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

  • Restaurant Madness: What's the best restaurant in South Florida? Vote now September 22, 2014
    Calling all foodies! South Florida Business Journal is launching a new competition today called Restaurant Madness, where some of our region’s most well-known restaurant brands will compete for the title of South Florida’s top dining establishment. We've gathered 64 companies and matched them up in an online head-to-head bracket-style tournament. Throug
  • RBC bank closes Miami operation, 155 lose jobs September 19, 2014
    RBC Wealth Management has closed its international private bank branch in Miami, leading to dozens of layoffs. Nicole Garrison, a spokeswoman for the Canadian banking company, said its private banking branch in Miami, which specializes in international cross border business, will be closed. Its international wealth advisory group will remain in Miami, she ad
  • Billionaire-backed Boca Raton company aims to be ‘the next Citrix’ September 19, 2014
    If you’re looking for business expertise, it’s hard to beat the board of Boca Raton software company Aplicor. The board of directors includes a former CEO of Citrix, a former Miami Dolphins owner, the president of the investors’ group New World Angels and a tech giant who sold his company for nearly $4 billion. Aplicor’s all-star board hopes to drive the fir
  • VITAS to build hospice on newly acquired site September 19, 2014
    VITAS Healthcare has acquired a site in Delray Beach so it can build its first company-owned hospice. The Miami-based company, which operates 50 hospice programs, leases all of its facilities but that’s about to change. It recently paid $1.65 million for a 2.3-acre site on the southeast corner of Atlantic Avenue and Lakes of Delray Boulevard. The seller was

RSS South Florida Community Association Headlines

  • Does your HOA have to worry about the $24.99 rule? October 19, 2013
    If you are a long time reader of this column, or even someone who just started to follow it today, you will notice that a regular topic covered here is educational conferences. Some of these conferences are more like seminars, where all you get is a professor like figure behind a lecturn, talking about HOA issues.
  • Dolphin Towers repairs stall; owners won't return for at least a year October 19, 2013
    It will be at least another year before homeowners in Dolphin Tower, the downtown condominium tower vacated in July 2010 because of severe structural damage, will be able to move back into the 15-story building.