adviser to extend a delay under certain
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 813 (2020)
Amendment No. 1

166 circumstances; requiring a dealer or investment
167 adviser to notify the office within a specified
168 timeframe after such extension begins; providing that
169 the length of such delays may be shortened or extended
170 by a court of competent jurisdiction; providing that
171 delays may be terminated by dealers or investment
172 advisers under certain circumstances; requiring that
173 certain records be made available to the office;
174 providing immunity from administrative and civil
175 liability for dealers, investment advisers, and
176 associated persons who in good faith and exercising
177 reasonable care comply withs. 517.34, F.S.; requiring
178 dealers and investment advisers to develop and conduct
179 annual training for associated persons and maintain
180 written records of compliance with such requirement;
181 requiring dealers and investment advisers to review
182 suspected financial exploitation; providing
183 construction; providing an

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HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 6033 Rental Agreements upon Foreclosure
SPONSOR(S): Sirois
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

1) Civil Justice Subcommittee 14 Y, 0 N Mawn Luczynski

2) Insurance & Banking Subcommittee Hinshelwoo ooper~,G---

3) Judiciary Committee

SUMMARY ANALYSIS
A mortgage foreclosure is a civil action brought by a mortgage lender against a borrower in state court to force
the sale of real property securing a mortgage loan when the borrower defaults on his or her loan obligation.

During the 2007-2008 financial crisis, lending practices, falling home prices, and high unemployment rates led
to a high number of foreclosures across the United States. The impact was not limited to borrowers; one in five
properties in foreclosure was a rental property, and roughly 40 percent of families facing eviction due to
foreclosure were tenants. Prior to 2009, tenant protection at foreclosure varied by state, generally providing
tenants few, if any, protections. However, on May 20, 2009, the President signed into law the Federal
Protecting Tenants at Foreclosure Act ("PTFA") to provide bona fide tenants basic rights in residential property
foreclosure proceedings. Specifically, the PTFA required the successor in interest at foreclosure to:
• Honor a tenant's lease until the end of the lease term; however, if the successor in interest at
foreclosure were to sell the property to a purchaser who intended to occupy the unit as a primary
residence, the lease could be terminated as of the date of sale so long as the tenant received at least
90 days' notice to vacate.
• Give a tenant at least 90 days' notice to vacate if there was either no lease or a lease terminable at will.
• Assume the housing assistance payments contract associated with an existing Section 8 lease.

The PTFA expired under a sunset clause on December 31, 2014, leaving state and local laws the sole source
of tenant rights at foreclosure. To fill the void, s. 83.561, F.S., became law on June 2, 2015. This statute
mirrors the PTFA in its application to the same types of properties, leases, tenants, and tenancies. However,
Florida's statute differs from the PTFA in that a successor in interest at foreclosure does not have to honor an
existing lease and may petition for a writ of possession only 30 days after serving the tenant with a lease
termination notice.

On May 24, 2018, the President signed into law the Economic Growth, Regulatory Relief, and Consumer
Protection Act, permanently restoring the PTFA in its original form. Because the restored PTFA provides
greater protections for tenants at foreclosure than, and therefore conflicts with, s. 83.561, F.S., the PTFA
preempts Florida's law. Thus, a successor in interest at foreclosure must adhere to the PTFA's standards.

HB 6033 repeals s. 83.561, F.S., as it conflicts with, and is therefore preempted by, the PTFA. The repeal
clarifies the rights of Florida tenants and successors in interest at foreclosure, which may reduce litigation
resulting from confusion over applicable law.

The bill will have no fiscal impact on state or local governments and will have an indeterminate impact on the
private sector.

The bill provides an effective date of July 1, 2020.

This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h6033b.lBS.D0CX
DATE: 1/8/2020
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Background

Foreclosure

A mortgage foreclosure is a civil action brought by a mortgage lender1 against a borrower in state court
to force the sale of real property2 securing a mortgage loan 3 when the borrower defaults4 on his or her
loan obligation. State law provides -significant rights to borrowers facing foreclosure, including a right to
service of the foreclosure complaint, 5 a right to respond to the suit, 6 and a right to a summary judgment
hearing or a bench trial.7

During the 2007-2008 financial crisis, lending practices, falling home prices, and high unemployment
rates led to a high number of foreclosures across the United States. 8 The impact was not limited to
borrowers; one in five properties in foreclosure was a rental property, and roughly 40 percent of families
facing eviction due to the foreclosure crisis were tenants. 9 Prior to 2009, tenant protection in
foreclosure proceedings varied by state, generally giving tenants few, if any, protections. 10 In most
states, a tenant could be legally required to move with only a few days' notice. 11

Tenant Rights Legislation

Federal Protecting Tenants at Foreclosure Act

On May 20, 2009, President Barack Obama signed into law the Federal Protecting Tenants at
Foreclosure Act ("PTFA") to provide bona fide tenants basic rights in foreclosure proceedings. 12
Specifically, the PTFA required the successor in interest at foreclosure 13 to:

1 A mortgage foreclosure may be brought by a person entitled to enforce a mortgage note, as defined ins. 673.3011, F.S.

"The term 'person entitled to enforce' [a mortgage note] means: (1) The holder of the [mortgage note]; (2) A nonholder in
possession of the [mortgage note] who has the rights of a holder; or (3) A person not in possession of the [mortgage note]
who is entitled to enforce the [mortgage note] pursuant to s. 673.3091 ors. 673.4181(4). A person may be a person
entitled to enforce the [mortgage note] even though the person is not the owner of the [mortgage note] or is in wrongful
possession of the [mortgage note]." S. 673.3011, F.S. Depending on the circumstances, the person entitled to enforce the
mortgage note may be the original lender, a servicer, or a holder in due course such as a subsequent purchaser of the
note. Id.; Fla. R. Civ. P. 1.21 O(a) (commonly known as the real party in interest rule); Rodriguez v. Wells Fargo Bank,
N.A., 178 So. 3d 62, 63 (Fla. 4th DCA 2015) ("A servicer that is not the holder of the note may have standing to
commence a foreclosure action on behalf of the real party in interest .... ").
2 "Real property" means land, buildings, fixtures, and all other improvements to land. S. 192.001(12), F.S.
3 "Mortgage loan" means "[a] loan secured by a mortgage ... on real property." BLACK'S LAw DICTIONARY 955 (8th ed.

2004). "Mortgage" means "[a] lien against property that is granted to secure an obligation (such as a debt) and that is
extinguished upon payment or performance according to stipulated terms." Id. at 1031.
4
A borrower defaults when he or she breaches a term of his or her mortgage loan agreement. For example, a borrower
defaults on his or her loan if he or she fails to make a scheduled mortgage payment. See "Default," Legal Information
Institute, available at https://www.law.cornell.edu/wex/default (last visited Dec. 12, 2019).
5 Fla. R. Civ. P. 1.070U); Chs. 48 and 49, F.S.
6 Fla. R. Civ. P. 1.500.
7
Fla. R. Civ. P 1.510(a); Ss. 45.031(2) and 702.01, F.S.
8 Elayne Weiss, Protecting Tenants at Foreclosure, National Low Income Housing Coalition, available at

https://nlihc.org/sites/default/files/AG-2019/06-06 PTFA.pdf (last visited Dec. 12, 2019).
9 Id.
10 Id.
11 Id.
12 Protecting Tenants at Foreclosure Act of 2009, Pub. L. 111-22, 123 Stat. 1660.
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• Honor a tenant's lease until the end of the lease term; however, if the successor in interest at
foreclosure were to sell the property to a purchaser who intended to occupy the unit as a
primary residence, the lease could be terminated as of the date of sale so long as the tenant
received at least 90 days' notice to vacate.
• Give a tenant at least 90 days' notice to vacate if there was either no lease or a lease
terminable at will.
• Assume the housing assistance payments contract associated with an existing Section 814
lease. 15

The PTFA applied to foreclosures on residential properties, including single family homes and multi-unit
properties. 16 Tenants with lease rights of any kind, including month-to-month leases or leases
terminable at will, were protected as long as the tenancy existed on the date of the notice of foreclosure
and the tenant:
• Occupied the premises under an arm's length transaction rental agreement;
• Did not have a rental agreement significantly below market value; and
• Was not the mortgagor17 in the subject foreclosure or the mortgagor's child, spouse, or parent. 18

Additionally, the PTFA preempted 19 conflicting state law but specifically provided that it did not affect
"any [s]tate or local law that provides longer time periods or other additional protections for tenants." 20
However, the PTFA expired under a sunset clause 21 on December 31, 2014, 22 and though the 114th
Congress considered legislation to make the PTFA permanent, no extension passed. 23 State and local
law again became the sole source of tenant rights at foreclosure. 24

Florida's Response

On June 2, 2015, Governor Rick Scott signed into law HB 779, creating s. 83.561, F.S. 25 This statute
filled the void left by the PTFA's expiration, mirroring the PTFA in its application to the same types of
properties, leases, tenants, and tenancies. However, Florida's statute differs from the PTFA in that a
successor in interest at foreclosure does not have to honor an existing lease and may petition for a writ
of possession 26 30 days after serving the tenant with a lease termination notice.

13 A successor in interest at foreclosure is the person or entity acquiring title to a foreclosed property at the end of the

foreclosure action. It could be the mortgage lender or a person who purchased the property at foreclosure. See Protecting
Tenants at Foreclosure, supra note 8.
14 Section 8 of the United States Housing Act of 1937, Pub. L. 75-412, codified at 42 U.S.C. § 1437 et seq.
15 See supra note 12.
16 Jd.
17 "Mortgagor'' means "(o]ne who mortgages property; the mortgage-debtor, or borrower." BLACK'S LAw DICTIONARY 1034

(8th ed. 2004).
1a See supra note 12.
19 The United States Constitution's Supremacy Clause provides that federal law is "the supreme Law of the Land ... ,

anything in the Constitution or Laws of any State to the contrary notwithstanding." From this concept springs the federal
preemption doctrine, under which federal law preempts, or supplants, conflicting state laws. The United States Supreme
Court identified two ways in which federal law preempts state law: expressly, when a federal law contains explicit
preemptive language, and impliedly, when the federal law's structure and purpose contains implicit preemptive intent. See
U.S. Const. art. VI., cl. 2.; see also Glade v. Nat'/ Solid Wastes Mgmt. Assn., 505 U.S. 132 (1963).
20 See supra note 12.
21 A law with a sunset clause automatically terminates unless expressly renewed. See "sunset law," Legal Information

Institute, https://www.law.cornell.edu/wex/sunset law (last visited Dec. 12, 2019).
22 See supra note 12; Mortgage Reform and Anti-Predatory Lending Act, Pub. L. 111-203, 124 Stat. 2204.
23 See supra note 8.
24 Jd.
25 Ch. 2015-96, Laws of Fla.
26 A writ of possession, issued by a clerk to the sheriff after entry of a judgment in favor of a landlord, describes the

subject premises and commands the sheriff to put the landlord in possession of such premises after 24 hours' notice
conspicuously posted thereon. S. 83.62, F.S.
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DATE: 1/8/2020
PTFA Restoration

On May 24, 2018, President Donald J. Trump signed into law the Economic Growth, Regulatory Relief,
and Consumer Protection Act, permanently restoring the PTFA in its original form. 27 Because the
restored PTFA provides greater protections for tenants at foreclosure than, and therefore conflicts with,
s. 83.561, F.S., the PTFA preempts Florida's statute. Thus, a successor in interest at foreclosure must
adhere to the PTFA's standards.

Effect of Proposed Changes

HB 6033 repeals s. 83.561, F.S., as it conflicts with, and is therefore preempted by, the PTFA. The
repeal clarifies the rights of Florida tenants and successors in interest at foreclosure, which may reduce
litigation resulting from confusion over applicable law.

B. SECTION DIRECTORY:
Section 1: Repeals s. 83.561, F.S., relating to termination of rental agreement upon foreclosure.
Section 2: Provides an effective date of July 1, 2020.

11. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:
None.

2. Expenditures:
None.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The impact on the private sector is indeterminate. The PTFA currently applies to Florida tenants and
successors in interest at foreclosure due to its preemption of s. 83.561, F.S. However, repealing this
Florida statute may reduce litigation resulting from confusion over applicable law.

D. FISCAL COMMENTS:
None.

111. COMMENTS

A. CONSTITUTIONAL ISSUES:

21 Economic Growth, Regulatory Relief, and Consumer Protection Act, Pub. L. 115-174, 132 Stat. 1339.
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DATE: 1/8/2020
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.

2. Other:
None.

B. RULE-MAKING AUTHORITY:
None.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES

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DATE: 1/8/2020
FLORIDA H O U S E 0 F REPRESENTATIVES

HB 6033 2020

1 A bill to be entitled
2 An act relating to rental agreements upon foreclosure;
3 repealing s. 83.561, F.S., relating to the termination
4 of rental agreements upon foreclosure of residential
5 premises; providing an effective date.
6

7 Be It Enacted by the Legislature of the State of Florida:
8

9 Section 1. Section 83.561, Florida Statutes, is repealed.
10 Section 2. This act shall take effect July 1, 2020.

Page 1 of 1

CODING: Words strisken are deletions; words underlined are additions.
hb6033-00

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