Gerstin & Associates Commercial Litigation, Community Associations & Commercial Real Estate

April 14, 2011

Florida Supreme Court Alters Community Association Declarations, in a Big Way.

Posted by : gerstin

Did Florida’s Supreme Court render laws governing condominium and homeowner association declarations useless and unenforceable?

Click here to read the Court’s full opinion

Florida’s community associations across the state are becoming increasingly concerned the legislature can no longer pass laws that affect Florida’s condominium and homeowner associations after the Supreme Court’s recent decision in  Cohn v. Grand.  Florida’s community associations should be concerned and need to take action, but as explained below all hope is far from lost.

The facts:

1.      The Grand was a condo hotel.

2.      When owner Cohn purchased a unit the Grand the Declaration stated “unit owners would governed by the “the Condominium Act of the State of Florida in effect as of the date of recording this Declaration.”

3.      The Declaration did not include the phrase, “as amended from time to time.”

4.      The dispute specifically arose as to whether the unit owners are afforded voting rights in accordance with the Condominium Act in effect at the time the Declaration was recorded or were said voting rights altered over time by each amendment made to legislation relating to condominium associations and in particular voting.

The legal argument:

Unit owners’ contractual rights, defined by the terms of the Florida Condominium Act (“Act”) at a fixed point in time, do not vary when changes to the Act are made because the term “as amended from time to time” was not included in the Declaration.

Florida law applied to the facts and the legal argument:

An overriding principle embedded in the Florida Constitution is that “state action” (legislation) that impairs a contract is unconstitutional. In determining whether legislation impairs a contract a three part test is used and the results are weighed and balanced:

1)      To what extent are the contractual rights impaired;

2)      Does the state have a good reason for enacting policy that changes contractual rights; and

3)      Are the means the state will use to achieve this policy reasonable?

The issue in Grand related to owner voting which has long been considered a substantive right. As such, the Court gave greater weight to item # 1 above and less to item # 2.

The Court’s Decision:

The Florida Supreme Court held “The Constitution prohibits the impairment of contracts; and the statute regulating mixed-use condominiums (F.S. 718.404(2)) impaired the Grand’s unit owner’s contractual rights, which are established in the Grand’s declaration.” In other words, the law at the time the Declaration was recorded, not at the present time, was the law that applies to owners’ voting rights in the Grand.

 

What this means to your Association:

The Grand decision should not be read as the end of legislative control over Florida community associations.. Surely, rules relating to enforcement of covenants would not be considered a substantive right that any  legislative changes would be outweighed and nullified. Instead, each such case will be reviewed by the courts on a “case-by-case” basis, if the magic words “as amended from time to time” is not in the Declaration.

What to do:

Check your community association’s Declaration and determine whether the drafter included the words “as amended from time to time” in relation to statutes that will be used to enforce and interpret the Declaration (Condo. Act or HOA Act.). If not, speak with your community association’s attorney and begin the process of amending your community association’s Declaration.

 


No Comments

(will not be published)
(opitional)

RSS South Florida Business, Real Estate & Litigation Headlines

  • Carnival Corp. names new president of Carnival Cruise Line December 17, 2014
    Carnival Corporation & plc has named Christine Duffy the president of Carnival Cruise Line. She takes the place of Gerry Cahill, who retired from the position in November. Duffy is currently the president of Cruise Lines International Association (CLIA), a leading cruise industry trade association. She begins her new job on Feb. 1, and will report to Arn
  • MasTec lowers 2015 expectations as oil prices fall December 17, 2014
    Construction giant MasTec lowered its 2015 expectations Wednesday as world oil prices fell and a major customer predicted less wireless project activity. The Coral Gables-based company (NYSE: MTZ) now projects 2015 revenue of $5 billion, compared to an October prediction of up to $5.4 billion. MasTec builds energy, utility and communications infrastructure.
  • Brickell City Centre-area hotel sold for $24.8 million December 17, 2014
    The Starlite East Motel in Miami was sold for $24.8 million to Optimum USA Brickell. The company has ties to MiamiTeam.com founder Ricardo Tabet, who has an office at 846 Lincoln Road in Miami Beach. The seller, Rafer Enterprises, bought the 60-room property at 128 S.W. 7th St. in Miami in 1993 at $700,000. The appraised value of the property is $5.17 millio
  • University holds groundbreaking for six-story building December 17, 2014
    Florida National University will hold a groundbreaking ceremony on Wednesday for its six-story classroom building. The event will take place at 10:30 a.m. at the university's Hialeah campus at 4425 W. 20th Ave. The Jose Regueiro Classroom Building will total 125,741 square feet and have 45 classrooms, a computer lab, a nursing lab, patient simulation la

RSS South Florida Community Association Headlines

  • What standards for minutes are acceptable by Florida law? December 14, 2014
    Q: I follow your firm’s column regularly in the Sunday edition of the Naples Daily News. My question centers around the accuracy required of the minutes to the homeowners association (HOA) monthly board meetings.    Read more……… The post What standards for minutes are acceptable by Florida law? appeared first on communityassociations.net.
  • At Miami Beach’s Tallest Condo, Board Elections Get Nasty (FL) December 9, 2014
    But not all is sparkling inside the Blue Diamond. The condo board association elections are approaching, and for weeks leading up to the vote, condo residents have seen enough personal mudslinging to rival any of South Florida’s notoriously icky political races, including allegations of sexual harassment, pool temperature manipulation, and a vague reference
  • Homeowner’s association can revive expired covenants December 6, 2014
    Q: You recently stated that voluntary homeowners’ associations are governed by Chapter 617, the Florida Not-For-Profit Corporation Act. You also stated that voluntary homeowners’ associations may be entitled to preserve the covenants regulating the community under the Marketable Record Title Act (MRTA) if the association has the authority to enforce use rest