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October, 2019 – Insider Real Estate and Community Association Law Update





HOMEOWNERS ORDERED TO ARBITRATION



Hayslip v. U.S. Home Corp., 276 So. 3d 109 (Fla. 2d DCA 2019)A



Several years after purchasing a home from the original buyers, the Hayslips discovered defects in the stucco system and sued the developer for construction defects and violation of the Florida Building Code. The developer moved to compel arbitration based upon a provision in the special warranty deed given to the original buyers.



The Second District Court of Appeal agreed with the developer that the owners were required to submit their claim to arbitration. Even though the Hayslips never signed any documents agreeing to arbitrate, the court reasoned that they were nonetheless bound by the arbitration provision contained in the deed to the original purchasers because the provision affected “the occupation and enjoyment” of the home. Given the great public importance of this question, the Second District certified it as one of great public importance for the Florida Supreme Court to consider.



In light of this decision, it is imperative that when considering the purchase of real property, purchasers thoroughly research covenants that may similarly bind them.







DEVELOPER ALLOWED TO USE WORKING FUND CONTRIBUTIONS



Valencia Reserve Homeowners Ass’n v. Boynton Beach Assocs., XIX, LLLP, 44 Fla. L. Weekly D2208 (Fla. 4th DCA August 28, 2019)



Working fund contributions are generally considered to benefit the association, rather than a developer. Not so in a recent case decided by Florida’s Fourth District Court of Appeal involving Valencia Reserve, a residential community of single-family homes in Palm Beach County.



While the developer controlled the homeowners association it was responsible to pay assessments on any lot within the community that it owned. The Declaration of Covenants, Restrictions and Easements which established and governed the community and the Homeowners Association Act (Chapter 720, Florida Statutes) gave the developer the right to excuse itself from paying assessments on is lots provided the developer obligated itself to pay the deficit—i.e., any operating expenses incurred during the guarantee period which exceeded the assessments receivable from other members. The guarantee period began when the developer recorded the declaration and ended upon the date control of the HOA was turned over. While in control of the HOA, the developer used “working fund contributions” paid by each initial purchaser to the HOA at closing, to satisfy the deficit.



After turnover, the HOA sued the developer claiming that the HOA Act prohibited the developer’s use of working fund contributions to satisfy the deficit. The trial court ruled in favor of the developer and the HOA appealed to Florida’s Fourth District Court of Appeal. The Fourth District affirmed the lower court’s ruling finding that the developer’s use of the working fund contributions was permitted by both the Declaration and the HOA Act – the working fund contributions qualified as regular periodic assessments for the purpose of calculating the Developer’s final deficit obligation under Florida Statute § 720.308(5) since they were not budgeted for designated capital contributions.







MANDATORY INJUNCTION ENTERED AGAINST CONDOMINIUM ASSOCIATION TO MAKE REPAIRS



Cabana Key Condo. Ass’n v. Schofield, 44 Fla. L. Weekly D2228 (Fla. 5th DCA August 30, 2019)



A condominium unit was damaged by a fire which originated next door. When the condominium association failed to effectuate repairs to the shell and infrastructure of the unit in a timely manner, the unit owner filed a lawsuit seeking both damages and an order requiring the association to fulfill its duties.



After the trial court judge ordered the association to complete repairs of the shell and infrastructure within a reasonable period of time, the association challenged the order as an improper injunction. The appellate court affirmed the judge’s decision finding that the association had failed to meet its obligations under the declaration of condominium and that Florida Statute §718.303 expressly authorized injunctive relief to compel the association to perform obligations required of it by the condominium documents.



COURT CORRECTS MISTAKE BY ASSOCIATION’S ATTORNEY



Baker v. Courts at Bayshore I Condo. Ass’n, No. 3D18-1669, 2019 Fla. App. LEXIS 14229 (3d DCA Sep. 18, 2019)



After a condominium unit owner failed to pay assessments, a condominium association turned the matter over to its law firm to collect. The law firm filed a complaint to foreclose the association’s claim of lien and obtained a final judgment against the unit owner. The unit was purchased by a third-party at public sale.



After the sale, the third-party discovered that the final judgment prepared by the association’s law firm contained an incorrect legal description for the unit and sought to have the certificate of title issued to it by the Clerk of Court amended to the correct legal description. The delinquent unit owner seized upon this error and sought to have the final judgment, certificate of sale and certificate of title vacated.



The court denied the relief sought by the delinquent unit owner and corrected the scrivener’s error in the final judgment because the error first occurred in the final judgment itself, not in the proceedings leading up to that judgment. While ultimately corrected by the court, this error led to years of otherwise unnecessary litigation and expenditure of tens of thousands of dollars in attorneys fees.







PROPERTY OWNERS MUST COMPLY WITH FLORIDA ACCESSIBILITY CODE



Krueger v. Quest Diagnostics, Inc., MPN, Ltd. Liab. Co., 44 Fla. L. Weekly D2318 (Fla. 2d DCA September 13, 2019)



After an elderly patient visiting a medical facility in a strip mall fell near a curb in the parking lot, he sued the medical facility, the manager of the mall, and the owner of the mall based on a premises liability negligence claim. In support of his claim, the injured patient relied up a provision in the Florida Accessibility Code of Building Construction which required the shortest accessible route between the handicapped parking space where he parked and the entrance to the medical facility. Because there was a step (and no curb cut) to the sidewalk, he claimed this area of the parking lot did not comply with the Code.



After reviewing the Florida Accessibility Code and the Americans With Disabilities Act, the trial court judge ruled that there was a difference between building code provisions that addressed safety and those that addressed accessibility. He then entered a directed verdict against the patient.



On appeal, the Second District Court of Appeal reversed the trial judge, finding that he erred in directing the verdict and should have let the jury consider the Accessibility Code and determine whether the defendants complied with their duties of care.



Property owners, managers, and tenants should be aware of the requirements of both the Florida Accessibility Code and the ADA as these can create liability not only to persons denied access but to those injured as the result of conditions that violate these provisions.







UNMARKED CHANGE IN ELEVATION NOT A “DANGEROUS CONDITION”



Contardi v. Fun Town, LLC, No. 5D18-3518, 2019 Fla. App. LEXIS 14537 (5th DCA Sep. 27, 2019)



A girl fell and broke her leg trying to step off a roller-skating rink when one of her skates got caught in a lip between the skating rink floor and the floor of the building. A lawsuit was filed against the roller-skating rink operator for maintaining a hazardous and dangerous condition – an “improper and unmarked change in elevation between the skating rink floor and the building’s sub floor.”



The court ruled in favor of the defendant rink operator because uneven floor levels in public places, by themselves, do not constitute latent, hidden, and dangerous conditions. The uneven floors – even in the dim lighting of the roller-skating rink – were open and obvious; therefore, the operator did not have a duty to warn patrons of them.







FINAL JUDGMENT REVERSED FOR FAILURE TO PAY DOCUMENTARY STAMP AND INTANGIBLE TAXES



Schroeder v. MTGLQ Inv’rs, L.P., No. 4D18-3177, 2019 Fla. App. LEXIS 14130 (4th DCA Sep. 18, 2019)



Holders of promissory notes in Florida are required to pay documentary stamp and intangible taxes. But what happens when the loan amount is increased?



In Schroeder, the Second District Court of Appeal was presented with a case where the trial court entered final judgment for a lender which included the increased principal balance of a loan, even though the lender paid documentary stamp and intangible taxes on only the amount of the original loan, not the increased amount. The Second District reversed the trial court ordering that the final judgment be vacated. Throwing a bone to the lender, the appellate court further ordered that another final judgment could be entered without hearing, provided the lender submit proof that it paid the documentary stamp and intangible taxes to the judge.







Jed Frankel is a shareholder with Eisinger Law. He is a Florida Certified Circuit Mediator and is Board Certified in Condominium and Planned Development Law, as well as Civil Trial Law, by The Florida Bar. He focuses his practice on community association law, litigation and dispute resolution. He can be reached at jfrankel@eisingerlaw.com or 954-894-8000 x 301.



This presentation is designed to provide general information on the topic presented and is not rendering any legal or professional services.  Although these materials are prepared by professionals, the content and information provided should not be used as a substitute for professional services, and such content and information does not constitute legal or other professional advice.  If legal or professional advice is required, the services of a professional should be sought. Eisinger Law, is a full service Florida law firm focusing on community association law, real estate law, developer representation, commercial litigation and insurance law. Visit eisingerlaw.com