• A Florida Court’s Inherent Power to Appoint a Receiver Over a Non-Profit Condominium Association is Not Limited to the Enumerated Categories Set Forth in the Florida Statutes
  • November 28, 2013 | Author: Gavin C. Gaukroger
  • Law Firm: Berger Singerman LLP - Fort Lauderdale Office
  • On October 31, 2013, the Supreme Court of Florida held that the appointment of an equitable receiver to manage the affairs of a condominium association in financial distress was within a trial court’s inherent, equitable authority. The decision in Granada Lakes Villas Condominium Ass’n., Inc. v. Metro-Dade Investments Co., —So.3d—, 2013 WL 5878908 (Fla. Oct. 31, 2013), clarified that the Florida statutes authorizing the appointment of a statutory receiver in specific, enumerated circumstances do not restrict a trial court’s inherent authority to appoint an equitable receiver where the facts and circumstances so require.

    In Granada Lakes, Metro-Dade Investments Company (“Metro-Dade”) developed the Granada Lakes Villas condominiums (“Granada”) and continued to own several condominium units in the Granada subdivision. The Granada subdivision is within a larger condominium complex in Collier County, Florida known as Santa Barbara Landings (“Santa Barbara”). Owners of the Granada condominium units are required to pay fees and assessments to both the Santa Barbara master association and the Granada condominium association. Fees paid by Granada condo owners paid Metro-Dade and Santa Barbara for expenses related to the common areas. When certain Granada condo owners failed to pay the fees and assessments, Metro-Dade and Santa Barbara sued on allegations that they were unable to pay for utilities and maintenance expenses for the common areas which allegedly resulted in ongoing health nuisances on the property. On an emergency basis, Metro-Dade and Santa Barbara moved for appointment of a receiver to facilitate the collection of the fees and assessments and to perform an accounting.

    At a rehearing on a motion to appoint a receiver, the trial court determined that section 718, Florida Statutes, provided a limited, enumerated set of circumstances upon which a receiver may be appointed. Metro-Dade and Santa Barbara appealed to the Second DCA, which rejected the trial court’s application of section 718. The Second DCA applied common law receivership principles and held that the trial court had the authority to order the appointment of a receiver despite the narrowly tailored enumerated statutory provisions. Certiorari to the Supreme Court of Florida followed.

    The Supreme Court of Florida affirmed the Second DCA opinion per curiam. The Court held that, while statutes can authorize a receivership based on specific grounds not generally available in common law, they cannot limit a court’s authority to appoint a receiver. The general tenets of equitable receiverships are established by the common law and remain typically reserved for cases involving fraud, self-dealing, destruction or loss of property, or waste. However, the enumerated limitations established for statutory receiverships do not otherwise impinge upon the common law right to the appointment of a receiver under Florida common law. Id. at *2.

    Notably, in the context of condominium association law, the statutory framework provides for statutory receiverships in certain limited circumstances. See §§ 617.1432, 718.117, and 718.1124, Fla. Stat.; see also Granada Lakes, at *2. Although the facts in Granada Lakes did not support the appointment of a statutory receiver, they did support the appointment of an equitable receiver. Id. at *3.

    The Supreme Court of Florida confirmed that the trial court had, and should have exercised, its authority to appoint a receiver to protect property and avoid health nuisances occurring at Granada.

    The implications of this holding likely extend beyond condominium association law and may lead to the appointment of receivers in other contexts where Florida statutes do not directly provide for statutory receivers.