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

  • ATM, overdraft fees in South Florida among highest in the nation September 30, 2014
    South Florida residents pay some of the highest ATM and overdraft charges in the nation, as lenders adjust for federal banking regulations enacted after the 2008 financial crisis, indicates a survey by Nationally, out-of-network ATM fees rose 5 percent to $4.35 on average, said the North Palm Beach-based consumer website. But the average fee in
  • Miami-based Developer seeks EB-5 funds to build offices September 30, 2014
    Riviera Point Development group is seeking to raise EB-5 funds from international investors to fund an office project in Miramar. The Miami-based developer said the 72,000-square-foot Riviera Pointe Corporate Center would cost $18 million to complete by fall 2015. For a minimum investment of $500,000 in the project, qualified foreign nationals can seek perma
  • Suffolk Construction moves to One Biscayne Tower September 30, 2014
    Suffolk Construction has moved its Miami-Dade County office to One Biscayne Tower in downtown Miami. The construction firm is leaving its current digs at 701 Waterford Way in the Blue Lagoon area. Taylor & Mathis’ Ryan Holtzman brokered a 15,000-square-foot lease for the company. “Suffolk is excited to expand into a larger and more collaborative space in
  • 6 charged in $6M home health care fraud scheme September 30, 2014
    Residents from Miami and Palm Beach County have been indicted for their alleged participation in a $6.2 million Medicare fraud scheme. The charges involved the defunct home health care company Professional Medical Home Health. On Sept. 25, a federal grand jury in Miami returned a 14-count indictment charging Ernesto Fernandez, 48, Dennis Hernandez, 32, Jose

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.