- Are You Bound By Amendments to the Florida Condominium Act? It Depends...
- August 31, 2016 | Author: Raul Valero
- Law Firm: McDonald Hopkins LLC - West Palm Beach Office
Generally, as we move forward in time, laws change to reflect societal changes. For example, statutes typically are amended. This certainly is true of the Condominium Act of the State of Florida, which has been amended on several occasions. In Florida, a condominium regime may be created only under chapter 718 of the Condominium Act. A condominium is established when the Declaration of Condominium is recorded. The Declaration of Condominium governs the condominium and is binding on the unit owners. It operates as a contract among the unit owners and the association, spelling out mutual rights and obligations of the parties, and possesses attributes of a covenant running with the land. In most cases, the Declaration of Condominium will adopt the terms of the Condominium Act. The question that frequently arises is whether the Declaration of Condominium also adopts future amendments to the Condominium Act, which occur after the Declaration was recorded. The answer is that, unbeknownst to many Condominium Associations, they may be bound by old versions of the Condominium Act that do not reflect recent amendments.
The Declaration of Condominium operates as a contract among the unit owners and the association. Article I, section 10 of the Florida Constitution prohibits the enactment of any law impairing the obligation of contracts. This can include the impairment of contractual obligations by Florida Statutes, such as the Condominium Act. An example of this can be found in Cohn v. Grand Condo. Ass'n, Inc., 62 So. 3d 1120, 1121 (Fla. 2011). Cohn involved a dispute regarding voting rights in a mixed-use condominium complex. Organized in 1986, “the Grand Condominium is a mixed-use condominium comprising 810 residential units, 259 commercial units, and 141 retail units.” Id. at 1121. Even though there was a disparity in number of units within each group, the “articles of incorporation, declaration of condominium, and bylaws provide[d] for a seven-member board of directors governing the association, with two members each elected by the residential unit owners, the commercial unit owners, and the retail unit owners, and the seventh member elected at-large.” Id. In 1995, the Legislature amended the Condominium Act to add section 718.404, establishing that in “mixed-use condominiums with fifty percent or greater residential composition, the residential unit owners must be entitled to vote for a majority of seats on the board of directors.” Id. In 2007, the law again was amended to apply retroactively. Id. Regardless of the new law, the Grand Condominium’s current Declaration established that the “retail and commercial unit owners, collectively, shall have majority vote control over the board of the directors.” Id. The Declaration, which was filed in 1986, stated that it adopted the terms of “the Condominium Act of the State of Florida (Florida Statute 718, et seq.) in effect as of the date of recording this Declaration”; however, the Declaration did not include the key language “as amended from time to time.” The addition of the latter phrase would have subjected the Declaration to future statutory changes to the Condominium Act. The Court held that the retroactive application of section 718.404, changing the distribution of voting power, would alter the rights of the unit owners in contravention of their contractual agreement; ultimately, the Court held the Florida Condominium Act could not be unconstitutionally applied to impair the parties' contract, as set out in the Declaration. Id.
Whether you are a developer, association, or even an owner, it is key to look at the governing documents and the applicable statutory law. It is a realistic scenario to envision an association attempting to comply with a newly enacted statute, when doing so would impair the parties’ contractual terms, as set out in the Declaration of Condominium. This conduct could lead to litigation and cause other problems. The mere fact that a statute is enacted, giving one rights, does not necessarily mean the statute applies. The Declaration of Condominium operates as a contract among the unit owners and the association, and all legislative changes to the Condominium Act are not always incorporated into the Declaration. When adopting the language of the Condominium Act, if the parties wish to be bound by future Amendments to the Act, the addition of the simple phrase “as amended from time to time” to the Declaration will provide clarity and may reduce future litigation.