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)

RSS South Florida Business, Real Estate & Litigation Headlines

  • ADT posts slight increase in Q3 revenuer with launch of voice app July 30, 2014
    ADT Corp. posted a slight increase in revenues in the third quarter due to the launch of a voice app that allows users to remotely control their systems. The Boca Raton-based maker of security systems (NYSE: ADT) had revenue of $849 million for the quarter, compared to $833 million for the same period last year. Net income decreased to $82 million from $113
  • Pitbull-affiliated restaurant seeks franchisees July 30, 2014
    Miami Grill, Miami Subs' updated brand, is seeking local franchisees with food service experience for an expansion from the Keys to Orlando. Rap artist Pitbull is an equity partner in Miami Grill. The brand serves the same menu as Miami Subs, plus breakfast and alcohol, and has an updated design. Tom Prakas, president and founder of brokerage Prakas
  • Broward Bank of Commerce acquired by Arkansas bank for big premium July 30, 2014
    Broward Financial Holdings, the parent company of Broward Bank of Commerce, agreed to be acquired by Home BancShares for a package worth $33.06 million to $33.96 million. The Conway, Ark.-based company (NASDAQ: HOMB) is the parent company of Centennial Bank. It currently has 58 branches in Florida but none in the tri-county area. Its branches are in the Keys
  • Bank of Coral Gables suffers deeper losses as sale is pending July 30, 2014
    Bank of Coral Gables absorbed a deeper loss in the second quarter, but a rescue awaits as its sale is pending regulatory approval. In May, the bank agreed to be acquired by Chicago-based First American Bank for $7.5 million. That represents a premium over its $6.3 million in Tier 1 capital as of June 30. However, it’s less than the $21.6 million that Bank of

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.