QUARTERLY NEWSLETTER
Dear Business Partners, First of all, Happy New Year! My best wishes on a prosperous 2014. I took the opportunity to put together this “Year In Review” which provides a summary of significant appellate decisions issued in the State of Florida in 2014 directly impacting Community Associations in Florida. What follows is not an exhaustive list of every appellate decision issued which affects Community Associations but, only those which I felt will have a significant impact on Community Associations in Florida. Feel free to call or e-mail should you have questions regarding a particular appellate decision or issue. Best wishes in 2014! Frank A. Ruggieri The Ruggieri Law Firm, P.A.
Year In Review Maronda Homes, Inc. of Florida v. Lakeview Reserve Homeowners Association, Inc. Unlike condominiums, homeowners
common areas which provide significant support to the homes
associations do not have statutory implied
such as roadways.
warranties against construction defects in the
While on appeal, our legislature modified Florida Statute
a significant benefit to condominiums
§553.835, Florida Statutes to limit implied warranty claims in
as there is no burden to prove fault or
favor of homeowners association improvements on the lot
knowledge of the defect on the part of
which immediately supports the home. The Florida Supreme
the developer. Rather, the condominium
Court ultimately decided that this legislative change could not
association need only prove the defect
be applied retroactively to defeat Lakeview Reserve’s implied
itself. Implied warranties are a “strict
warranty claim. In so holding, the Florida Supreme Court
liability” cause of action. In Mironda
stated that a cause of action on the part of a homeowners
Homes, the Association filed suit
year in review
against the developer for construction defects in the common areas, and included a claim for breach of implied warranty. The trial court entered summary judgment in favor of the
2013
That decision was appealed to the Florida Supreme Court.
common areas. Implied warranties provide
developer and the builder, and the association appealed to the Fifth District Court of Appeals who ultimately ruled that implied warranties do extend to
association for implied warranties as they pertain to common areas which accrued prior to the effective date of the act cannot be defeated by this legislative change. This is significant as the Court stated, “a cause of action, in short, occurs when the complaining party sustains damage and the last act necessary to establish liability occurs.” Consequently, you should consult your community association counsel to determine if a potential claim for construction defect which you have in your community occurred prior to the effective date of the statute which would allow the association to pursue a claim for breach of implied warranties.
Rosenberg v. Metrowest Master Association, Inc. Rosenberg filed suit against the master
homeowners and it was therefore improper to award the master association
association alleging violations of the
its attorney’s fees and costs because he was not a “member”. The Fifth District
transition provisions of Chapter 720. The master association prevailed on summary judgment and the trial court awarded the master association its attorney’s fees and costs.
Court of Appeals held that the statutory definition of member controlled because Rosenberg was obligated to pay assessments to the master association, and he was a member of the master association pursuant to F.S. §720.301 (10) which defines member as any parcel owner who is obligated by the governing
Rosenberg appealed the final judgment to the Fifth
documents to pay an assessment or amenity fee. The Court held that the fact
District Court of Appeals arguing that the trial
that the master assessments were paid to the sub-association where Rosenberg
court improperly awarded the master association’s
resided did not alter the fact that he was obligated to pay assessments to the
attorney’s fees as the definition of member in
master association. The Fifth District Court of Appeals held that the statutory
the master declaration did not include individual
definition controlled over the definition in the master declaration.
Yang v. Sebastian Lakes Condominium Association, Inc. In this case, the condominium association filed lien
conducted business activity; and (4) That it was a regular practice of that
foreclosure actions against two (2) owners of a unit. At
business to make such a record. The unit owners claimed to have made a
the hearing on the association’s motion for summary
partial payment which was not reflected on the association’s ledgers. During
judgment, the association presented the testimony of
the community association manager’s testimony, on cross-examination,
its then community association manager regarding the
she testified that the records prior to the 2008 takeover were maintained
ledgers to admit them into evidence under the “business
by the prior accountant, that she started with an account balance from
records exception” to the hearsay rule. The association
outside records, that she did not know the prior accountant’s practice and
had transitioned management companies prior to the
procedure, and that she never worked for that accountant. She was unable to
time that the lien foreclosures were initiated. The
testify as to the accuracy of the starting balance. The Fourth District Court
current management company did not have ledgers
of Appeals reversed the lower court’s ruling in favor of the association and
dating back to a zero balance. Pursuant to the business
remanded the case to the trial court for entry of a directed verdict in favor
records exception to the hearsay rule, the proponent
of the condominium unit owners. This case demonstrated the importance
of a record must show: (1) The record was made at or
of obtaining ledgers that date back to a zero balance when taking over a
near the time of the event; (2) Was made by or from
community from another management company. The association must
information transmitted by a person with knowledge;
either have ledgers that date back to a zero balance or be prepared to obtain
(3) Was kept in the ordinary course of a regularly
testimony from the prior management company regarding their records.
Boyle v. Hernando Beach South Property Owners Association, Inc. The association filed suit against the homeowner
favor of the association and entered the mandatory injunction ordering the
alleging he was in violation of the declaration by
homeowner to “properly maintain and trim the landscaping and trees…”. It
failing to keep his lot in a neat, clean and orderly
also allowed the association to enter onto the lot if the homeowner failed to do
condition by failing to properly maintain and
so, perform the maintenance, and lien the lot if necessary to secure its costs.
trim the landscaping and trees. In support of its motion for summary judgment, the association filed affidavits from the board members with no photographic evidence alleging generally that the homeowner had failed to keep his lot in a
The homeowner appealed arguing that the summary judgment evidence in the record did not indicate how he was in violation of the declaration. The Fifth District Court of Appeals ruled that there was no evidence to show how the landscaping and trees had not been properly maintained and trimmed, and the summary judgment in favor of the association was reversed.
neat, clean and orderly condition by failing to
In connection with maintenance violations, or any violation for that
properly maintain and trim the landscaping
matter, it has always been my practice to submit photographic evidence to the
and trees (there was also an allegation regarding mold on the house which is not relevant to the discussion). The trial court granted summary judgment in
court attached to the community association manager’s affidavit depicting specifically how the property is not in compliance. The failure to do so in this instance was fatal to the association’s action.
Flescher v. Oak Run Associates Limited This opinion of the Fifth District Court of Appeals involves amendments by
As amended, the new provisions limited the use of assessments to the
a developer to the declaration pursuant to the amendment provision in the
common areas and recreational areas, and allowed the developer to retain any
declaration which reserved the unilateral power of the developer to amend
unused assessments, effectively preventing the creation of any reserves. The
the declaration while in control. The opinion also addresses the retroactive
lower court ruled in favor of the developer and the homeowner appealed.
application of Florida Statute §720.3086 regarding the developer’s obligation
The Fifth District Court of Appeal referenced prior case law which
to disclose financial information (the declaration was recorded prior to the
provides that a developer’s right to unilaterally amend the declaration is
effective date of this legislation).
subject to a reasonableness standard and the developer may not materially
The original covenant for maintenance assessments provided that the
change the burden to the community members unless the amendment
assessments were, in part, to be used for maintaining the lawn and landscape
provision specifically reserves the right to do so. The Fifth District Court of
areas, common areas and recreational areas, for all utility costs, including
Appeals ruled that the amendment violated this standard as it impermissibly
electricity, water, gas, and telephone service in connection with the foregoing,
changed the burden between the parties. It effectively operated to relieve the
garbage and trash collection, 24 hour security service, cable television reception
developer of his express burden to use the funds collected for maintaining the
service, and an exclusive closed circuit Oak Run television channel, for road
lawns and landscaped areas, utilities, etc.
and drainage facilities, repair and maintenance. It further stated that the
With respect to the financial disclosure requirements of F.S. §720.3086,
assessments may also provide reasonable reserves for deferred maintenance and
the Fifth District Court of Appeals overruled the trial court’s ruling, ruling that
replacement, for construction of common areas, recreational areas, and was to
it was not impermissible to retroactively apply the statute as the developer had
also be used as a means of enforcing compliance with the deed restrictions.
no “vested right” to the confidentiality of its financial records.
South Fields of Palm Beach Polo and Country Club Homeowners Association, Inc. v. McCullough A homeowner in the community filed suit seeking both an injunction and
affirmed the lower court’s ruling and specifically referred to provisions of the
mandamus relief compelling the association to file a marketable record title act
declaration that the board had a duty to protect the covenants. This appellate
notice to preserve the covenants. The lower court granted the injunction and
opinion makes it clear that boards should file its marketable record title act
mandamus relief ordering the association to file the marketable record title
notices in a timely fashion, and homeowners do have the right to compel that
act notice, and the association appealed. The Fourth District Court of Appeals
action should the board indicate that they are not willing to do so.
Estoril, Inc. v. Mayfield Condominium Association, Inc. The appellant, Estoril, Inc., was the developer of a multiuse building which
budget prior to turnover, was sufficient course of conduct to establish a rule
included a residential condominium, and numerous shared facilities. The
or regulation. The Third District Court of Appeals noted that the governing
shared facilities included a parking garage which the developer owned. The
documents did not specify that a rule or regulation had to be in writing. It
declaration specifically stated that the developer was entitled to establish
should be noted that the Third District Court of Appeals did not address
fees for use of the shared facilities and, prior to turnover, the developer had
whether it felt the course of conduct was sufficient. It merely held that there
for several years charged the condominium association use fees for use of its
was a material issue of fact that precluded summary judgment and remanded
parking garage. The association paid them for several years. However, after
the case back to the trial court for further proceedings consistent with its
turnover, the association refused to pay them stating that no specific rule had
opinion.
been adopted regarding the use fees and the developer filed suit to recover
It is unclear whether the Third District Court of Appeals felt that the
the unpaid parking garage charges. The trial court entered judgment in favor
developer’s actions were indeed sufficient to establish a rule or regulation by
of the association based upon the lack of a formally adopted written rule
course of conduct. This opinion appears to stand for the proposition that a
regarding the use fees for the parking garage, and the developer appealed.
rule or regulation can be adopted by course of conduct if there are sufficient
The Third District Court of Appeals reversed indicating that there were
actions to establish the rule in question. I would certainly recommend that
material issues of fact regarding whether the developer’s course of conduct
all rules and regulations be formally adopted by the board with a formal board
of having charged the use fees and having included it in the association’s
resolution and proper notice of the meeting at which the rules will be adopted.
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Aventura Management, LLC v. Spiaggia Ocean Condominium Association, Inc. The association initiated a lien foreclosure action against
for all unpaid assessments that came due
a unit and ultimately obtained title at the foreclosure sale.
up to the time of transfer of title. The Third
The first mortgage holder initiated its mortgage foreclosure
District Court of Appeals reversed the ruling
while the lien foreclosure action was pending, and Aventura
that the association was the “prior owner” for
Management, LLC was the successful bidder at the first
purposes of the statute and, therefore, could not
mortgage holder’s foreclosure sale and took title to the
demand the amounts that had accrued in unpaid
unit shortly after the condominium association took title
assessments prior to the time that the association
in their own lien foreclosure. The Association fought to
took title.
collect all delinquent amounts which had accrued prior
Interestingly, this issue was specifically
to the time that it took title. The trial court ruled in favor
addressed by the legislature in July of 2013 in the
of the Association and Aventura Management appealed.
legislative changes to Chapter 720. However, the
On appeal, the Third District Court of Appeals reversed
same change was not made to Chapter 718. This
the ruling that the association was the “prior owner” for
may simply be a legislative oversight that will be
purposes of F.S. §718.116 (1) (a) which provides that a unit
corrected in the next legislative session.
owner is jointly and severally liable with the previous owner
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