Community Update

“Top Five Tips When Negotiating a Construction Contract”

By: David Milton / Scott Kiernan

Often even a small proposal for repair work can cause thousands of dollars in unanticipated costs later, which likely could have been avoided by association counsel. A few changes and/or a short addendum to a contract can be surprisingly affordable and possibly the best fiduciary decision a board can make in any given year.

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Community Association Due Process Rights with Respect to Neighboring Developments

By: Kathleen O. Berkey, AICP

If your community association receives notice about a public hearing to consider or approve a development proposal on adjacent land, does the association or its members have a right to object? Yes, local governments must afford objecting property owners and residents procedural due process, which includes fair notice of the public hearings at which the proposal will be considered and a meaningful opportunity to be heard. However, the extent to which a community association and its residents “have the floor” to object to a proposed development during a public hearing depends on several things.

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Three Common Covenant Enforcement Defenses – Waiver, Estoppel, and Selective Enforcement

By: Joseph Arena

Associations frequently find themselves in a position of strength when they wish to enforce violations of their convents. Where the terms of a covenant are unambiguous, courts will enforce such restrictions. However, it is not uncommon for an owner who has violated the covenants to scramble for defenses to try to justify his or her violations and give the association pause in its resolve to pursue enforcement. While successful owner defenses are by far the exception and not the rule, three particular defenses—waiver, estoppel, and selective enforcement—are raised with such frequency that associations are wise to understand what each of these is and when it might apply.

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Bay Holdings, Inc. v. 2000 Island Boulevard Condominium Association, Inc.895 So.2d 1197 (Fla. 3d DCA 2005)

By: Jay Roberts, Esq.

Limitations on the judicial interpretation of statutes is at the heart of THIS CASE. Bay Holdings, Inc. was a wholly owned subsidiary of Bank United FSB. Bank United FSB foreclosed its first mortgage on a condominium unit within 2000 Island Boulevard Condominium. Following the foreclosure, Bank United FSB assigned its rights under the foreclosure final judgment to Bay Holdings, Inc. Bay Holdings, Inc. took title to the unit following a judicial foreclosure sale. Bay Holdings, Inc. then asserted to the condominium association that it was entitled to the statutory “safe harbor” contained in F.S. 718.116. The condominium association disagreed, and a lawsuit ensued.

F.S. 718.116 provides a limitation on the liability of foreclosing first mortgagee or its successor or assignee to have to pay the condominium association unpaid assessments accruing prior to the foreclosure. However, the statute expressly limits “successor or assignee” to a “subsequent holder of the first mortgage.” F.S. 718.116(1)(g). Since Bank Unit FSB assigned its rights to Bay Holdings, Inc. after the mortgage had been foreclosed by the final judgment, the trial court held that Bay Holdings, Inc. was not a “subsequent holder of the first mortgage” and therefore not entitled to the “safe harbor.”

In affirming the trial court’s decision, the Third District Court of Appeals stated that F.S. 718.116 “clearly and unambiguously affords this safe harbor only to first mortgagees or ‘a subsequent holder of the first mortgage’” and Bay Holdings, Inc. was not a subsequent holder of the first mortgage. The Court then went on to discuss statutory interpretation limitations by stating:

As the Florida Supreme Court has recently reminded, “[w]e are not at liberty to add words to statutes that were not placed there by the Legislature.” (internal citations omitted). To do so, would be an abrogation of legislative power. Donato v. American Tel. & Tel. Co., 767 So.2d 1146, 1150 (Fla.2000); Holly v. Auld, 450 So.2d 217, 219 (Fla.1984) (courts are “without power to construe an unambiguous statute in a way which would extend, modify, or limit its express terms”).

So why is THIS CASE important? Courts serve distinct and limited functions, and those functions are to interpret and apply the law. If statutory text is unambiguous, the court must apply its plain meaning to the facts of the case in front of it.