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NEWS

New Decision: Chapter 558 & Repose Bar Time (Gindel v. Centex Homes)

Michael J. Gelfand 9/17/2018

On the table Wednesday was whether the 60 day mandatory pre-suit notice and opportunity to cure mandated by § 558.003 and § 558.004(1)(a) Fla. Stat. 2014 extends the Statute of Repose ten year deadline for filing a claim for a latent construction defect. The decision was Gindel v. Syntax Homes (Case No. 4D17-2149, September 12, 2018).

The timeline is straightforward:

  • March 31, 2004, homeowners closed and took possession of townhomes constructed by Centex.
  • February 6, 2014, homeowners provided a Chapter 558 pre-suit notice of defect to Centex.
  • May 2, 2014, after Centex notified the homeowners that Centex would not cure the alleged defects, the homeowners filed suit.

Reversing, the appellate court stated that the ten year Statute of Repose provided by §95.11(3)(c), Fla. Stat. (2014) began to run from the date of closing.

The key for the court was what is an “action.” The court quickly determined that their was no one size fits all definition. The reason is that different laws had different statutory definitions for “action”!

Chapter 558 continues to include the 60 day pre-suit notice of defect requirement, prohibiting the filing of a “action” “without first complying with the requirements of this chapter.” §558.004(1)(a), Fla. Stat. (2014).

The court held that the definition of “action” in the two chapters must be kept separate. The Statute of Repose definition of “action” in Chapter 95 is broader than the definition in Chapter 558, §95.11(3)(c)’s definition includes a “proceeding.” The “action” defined in Chapter 558 may not commence before the notice. Because an “action” cannot be filed before the notice, the notice is in essence a “proceeding” initiated as defined in Chapter 95 and thus is a “action” for the purpose of the Chapter 95 Statute of Repose.

As an independent basis for reversal, perhaps as dicta, the court commented that prohibiting the filing of an action until the pre-suit notice is provided which would have the effect of barring the claim would constitute an unconstitutional impairment to access of the courts.

The court distinguished Busch v. Lennar Homes, LLC, 219 So.3d 93, 96n.2 (Fla. 5th DCA 2017) which noted that tolling the Statute of Repose to allow time for a pre-suit notice was not an unconstitutional bar of access to the counts because of the stay right. Instead, the Gindel court stated that because the pre-suit notice requirement is mandatory, the developer should not be allowed to utilize the stay “as a sword against the homeowners” who “should not be penalized for rightly complying with the mandates of the [pre-suit notice] statute.”

The decision has the practical effect of extending the Statute of Repose for the Chapter 558 pre-suit notice period. The impact of the court’s pronouncement that the pre-suit notice period is mandatory, barring an early filed claim, may have no practical consequence as the statute expressly anticipates the potential for an early filed claim by authorizing a stay of litigation, though the stay is worded in response to an offer, § 558.004(7), which leads back to the stay discussion in Busch. Of course, if a defendant could show some prejudice by an earlier filing then that might create another story.

There is an interesting interplay between what statute should apply. The court applied without comment the 2014 statutes, the law in effect at the time the lawsuit was filed, not the statute in effect at the time of the sale when the defect apparently occurred. The earlier Statute of Repose provided for a fifteen year bar date. § 95.11(3)(c). It is noted that Fla. Laws 2006-145, Section 3) shortening the fifteen year Statute of Repose to ten years, stating that it would apply with a one year phase-in to all litigation commenced after July 1, 2006.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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About Florida’s Largest Substantive Law Section!

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Springing Condominium Association Sprung (Dimitri v. Commercial Center of Miami Master)

Michael J. Gelfand 9/17/2018

The Third District Court of Appeal issued its mandate in Dimitri v. Commercial Center of Miami Master Association, Inc., Case No. 3D16-2549 (Fla. 3rd DCA, August 8, 2018).

The passage of time since the decision’s issuance may allow for calmer analysis, and perhaps to reduce the initial alarm spawned by the slip opinion’s publication.

As one initial consideration, the decision is not likely to impact the status of “master” condominium associations created after 1991.

Reversing thirty years of precedent, the status of many “Jungle Den” condominium “master associations” created before January 1, 1992, See Fla. Laws 1991-103 Sec 1 (PDF Volume 751/1084) is up in the air as a result of the Third District Court of Appeal’s decision. The appellate court addressed whether the Condominium Act’s 1991 amendment to §718.103(2), expanding the definition of “association” applies to a “master” association created before the January 1, 1992 effective date of the amendment, and whether a pre-1992 association that does not operate condominium property can be a condominium association even if the association is composed of only condominium unit owners.

Background.

No material fact appeared to be in controversy. The Association is described as a “master association for a group of buildings, each with its own sub-association.” The decision recited that the Association was “formed” in 1982 “under” a recorded “Declaration of Covenants, Restrictions and Easements for the Commercial Center of Miami.” The Articles of Incorporation stated that the Association was a “corporation not-for-profit under Chapter 617.” Appellant “Dimitri owned six commercial condominium units located in one of the sub-associations.” The Association apparently does not govern or administer condominium property.

The dispute was triggered by what likely was first presented as a rather pedestrian conflict. The Association rejected Dimitri’s March 2015, request to inspect specific Association official records. Dimitri’s request was stated to be pursuant to the Condominium Association Act’s Official Records process in §718.111(12), Fla. Stat. (2014). After the denial, Dimitri sought declaratory and injunctive relief, including a declaration that the master association was subject to the Condominium Act. The trial court granted the Association’s motion for summary judgment.

No Retroactive Application of Definition

A substantial portion of the appellate court’s discussion focuses upon whether the amended statutory definition has retroactive application. The appellate court found that the 1991 amendment to the Condominium Act expanded the definition of an “association” to include:

in addition to any entity responsible for the operation of common elements owned in undivided shares by unit owners, any entity which operates or maintains other real property in which unit owners have use rights, where membership in the entity is composed exclusively of unit owners or their elected or appointed representatives and is a required condition of unit ownership.

§718.103(2), Fla. Stat. (1992 Supp.); Fla. Laws 1991-103 §1 (PDF Volume 751/1084). The court reasoned that because the 1991 Law did not expressly provide for retroactive application and, perhaps more persuasive for the court, the Law expressly stated as an effective date that it “shall take effect January 1, 1992,” there was no clear expression of a legislative desire for retroactivity. Thus, the court held that the new definition of “association” in §718.103(2) Fla. Stat. (1991) did not apply retroactively.

1982 Definition Not Applicable

Continuing, the appellate court addressed whether the 1982 version of the Condominium Act applied to the Association, 1982 being the association’s year of incorporation. The court focused on the statutory “association” definition which was limited to “operation of the condominium,” which in term was “a term of art.” Thus, because the Association does not solely administer condominium property the court determined that §718.103(15), Fla. Stat. (1981) does not apply.

The Dimitri court supported its focus solely on the administration of “condominium property,” by citation to the Florida Supreme Court’s decision of Siegel v. Div. of Fla. Land Sales, 479 So.2d 112 (Fla 1985). The Dimitri decision stated that “the Florida Supreme Court did not find the test [constituency and function] to be persuasive or helpful in Siegel” remarking that the Third District’s use of those tests, at 453 So. 2d 414 (Fla. 3rd DCA 1984), was overturned by the Florida Supreme Court.

In addition, the Dimitri court derided the constituency and function tests as being “administrative interpretations” from the Department of Business and Regulation. Because the language of the statute, presumably §718.103(2) Fla. Stat. (1982), was plain and unambiguous an agency interpretation would not be utilized.

Precedent Crumbler?

In the wake of Dimitri’s issuance, many commented that the opinion is, to say the least, inconsistent with Downey v. Jungle Den Villas Rec. Ass’n., Inc., 525 So. 2d 438 (Fla 5th DCA 1988). Long before the 1991 amendment to the Act, Jungle Den adopted the “constituency” test and the “function” test to determine whether a “master” type association is to be considered a condominium association.

The constituency test asked “whether the recreation association's "membership is comprised of only condominium unit owners, and only condominium unit owners have rights in the property administered by the Association”

The function test asked whether the association maintains or operates condominium property.

Id. at 440-441. The Jungle Den court was concerned that consumers would be left unprotected by crafty drafting undermining the legislative intent behind the Condominium Act.

The legislative intent of the requirement in section 718.110(4) of unanimous approval of any material alteration or modification of the appurtenances to a condominium unit should not be vulnerable to circumvention by the simple act of setting up an ostensibly independent corporation empowered to perform some of the functions of a condominium association but without the unit owner protection provided by chapter 718, Florida Statutes.

Id. at 441. (Footnote omitted.) It should go without saying that Jungle Den, predating the 1991 amendments to the Condominium Act, did not base its reasoning upon the 1991 amendments.

Jungle Den owed its conclusion to what the Fifth District Court of Appeal saw was a practical application of the Act. In essence, a developer’s labeling of a project should not take precedence over what actually was the status of the Towers of Quayside Association. The Dimitri court should have been well aware of Jungle Den’s rational because the Dimitri opinion begins with a reference to Jungle Den. In perhaps irony, the Fifth District recognizes that the issue is one that “has vexed” the courts!

Dimitri’s reliance on the Florida Supreme Court’s decision in Siegel appears misguided because Siegel’s facts showed that the association there could not meet either the constituency test or the function test. In Siegel, non-condominium unit owners and non-condominium property could be subject to the association. Thus, the Florida Supreme Court’s statement of legislative intent with facts which could have not created a “Jungle Den condominium” was purely dicta.

The Dimitri court’s choice of phrases likely will not reassure readers. A condominium association is not created pursuant to Chapter 718 or the other community association laws. The distinction being that a condominium association is created by the corporate acts and governed by Chapter 718.

Concerning the statutory amendment’s effective date of the 1992, it is questioned whether that is legislative guidance because all bills now have effective dates which state when they can be enforced, not consistently stating whether there is retroactive impact.

Stepping back a bit further for analysis, the Dimiti court’s confusion may be foreshadowed by the court’s terminology. For example, the court stated that the association “was formed” “under the recorded declaration of covenants…” not the articles of incorporation. A condominium association is not created pursuant to Chapter 718 or the other community association laws. The distinction being that a condominium association is created by the corporate acts and governed by Chapter 718. Furthermore, the decision speaks of Dimitri owning units in “one of the sub-association.” This is as opposed to being a member of a sub-association or owning a unit in a condominium.

This decision is certainly going to reverberate in many ways, first directly as to the administration of the master associations. It will be interesting also what becomes of the definition of a “master association.” Second, in terms of statutory retroactive impair analysis will there now be an evaluation of whether the statute is procedural or provides remedies, or just rely on the effective date?

Finally, stepping way back, this decision is a reminder that a seemingly minor situation, a request for records, can have astounding implications. But why was this dispute about access to records not mediated or arbitrated?

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke

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New Decision: Premature Alteration? (Holiday Isle v. Destin Parcel 160) [Corrected Subject Line]

Michael J. Gelfand 9/17/2018

Whether obtaining a governmental developmental order and talking about proceedings triggers an association’s alteration approval process was at issue in Holiday Isles Improvement Ass’n, Inc. v. Destin Parcel 160, Case No. 1D17-2090, August 30, 2018).

Apparently, the Association was entitled to enforce covenants requiring building plans to be approved for work “commenced, erected or maintained.” Destin Parcel 160’s predecessor in title had “produced some construction plans and obtained a development order.”, and Destin Parcel “talked publicly about proceeding.” Destin Parcel’s refused to submit plans to the Association, at least in part asserting that plans were not finalized and no building permits had issued.

When Destin Parcel refused to provide plans in response to the Association’s demand, the Association sought declaratory and injunctive relief. The trail court granted Destin Parcel a summary judgment.

The appellate court held that the Association’s demand to review the plans was “premature.” When the trigger for obtaining approval is couched in terms of “commenced, erected or maintained”, it is unreasonable to interpret that language to require submission of plans that are either incomplete, non-final, or when the owner has not made a final decision to proceed.

Short and sweet, the decision may give pause to drafters of restrictions. Thresholds for action are desired to clearly set forth the threshold for submission. For example, seeking an alteration approval upon erection or maintaining would appear to be somewhat late, the key being approval before any work commences.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Air Rights (Sterling Breeze Owners’ Ass’n v. New Sterling Resorts)

Michael J. Gelfand 9/17/2018

Swiss cheese like apertures underlay the recent decision in Sterling Breeze Owners’ Ass’n, Inc. v. New Sterling Resorts, LLC, Case No. 1D17-1553 (September 5, 2018).

Sterling Breeze’s developer declared and constructed a 22-story condominium, including 145 residential units. The Declaration expressly excluded four ground-floor “Associated Commercial Parcels” referred to as “ACPs” to which the developer retained fee simple ownership. Attached to the Declaration was an “Associated Commercial Parcels Easement and Reservation” between the Association and developer which specified that the ACP’s “would be used for commercial purposes in the building” and the ACP’s owner would maintain the interior and be responsible for ACP’s expenses including utilities.

Six years after the Declaration was recorded the Association sued to nullify the Reservation asserting that the ACPs were “airspace” not able to be privately owned separate from the condominium, seeking declaratory relief, quiet title and unjust enrichment for the expenses of utilities and maintenance. The trial court granted New Sterling, the ACP owner, summary judgment on the declaratory relief and quiet title claims, and after a bench trail awarded unjust enrichment damages of $332,752.93 to the Association.

The Appellate Court began its analysis with the Condominium Act’s definition of “land” as including “airspace” above the surface and

if so defined in the declaration, the term “land” may mean all or any portion of the airspace….”

§718.103(18) Fla. Stat. Thus, the Condominium Act contemplates that a declaration of condominium may exclude certain portions of airspace from the condominium.

The appellate court reversed the quasi-contract unjust enrichment award. The ACP Agreement attached to the Declaration created express obligations from the ACPs owner to the Association for the expenses sought. When a contract addresses the exact issue, a quasi-contract claim cannot proceed.

It is assumed, but interestingly the court does not expressly state, that the statute relied upon is the 2008 version which has the same language as the current version. Also interesting, the court cites for the proposition that “common law yields when it is inconsistent with state law” the Florida Supreme Court’s decision in Maronda Homes, Inc. of Fla. v. Lakeview Reserve HOA, Inc. 127 So. 2d 1258, 1268 (Fla. 2013), even though the Florida Legislature rejected the substantive holding regarding implied warranties for common area construction essential to habitability,. Fla. Laws Chapter 2012-161 Section 3, Maronda at 1271.

Those with interest in the right to buy thin air should read up on Marty Schwartz’s informative “It’s Up In The Air: Air Rights in Modern Development, 89 Fla. Bar. J. No. 4 at page 42 (April 2015), as well as §193.0237 Fla. Stat. (2018) allowing for separate parcel tax identification numbers, and thus taxation, for air parcels, which was drafted in large part by Burt Bruton and Marty.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Mortgage Foreclosures: No Limitations Bare (Gonzalez v. FNMA)

Michael J. Gelfand 8/8/2018

“Having your cake and eating it too!” This may be a fair reference to Wednesday’s decision from the Third District Court of Appeal in Gonzalez v. Federal National Mortgage Ass’n, Case No. 3D17-1246 (Fla. 3rd DCA, August 1, 2018).

First, the critical facts in very short summary. The Borrowers defaulted on their mortgage and note in April 2007. The lender’s initial mortgage foreclosure complaint was dismissed for, as the court noted, a reason not clear in the record.

On June 12, 2013 a new mortgage foreclosure was filed alleging borrowers’ default from June 1, 2007, and that the plaintiff was exercising its right to accelerate all amounts due. A bench trial resulted in a judgment of foreclosure including apparently monies due more than five years before the filing of the “new” 2013 complaint.

The Third District cited Bartram v. US Bank Nat. Ass’n, 211 So.3d 1009 (Fla. 2016), for the:

The right to file a subsequent foreclosure action – and to seek acceleration of all sums due under the note – so long as the foreclosure action was based on a subsequent default, and the statute of limitations had not run on that particular default.

Id. at 1021 (Emphasis added by court). Thus, the Third District relied on Bartram to allow a lender to recover judgment for “old” installments that otherwise would be extinguished by the statute of limitations merely by filing a complaint accelerating all installments of the debt and alleging a default within the limitations period!

The Third District acknowledged conflict with the Fifth District’s recent decision in Velden v. Nationstar Mortgage, LLC, 234 So.3d 850 (Fla. 5th DCA 2018). Thus, the stage is set for the Supreme Court to rule, undoubtedly after three of the Bartram judges rotate off the Supreme Court at the beginning of next year.

Recognizing that Supreme Court review may be lengthy, and that there may also be similar appeals on the dockets of other DCAs, we are apparently going to enter an area of great uncertainty on this issue.

While we wait for the Supreme Court to address the conflict, it likely is worth re-reading Bartram. The Third District’s interpretation is questioned. Strangely, the Third District did not quote the certified question of great public importance as rephrased by the Supreme Court:

Does acceleration of payments due under a residential note and mortgage with a reinstatement provision in a foreclosure action that was dismissed pursuant to Rule 1.420(B), Florida Rules of Civil Procedure, trigger application of the statute of limitation to prevent a subsequent foreclosure action by the mortgagee based on payment defaults occurring subsequent to dismissal of the first foreclosure suit?

Bartram, 211 So.3d at 1012 (Emphasis added). As the Bartram court laid out the facts, the initial mortgage foreclosure action was dismissed on May 5, 2011. Id. at 1014.

The issue in Bartram was simply, in essence, the right to deaccelerate and proceed anew as if acceleration had never occurred in the first place. The Supreme Court allowing a lender to “seek acceleration of all sums due” did not appear to provide any green flag that to “seek” would mean all defenses are waived merely because the magical wand of acceleration passed over the case.

The Gonzalez decision is anticipated to lead to absurd results. Consider a lender failing to file an action to enforce a note with installment payments and an acceleration provision until more than five years after the initial installment default. If there was a suit just for that initial payment, the statute of limitations would presumably bar that claim. Was it the intent of Gonzalez that all a lender would have to do to breathe life into an installment payment extinguished because of a limitations period, would be to accelerate, no matter how long after the default. This would have the practical effect of erasing a statute of limitations application until only five years after the last installment payment was due.

In addition, the Gonzalez decision appears to turn on its head the rational of Bartram, that under the mortgage text acceleration does not occur until judgment is entered. The Third District’s rational could be read to mean that when a lender accelerates all defenses are extinguished! The Gonzalez court does not quote from the mortgage and note acceleration provisions however, if the Gonzalez’ terms are similar to the Bartram terms, then acceleration and the rights that flow from it cannot occur until the entry of judgment which would not retroactively breathe life into installments extinguished five years before the complaint was even filed.

As the time for re-hearing rapidly comes to a close we will see if a motion is filed.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Unilateral Mistake (DePrince v. Starboard Cruise Services)

Michael J. Gelfand 8/8/2018

Last Wednesday, the Third District Court of Appeal sitting on en banc resolved a conflict between itself and the other four District Courts of Appeal, holding that rescission of a contract based on a unilateral mistake does not require inducement as an element of proof. DePrince v. Starboard Cruise Services, Inc., Case No. 3D16-1149 (Fla. 3rd DCA, August 1, 2018).

Boiling the facts down to the essence, cruise ship passenger DePrince visited the ship’s jewelry store operated by Starboard and inquired for a fifteen to twenty carat loose diamond. After the store communicated with its land-based vendor, the store provided DePrince and his partner Crawford whom was a certified gemologist, pricing of $235,000.00 to $245,000.00. The salesperson did not realize that the vendor’s quote was per-carat, not total; however, Crawford the gemologist checked with DePrince’s sister whom warned “that something was not right because the price for a diamond of that size should be in the millions and recommended not buying the diamond.” Nevertheless, DePrince bought the diamond using his American Express card. Shortly thereafter when Starboard realized its mistake it reversed the credit card charges to cancel the transaction.

DePrince sued to enforce the sale contract. Starboard defended on the basis of unilateral mistake. After two trials and two appeals the Third District Court of Appeal sat en banc on the issue of what are the elements of unilateral mistake. Procedurally, the en banc court commented that it is not bound by the District’s precedent but is “allowed to take a fresh look”. The court would be bound by Supreme Court precedent to which it cited Maryland Cas. Co. v. Krasnek, 174 So.2d 514, 542 (Fla. 1965), which held that a contract may be rescinded based upon unilateral mistake.

The en banc court found three reasons to recede from its earlier precedent requiring inducement as an element:

1. Inducement is inconsistent with Krasnek. Supporting citations in Krasnek were to contracts rescinded based on unilateral mistake without inducement. Perhaps more important, the facts recited in Krasnek did not include inducement; thus, inducement could not have been a basis for the decision.

2. The Supreme Court’s most recent discussion of the unilateral mistake test in In re Standard Jury Instructions – Contract & Bus. Cases, 116 So.3d 284, 323-24 (Fla. 2013) included instruction that did not include inducement, citing an earlier Third District decision, Penn Nat'l Mut. Cas. Ins. Co. v. Anderson, 445 So.2d 612, 613 (Fla. 3d DCA 1984).

3. The other four District Courts Appeal interpreted Krasnek to be consistent with the lack of an inducement element.

Moving forward, the court held that the three elements for setting aside a contract on the basis of unilateral mistake of material fact are

:

1. The mistake was not the result of an inexcusable act of due care;

2. Denial of release from the contract would be inequitable; and,

3. The other party to the contract has not so changed its position and reliance on the contract that rescission would be unconscionable.

The court also favorably quoted from Anderson recognizing that when there is a mistake there is undoubtedly some negligence; however, that does not always mean that there is a “inexcusable act of due care.”

Thus, the en banc panel vacated the panel opinion in the case, DePrince v. Starboard Cruise Servs, Inc., 43 Fla. L. Weekly D171 (3rd DCA January 17, 2018), and related cases were receded from, judgment for Starboard being affirmed.

This decision will undoubtedly increase the use of the defense of rescission for a unilateral mistake, particularly in the Third District. By aligning itself with the other districts, the Third District appears to remove the potential of the Florida Supreme Court exercising conflict jurisdiction to revisit the Krasnek decision. There is always the potential of certification of great public importance; however, with all five Districts aligned providing greater certainty in this area of the law, the need for certification would seem to be reduced.

Of course, after reading the decision it is hard to repress the temptation to recite “don’t leave home without it.”

Best wishes for a great week.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: FAR/BAR “As Is” Contract Interpretation (Diaz v. Kosch)

Michael J. Gelfand 8/6/2018

Affirming an $850,000 fee judgment in a residential real estate contract dispute, a guaranteed attention grabber, introduced a trail blazing decision outlining real estate transaction does and don’ts. .” Diaz v. Kosch, Case Nos. 3D17-1498 & 3D17-1621 (Fla. 3rd DCA June 13, 2018).

Identifying the Buyers as “attorneys with substantial experience with real estate transactions and title matters” pulls transactional attorneys and litigation counsel into the well written opinion which graciously, and correctly, comments on one of the RPPTL Section’s outstanding products, painstakingly reviewed and updated continuously:

“The “as is” residential real estate contract developed jointly by the Florida Realtors and The Florida Bar reflects a middle-of-the-road form intended to reduce the legal fees that could be incurred if purchase contracts started from scratch for each transaction. The form reflects a wealth of experience with both successful and failed transactions among professional realtors and real estate attorneys.”

Thus, the Third District Court of Appeal recently affirmed a final summary judgment, arising from a $2.850 million residential real estate contract, ending the Buyers’ fraud and other claims in “a bitter and ‘no hold’ lawsuit against the sellers.” Diaz v. Kosch, Case Nos. 3D17-1498 & 3D17-1621 (Fla. 3rd DCA June 13, 2018).

The short form chronology is:

March 2012. Sellers list their residence for sale. Sellers’ “Owners Property Disclosure Statement” “prominently discloses” that the information is “to the best of Owner’s knowledge,” disclaims any “warranty” and warns that “it is not a substitute for any inspections or warranties.” The Disclosure covers sixteen different areas, marked “no” as to any permitting or toxic substance issues. A buyer is “encouraged to thoroughly inspect” the property, and repeats the Owners’ disclaimers.

Spring 2012. Buyers walk through the property.

September 2012. Utilizing The Florida Realtors and The Florida Bar’s “As Is Residential Contract for Sale and Purchase” the parties contracted for a $2,850,000.00 sale with an initial $50,000.00 deposit and a $235,000.00 additional deposit to be paid at the end of the ten day right of inspection period. The Contract’s “standard” provision’s addressed integration, modification, radon gas, permits and seller disclosures, together with a ten day right of inspection and the Buyers right to terminate by the end of that period.

Apparently, on day nine of the ten day inspection period, Buyers notified their broker of potential permitting issues. The following day, day ten of the ten day inspection period, the Buyers, e-mailing “for settlement purposes only,” accused the Sellers of “active misrepresentations” claimed “diminished value” and threatening “legal fees and litigation with the facts present here could easily be in the hundreds of thousands of dollars and of course during the litigation, the property will not be marketable” which the appellate court parenthetically, if not tongue in cheek, remarked that the Buyer’s communication was “presciently, as it turned out.”

The Buyers made the second deposit stating it was “with full rights reserved.” A week and a half later Buyers e-mailed a Notice of Termination, not claiming a seller breach nor inability to procure financing. The sellers confirmed that they imposed no conditions on release of the deposit however, it appears that the Buyer’s broker required a release!

October 2012, a Buyer which the court referred to as “litigation attorney Richard Diaz” listed four issues: Significant amount of unpermitted work; presence of mold and radon gas requiring significant remediation; As Is contract does not protect a seller from fraud; and, a broker’s obligation “to inform any prospective buyer everything you know.” In response, Sellers confirmed no claim to the deposit.

Two weeks thereafter Buyers sued Sellers. Eventually proceeding on their fourth amended complaint, after significant discovery, and Buyers’ depositions the court granted summary judgment for brokers and the sellers and awarded $850,000.00 in attorney’s fees and costs.

The appellate court ruled that contract paragraph 12(c) regarding inspections, was “unambiguous.”

Right to terminate without penalty. At the end of the inspection, a buyer has two choices: Either a written notice of cancellation before expiration triggering an immediate return of the deposit to the buyer; or, the contract goes hard requiring the buyers’ second deposit. The contract does not provide a “conditional tender” of the additional deposit.

The court helpfully explains that the contract creates “a path to closing the transaction.” After the inspection period is completed, there is: a walk through the day before closing; and, between the inspection period and closing seller has a duty to provide certain documents and information. The duty to provide documents is not triggered until after the inspection period is over. Buyers right to cancel is not an “open-ended extension” to investigate records or documents, especially light of the contract’s “time is of the essence” provision. Nevertheless, the appellate court goes out of its way to note that the Sellers paid over $32,000.00 to “permitting consultants” to assist with these issues, including meeting with the Buyers.

The court also laid out a path for extending the inspection/cancelation time period. Unremarkably, the extension period could have been extended by the parties’ written agreement. The court also remarks that there could be an extension of the inspection/cancellation period by the buyer “furnish additional consideration beyond that required by the existing agreement. [To this commentator it is certainly understandable that additional consideration should support an agreement, it is unclear how the decision leaps from additional consideration, in and of itself, without an agreement to an inspection period extension. Particularly because there was no mention in the decision of actual additional consideration this language may be considered dicta].

Radon: Beginning with the State statutory radon gas disclosure, and then that the Buyers were “experienced real estate attorneys familiar with radon tests” the decision markedly states the Buyers did not undertake testing during the inspection period, could have inspected, and did not establish that radon or the permitting matters were not observable.

Waiver: Waiver was not deemed to be an issue because “following accusations of fraud,” the accuser may not “justifiably rely” on the representations of the accused, and substantive negotiations aimed at resolving the dispute.” Citations deleted.

Claim to the Deposit: Anticipatory repudiation excused the Sellers from scheduling a closing or even demonstrating the traditional “ready, willing, and able to close.”

The appellate court summed up the Buyers’ efforts as seeking “to avoid losing the Property to a backup buyer, while simultaneously attempting to preserve a claim to reduction in the purchase price.” Buyers’ conduct just “exacerbated” the situation when they launched the bitter, no holds barred lawsuit.

The “moral” to this “story” may be first, at the negotiation stage, not to “reinvent” the “wheel”. The praise heaped upon the AS IS contract form, quoted at the top, could embarrass its drafters except that they deserve significant praise for their volunteer efforts, literally consuming hundreds of hours each year seeking to anticipate intricate issues to protect Florida’s citizens and investors. Proclaiming the text unambiguous, at least in the circumstances provided, transactional counsel will likely be looking to the Contract’s language. Noting the copyright on the form, please always provide recognition to the drafters!

The decision provides significant guidance regarding conduct surrounding the inspection period. Especially in the face of “bullies,” the decision will seem heaven sent. On the other hand, when a buyer keeps pushing the envelope, this will assist buyer counsel’s efforts to educate a buyer/client that limitations will be enforced and that the threats of expensive litigation likely will not be availing. For litigation counsel this decision will be handy to oppose claims if not in a motion to dismiss, then at the summary judgment level, including fraud claims.

Certainly, this decision will remind everyone of the adage attributed to President Abraham Lincoln. “Honest Abe”, known because of his reputation epitomizing professionalism, remains a hallmark standard for all attorneys. His applicable adage in this circumstance, of course, is “an attorney who represents himself has a fool for a client.” Enough said.

Knowing which version of the “AS IS” contract was utilized would assist practitioners to no end. We would know if the contract form text is the same as what might be in front of us. Though not stated in the opinion, it appears from the Miami-Dade Clerk’s docket that the contact attached to the complaint is the 2012 revision, bearing “Rev 8/10©2010 Florida Realtors and The Florida Bar.”

Many thanks to Fred Jones for bringing the decision to my attention immediately (delays in reporting of course mine) and to Marty Schwartz for also reminding. Kudos of course belong to Fred Jones and the committee members and other chairs, reviewing contract provisions selflessly to assist practitioners.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Deficiencies/Forum Shopping (Dyck-O’Neal v. Lanham)

Michael J. Gelfand 8/6/2018

Resolving a conflict among the districts concerning which forum has jurisdiction for a mortgage foreclosure deficiency judgment was at issue in Dyck-O’Neal, Inc. v. Lanham, 17 Fla. L. Weekly S278, Case No. SC17-975 (Fla. July 5, 2018).

A mortgage foreclosure judgment expressly reserved jurisdiction concerning a deficiency. A deficiency was not sought in the same forum. Instead, Dyck-O’Neal, the assignee of the mortgage and note, filed a separate legal action against the borrower seeking a deficiency judgment. The trial court granted judgment for the borrower but based solely on the validity of an assignment of the mortgage and note. The First District Court of Appeal quashed the trial court’s judgment concluding that the foreclosure court, not the court where the money claim was newly filed, had jurisdiction pursuant to §702.06, Fla. Stat. (2014).

The issue framed by the Supreme Court was:

… Whether a complainant may pursue a separate action at law to recover a deficiency judgment when the foreclosure court reserved jurisdiction in its final judgment to adjudicate the deficiency claim.

The Court began its analysis with a review of the statute:

In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound discretion of the court . . . . The complainant shall also have the right to sue at common law to recover such deficiency, unless the court in the foreclosure action has granted or denied a claim for a deficiency judgment.

§702.06, Fla. Stat. (2014) (Emphasis added by Court).

The Supreme Court held that the language “plainly allows,” indicating that the language was clear and unambiguous, that:

the right to sue at common law to recover such deficiency, unless the court in the foreclosure action has granted or denied a claim for a deficiency judgment.

A separate action is prohibited only when the court handling the foreclosure action has actually granted or denied a deficiency claim.

In quashing the First District’s decision, the Court agreed with decisions from the other four districts:

Garcia v. Dyck-O’Neal, Inc., 178 So. 3d 433 (Fla. 3d DCA 2015);

Dyck-O’Neal, Inc. v. Hendrick, 200 So. 3d 181 (Fla. 5th DCA 2016);

Gdovin v. Dyck-O’Neal, Inc., 198 So. 3d 986 (Fla. 2d DCA 2016); and,

Dyck-O’Neal, Inc. v. McKenna, 198 So. 3d 1038 (Fla. 4th DCA 2016).

The decision provides a number of important lessons for practitioners. First, the Court remarked on the First District Court of Appeal’s reliance on an earlier decision which in turn relied on an earlier version of the statute. The 2013 amendments to the statute included the italicized language quoted above. Thus, relying on a prior court decision for statutory interpretation may require determining whether and how the statute has changed over time.

Strategically, the legislative change allows, if not begs for, forum shopping. After all, why would a deficiency claimant go through the exercise of drafting a new complaint, incurring filing fees and service fees, starting from scratch, as opposed to merely proceeding with a deficiency. The proofs would be similar. One exception, of course, would be if the foreclosure action was a purely in rem proceeding without obtaining personal jurisdiction over the borrowers; however, in that instance a foreclosure judgment would presumably not reserve jurisdiction for a deficiency.

In the condominium context it is noted that for quite some time the courts recognized that the Condominium Act provided a separate independent basis for a money damage claim. Maya Marca Cd’m Apts., Inc. v. O’Rourke, 669 So.2d 1089 (Fla. 4th DCA 1996).

Last week the First District Court of Appeal acknowledged the Lanham reversal in apparently similar case, Dyck-O’Neal, Inc. v. Stermilli, Case No. 1D17-3396 (Fla. 1st DCA, August 3, 2018).

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Derivative Claims (Iezzi Family v. Edgewater Beach)

Michael J. Gelfand 8/6/2018

A unit owner’s claim for damages suffered by a condominium association must comply with the derivative action procedure in the Florida Not for Profit Corporation Act, §617.07401, Fla. Stat., however, in seeking to reinforce a bright line test, the First District Court of Appeal may have blurred that line in the context of equitable actions in Iezzi Family LP v. Edgewater Beach Owners Ass’n., Inc., Case No. 1D16-5878 (Fla. 1st DCA August 1, 2018). Compliance with derivative action notice, independent investigation and court fact finding requirements can add substantial complexity, time, and expense to what an owner may consider is a routine straight forward claim.

The decision did not identify the underlying facts or even the claims in the owner’s 27 count complaint seeking legal and equitable relief against the Condominium Association and seven current or former officers and directors, perhaps because of the unit owner’s critical “acknowledgment” that his 27-count complaint fit within the description of a derivative action!

The court emphasized that the description of a derivative claim encompasses claims “existing in the corporation, the injury sustained … is basically the same as the injury sustained by others…” citing Leppert v. Lakebreeze HOA Inc., 500 So.2d 252 (Fla. 1st DCA 1986) (emphasis in original).

Proceeding with the owner’s concession acknowledgement, the appellate court addressed whether the Condominium Act’s private cause of action in §718.303(1), Fla. Stat. conflicts with the Not for Profit Corporate Act’s derivative action procedures. The court noted that neither statute has been substantially amended since 1976 which explains why the decision does not identify a particular year for the statutes cited.

The court began its analysis reminding that statutory interpretation begins with reading “related statutory provisions in harmony with one another….” Thus, the court held that the two statutes do not conflict.

The threshold for which statute applies turns upon the basis of the claim. If the one owner plaintiff’s claim is “… not distinct from any other unit owner, and seeks legal damages for its exclusive benefit…” then that claim would be a derivative action. The court appeared to distinguish a derivative action seek damages for a loss suffered by all owners from a claim based on a loss suffered just by an individual owner.

The courts approach to legal claims for damages may be well understood. After all, it would not seem “right” for one owner to sue for damages that were incurred, or damages that are the right of, all owners while the suing owner kept all the funds.

The court’s discussion strove to differentiate a claim for equitable relief as opposed to a claim for legal money damages. This is an important distinction because equity has traditionally allowed injunctive relief to address common element issues. For example, consider a claim for injunctive relief to repair a roof or wall, or to address an improper alteration.

The court cited three decisions from other District Courts of Appeal allowing the owner of one unit to seek equitable relief concerning common elements. Unfortunately, these favorable citations, though including parenthetical notes, did not explain why one unit owner would have a claim for equitable relief regarding common elements that all owners own, as differentiated from an owner’s claim for legal damages from a claim seeking equitable relief.

By contrasting the legal and equitable actions, it appears that the court was concerned with an individual unit owner seeking money for legal damages suffered by all owners, but still desired to allow one owner to seek equitable relief against an association for failing to comply with common element maintenance duties. In the later equitable claim, repairs to the roof or wall would not inure to the single claimant, but would benefit all owners indivisibly. Further that claims would not bar another owner from seeking relief.

Unfortunately, the decision may have created more issues by its focus on “legal” verses “equitable” claims, especially in the context of a breach of fiduciary duty claim for damages. While a claim for damages may be assumed by many to be a legal claim, a fiduciary duty claim has been seen as different. It is an “ambiguous expression”, and “…whether the action will lie at law, in equity, or both depends on the nature of the breach and the remedy sought.” King Mountain Cd’m. Ass’n., Inc. v. Gundlach, 425 So. 2d 569, 571 (Fla. 4th DCA 1982).

The court sought to differentiate a more traditional carveout for a unit owner seeking legal damages in Rogers & Fords Const. Corp. v. Carlandia Corp., 626 So.2d 1350, 1354 (Fla. 1993). In Carlandia one unit owner was able to claim damages for construction defects to common elements; however, other unit owners’ rights must be protected. The Iezzy court appears to conclude that the 2009 enactment of the Not for Profit Corp. Act Derivative Action statue “resolves the representation issues discussed in Rogers.” It is suggested that the court’s write off of Rogers may be too quick, at least to the extent that a unit owner seeks damages only that the unit owner incurred; thought it is recognized that usually all unit owners would be an indispensable party.

Touching on representative claims, the court largely sidesteps a closely related concept, the community association as class action representative provisions of Fla.R.Civ.P Rule 1.221. While the Rule is procedural, a question may be asked: does standing mandate compliance with the statutory derivative action substantive requirements in the class action context for a unit owner bringing a claim held by all owners? Perhaps because the claims were not brought as a derivative action, the court believed it did not have to reach the issue.

In conclusion, legal claims for money damages not differentiated from the same claim held by all unit owners requires a derivative action. An equitable claim seeking injunctive relief that does not award one unit owner relief to the exclusion of other owners may be able to be filed. The distinction is between claims benefiting just the plaintiff owner and claims that would ostensibly benefit the association and all owners

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


New Decision: Interest (Sterling Villages of PB Lakes v. Lacroze)

Michael J. Gelfand 7/11/2018

Time is money. Thus, recent seemingly conflicting appellate court decisions as to when interest starts to accrue may impact counsel’s approach.

Thursday the Fourth District Court of Appeal addressed whether a trial court has discretion to award pre-judgment interest in Sterling Village of Palm Beach Lakes Cd’m. Ass’n., Inc. v. Lacroze, Case No.: 4D-17-1385 (Fla. 4th DCA, July 5, 2018).

Astute followers will recall that just weeks ago the Third District Court of Appeal addressed a similar issue in First Equitable Realty III Ltd. V. The Grandview Palace Cd’m. Ass’n., Inc. Case No.: 3D-17-669 (Fla. 3d DCA, April 11, 2018), rehearing denied June 25, 2018.

Analysis of the two decisions indicates a conflict among the Districts.

In Sterling Village, Lacroze, successfully bid for a Sterling Village Condominium unit at a foreclosure sale and obtained title to that unit. A dispute over the Association’s demand for assessments resulted in Lacroze filing an action for an accounting, injunctive relief and damages. The Association counter-claimed seeking damages for unpaid assessments, later adding a count to foreclose a claim of lien.

Following a non-jury trial, the trial court held that owner Lacroze “shall take nothing from the action.” The trial court found owner Lacroze owed the Association money damages, plus pre-judgment interest from the date of the claim of lien’s recording, not from the date money was delinquent and due. While the opinion mentions that jurisdiction was reserved for the injunction claim, the opinion is silent as to the disposition of the foreclosure claim.

Affirming that interest did not have to be awarded from the date of the delinquency, the appellate court held that the trial court in this case had discretion to find that pre-judgment interest should commence from the date the owner received the Association’s default notice. Reciting that interest is to make a claimant whole, and the “general rule that prejudgment interest should run from the date of the loss…”, the appellate court cited to Broward County v. Finlayson, 555 So. 2d 1211 (Fla. 1990), for the proposition that interest could be withheld based on considerations of “fairness.”

When a trial court determines it would be inequitable under the circumstances to award prejudgment interest prior to a party’s notice of the default, the trial court has the discretion to find that prejudgment interest should run from the date the party received notice of the default and not the date of the default. Cuillo v. McCoy, 810 So. 2d 1061, 1064-65 (Fla. 4th DCA 2002).

Thus, “equity” may be perceived to be a basis for shortening the time from which interest accrues.

Interestingly, the decision does not cite to a specific date for when interest accrues, and its holding seems to refer to two different dates. The court’s analysis refers to the date that a notice of default is provided. That date is normally different from the date of recording of the claim of lien which is the date from which interest was allowed to accrue. The factual deference to the trial court may be explained by the lack of a record on appeal; but, is nevertheless not explained.

Especially as the Sterling Village decision appears to contradict the Third District’s First Equity decision, it may be helpful to understand the precedent upon with the appellate court relied. Both decisions appear to provide narrow distinguishing facts that would not appear to invite broad extension. The Broward County limitation on interest was predicated on the parties first negotiating in good faith on a distinct issue, workweek pay, and apparently only after extensive negotiations was a separate overtime claim raised; the Supreme Court invoked the fairness analysis for interest on the not negotiated overtime claim. In Cuillo, the claim was against an indemnitor which had no notice of the primary debtor’s underlying default. Thus, the two citations’ situations would have appeared to have been clearly distinguishable from the Sterling Village situation.

For practitioners this decision may raise uncertainties. Initially, what is the test for limiting interest, particularly what factors or threshold trigger the equitable or fairness withholding of interest? Then, if interest is to be partially withheld, then what date should interest begin to accrue, recognizing that there is usually a difference between the date of default notice and the date of recording a claim of lien.

Concerning the first, threshold issue, whether equity may reduce or bar interest, there is the recent holding by the Third District Court of Appeal in First Equitable Realty that a trial court did not have discretion to reduce interest recoverable pursuant to statute. While First Equitable could be stated to be distinguishable because it addressed the rate of interest, not when it accrues, that appears to be a distinction without a purpose.

In fairness to the Sterling Village court, the First Equitable conflict may not have been raised by the parties. In Sterling Village the Fourth District affirmed over the Association’s objection, most of the trial court’s holdings because a transcript was not provided! Further, it appears from the appellate court’s docket that briefing was completed only two days before the First Equitable decision was published which normally would have been too short of time for even counsel to have been appraised of First Equitable, and there was no notice of supplemental authority to bring the First Equitable decision to the appellate court’s attention.

Interestingly, First Equitable relies upon a Fourth District decision holding that the trial court lacked discretion to reduce an interest award based upon equitable considerations because equity cannot override a statutory mandate for an interest award. Oreal v. Steven Kwartin, P.A., 189 So. 3d 964, 966-67, (Fla. 4th DCA 2016).

Concerning the second issue, the date from which interest was allowed to accrue, there might be confusion. The court’s use of the date of recording of the lien does not normally relate to the date of a default notice, and the decision does not explain the differentiation. As the claimant was a condominium association normally the association would have provided a statutory notice of intent to lien which in turn would have been at least forty-five days before the recording of the lien. Again, this issue may be a mystery because there was not trial transcript as part of the record on appeal.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Attorney:

Real Estate Law

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke


Attending your first RPPTL Meeting?

7/6/2018
Everything you need to know to easily navigate your first RPPTL meeting . Download the tip sheet. 

New Decision: Sequestering Rents (Green Emerald Homes v. Residential Credit Opportunities Trust)

Michael J. Gelfand 7/1/2018

What is good for the goose is good for the gander. Turnabout is fair play?

Wednesday’s decision by the Florida’s Second District Court of Appeal seems, at least to those who compare appellate decisions, to allow aphorisms to run wild.

Green Emerald Homes, LLC v. Residential Credit Opportunities Trust, Case No. 2D17-4410 (Fla. 2nd DCA June 27, 2018), may be known not only for its substantive holding that the lender could not enforce a mortgage’s sequestration and assignment of rents against a third-party acquirer of title subject to the mortgage, but also the logic leading to the holding, that plain statutory and contract language must be followed, and not subjected an interpretation analysis.

The facts are straightforward.

· 2008: Borrowers execute a promissory note and mortgage to CTX Mortgage which contained an assignment of rents. The Mortgage was recorded.

· June 2014: Junior lien holder Homeowners’ Association forecloses, resulting in a Clerk’s sale and Green Emerald Homes obtaining a Certificate of Title.

· September 2014: Residential Credit was assigned the Note and Mortgage.

· October 2014: Residential Credit files a foreclosure action, including Green Emerald Homes as a defendant.

· April 2017: Residential Credit moves to sequester earnings, revenues, rents, issues, profits and incomes based upon §697.07 Fla. Stat. (2017), and the Mortgage’s sequestration terms.

The trial court’s order on appeal granting the motion to sequester, required Green Emerald to file a copy of rental agreements to which it was a party for the year 2017, and to deposit in Residential Credit attorney’s trust account rents collected from March 2017 forward. Renters were required to pay into the trust account rents not previously paid.

The Appellate Court quoted §697.07 in large part, including the provisions stating the statute is binding upon the “mortgagor.”

The appellate court began its analysis with a foundation premise, that the purchaser of real property at a junior lien holder’s foreclosure sale did not become the mortgagor or borrower. Instead, the third-party purchaser becomes the “owner of the property subject to the superior interest and lien and posed by the recorded mortgage.” (Citations omitted). Thus, Green Emerald, not a party to the mortgage and note, was not obligated to perform pursuant to those documents. Further, otherwise Green Emerald was not an assignee.

Analyzing the duty created by the statute, the statute’s language does not bind third party owners. The statute places an obligation upon a “mortgagor.” Similarly, the Mortgage’s sequestration provisions bind the “borrower.” Green Emerald did not become the “mortgagor” or “borrower” by virtue of purchasing at the foreclosure sale, it was neither a “mortgagor” or “borrower”.

The Appellate Court does not interpret the mortgage or the statute’s text because courts do not have authority to vary the “plainly written” language of the mortgage and statute. Thus, applying the seemingly tried and true rules of judicial interpretation, at the first stop, if a statute or document is not ambiguous, there is no ambiguity to interpret! Applying the mortgage binding the “borrower” and in the statute binding the “mortgagor,” neither the Mortgage or the statute limits the third-party purchaser subject to the Mortgage.

The Court notes that the decision does not address whether the assignment of rents provision would apply to leases executed by the mortgagor/borrowers which may have been assumed by Green Emerald Homes. That issue of assumption of leases apparently was not raised in the the motion.

Moving forward, this decision will find a warm welcome from most third-party purchasers at foreclosure sales, and those purchasing property without assuming an otherwise binding mortgage. This would include Florida community associations that take title and rent property until the seemingly unending foreclosure action is completed. The decision readily acknowledges that the holding may result in longer foreclosure processes, implying that third party purchasers have a financial incentive to avoid a swift determination, but the court is bound by words as “plainly written.”

Of course, an observer may conclude that if lenders were interested in swift resolutions, then sequestration is near the end of the list of processes anticipated to speed litigation. Interestingly, the decision does not state the date of the alleged mortgage default, but the timeline reflects nearly three years passing from the filing of the foreclosure action before the sequestration of rents was sought. One would anticipate that in three years a summary judgement could be heard, if the lender had its proverbial “ducks lined up.”

One may also anticipate that lenders will seek to change the law and similarly amend mortgage documents; however, these changes would likely not impact existing mortgages.

As for the introduction’s reference to aphorisms, readers may recall the holdings that when a borrow prevails in a foreclosure because the lender cannot prove up the note, then the borrower cannot obtain prevailing party attorney’s fees because if there is no note, then there is no agreement providing for fee. The courts have strictly construed who is the “borrower” or the “mortgagor” and though the lender lost the case, the lender did not pay the borrower’s fees. See e.g. Sabido v. The Bank of New York Mellon, _____ So. 3d _____, 43 Fla. L. Weekly D 296 (Fla. 4th DCA, February 7, 2018); Nationstar Mortgage LLC v. Glass, _____ So. 3d _____, 42 Fla. L. Weekly D 815 (Fla. 4th DCA, April 12, 2017).

This decision similarly applies the plain text as to who is the “borrower” or “lender” but the result denies the lender relief. Thus, pick your aphorism: “What is good for the goose is good for the gander” or “Turnabout is fair play?” Or come up with your own.

As we head into the Independence Day holiday, please take a moment during celebrations to remind family and friends of the freedoms fought for on many types of battlegrounds over the past two and a half centuries. Relate how lawyers crafted the Declaration of Independence, and the Federal Constitution. Communicate that it is the duty of each citizen to educate themselves as to the issues of the day, to challenge what is false, what is not right, and to vote.

Do not just talk about our freedoms, but help all to be able to exercise these freedoms.

Have a great holiday. Turn off the \phone. Get some rest.

Many thanks to appellant’s counsel Brennan Grogan, and to Doug Christy, each for swiftly providing the decision.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke



New Decision: Alterations (Lenzi v. The Regency Tower)

Michael J. Gelfand 6/26/2018

At first glance, Wednesday’s decision by the Fourth District Court of Appeals was a seemingly pedestrian alteration dispute over the authority of a condominium association’s board of directors to alter the condominium’s common elements; however, a further reading reveals an interesting, if not concerning, commentary on how to interpret terms in a declaration of condominium which should relegate a substantial portion of the decision to being considered dicta.

Further, the decision includes helpful guidance as to interpretation, generally, and specifically, the term “general-terms cannon.”

Posture.

In Lenzi v. The Regency Tower Ass’n, Inc., Case No. 4D17-2507 (Fla. 4th DCA June 20, 2018), Regency Tower Condominium unit owner Lenzi objected to the authorization by the Condominium Association’s board of directors of a lobby renovation swapping Carrara marble for ceramic tile without an owner vote. Apparently, the attributes of marble must have been paramount because Lenzi pursued his dispute. An adverse condominium mandatory pre-suit arbitration decision led to the trial court, and then to the District Court of Appeal.

Background.

The dispute hinged on whether the Regency Tower’s Declaration of Condominium’s use of the word “alterations” includes alterations encompassed within the Condominium Act’s use of the term “material alterations” in §718.113(2)(a) Fla. Stat. (2015). This provision stated in pertinent part:

If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions.

The Declaration of Condominium’s Article titled “Right of Association to Alter and Improve Property and Assessment Therefor,” stated that the board of directors had approval authority for “such alterations or improvements to the COMMON PROPERTY.” Mr. Lenzi asserted that the marble to tile swap was a material alteration for which the Condominium Act which required a 75% unit owner vote pursuant to §718.113(2)(a), because the Declaration did not contain the term "material alteration", instead granting the board the sole authority to approve "alterations", without further definition or qualifier.

Alteration.

It is recognized that an “alteration” has been defined very broadly, including “"To vary; change; or make different…” which lead over three decades ago to a sweeping definition of a “material alteration”:

We hold that as applied to buildings the term "material alteration or addition" means to palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance.

Sterling Village v. Breitenbach, 251 So.2d 685, 687 (Fla. 4th DCA, 1971).

In light of Sterling Village and its progeny should an affirmance of the trial court’s hold in favor of the Association that a unit owner vote was not necessary have been a swift and foregone conclusion? Under the rules of interpretation that have guided the courts, in the absence of a finding of an ambiguity there is no need for a court to interpret the meaning of a disputed provision. The analysis normally stops with a court stating the plain meaning of the words.

In this matter, the Regency Tower Declaration utilizes the term “alterations.” The Condominium Act’s adding the adjective “material” does not change the target noun “alteration.” The adjective “material,” by definition a modifier, creates a subset of all “alterations.” Thus, a “material alteration” is still an “alteration.”

Thus, the Condominium Act’s use of “material alteration” in §718.1130(2)(a) does not create an ambiguity. The Act’s use of the term “material alteration” does not change the fact that a “material alteration” is still a type of “alteration.”

Dicta.

While the Court could have simply concluded its opinion with a finding that the term "alterations" contained in the Declaration is unambiguous, and therefore not subject to interpretation, the Court continued its analysis. Perhaps the Court desired to provide a fuller explanation so as to not just shut out the unit owner with a PCA. However, the extended explanation by the Court of its rationale seems to upset decades of decisions addressing judicial interpretation, including: thou shall not interpret if not ambiguous!

Nevertheless, continuing in what appears to be dicta the Court cites to two decisions interpreting contracts in the divorce arena for the proposition that a court is to seek “a reasonable interpretation of the text of the entire agreement to accomplish its stated meaning and purpose.” This broad swath of “reasonableness” creates two concerns. First, reading text in context is a standard touchstone of covenant analysis; however, a court still must return to settled precedent requiring no interpretation unless an ambiguity exists.

Second, there is the potential creation of confusion as to whether covenants are subject to a test of “reasonableness” or rather in application the test of “clear and unambiguous.” “Reasonableness” may be appear de rigor when construing contracts of money and services, or identifying procedures. On the other hand, substantive property restrictions in covenants have traditionally been subject to a stricter test of “clear and unambiguous” as a threshold to enforceability.

Thus, the Regency Tower’s Declaration provision in question, how to approve an alteration, addresses procedures, specifically the process to approve an alteration. This provision does not address restrictions on an owner’s use of real property; thus while the threshold for enforcement may be reasonableness, this memo proposes that reasonableness is not the threshold for enforcement of a covenant imposing a use restriction. Thus, when at issue was a narrow procedure, and at that a clear procedure. hopefully the decision’s broad statement regarding the interpretation of a declaration’s terms, will be recognized as dicta, not in itself create an ambiguity!

Additional Drafting Principles.

Finally, for trial courts and practitioners, the decision reinforces the value of a good dictionary and the presumption created by use of a general term. While quoting from Black’s Law Dictionary the decision continues:

terms should be given their plain and unambiguous meaning as to be understood by the “man-on-the-street”

* * *

words of common usage should be construed in their plain and ordinary sense.

Citations omitted.

The decision also explains the “general-terms cannon” as follows:

The “general-terms canon” posits that “[w]ithout some indication to the contrary, general words (like all words, general or not) are to be accorded their full and fair scope [and] are not to be arbitrarily limited.”

* * *

[T]he presumed point of using general words is to produce general coverage—not to leave room for courts to recognize ad hoc exceptions . . . in the end, general words are general words, and they must be given general effect.

Citations omitted.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified:

Real Estate Attorney

Condominium & Planned Development Law

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

Constitutional Revision Commission’s Final Report /Proposed Constitutional Revisions: General Election Ballot

Michael J. Gelfand 6/1/2018

The Constitutional Revision Commission’s Final Report proposed to the citizens of the State eight sets of revisions to the Florida Constitution. The proposed revisions are scheduled to be on the next General Election Ballot, November 6, 2018. A proposed revision requires approval of sixty percent of the votes cast for the proposal. Fla. Const. Art. XI, §5(e)

Voters will look to lawyers for guidance as to the proposals. Please review the proposals so that you can provide that guidance, and understand how these proposals are important to all Florida citizens, not the least Florida lawyers, and in particular members of the Real Property and Probate Law Section of The Florida Bar and their clients. Changes to the Florida Constitution, Florida’s fundamental source of law after the Federal Constitution, impact our clients, and thus our practices.

After holding public hearings around the state to solicit citizen input the Commissioners filed 103 proposals for consideration. During open meetings at the State Capital, and a second series of public hearings around the State, the number of proposals was reduced, dropping many that were of concern to the Section. Proposals that did not survive the process included a revision to the homestead protection against forced sale, and to disability law thresholds. Surviving proposals were refined, somewhat.

Unlike Florida legislation which is required to embrace a single subject, the Commission’s proposals have no similar restraint. At least five proposed revisions contain varied subjects. The impact of grouping disparate subjects may create unusual dynamics as election day approaches.

Below are links to each proposed Revision as numbered and titled by the Commission. The Commission’s titles may be perceived as too narrow and incomplete; thus, I have supplied bullet summaries which are intended to be short, concise and non-partisan. The ballot will contain Commission approved summaries which are included in the Final Report.

SUMMARY OF PROPOSED CONSTITUTIONAL REVISIONS

Revision 1: Rights of Crime Victims; Judges

  • Victims’ rights include being informed as to process, a speedy trial, restitution and prompt return of property, protection which includes bail setting and location non-disclosure considerations, participation in clemency and expungement.
  • Speedy trial requirements which state can trigger, including 60 days from calendar call.
  • Limiting appeals and collateral attacks including two years for appeals, capital appeals being five years.
  • Judicial mandatory retirement age is to be extended to seventy-five years.
  • Agency statutory and rule interpretations are not provided judicial deference.

Revision 2: First Responder and Military Member Survivor Benefits; Public Colleges and Universities

  • State universities may not impose or increase fees without supermajority trustees’ vote (not including tuition).
  • Each state college shall have a board of trustees, and shall be supervised by the Department of Education.
  • Certain death benefits for survivors of first responders and military members are mandated.

Revision 3: School Board Term Limits and Duties; Public Schools

  • School board members are prohibited from seeking election after eight years of service.
  • School board oversight is limited to schools created by that board’s District.
  • The Legislature shall promote civic literacy for public school students.

Revision 4: Prohibits Offshore Oil and Gas Drilling; Prohibits Vaping in Enclosed Indoor Workplaces

  • Offshore extraction of oil and gas is prohibited in the state’s territorial seas unless the area is alienated.
  • Vaping is prohibited in most indoor work-spaces, excluding most private residences.

Revision 5: State and Local Government Structure and Operation

  • Regular legislative sessions in even numbered years are advanced to January.
  • Office of Domestic Security and Counter-Terrorism to support law enforcement agencies.
  • Department of Veterans’ Affairs to be headed by the Governor and the Cabinet.
  • County Constitutional Officers duties, selection and term cannot be changed by county charter.

Revision 6: Property Rights; Removal of Obsolete Provision; Criminal Statutes

  • Repeals legislative regulation of real property ownership by aliens ineligible for citizenship.
  • Deletes the prohibition of the application of a criminal penalty which was repealed after a crime occurred.
  • Repeals high speed ground transportation alternatives development.

Revision 7: Lobbying and Abuse of Office by Public Officers

  • Prohibits elected and many high placed appointed officials from lobbying for compensation while in office and for six years after leaving office, except as their office may require, and defining parameters.
  • Rule-making authorized to implement anti-nepotism requirement.

Revision 8: Ends Dog Racing

  • Prohibits racing of dogs in the State for wagers after December 31, 2020.
  • Licensed greyhound permitholder may cease dog wagering after 2018 without being subject to revocation of the right to conduct other pari-mutual activities.

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Lawyers

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New Decision: Injunctions and Prevailing Party Fees and Costs (Coconut Key HOA v. Gonzalez)

Michael J. Gelfand 5/11/2018

Yesterday morning the Fourth District Court of Appeal clarified two important concepts for practitioners: who is a “prevailing party,” particularly in a multi-count complaint context; and, when injunctive relief is appropriate, even though money may compensate for past damages?

THE ISSUES

Coconut Key HOA, Inc. v. Gonzalez, Case Nos. 4D17-739 & 17-1749 (Fla. 4th DCA May 9th, 2018), involved an appeal and a cross-appeal. Gonzalez, a homeowner, sued asserting that the homeowners’ association failed to “properly manage the surface water management system” as required by the “governing documents” and including what the appellate court stated were assertions regarding the HOA Act. Count one sought a money judgment for damages allegedly resulting from the flooding of her property. Count two sought injunctive relief relating to the homeowners’ association’s alleged management failures, including failing to address alterations.

Three distinct trial court decisions provided the foundations for the issues on appeal.

  • After a three-day trial the jury found that the association failed to maintain the surface water management system; however, the Association’s breach did not cause Gonzalez’s damages and no damages were rewarded on count one.
  • Following the jury’s determination that the Association “violated clear legal rights in its governing documents,” the trial court granted Gonzalez’s motion for entry of the mandatory injunction sought in count two.

INJUNCTIVE RELIEF

Reciting the standard of appellate review as being discretionary, the appellate court cited three elements forming the statutory basis for legal and equitable relief in §720.305(1):

  • A clear legal right which has been violated;
  • Irreparable harm must be threatened; and,
  • Lack of an adequate remedy at law.

As to the first element, the jury found a violation of the governing documents. Addressing the second element, evidence existed that flooding could only be resolved if the Association acted. For the third element, past and future damages were differentiated. While compensatory damages were potentially available, they would only address past damage and only an injunction would prevent future harm. Nevertheless, the potential of damages for future diminished property value did not negate the lack of an inadequate remedy at law.

ATTORNEYS’ FEES

Rejecting the “no money judgment, no fees” approach to prevailing party attorneys’ fees, the appellate court focused upon the “prevailing party” language in §720.305(1).

Generally, the standard of review of an entitlement to attorney’s fees is an abuse of discretion; however, where the denial of entitlement was based not on a factual determination, but on the trial court’s interpretation of a legal issue, specifically a “prevailing party” designation, a de novo standard of review applies. The trial court is subject to reversal if the decision is not supported by “logic and justification for the result and founded on substantial, competent evidence.” As a corollary, the court recounted that when a “prevailing party” fee statute applies, reasonable attorneys’ fees must be awarded to the party that “won on the significant issues.” The trial court’s focusing on damages, or the lack thereof, was in error.

In a learning moment on the way to the holding, the appellate court reminded counsel that when a court must interpret the meaning of a legal term that is not otherwise defined by contract or statute, the court will often follow the definition contained in Black’s Law Dictionary. Corresponding to this point, Black’s is quoted as defining “prevailing party” as “[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded.Black’s Law Dictionary 1154 (8th ed., 2004) (emphasis in quotation added from original).

Applying Black's “prevailing party” definition, the appellate court held that:

  • “Normally, the ‘touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties.’” which usually occurs when there is an enforceable judgment. Practicality trumps principle because “a moral victory or a satisfaction would not suffice.”
  • When considering the amount of fees, Proportionality, or the relationship of the client’s recovery to the amount of fees to be awarded is not a proper factor. The court noted that private claims such as this are distinguishable from public litigation where a prevailing party may not recover damages, such as civil rights cases pursuant to 42 U.S.C. §1988. Thus, a prevailing party determination was not based on “the magnitude of relief,” but instead on whether “some relief on the merits” was obtained, harkening to the concept of whether a party succeeds “on any significant issue in the litigation.”

COSTS

Regarding court costs, the trial court has no discretion but to award costs to the “prevailing party.” More on what should have been a straightforward matter is below.

CONCLUSION

Concluding, the trial court’s decision granting the injunction was affirmed and the decision denying attorneys’ fees and costs was reversed and remanded for an award not only for the injunction claim but also for the damages claim.

MORE THOUGHTS FOR THE PRACTITIONER

While the decision provides helpful explanations, there are some areas that may leave you with contradictory impressions and concerns.

  • Interestingly, the court cited initially to the Condominium Act’s authorization of a private cause of action for injunctive relief in §718.303(1) without stating the reason for the quotation. It may be that the Condominium Act specifically provides for injunctive relief for a breach where the HOA Act only generally refers to “actions at law or inequity, or both” may be brought for “redress.” §720.305(1). There does not appear to be a reason for distinguishing causes of action between the two Acts, perhaps a matter for future legislative action, but nevertheless, the different wording between the two Acts does not appear to justify a different approach.
  • Concerning the award of costs, note the seemingly inconsistent treatment. Though citing to §57.041, the court did not actually quote that statute when holding that costs are awarded to the “prevailing party.” The statute actually provides for a cost award to the “the party recovering judgment….” §57.041(1) Fla. Stat. (2017). The distinction was most recently the subject of Section commentary concerning Olson v. Pickett Downs, Unit IV HOA, Inc., Case No. 5d 15-4043 (Fla. 5th DCA, December 2, 2016). Interestingly, the HOA Act has a prevailing party cost provision which the court could have utilized to the same end.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

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New Decision: Assessments, Alterations, Injunctions and Mootness (Smulders v. Thirty-Three Sixty Cd’m Ass’n)

Michael J. Gelfand 4/27/2018

A condominium association’s completion of an alteration project does not moot a challenge to the special assessment funding the project as determined the day before yesterday by Florida’s Fourth District Court of Appeal in Smulders v. Thirty-Three Sixty Cd’m Ass’n, Inc., Case No. 4D17-1138 (Fla. 4th DCA, April 25, 2018).

The Condominium Association approved a $350,000.00 special assessment to maintain and renovate lobbies. Two unit owners sought injunctive and declaratory relief claiming that the Association violated the Declaration of Condominium. After the Association commenced the project the owners sought a temporary injunction which was denied. The owners in “a prudent act,” paid the assessment. By the time each of the parties’ summary judgment motions were heard, the project was completed and the owners of all the Condominium’s units having paid their share of the special assessment.

At the hearing on the parties’ summary judgment, the court questioned whether there was anything to enjoin noting that “it’s over.” The trial court granted the Association’s Motion for Summary Judgment.

Reversing, the appellate court stated that the mootness finding “is contrary to the system of self-government created by the Condominium Act. Section 718.303(1).

Nothing is more central to condominium governance than the manner in which a board raises money from unit owners and then spends it. Given the glacial pace of litigation, a board would almost always be able to pass a special assessment, collect it, and spend it on a project before a challenge to the assessment came to trial. If the spending of an assessment always rendered moot a challenge to its legality, then the self-governance contemplated by the Condominium Act would be severely undermined; a board would have little check on its handling of money.

The owners’ claim for reimbursement of the assessment remained if a violation of the Declaration is proven, presumably as part of the declaratory judgment count. Further, if the owners prevail, the owners are entitled to the pro rata amount of assessments funding the litigation and their attorneys’ fees pursuant to §718.303(1) Fla. Stat. (2017).

The decision provides a practical reinforcement that there does not necessarily have to be a race to court before work is completed, at least as to monetary remedies. Presumably, the concept that completed work does not moot a challenge to the authority to undertake work would equally apply to a challenge by an association against an owner’s alteration. Interestingly, the appellate court outlined monetary remedies being available pointedly not disagreeing with the trial court’s determination that an injunction to reinstate the lobby before the work was inappropriate. When a case is moot, the opinion provides guidance on the method of disposition which should be a dismissal, not final judgment.

Concerning assessment payments, the appellate court provides support to two significant strategy issues. First, noting that payment of assessments while in the dispute is normally “prudent” to avoid an assessment lien foreclosure action. Second, that there is no Condominium Act provision allowing for the deposit of disputed funds in the court registry, unlike the provision for deposit of rents in the Landlord Tenant Act §83.60(2) Fla. Stat. (2017). (In this regard, the same lack of authority appears to apply to the Homeowners’ Association Act)

It is interesting to note that this opinion was issued almost ten years after an opinion by the same author in D & T Properties v. Marina Grande Association, 985 So.2d 43 Fla. 4th DCA (2008) in which Judge Gross’ opinion held in part that “… like electricity, internet access is becoming a necessity of modern life.” Id. at 50, rejecting a buyer’s challenge to a developer’s addition of internet service as part of a “multimedia” package was a material alteration or modification of an offering allowing a buyer to cancel a contract.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


New Decision: Appeals/Voluntary Arbitration (Bloom v. Iron Horse POA)

Michael J. Gelfand 4/12/2018

Yesterday, the Fourth District Court of Appeal strictly construed the basis for appealing an award in voluntary arbitration in a short decision. Bloom v. Ironhorse Property Owners Association, Inc., Case No.: 4D17-1985 (Fla. 4 DCA, April 11, 2018). A community association was involved; however, that may be only by happenstance.

Specifically, concerning voluntary binding arbitration, §44.104 Fla. Stat. (2016), narrowly limits the basis for a trial court to reject an award. If the issue on appeal does not fit into one of the delineated items, then, as the court quoted from the statute: No further review shall be permitted unless a constitutional issue is raised.

Please note that the cited statute and the holding do not apply to mandatory pre-suit arbitration conducted by the Division of Condominiums. The decision does not elaborate on the underlying dispute, but by the terminology utilized, it is apparent that the parties voluntarily choose the arbitration route.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


New Decision: Interest/Assessments (First Equitable Realty v. Grandview Palace Cd’m.)

Michael J. Gelfand 4/12/2018

In the first of two interesting appellate opinions yesterday, it was held that a trial court has no discretion regarding the ministerial award of interest awarded to a condominium association seeking to collect delinquent assessments. First Equitable Realty III Ltd. v. Grandview Palace Cd’m. Ass’n., Inc., Case No.: 3D17-669 (Fla 3rd DCA, April 11, 2018).

As a result of the Association’s lawsuit against a developer, the Association recovered a judgment for unpaid assessments. The declaration of condominium provided that interest accrues at the maximum rate permitted by law. The trial court reduced the interest claim to approximately $14,000.00, about one-third of the Association’s calculation. The Court determining that “the Association was responsible for protected litigation” and the Association “failed to mitigate its damages.”

Reversing, the appellate court relied on §718.116(3) Fla. Stat. (2017), which provides a default assessment interest rate of 18% per year if the declaration of condominium fails to provide a different rate. The court held that the statute is “clear and ambiguous.” Thus, the court would not reinterpret the statute. Therefore, the trial court had no discretion to vary from the Declaration’s rate of interest.

The opinion is unclear as to the underlying facts the trial court relied upon when reducing interest. Apparently, the trial court was less than impressed with the proceedings. Whether that impression was justified or not is unknown.

This decision likely is of assistance to condominium associations where a trial court may not understand the dynamics with the need to litigate when delinquent assessments are not paid. It is also likely that the holding will apply to homeowners’ associations because the Homeowners’ Association Act provisions in §720.3085 Fla. Stat. (2017) are substantially similar to the Condominium Act provisions cited above. As a practical matter counsel likely will need to exercise some awareness of courtroom dynamics and the potential need to educate a trial before a trial court may seek to “take it out on you” by silently punishing through a reduction in attorney’s fees.”

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Ad Valorem Tax Class Action (Central Carillon Beach Cd’m v. Garcia)

Michael J. Gelfand 3/23/2018

This Wednesday the Third District Court of Appeal, addressing Rule 1.221 community association class action standing, significantly limited the authority of a community association to serve as owners’ class representative, in an apparent departure from the Florida Supreme Court’s precedent.

In Central Carillon Beach Cd’m Ass’n, Inc. v. Garcia, Case Nos. 3D17-1198 & 3D17-1197 (Fla. 3rd DCA, March 21, 2018), two condominium associations, Central Carillon Beach, administering 140 units, and 2201 Collins Avenue, administering 180 units, each filed for their respective unit owners a single joint ad valorem tax petition challenge to Miami-Dade County’s Value Adjustment Board (VAB). As the appellate opinion recognized, the statute governing the VAB petition process expressly provides criteria for a condominium association to file a joint petition, §194.011(3)(e) Fla. Sta. (2016). The associations prevailed before the VAB, obtaining approximately 20% and approximately 40% reductions, respectively. Note that association standing before the VAB was not at issue in the decision.

The Property Appraiser appealed the VAB reductions in circuit court, filing numerous lawsuits, one for each condominium unit, each lawsuit naming as defendants the individual owners of the subject condominium unit. The trial court denied the Associations’ Motion to Dismiss and Motion for Certification which sought to allow the Associations to serve as owners’ class representative. The Associations appealed.

The appellate court’s analysis focused initially on the definition of “taxpayer.” Unlike the above referenced statute applying to non-litigation VAB proceedings, the “taxpayer” party in litigation is “the person or other legal entity in whose name property is assessed….” §192.001(13) Fla. Stat. (2016).

Shifting to the Condominium Act’s grant of authority, the court commented that there was only one reference to an association’s class representative standing to defend an action. An association “may defend actions in eminent domain or bring inverse condemnation actions” §718.111(3) Fla. Stat. (2016).

Contrasting the two statutes, the court leaned to the more “precise” provision for tax appeals which requires a taxpayer to be named as a party, away from what implicitly were more general application provisions in the Condominium Act providing for defensive class action standing in reference to only eminent domain and inverse condemnation actions.

Moving to the community association class action rule, Florida Rule of Civil Procedure Rule 1.221, the court dismissed the Rule’s independent efficacy as the Rule “essentially repeats” the Condominium Act’s provisions. “Again, the oblique examples and categories within Rule 1.221 must yield to the precise legislative directive in §194.181(2).” Thus, the court held that because “the associations simply do not pay the taxes in question” each individual unit taxpayer shall be the defendant in the litigation contesting that unit’s tax. The court did recognize that a class representative would bring judicial efficiencies, but that did not trump the statutory and rule provisions.

The court’s approach is surprising considering the history and policy of Rule 1.221. The Florida Supreme Court created the rule because that Court held that the Florida Legislature did not have authority to create procedures for class action standing. See Avila South Condominium Ass'n, Inc. v. Kappa Corp., 347 So. 2d 599 (Fla. 1977). Thus, the Third District appears to be breaking with Supreme Court’s Avila South precedent. Further, not addressing the purpose of a class representative, is not a class representative just place holder in name alone? Unit owners are identifiable and are bound by any judgment in which a class representative was a defendant.

Additionally, relegating Rule 1.221 to a seemingly subordinate status to statute, the court’s partial quote, listing some, but not all claims listed as allowing class action representation, seemingly overlooks the crux of the Rule. The Rule’s text is expansive, not limited, authorizing association class action representation “…concerning matters of common interest to the members, including, but limited to:….” (emphasis added). The Rule was deliberately drafted in a broad fashion, the delineation of six categories of claims not meant to be exclusive, but to be merely examples.

The court did distinguish the taxation litigation standing issue on appeal from other situations where an association is a defendant class representative. Perhaps seeking to narrow the decision’s application, for example, the court noted that contractor lien foreclosure actions do not have the same statutory party requirements as tax litigation.

Many thanks to Mr. Christy for immediately providing a copy of the decision.

Best for the weekend.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section. Decisions may not be final.

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

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News: Miami-Dade County amends County Code: Requires sellers to disclose whether the property is within special taxing districts

Admin 3/21/2018

MIAMI - DADE AMENDS COUNTY CODE

Recently, the Board of County Commissioners approved ordinance 18-12 amending section 18-20.2of the Miami | Dade County Code. The new ruling calls for the seller to disclose whether the property is within one of Miami | Dade County’s 1,070 Special Taxing Districts. The seller must include speci?c language on the instrument conveying property (the deed) and have the purchaser sign it.

EXAMPLE - I HEREBY CERTIFY THAT I UNDERSTAND THAT THE PROPERTY WHICH IS THE SUBJECT OF THIS TRANSACTION IS LOCATED WITHIN _____ SPECIAL TAXING DISTRICT CREATED BY MIAMI- DADE COUNTY (OR PROPOSED TO THE BOARD OF COUNTY COMMISSIONERS) FOR THE PURPOSE OF PROVIDING LOCAL IMPROVEMENTS AND SERVICES IN THE NATURE OF _____. _______________________ Signature of Purchaser

The enforcement of this new ruling is set to begin May 17, 2018. However, there has been no clear outline as to what the penalty will be for non-compliance. Included in the new changes, the buyer will now be required to sign the deed acknowledging the disclosure. It is also unclear as to whether any liability would fall upon the title agent executing the closing should the seller not disclose the required information prior to the sale.

Currently, the new ordinance is centralized to the South Florida area, but could expand into Broward County.
 

New Decision: Condominium Arbitration (Browning v. Palisades Owners’ Ass’n)

Michael J. Gelfand 3/16/2018

Yesterday, the death knell may have been delivered to the mandatory non-binding pre-suit arbitration requirement for a condominium unit owner claims against that owner’s condominium association. The exclusion from mandatory arbitration of a “dispute” including an alleged “breach of fiduciary duty” was addressed in Palisades Owners’ Association, Inc. v. Browning, Case No. 1D17-2129 (Fla. 1st DCA, March 15, 2018),

Reinforcing that bad facts make bad law, as recited in the opinion two Association directors who are unit owners installed a permanent boat lift at the end of the condominium’s boat dock for those two owners’ “exclusive use” without obtaining approval of the unit owners. After unit owner Browning complained, the Association’s Board of Directors, including one of the two directors that installed the lift, voted to amend the “by-laws” to allow “temporary personal boat docks.” The opinion recites that a common element alteration requires super-majority unit owner approval.

Without demanding or undertaking mandatory pre-suit non-binding arbitration pursuant to §718.1255 Fla. Stat., Browning filed a complaint in circuit court. The opinion without indicating all the claims, stated that the complaint “included claims of breach of fiduciary duty by the Association….” The Association’s Motion to Dismiss predicated on the statutory arbitration requirement was denied by the trial court.

The Appellate Court in briefest part, perhaps setting the foundation for a re-hearing, recited that the statutory definition of a “dispute” which triggers mandatory arbitration, excludes “breaches of fiduciary duty”, citing to §718.1255(1) Fla. Stat. (2016). The Court rationalized that:

Browning’s complaint alleges a breach of fiduciary duty by the Association through the action of two of its board members, conflicts of interest, and violations of the Association’s by-laws. As our review is limited to the four corners of the complaint, all well-pleaded allegations must be accepted as true. Gomez v. Fradin, 41 So. 3d 1068, 1070 (Fla. 4th DCA 2010).

Thus, utilizing a binocular view of the recitation of a few seemingly “magical words” from the statute, the trial court’s denial of the Motion to Dismiss for failing to seek mandatory pre-suit non-binding arbitration was affirmed.

It is respectfully submitted that a unit owner’s mere incantation of the four words “breach of fiduciary duty” in a complaint against the owner’s condominium association fails to take into account the statute’s plain language and intent, and further is based upon misperceptions of underlying legal theories.

Starting with the statutory duty to arbitrate, the opinion paraphrased the arbitration statute, apparently overlooking the express predicate for an exclusion from the definition of “dispute,” three significant words. Compare the Court’s recitation of the exclusion to the actual statutory text. The Court’s paraphrase is as follows:

However, the Legislature specifically excluded from the statutory definition of “dispute” several categories of more complex disagreements between unit owners and condominium associations including title claims, interpretation or enforcement of a warranty, fee assessments, evictions, breaches of fiduciary duty, and claims for damages for failure to maintain common areas. § 718.1255(1), Fla. Stat. (2016).

(Emphasis added by Court). Next, compare the above to the actual text of the exclusion:

“Dispute” does not include any disagreement that primarily involves: title to any unit or common element; the interpretation or enforcement of any warranty; the levy of a fee or assessment, or the collection of an assessment levied against a party; the eviction or other removal of a tenant from a unit; alleged breaches of fiduciary duty by one or more directors; or claims for damages to a unit based upon the alleged failure of the association to maintain the common elements or condominium property.

(emphasis added). While the opinion properly states that a statute must be given its plain and obvious meaning when clear and unambiguous, in this circumstance the paraphrasing deleted critical language. The deleted words appear intended to prevent removing from a trial court what otherwise would be a “dispute” subject to mandatory pre-suit non-binding arbitration.

The opinion’s lack of specific identification of the claims and of any discussion of their interrelationship, critical in light of the “primarily involves” statutory text, led this writer to the rare delving into the record for information outside of the opinion. For example, the opinion does not state whether the plaintiff unit owner sought damages or equitable injunctive relief. A review of the Bay County Clerk's docket reveals a Complaint that has but one count entitled “Count I – Injunctive Relief//Specific Performance as to Defendant Palisades Condominium Association [sic.].” The prayer for relief demands:

… any and all immediate and permanent injunctive relief/specific performance to do the allegation in this complaint [sic], plus damages recoverable under law, plus interest and costs and attorneys’ fees together with any all other relief deemed just and appropriate.

Beyond the title of the sole count in the Complaint misnaming the defendant Association and being identified as “Count I” when there is no second count, the single count contains contradictory allegations if the claim is primarily to seek damages for breach of fiduciary duty:

  • “this is an action in equity to compel specific performance of a restrictive covenant and to further enjoin… and damages….” (Complaint Paragraph 28).
  • “Plaintiff has no adequate remedy at law for breach of the Declaration….” (Complaint Paragraph 32).
  • “Plaintiff has suffered and is suffering irreparable injury.” (Complaint Paragraph 36).

As such, pleading claims in equity for injunctive relief would appear to bar a simultaneous claim in the same count for an action at law for damages! It must be stressed that this is not the situation where the Complaint pleads relief in different counts where alternatively may be alleged, more of which is below.

In addition, the opinion appears to take for granted that as a matter of law there are “claims of breach of fiduciary duty against a condominium association….” The Condominium Act clearly states in plain language:

The officers and directors of the association have a fiduciary relationship to the owners.

§718.111(1)(a) Fla. Stat. (2017) and (2016) (emphasis agdded).

Notably, the opinion does not site to the statute quoted above or the decision in Collado v. Baroukh __So.3d __, Case no. 4D16-2075, Fla. 4th DCA August 30, 2017 (Mandate Issued), which conclusively held:

Count one improperly alleged the association breached a fiduciary duty to its unit owners even though as a corporate entity, it does not have a duty to its unit owners. See § 718.111(1), Fla. Stat. (2016) (only officers and directors of a corporate entity have a fiduciary duty, not the corporate entity).

(emphasis added.) Thus, alleging a breach of fiduciary duty by the association does not create a cause of action.

If there was to be a claim for breach of fiduciary duty, then the Complaint would have to comply with the pleading requirements of Perlow v. Goldberg, 700 So. 2d 148 (Fla. 3rd DCA, 1997). While not excusing the conduct as alleged, in order to properly plead a count for breach of fiduciary duty, the Complaint would have to name as defendants the directors whom allegedly breached their duty which the Complaint does not.

Portions of the opinion indicate that there may be some misunderstandings that lead to the result, in addition to the paraphrasing of the arbitration statute. The opinion refers to the “by-laws” regarding amendments concerning common element use rights; however, the Complaint while mentioning the “By-laws” apparently once in the allegations (Complaint Paragraph 8), other references are to the Declaration of Condominium or to Rules. The By-laws at least in the form attached to the Complaint as Exhibit B do not include restrictions on use or changes to common elements or amendments for changes to the common elements.

If this opinion stands it is feared that the opinion would provide a condominium unit owner a unilateral trap door to escape from the Condominium Act’s mandatory non-binding pre-suit arbitration requirement by just incanting the magical words “breach of fiduciary duty” regardless of whether an actual claim was alleged or if it was just a tangential rather than primary focus of a claim. In this case, a decision the issues revolve around use and limitations on change, the vote by one director with a potential conflict of interest and not named as a defendant appears tangential, and not primary to the claim.

You can see how this decision could gut the “mandatory” requirements of the statute because one would expect every unit owner bringing a claim would assert that the failure to follow the “governing documents” would be a breach of fiduciary duty if there was no “primary” involvement. Because a unit owner normally does not owe a fiduciary duty to the owner’s association, this would make the trap door swing in only one direction, relegating only condominium associations to the arbitration program, again, clearly contrary to the legislative intent.

No matter what one may think of the arbitration program as it creaks away a shadow of its former self, this end run around the program’s jurisdiction is not a suitable or efficient method of attacking the process.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section. Decisions may not be final.

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


New Decision: Business Records Exception (Jackson v. HFC)

Michael J. Gelfand 3/14/2018

Dear Committee Members:

Abracadabra! With a flick of the hand the admission of business records was simplified, at least within the jurisdiction of the Second District Court of Appeal following Jackson v. Household Finance Corp III, 43 Fla. L Weekly D261 (Fla. 2nd DCA, January 31, 2018). This decision likely will ease concerns within the First and Second Districts when planning how to lay a foundation for admission of records when management or administrators change, such as management companies or loan servicers.

While the mere incantation of statutory “magical words” will now pave the way for consideration of records in the Second District, the Court avoided comment on the policy implications which eventually must be addressed by the Florida Supreme Court because Jackson creates a conflict between with the Fourth District Court of Appeal.

HFC sought to introduce lender transaction records in a mortgage foreclosure action. HFC’s witness’s testimony mimicked word for word the regularly conducted business activities exception to the hearsay rule, §90.803(6) Fla. Stat. (2014). HFC’s witness did not explain how the witness obtained personal knowledge of record keeping systems. The trial court admitted the records.

Affirming, the Appellate Court set out a two part test for admission. Reviewing precedent, first, a proponent’s burden of proof for the admissions of a business record may be laid with the “magical words” reciting the text of the statutory exception of the hearsay rule. Once that predicate is established, then, second, if there is an objection to admission of the record the burden of proof shifts to the opponent to undermine the witness’s credibility. An example of an opponent’s strategy may be by demonstrating that the witness was unqualified by inadequate personal knowledge or otherwise.

The Jackson Court relied in part on Nordyne, Inc. v. Fla. Mobile Home Supply, Inc., 625 So. 2d 1283, 1288 (Fla. 1st DCA 1993). Nordyne recounted the testimony of the records custodian which when compared to the statutory hearsay exception, appears to track the statute’s text; thus, the testimony satisfied the statutory requirements and that court reasoned, should have been admitted. Therefore, though the term “magical words” was not utilized in Nordyne, that is apparently sufficient in the jurisdiction of the First District Court of Appeal. It is noted that the Second District doubled down on Jackson recently in Knight v. GTE Federal Credit Union, case no. 2D16-3241 (Fla. 2nd DCA, February 14, 2018).

The Jackson Court sought to distinguish and certified conflict with Maslak v. Wells Fargo Bank, N.A., vg190 So. 3d 656 (Fla. 4th DCA 2016), which in turn relied upon Sanchez v. Suntrust Bank, 179 So.3d 538 (Fla. 4th DCA, 2015). Thus, the Jackson decision will likely not have state wide application, especially within the jurisdiction of the Fourth District. Trial courts within the First District will likely follow Nordyne.

As a practical matter, this statute reinforces the teaching that proponents offering to introduce business records should have the hearsay exception statute ready to recite the magical words (not abracadabra!). Also, the Court reminds litigants of what may be overlooked, that business records may be admitted by a “certification or declaration,” without a live witness, so long as notice of an opportunity for inspection in advance is provided pursuant to §90.803(6)(c) and §90.902(11).

In conclusion, it appears that the broad approach for admissibility of business records that began with Glarum v. LaSalle Nat’l. Ass’n. 83 So.3rd 780 (Fla. 4th DCA 2011), continues. As to whether this trend stays true to the policy of ensuring genuineness and authenticity is a question apparently for another time.

We await word from the Supremes!

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Relinquished Dedications (Pelican Creek HOA v. Pulverenti)

Michael J. Gelfand 3/14/2018

The benefit of living on the edge was apparent, so to say, in Pelican Creek Homeowners, LLC v. Pulverenti, Case No.5D16-4046 (Fla. 5th DCA February 2, 2018).

In this case, the edge was platted property. Specifically the issues involved: Who owns real property dedicated in a plat to a county for street and easement purposes after the county relinquishes its dedicated rights? Are there special considerations when the dedicated area is just inside a plat’s boundary?

The HOA and some owners of lots within a plat sued to require removal of the Pulverentis’ dock and boathouse allegedly constructed on the Plaintiff owners’ property. The trial court facing dueling motions for summary judgment denied the Plaintiff owners’ motion, but granted the Pulverentis’ motion.

In brief review of the facts, a plat created in 1960 included Plaintiff owners’ lots, and dedicated to Brevard County a ten-foot drainage easement area along the north side of a canal on the plat’s “margin” which was just inside the plat’s boundary. In 1980, the County relinquished its right to the easement area. The dock and boathouse were constructed on this easement area in 2006. The Pulverentis apparently own property adjoining, but not within, the northern boundary of the plat.

Initially the appellate court differentiated between dedications created by statute and dedications by common law. The Court’s explanation is summarized as:

  • A common law dedication subjects property to a use easement; but, does not divest the owner of title.
  • A statutory dedication pursuant to §95.361 Fla. Stat. (2016) may vest title in the named political subdivision. Filing a map that refers to the dedication provides “prima facie evidence” of a statutory dedication and transfer of title to the political subdivision.

Here, the 1960 plat dedication does not refer to the statute or an intent to transfer; thus, there was no statutory dedication and title remained in the dedicator at the time of the dedication.

Pursuant to §177.085 Fla. Stat. (2016), codifying the common law rule, the transfer of property subject to a plat with a reservation for streets and easements creates a presumption that the abutting lot owners own to the center of the road or easement. Though the statute allows an exception when the dedicator files suit to reserve title, the dedicator did not timely do so.

When the dedicated area is not located between two lots, such as when the dedication is to an area within and bordering the edge of a plat, the “margin,” common sense dictates that the one adjoining lot within the plat retains ownership of the dedicated area, not just to the centerline.

Why? The Court recognized that a line must be drawn to avoid the impossibility of a parcel of land not having an owner upon relinquishment of the dedication. Two bases for their holding appear to be:

· A lot outside the plat should not enjoy half of the easement area because the lot outside the plat did not share a common grantor.

· A lot within the plat would enjoy the greatest benefit because the area adjoins the lots and would provide, in this instance, drainage for future maintenance.

Here because the Plaintiff owners’ lots are the closest to the easement area which is on the edge of a plat, the owners can be said to be the only property owners that contributed to the creation of the easement area. Also, when the County vacated the dedication, public policy supports the Plaintiff owners owning what appears to be an extension of their lots into the easement area, the easement area not being carved from the Pulverentis’ lot. As a result, the trial court’s summary judgment was reversed and remanded. Note that the Court’s textural description of the property indicates that a canal separates the Plaintiffs’ lots and the easement area, a distance that did not apparently impact the Court’s reasoning, but which might have an impact under other circumstances.

This decision is of interest to the practitioner as it contains a thorough explanation of the difference between common law and statutory dedications as well as differentiating tracts that bound a plat.

One question raised by the opinion’s choice of words is the difference between “revoking,” “abandoning” or “vacating” a dedication? The opinion utilizes these terms apparently interchangeably.

As is increasingly common, would the result have changed if the property adjoining the plat was owned by a common grantor/dedicator of the first plat? Developers of planned communities frequently plat one portion at a time, and adjoining plats will be created by a common grantor. As the opinion appears in part to rest upon the assumption that there is not a common grantor, the result could change under this scenario.

Though perhaps not at issue in this matter, but occurring in other developments are irregularly drawn lots, not perfect rectangles. When a lot line meets a dedicated area at a non-perpendicular angle, how should a lot’s property line extend in that dedicated area.

Further, while it would have been helpful, it apparently was not necessary for the Court to reach the question of what is the effect of a plat’s purported dedication to a non-public, private entity, such as a homeowners’ association.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!


Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


New Decision: Laundry Contracts: Unlawful detainer (CSC ServiceWorks the Boca Bayou Cd’m)

Michael J. Gelfand 3/7/2018

Wednesday morning the Fourth District Court of Appeal issued what may be the year’s first real “condominium case” CSC ServiceWorks, Inc. v. Boca Bayou Cd’m Ass’n, Inc. case no. 4d 12-0974 (Fla. 4th DCA, March 7, 2018). Or at least it addressed a condominium situation.

The dispute harkens back to old English common law concepts which is especially appropriate as today over seventy of our peers are scheduled to sit for the Condominium and Planned Development Board Certification Exam which is based upon fundamental real property concepts!

The battleground may be familiar, a condominium’s laundry rooms. The warriors just as familiar, the “old” laundry machine company, the “new” laundry machine company, and the condominium association.

Boiled down to essentials, CSC ServiceWorks lease of the condominium’s laundry rooms contained a right of first refusal apparently for a new lease which survived for one year beyond the lease expiration. After a lease renewal period CSC continued to occupy the laundry rooms, paying the condominium association rent on a month to month basis for nearly two years.

Apparently because of owner complaints the Association began a bidding process for a new lease in which CSC participated. Commercial Laundry was selected to be the new lessee and sought CSC to remove CSC’s machines. CSC promised to schedule machine removal, but did not do so. After not responding to a second request for removal, CSC responded to a third advising that there would be scheduling, but again without follow up. Instead, a month after the initial request to remove the machines CSC asserted that CSC would exercise its right of first refusal.

In light of CSC’s refusal to remove its machines, the Association allowed Commercial to disconnect CSC’s laundry machines. CSC’s machines were left in the laundry rooms. Though CSC was never denied access to the laundry rooms when CSC refused to remove its machines the Association demanded removal and provided notice of intent to commence a tenant eviction action. CSC then removed its machines.

CSC filed numerous claims including an unlawful detainer claim that was severed and proceeded to jury trial. The jury rendered a verdict in the Association’s favor.

The appellate court affirmed in large part relying upon the unlawful detainer statute:

No person who enters without consent in a peaceable, easy and open manner into any lands or tenements shall hold them afterwards against the consent of the party entitled to possession.

§82.02(1) Fla. Stat. (2017). The court identified three elements for the cause of action:

(1) plaintiff was in peaceful possession of the property;

(2) plaintiff was ousted of actual possession of the property; and

(3) defendant withheld possession of the property from plaintiff without consent or legal process.

Quoting from Floro v. Parker, 205 So. 2d 363, 367 (Fla. 2d DCA 1967).

It appears from the opinion that as a matter of law that an ouster is not the simple act of disconnecting CSC’s laundry machines and moving the machines to an opposite side of the laundry rooms, but within the leased premises, remaining open to the tenant. CDC’s claimed right to maintain the connections was controlled by the lease which was not at issue in the unlawful detainer proceeding. The court further elaborated that the unlawful detainer action was “about actual physical dispossession of real property, not constructive or useful disposition.”

This decision reminds practitioners that it sometimes it bears looking beyond the Condominium or Homeowners’ Association Acts, and even beyond your client’s contract for remedies and relief, in this case, the common law incorporated into Florida Statutes Chapter 82. It is also of interest in this matter that the machines were disconnected after the lease expired and possession was on a month to month basis. There is also the Court’s legnthly recitation of the requests for removal and CSC’s apparent lack of follow through. Of course, would you really want a jury trial?

Good luck to the Certification Exam takers.

Have a great rest of the week.

P.S. I have some notes on decisions issued since the beginning of the year that will shortly be forthcoming.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Two Islands Dev v. Clarke (SLAPP)

Michael J. Gelfand 3/7/2018

What may be the first reported Florida appellate court decision applying the Homeowners’ Association Act’s SLAPP suit prohibition, §720.304 Fla. Stat. (2015), appeared recently in Two Islands Dev. Corp v. Clarke, Case No. 3D 16-388 (Fla. 3rd DCA, January 24, 2018).

Described as the fifth of a “series of cases” the facts were a bit long compared to the HOA law impact.

Setting: Miami-Dade County. A road from “Williams Island” connects by a bridge to the “South Island” and the road continues across another bridge to the “North Island”.

Appellants/Plaintiffs: Sought to develop on the North Island a 16 story two tower condominium.

Appellees/Defendants: Owners of single family residential homes on the South Island

Complaint. North Island development entities five count complaint against the South Island homeowners included claims for breach of covenant, specific performance and breach of duty of good faith and fair dealing alleging the South Island homeowners allegedly “have taken steps to protest or otherwise interfere with the development.” Wrongful conduct allegedly included “instituting lawsuits, lobbying city officials, and interfering and preventing a settlement of a settlement of a separate lawsuit creating delays and additional expenses and lost sales.”

Trial Court Disposition. Motions to dismiss an amended complaint were granted, including dismissing the three causes of action identified above because the defendants did not sign the covenants, the defendants are not parties and are not bound by the covenants, and “the litigation privilege and anti-SLAPP statute (§720.304, Fla. Stat. (2015)” applied to the claims asserted in the amended complaint.

Appellate Holding: Following a detailed analysis, the Appellate Court held that “South Island defendants were not parties or signatories” to the covenants and thus were not bound by the covenants. The South Island Homeowners Association apparently was a party to the covenants but that did not bind the individual owners, especially as the owners’ lots were excluded from the covenant.

The Appellate Court after announcing its affirmance of the trial courts dismissal on substantive grounds, noted at footnote 10 that an alternative ground of dismissal, the anti-SLAPP statute, was also an appropriate basis for dismissal.

It appears unfortunate that the Appellate Court did not provide additional detail regarding the anti-SLAPP factors. One might surmise from the summary nature of footnote 10 that that the Complaint’s allegations based upon the filing of a lawsuit and lobbying public officials lead as a matter of law to a SLAPP dismissal.

The relatively lengthy decision touched upon many areas that may also be of interest to litigators including: between an oral decision and entry of a written order, a Plaintiff may squeeze in a voluntary dismissal divesting the trial court of jurisdiction to enter the order which was the basis for reversing the trial court’s dismissal of the voluntary dismissed counts; and, the broad scope of the litigation privilege, protecting statements made in pleadings related to the litigation.Dear

Have a great day, and may the year be one of good health and peace.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Ice v. The Cosmopolitan Residences (Tortes and Agency)

Michael J. Gelfand 1/23/2018

Among the end of years decisions was one highlighting an association’s potential liability for the alleged wrongful conduct of the association’s manager, Ice v. The Cosmopolitan Residences on South Beach, A Condominium Association, Inc. Case No. 14-3999,42 Fla. Law L Weekly D 2604 (Fla. 3rd DCA, December 13, 2017).

Ice obtained title to a condominium unit as a result of the Condominium Association’s assessment lien foreclosure sale. His title was subject to a pending mortgage foreclosure action. Upon his being “surprised” at the lender’s 24-hour notice and writ of possession being posted on his door, Ice sought to remove some of his possessions, but was unable to secure storage for all.

From this point, what occurred apparently was greatly disputed. As this matter was an appeal from the granting of a motion to dismiss, the Court addressed Ice’s allegations which included the following:

  • The Association’s property manager instructed the Deputy Sherriff removing Ice’s property to place the property in the Condominium parking garage around which the manager placed barricade tape to provide caution and deter thieves.
  • The same day Ice discovered that the Association deactivated his access card preventing him from removing his property.
  • The Association’s security guard told Ice that he should contact management the next day for access to remove the property.
  • The Association’s property manager after the manager’s request for Ice’s couch and other items was refused by Ice, the manager stated that Ice could not access his property that the property was disposed, and if Ice returned he would be removed as a trespasser.
  • “A few days later” the Association’s security guard asked if he could have the property in Ice’s storage unit.

Ice also alleged that he never received any of his property. The court dismissed Ice’s Complaint with prejudice.

The dismissal of Ice’s conversion count was reversed. The Complaint alleged the Association’s intentional control over Ice’s property with an intent to possess some or all of Ice’s property. The alleged “quid pro quo” for Ice to turnover certain items in return for access was without a legal right. The property retained in the storage unit was never abandoned and for which Ice made demands and undertook to recover.

The Association’s defense based on the Landlord Tenant Act was not applicable because the situation did not involving the rental of a dwelling unit. Further, the exculpation provisions of §83.62(2) Fla. Stat. (2012), applies to the sheriff, landlord and landlord’s agent, not including the Association or it’s manager.

As the wave of the great recessions foreclosures may have crested, numerous writs of possession continue which have led to sheriffs removing and depositing property. Most associations do not want to see any person’s property deposited on the street in front of the condominium or a home. If an association allows the property to remain within the condominium or common area, then the association likely would want to take care not to violate the (former) owner’s right to possess his or her property. In this regard, association managers should be careful not to deprive owners of their rights or be seen to inappropriately bargain.

The dismissal as to the count seeking the breach of bailee’s duty was affirmed because the Association was not alleged to have obtained “independent, temporary, exclusive possession of the property from Mr. Ice.” The intervening efforts of the Deputy Sheriff appeared to prevent this claim from reaching fruition.

What is to be learned? Plan in advance. If a writ of possession is to be enforced, then associations should consider where would be best for property to be moved, of course in conjunction with law enforcement. Association’s should likely avoid taking possession or control. Personnel likely should be instructed not to bargain for the property.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


New Decision: Waverly 1 and 2 v. Waverly at Los Olas Cdm (Covenant Interpretation)

Michael J. Gelfand 1/23/2018

Continuing the end of year clean up, when faced with three different covenant provisions addressing the same issue, how would a court proverbially “split the baby” was addressed in Waverly 1 and 2, LLC v. Waverly at Las Olas Condominium Association, Inc., Case No. 4D16-2866, 42 Fla. L. Weekly D2569 (Fla. 4th DCA December 6, 2017).

Appellant, the Waverly LLC, owned two commercial units at the “mixed use” Condominium. The Waverly LLC apparently removed two $18,000.00 canary palm trees which were “appurtenant” to the owner’s condominium units. The Declaration provided in pertinent part as follows:

9.1 … no unit owner shall cause or allow any improvement or changes to… any landscaping… without first obtaining the written consent of the Board….

9.3 Anything to the contrary notwithstanding, the foregoing restrictions of this section 9 shall not apply to Developer owned Units or Commercial Units…. Additionally, each commercial unit owner shall have the right, without consent or approval of the Association, the Board of Directors or other Unit Owners, to make alterations….

17.4 The foregoing shall specifically not apply to the Owners or the Commercial Units specifically the Owner of Commercial Units expressly permitted….

After a non-jury trial the trial court found that the landscaping was a Common Element and that the commercial unit owners were required to obtain written consent before altering landscaping appurtenant to their unit.

The Court recited what we may commonly refer to as “judicial rules of interpretation” First priority is the intent of the parties which should be “discerned from within the ‘four corners of the document,’” quoting Emerald Pointe POA v. Commercial Const., 978 So. 2d 873, 877 (Fla. 4th DCA 2008). In addition, interpreted language must be “read in conjunction with the other provisions….” Royal Oak Landing HOA v. Pelletier, 620 So. 2d 786, 788 (4th DCA 1993). Finally, quoting again from Emerald Pointe “Where contractual terms are clear and unambiguous, the court is bound by the plain meaning of those terms.” 978 So. 2d at 877.

Thus, the “Notwithstanding” language of Article 9.3 governs, and the judgment reversed with directions on remind to enter judgment in favor of the owner!

This decision is helpful to the practitioner in re-enforcing the rules of judicial interpretation. Of further significance to the Association practitioner was the court’s commentary on the “rule of adverse construction.” This rule is invoked “where a contract is ambiguous, it will be interpreted against the drafter.” This is to be a “rule of last resort”, applied only if the party’s intent cannot be “conclusively determined.” citing again to Emerald Pointe at 878 n.1.

As we draft covenants, either originally as developer’s counsel or amendments as association counsel, this decision reminds of the potential problem of utilizing the “notwithstanding” language and taking to help ensure that the end result is clear, albeit recognizing that the true test may be decades latter and with absolute clarity of 20-20 hindsight.

Happy drafting!

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2018 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


RPPTL New Items: Altman Contr. v. Crum & Forster (Chp. 558 and Duty to Defend)

Michael J. Gelfand 1/22/2018

Catching up on holiday reading, the Supreme Court of Florida’s decision on Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company, Case No. SC16-1420, 42 Florida Law Weekly S 960 (Fla. December 14, 2017), may seem to focus on narrow issues but is jam packed with tidbits for the office practitioner and the litigator whether your practice is limited to community association law, or a broader civil practice. Drawing our attention are the four opinions issued.

The opinion of a majority, four responded to the request from United States Court of Appeals for the Eleventh Circuit. The Supreme Court rephrased the certified question as follows:

Is the notice and repair process set forth in chapter 558, Florida Statutes, a “suit” within the meaning of the commercial general liability policy issued by C&F to Altman?

Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 832 F.3d 1318, 1326 (11th Cir. 2016). The court answered yes:

… because the chapter 558 presuit process is an “alternative dispute resolution proceeding” as included in the policy’s definition of “suit.”

The facts may appear pedestrian. Sapphire Condominium provided Altman numerous Chapter 558 notices of claim from April 2012 through November 2012 claiming over 800 defects. In January 2013 Altman provided its insurer Crum & Forster (“C&F”) notice of the claims and a demand for coverage. C&F declined to defend asserting that the notices did not constitute a “suit” under the policy.

Altman retained its own counsel. In August 2013 C&F provided a reservation of rights letter and C&F retained counsel to defend Altman. Altman objected to new counsel and demanded that Altman’s original counsel continue and that C&F reimburse for the expense of its counsel. Ultimately, Altman settled all of the claims, the Association not filing a lawsuit.

Altman filed a declaratory judgement action against C&F resulting in the District Court finding no policy ambiguity on the issue of coverage, denying Altman’s motion for partial summary judgment and granting C&F’s motion for partial summary judgment. Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co.,124 F. Supp. 3d 1272, 1275 (S.D. Fla. 2015).

Construing Chapter 558 Fla. Stat. (2012), in context of the policy, the court then quoted from the policy which defines a “suit” as not just a complaint filed in court:

“Suit” means a civil proceeding in which damages because of “bodily injury,” “property damage” or “personal and advertising injury” to which this insurance applies are alleged. “Suit” includes:

a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or

b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.

Ultimately focusing on the “other alternative dispute resolution proceedings” language, and relying in part on Black’s Law Dictionary’s definition as “[a] procedure for settling a dispute by means other than litigation” the court held that the Chapter 558 proceedings fall under the policy’s definition of a “suit.”

On the path to this conclusion, the Court engaged in a number of interesting discussions. Harkening back to the Court’s decision in Raymond James Financial Services, Inc. v. Phillips, 126 So. 3d 186 (Fla. 2013) the Court revisited what constitutes a “civil proceeding.” Referring to only the statutory text, a “chapter 558 notice and repair process cannot be considered a “civil proceeding” because the process is voluntary, does not involved in adjudicatory body, or produce legally binding results.

The Court noted that §558.001 Fla. Stat. was amended to add that the benefits of the Act were extended to …. “the insurer of the contractor, sub-contractor, supplier, or design professional with the opportunity to resolve the claim through confidential settlement negotiations without resort to further legal process….” (Ch. 2015-165, § 1, Laws of Fla.). The Court did not comment that while insurers were provided an “opportunity” to participate, the statute does not expressly require the insurer to participate. The opinion does not comment as to why the legislature may have amended the law.

The Court was somewhat fractured. Four opinions were provided. A clear majority joined the courts opinion. Justice Lewis provided a concurrence and Justice Pariente separately provided concurring and descending opinions, as did Justice Lawson. These minority opinions considered whether the underlying policy provided coverage for the claim an issue that the majority opinion sidestepped when focusing only on the duty to defend.

How will this decision affect the community association, and likely other practitioners? This will focus on whether initiation of alternate dispute resolution processes such as, for example, mandatory pre-suit mediation provided by §718.311 Fla. Stat. trigger a duty to defend? This issue will send practitioners to review client’s policies.

What else? Of course, consider that the decision will provide insurers an impetus for insurers re-write their policies definition of a “suit.” Until then, consider what other ADR processes may trigger a duty to defend, of course depending upon your client’s policy provisions.

Thank you to Scott Pence, Chair of the RPPTL Insurance and Surety Committee for providing a heads up concerning the decision. For those that address insurance issues, you should consider joining the Insurance Committee. Check it out at www.rpptl.org.

Be certain to sign up for the Real Property and the Condominium certification review seminars scheduled in Orlando for February 9th and 10th.

Belated good wishes to all for a successful, healthy and positive new year.

Michael J. Gelfand
Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar
Click www.RPPTL.com for Breaking News
About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section
© 2018 Michael J. Gelfand

Michael J. Gelfand
Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator:
Civil Circuit Court & Civil County Court
Fellow, American College of Real Estate Attorneys

New Decision: It’s a lien! (Calendar v. Stonebridge Gardens Section III Cd’m)

Michael J. Gelfand 12/15/2017

A dissent occasionally rises to become law, and the author vindicated; however, usually that occurs decades later. Turnaround was evident in Wednesday’s decision by the Fourth District Court of Appeal in Calendar v. Stonebridge Gardens Section III Cd’m Ass’n, Inc., Case No. 4d 16-3393 (Fla. 4th DCA, December 13, 2017).

The issue in Calendar was whether when disbursing surplus sale proceeds a Florida condominium association that has not recorded a claim of lien has priority over the immediately former unit owner. The holding may have significant implications far beyond the tax sale context.

The court focused on the following Condominium Act language:

(5)(a) The association has a lien on each condominium parcel to secure the payment of assessments. . . . [T]he lien is effective from and shall relate back to the recording of the original declaration of condominium . . . . However, as to first mortgages of record, the lien is effective from and after recording of a claim of lien in the public records of the county in which the condominium parcel is located.

§718.116(5)(a) Fla. Stat. (2016). The juxtaposition of the last sentence lead the court to hold that “recording a claim of lien is not an absolute prerequisite to the enforcement of a lien for unpaid assessments.” The court commented that recording may only be of significance when the association’s assessment lien and a mortgage lien are contesting for priority.

In holding, the court sided with Judge Shepherd’s dissent in Aventura Management, LLC v. Spiaggia Ocean Cd’m Ass’n, 105 So. 3rd 637 (Fla. 3rd DCA, 2013). Readers of these missives may recall Judge Shepherd’s plaintive plea in response to the Aventura mortgage foreclosuire holding asking “What happens to the [association’s] lien?” Id. at 640. Judge Shepherd concluded:

. . . [I]t is apparent the fundamental purpose of the Legislature in promulgating section 718.116 was to assist condominium associations to be made whole in the collection of past due assessments, while at the same time not unduly impairing the value of collateral held by first mortgagees. In furtherance of this design, the Legislature has given condominium associations a statutory lien on each condominium unit over which it has jurisdiction, to secure payment of assessments without the necessity of filing a claim of lien in the public records, with the single exception of first mortgagees, where record notice is required. § 718.116(5)(a).

Id at 640. Thus, the condominium association without recording a lien had a lien in priority to the former’s owner claim, the lien

This decision raises a number of interesting questions for the practitioner and clients.

  • Whether to record a lien or not to record? Particularly because of the potential of mortgage issues, the answer would appear still to be yes. The “yes, record” would appear to be reinforced by the desire to avoid issues that may occur in Districts other than the Fourth District which issued the Calendar opinion, at least until, or if, the Supreme Court of Florida rules on the issue. There is also the practical advantage of record notice to stop disputes about notice cold. Further, there is that tantalizing adjective “absolute” modifying “prerequisite” as in recording is not an “absolute prerequisite” as quoted above. leaving the court’s field of play wide open as to when recording may be a prerequisite.
  • What is the vitality of the assessment lien after a mortgage foreclosure? The Calendar court also further quoted Judge Shepherd’s dissent which has caused the scratching of many heads when published originally:

The majority opinion . . . . first concludes, correctly in my view, that [the] Condominium Association’s statutory lien, afforded by section 718.116(5)(a), Florida Statutes (2008), “survives the foreclosure.” Maj. Op. at 5; see also Lassiter v. Kaufman, 581 So. 2d 147, 148 (Fla. 1991); Contos v. Lipsky, 433 So. 2d 1242, 1245-46 (Fla. 3d DCA 1983). . . .

Thus, we are still faced with the “conundrum” of if there is a lien that survives foreclosure, then what is the value of that lien particularly in light of Villas of Windmill Point II POA, Inc. v. Nationstar Mortgage, LLC, Case No.: 4D16-2128 (Fla. 4th DCA October 25, 2017), limiting the assessment liability of the lender’s grantee.

  • Will this apply to homeowners’ associations? Similar language in the Homeowners’ Association Act, at least for post 2007 associations, may lead to the same result.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

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New Decision: Judicial Estoppel (Anfriany v. Deutsche Bank)

Michael J. Gelfand 12/8/2017

Clarity of a judicial doctrine appeared paramount in yesterday’s decision from the District Court of Appeal, Fourth District, in Anfriany v. Deutsche Bank National Bank Co., Case No. 4D 16-4182 (Fla. 4th DCA, December 6, 2017).

The doctrine addressed is judicial estoppel, a defensive tool that arises not from statute or the rules of civil procedure, but common law. The doctrine of judicial estoppel generally seeks to ensure that the legitimacy of court decisions is not undermined by a party winning in a first case which then seeks to win in a second case by taking a diametrically opposite position. The rule can be said to keep the parties honest when appearing before different judges.

The setting once again was a mortgage foreclosure action that seemingly went awry.

In short background,

2008: The Bank files its foreclosure action against the Anfrianys which was voluntarily dismissed without prejudice at an unstated time.

May 2011: Anfrianys’ bankruptcy counsel moves to tax attorney’s fees and costs against the Bank.

May 2012: The trial court grants the Anfrianys’ motion for entitlement to attorney’s fees and costs, reserving the determination of the amount if the parties could not agree.

May 2013: The Anfrianys’ bankruptcy counsel, not foreclosure counsel, files a voluntary Chapter 11 petition for relief; however, neither the petition’s statements nor schedules list any contingency claim assets, either when originally filed or when amended.

2014: The Anfrianys’ reorganization plan was confirmed, the Appellate Court remarking that Anfriany’s debts were not discharged.

October 2015: The Anfrianys move to determine the amount of attorney’s fees and costs in the state court foreclosure action.

September 2016: The Bank’s moves to vacate the fee entitlement order granted in May 2012, arguing that judicial estoppel barred Anfrianys’ claim for attorney’s fees and costs because the Anfrianys’ failed to disclose in the bankruptcy proceeding the entitlement to attorney’s fees and costs as a contingent unliquidated asset and thus “misled ‘the bankruptcy court and creditors to believe that he had fewer assets from which he could pay his creditors.’”

In granting the motion to vacate the entitlement order the trial court relied upon a federal court decision, In re. Coastal Plains, Inc., 179 F.3d 197 (5th Cir. 1999).

In reversing, the appellate court remarked, without a comparison of analyzed the difference between federal and Florida approaches to judicial estoppel.

Traditionally, judicial estoppel has required a mutuality of the parties and that the movant or claimant in the second claim is taking an inconsistent position that was successfully maintained in a first claim. Citing Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1066 (Fla. 2001), the court noted that in addition to the traditional factors:

… the position assumed in the former trial must have been successfully maintained. In proceedings terminating in a judgment, the positions must be clearly inconsistent, the parties must be the same and the same questions must be involved. So, the party claiming the estoppel must have been misled and have changed his position; and an estoppel is not raised by conduct of one party to a suit, unless by reason thereof the other party has been so placed as to make it to act in reliance upon it unjust to him to allow that first party to subsequently change his position. There can be no estoppel where both parties are equally in possession of all the facts pertaining to the matter relied on as an estoppel; where the conduct relied on to create the estoppel was caused by the act of the party claiming the estoppel, or where the positions taken involved solely a question of law.

(Citations omitted, italics in decision, additional emphasis added. ) (Blumberg, 790 So. 2d at 1066)

The Court explained that the “prejudice” requirement would be that which “would drive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Citing Grau v. Provident Life & Acc. Ins. Co., 899 So. 2d 396, 400 (Fla. 4th DCA 2005). Applied to the current case, the Court recounted two elements relying on Blumberg:

“[t]here can be no estoppel where both parties are equally in possession of all the facts pertaining to the matter relied on as an estoppel.”

As a second requirement, there must be an “unfair advantage” or an “unfair detriment” on the “opposing party.”

In overview, in this time when frequently there are knee-jerk responses to court opinions, seeking to classify text as pro-debtor or pro-creditor, or otherwise, this decision appears to be a classic effort to provide guidance to trial courts and litigators. Thus, this decision should be a handy tool for the litigator. The decision interestingly implicitly draws comparisons to the doctrine of res judicata. The decision also declined to address whether the real party in interest was not the defendant owner or the owner’s attorney who may obtain the funds.

It is noted that the same Court simultaneously issued an opinion from Judge Gross which makes for very interesting reading, not because it necessarily outlines new legal doctrines, but because the Court reinforces in a context the Court described as “the underlying mortgage was passed around like the flu, giving rise to a complexity of ownership that frustrated the appellee’s attempts to demonstrate standing at trial,” the duty of a foreclosing bank to prove that it is the holder or holds a right to foreclosing note. Supria v. Goshen Mtg., LLC, Case No. 4D16-4356 (Fla. 4th DCA, December 6, 2017).

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys


ALM Nominations deadline Dec 15, 217

admin 12/7/2017
Deadline for ALM nominations is 12/15/17. More details and application

Apply for The Florida Bar Wm. Reece Smith, Jr. Leadership Academy

admin 11/20/2017
$3,500.00 IS AVAILABLE TO 2 RPPTL SECTION MEMBERS!
Interested in participating in The Florida Bar Wm. Reece Smith, Jr.
Leadership Academy? Two RPPTL Section scholarships cover out of pocket
travel and hotel expenses incurred in attending the Leadership Academy up to
$3,500.00.
 
WHAT IS THIS? The Florida Bar is accepting applications for the 20187 Leadership
Academy, a one-year multi-session training program designed to assist a diverse and inclusive group of
lawyers in becoming better leaders within our profession while enhancing their leadership skills.
 
HOW DOES IT WORK? In support of the Leadership Academy, the RPPTL Section will select up to 2 active
contributing members of a RPPTL Section Committee, to apply to the Leadership Academy as the
Section’s scholarship nominee. If a RPPTL Section nominee is chosen as an Academy Fellow, the
Section will reimburse the participant up to $3,500 for out of pocket travel and hotel expenses incurred
in attending the Leadership Academy. To receive the scholarship, the nominee(s) if chosen by The
Florida Bar as a Leadership Academy Fellow must agree to remain actively involved in the RPPTL Section
after the conclusion of the Leadership Academy.
 
TIMING? 2018 Leadership Academy applications will be available from The Florida Bar on
Thursday, December 1, 2017. To be eligible for the RPPTL Section scholarship(s), potential
applicants must submit a COPY of their Leadership Academy application to
rpptlapplications@gmail.com by Friday, December 15, 2017 (with a copy to
kfernandez@kfernandezlaw.com). The RPPTL Section Leadership Academy Committee will review the
applications and then inform the nominee(s) of their selection for the potential scholarship. The
nominee(s) must still submit the completed application to The Florida Bar for approval by The Florida
Bar Leadership Academy Committee.
 
A full explanation of the Florida Bar Wm. Reece Smith, Jr. Leadership Academy, is available on the
 
If you have any questions regarding the RPPTL Section scholarships for The Florida Bar Wm. Reece
Smith, Jr. Leadership Academy, please contact Kristopher Fernandez, (813) 832-6340,
kfernandez@kfernandezlaw.com or Brian Sparks, (813) 222-8515,
brian.sparks@hwhlaw.com; J Allison Archbold, Esq.; (941) 960-8825,

New Decision: Disclosures, Reliance and Construction Defects (Arlington Pebble Creek v. Campus Edge Cd’m)

Michael J. Gelfand 11/9/2017

Perversely, could sales disclosures protect the developer, not the buyer? Really, does anyone actually read that all stuff? Apparently not, if “stuff” means condominium sales disclosures. Monday’s decision by the the First District Court of Appeal in Arlington Pebble Creek, LLC v. Campus Edge Cd’m Ass’n, Inc., Case No.: 1D16-1347 (Fla. 1st DCA, November 6, 2017), involving claims of construction defects in a condominium conversion might make you think twice about the value, purpose, and who hides behind the disclosures.

Fraudulent misrepresentation and negligent misrepresentation claims were filed by the Condominium Association against Arlington Property. Arlington Property purchased apartments and created Arlington Pebble Creek to covert the apartments in to a condominium.

Jumping to the end, the appellate court reversed a final judgment based upon a jury verdict. The opinion does not state the judgment amounts, but this writer has been informed that there was a compensatory damage verdict of over $3,000,000, and two separate, independent punitive damage awards each in the amount of $250,000! The reversal was with directions to enter judgment in favor of the appellants/defendants below developer entities!!

What happened? Following transition/turnover, the Association discovered that the Condominium suffered extensive water intrusion damage to common areas. The repair work required a doubling of Association assessments levied upon unit owners.

Fraud or misrepresentation apparently became an issue when the developer entities dueling engineering reports were obtained and compared. The Condominium “Roth” Act conversion engineering report estimated the Condominium’s remaining lifespan at thirty-five to forty-five years, evaluating the structure’s functional soundness as “Good (localized deterioration).” Corresponding, the conversion disclosure budget listed less than $10,000 for building repairs.

As an apparent smoking gun, was Arlington Properties separate “property condition assessment” which it obtained near the time it acquired the apartment building, but not filed with the state or published to others. This report identified moisture intrusion and estimated structure/building estimate repair costs of $290,200.

The Association proceeded on claims of fraudulent misrepresentation and negligent misrepresentation made to the Association. The Appellate Court appeared to have no problem recognizing that there was a false statement of material fact and that the false statement was made knowingly, or that the developer entities should have known that the statement was false.

Nevertheless, the Appellate Court held that the Association did not prove two critical elements: intent to induce; and, injury. This was in spite of the testimony of the current president who owned a unit before turnover.

The catalyst for the Appellate Court was no proof of Association reliance on the false statements in the building report, whether in the turnover Association’s preparation of the budget or otherwise. The Association’s property manager at turnover provided testimony that he did not see the conversion report with the false statement. Further, in terms of damages, the increased assessments occurred without reliance on the misrepresentations.

How could no damages flow from the false statement, especially one concerning moisture intrusion in a Florida condominium? The answer likely lies in two areas: who has actually been damaged; and who relied on the misrepresentations. The Appellate Court noted (fn. 2) the Association acknowledgement that the claim was of misrepresentations to the Association, not unit owners.

The court further noted (fn.3) that the “the existence of a fraudulent statement does not in itself establish reliance on that statement.” While certainly providing a formula to reduce claims, this truism flies in the face of the purpose of the conversion report and the offering statement. The key likely is that reliance would be in the hand and mind of the buyer, now unit owner, not the Association.

How could unit owners have proceeded in a cost-effective manner? Even with the ease of pleading a Fla.R.Civ.P Rule 1.221 class action, there is still the historical reticence of Florida Courts to allow a class action for a fraud claim because of the reliance element of a fraud claim. Would the damaged areas be a subject for converter reserves? Perhaps not, but the opinion did not reach that issue.

One must wonder how did the Association obtain the previously undisclosed engineering report? Good sleuthing? Problem is what to do with the information once it is at hand?

One would presume that there was outrage when the dueling reports were compared. But what to do if the buyers merely used the disclosure statements to prop up the rear of a sofa, or hold down shelves in the rear of a closet? Do we paraphrase Benjamin Franklin, and others “for want of a nail … the horse…battle…war was lost? Now should we proclaim: For want of reading the offering circular, there was no reliance, with no reliance there could be no damages, for no damages, no judgment.

The practical lesson may be to encourage developers to throw everything into the disclosure because who actually reads it? And if there is a claim afterwards, it was disclosed!! Actually, many developer counsels appear to have been suggesting that the risk of losing a sale is well worth the cover from claims provided by a broad disclosure.

So consider what is the purpose of the disclosure?

In In closing, whether we observe Veterans Day by closing our offices or otherwise, take a moment with your families, friends and colleagues to recall those who sacrificed in uniform for our country’s ideals. Recall also the foundations of those ideals including an independent judiciary, and especially what propelled much of early voluntary immigration, seeking to flee the English Civil Wars and the civil strife between wars, based not only upon religious persecution, but also the Crown’s wrongful prosecution and punishment to coerce compliance, a special kind of treachery that our country’s leaders have eschewed for centuries. It is up to you to pass on the traditions of liberty, freedom and democracy, and the independent judiciary necessary to sustain the traditions!

Have a great holiday weekend.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. The decision addressed may not be final, and may be subject to further review. Statements and comments made are not those of The Florida Bar or the RPPTL Section.

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: What is an appurtenance (Silver Beach Towers v. Silver Beach Inv.)

Michael J. Gelfand 10/31/2017

When is an appurtenance not an appurtenance? That was the issue in last week’s decision in Silver Beach Towers POA, Inc. v. Silver Beach Inv. of Destin, LC, Case No.: 1D16-4555 (Fla. 1st DCA, October 18, 2017), involving whether a club membership defined by a developer as an “appurtenance” was an appurtenance that the Condominium Act prohibited from being separated from a unit.

Silver Beach Investments developed condominiums with two condominium Associations and the POA serving as the “Master Association.” The Master Association declaration provided that the condominium Associations were the Master Association’s members. Individual unit owners were defined as “Owners.”

The dispute focused upon the Club at Silver Shell’s which was located approximately a mile from the community. The Master Declaration provided that owners were non-equity members in the Club, that members could not terminate club membership except as part of a transfer to another owner and that “member in the Club shall be pertinent to the Unit upon which is based.”

Nevertheless, the Club’s facilities could be “available to the general public.” The Club was authorized to terminate an owner’s membership without notice, and in its discretion could unilaterally change Club dues and fees which were required to be collected by the Master Association.

In 2008 “turnover” was “completed” including transfer of title to common properties for the Master Association. In 2010 the Master Association’s Board of Directors amended the Declaration deleting the Club mandatory membership and fees and due provisions. In 2012 the developer and Club sued the Master and two condominium Association’s seeking to recover the unpaid dues and fees as well as declaring the Amendment invalid. The trail court granted the developer and Club’s Motion for Summary Judgement declaring that as appurtenances to the condominium units §718.110(4) prohibited the amendments as materially modifying or affecting appurtenances to a unit without the votes of all unit owners and reserving jurisdiction to determine issues of amounts due.

The appellate court first focused on what is an appurtenance. “A thing may be ‘appurtenance’ or annexed as something else, without qualifying as an ‘appurtenance to the unit’,” citing to Thiess the Island House Ass’n., Inc., 311 So. 2d 142, n.1 (Fla 2nd DCA, 1975). But, here the Club membership was:

  • Non-equity
  • Not exclusively for the unit owners
  • Terminable solely by the Club
  • Not common elements or condominium property

“The lack of any indica of ownership by Club members for…” appears fatal to the developers’ effort to not just label but treat Club membership as a Condominium Act defined “appurtenance” to a unit.

Second, the appellate court held that the Condominium Act does completely prohibit separating appurtenances without unanimous unit owner consent. The court quoted §718.110(4)’s preface “Unless otherwise provided in the declaration as originally recorded….” The Master Declaration did provide for amendment by the Members. Thus, the members being the condominiums’ Associations could proceed. The court also swiftly disposed of the developers’ assertion that it was entitled to personal notice of the Board of Directors meeting as the By-Laws only required personal notice to the Directors, and that posting was sufficient to provide notice to others.

The remand to the trial court included directions for a determination of damages to the Club for fees and dues accruing before the amendments affective date.

There are many lessons from this decision:

This decision re-enforces the need to look beyond labels. While “appurtenances” may seem sacrosanct, whether the label meets statutory pre-requisites may have to be considered.

Note also that statutory protections for appurtenances is subject to the declaration’s original amendment provisions. Note in particular in homeowners’ association communities many declarations do not have an express prohibition on changes to voting rights or assessment percentages; thus the “unless otherwise provided in the governing documents…” text in §720.306(1)(b-c), may allow the members to undertake significant changes. Developer counsel, consider this when drafting your next set of governing documents.

When reviewing the Club (or developer!) retained rights concerning Club membership shown by the above bullet points, there may be a lesson to developers regarding what could colloquially be referred to as “over-writing” covenants. How many times have we seen a contract or covenant that is so over-reaching that the terms become unenforceable. Remember the saying “pigs get fat and hogs get slaughtered!”

The decision does not address whether the developer declared the Master Association to be subject to the Condominium Act. It is interesting that the developer invoked the condominium act, usually a fate worse than death for developers, to defend its treatment the Club memberships as an appurtenance. If the project was marketed as a condominium and the prospectus was reviewed by the Division of Condominiums, it would be interesting to know whether the Division issued a deficiency notice concerning the retention of Club rights and effort to label memberships as an appurtenance.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Tax Lien Priority (Miami-Dade County v. Lansdowne Mtg)

Michael J. Gelfand 10/31/2017

Potentially increasing lender risks and thus the cost of financing, the Third District Court of Appeals clarified to the chagrin of many lenders the consequences of an improper homestead real property tax exemption in Miami-Dade County v. Lansdowne Mtg, LLC, Case No.: 3D 16-1046 (fla. 3rd DCA, October 18, 2017).

When dealing with priority of claims, the chronology is frequently important:

· September 2007: Lansdowne’s mortgage was executed and recorded;

· January 2014: County tax lien recorded as a result of a determination of improper homestead benefits; and,

· May 2015: Lansdowne files a mortgage foreclosure action including the county as a defendant.

The trial court granted the Lansdowne’s Motion for Summary Judgement pursuant to the priority of lien recording statute, §695.01(1) Fla. Stat. (2015).

The appellate courts analysis recognized the priority provided by the recording statute but noted exceptions, one being:

[a]ll taxes imposed pursuant to the State Constitution and laws of this state

shall be a first lien, superior to all other liens, on any property against which the

taxes have been assessed . . . .” See City of Palm Bay, 114 So. 3d at 928.

§197.122(1) Fla. Stat. (2015). The court differentiated the statutory authority for the “priority” of the lien, as opposed to the authority for when a lien “attaches” to real property. Thus, the court rejected the lender’s assertion that the statutory exemption structure does not subordinate the tax lien to the previously provided mortgage. The attachment statute prevails:

The lien herein provided shall not attach to the property until the

notice of tax lien is filed among the public records of the county

where the property is located. Prior to the filing of such notice of lien,

any purchaser for value of the subject property shall take free and

clear of such lien. Such lien when filed shall attach to any property

which is identified in the notice of lien and is owned by the person

who illegally or improperly received the homestead exemption. . . .

§196.161(3) Fla. Stat. (2015) (emphasis added).

Thus, there appears to be a race to the courthouse between the taxing authorities and others. This decision likely will encourage buyers and lenders of property for which a homestead tax exemption is claimed to undertake a minimum review of the basis for claiming the exemption. Title insurance may also be of added importance to provide protection to the lender/purchaser.

A couple of extra considerations: In light of the above quote that the “purchaser” takes free and clear, how the court will treat a lis pendens? Please note that this only address the homestead tax exemption, not the devise or creditor claim homestead provisions.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Safe Harbor (Villas of Windmill Point II v. Nationstar)

Michael J. Gelfand 10/31/2017

Whether a voluntary grantee is entitled to recognition of its grantor’s mortgage foreclosure “safe harbor” was at issue in last week’s decision in Villas of Windmill Point II POA, Inc. v. Nationstar Mortgage, LLC, Case No.: 4D16-2128 (Fla. 4th DCA October 25, 2017). The decision affirmed a final summary judgement, subject to remand to correct a calculation error.

Nationstar, as agent of Fannie Mae, sued the POA, seeking compliance with the Safe Harbor provisions of §720.3085(2)(c) Fla. Stat. (2011), declaratory relief and damages.

A brief derogation of title is appropriate:

· Fanny Mae held a mortgage on the property.

· CitiMortgage became the holder of the first mortgage.

· CitiMortgage foreclosed, including the borrower and the Association as defendants.

· CitiMortgage obtained a foreclosure judgment leading to a sale resulting in CitiMortgage taking title.

Thereafter CitiMortgage deeded the property to Fanny Mae.

Reciting the HOA Act’s “safe harbor” provisions:

Notwithstanding anything to the contrary contained in this section, the liability of a first mortgagee, or its successor or assignee as a subsequent holder of the first mortgage who acquires title to a parcel by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee’s acquisition of title, shall be the lesser of….

§720.3085(2)(c) (2011) (emphasis in decision), the court held that:

Here, although Fannie Mae was not “a first mortgagee, or its successor or assignee as a subsequent holder of the first mortgage who acquire[d] title to a parcel by foreclosure or by deed in lieu of foreclosure”1 under section 720.3085(2)(c), Fannie Mae does indirectly benefit from the safe harbor provision because, under section 720.3085(2)(b), it is jointly and severally liable with the prior parcel owner, CitiMortgage, for all unpaid assessments due up to the time of transfer of title, and CitiMortgage did qualify for the safe harbor provision.

(Emphasis in decision.)

In other words, the Association cannot pull the safe harbor out from under the subsequent grantee.

This decision re-enforces the prevailing view of Association counsel and in doing so helps avoid what otherwise would be unnecessary and costly disputes for Associations. It is noted because of the similarity in language that it is likely that this decision will also be applicable to condominium Associations pursuant to 718.116. The court appeared be very carefully outlining the transfer of title perhaps indicating that the court was not going to re-evaluate the safe harbor requirement that the holder of the mortgage take title.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Taxation, Improvements and Leaseholds (Beach Club Towers HOA v. Jones)

Michael J. Gelfand 10/16/2017

Wednesday the First District Court of Appeals addressed whether the remainder of a leasehold upon which a condominium was declared is to be included in the condominium’s units’ ad valorem tax valuation. In Beach Club Towers H.O.A. v. Jones, Case No. 1D15-5886 (Fla. 1st DCA, October 11, 2107), the property owner/leasehold remainder holder was a county which created special circumstances, and further, the decision justified a second look see for commentary concerning whether a condominium may be declared upon a leasehold.

Short and sweet background: Beach Club Towers is a condominium located in Escambia County. The United States conveyed the land to Escambia County with a condition that the County retain legal title. After a number of leases and subleases the Condominium developer obtained a sublease and declared the Condominium which included “an undivided leasehold interest in the underlying land.” The master lease provides for renewal “for an additional ninety-nine (99) years, terms and conditions to be renegotiated at such time.”

Focusing on “who owns the land” the opinion swiftly shifted to the concept of “equitable ownership” of the leasehold as described in the First District Court of Appeal’s earlier decision in Accardo v. Brown, 63 So. 3d 798 (Fla. 1st DCA, 2011) approved in Accardo v Brown, 139 So. 3d 848 (Fla. 2014).

The Supreme Court held that, because the leases in the land were “perpetually renewable,” the condominium owners owned a equitable title to the land and were liable to pay ad valorem property taxes. Id. at 856.

Slip at 4. The Court held that Accardo was inapplicable because in Accardo “the primary hallmarks of equitable ownership” were different. In Accardo the lease could be renewed upon nominal consideration “or to otherwise exercise perpetual “domination over the property.” In this instance, the lack of an automatic renewal distinguished the potential perpetual domination.

Onto the Condominium Act issues, the Court rejected the County’s assertion that the land underlying a condominium must be declared as part of the Condominium, apparently meaning the fee simple interest. The County relied upon Section 718.104(4)(s)(c) Fla. Stat., which the Court noted requires a statement of the underlying property submitted to condominium ownership. Instead, the Court relied upon Section 718.104(1) Fla. Stat. which it noted expressly acknowledges the creation of a condominium upon a leasehold.

Further, the Court commented that the Condominium Act does not change the exempt treatment of property. Section 718.120(1) Fla. Stat., only requires that each condominium parcel must be assessed separately from other parcels. Essentially, the underlying fee does not have to be included in the units valuation if a leasehold.

In reviewing the opinion, of critical significance is the fee owner being a county. Generally county land is exempt from ad valorem taxation. There are a number of condominium and homewowners’ communities that are declared on land owned by and leased from a political subdivision that would otherwise be exempt from ad valorem taxation. Note however the critical provisions of a lease which may provide the functional equivalent of taxation. Where a leasehold is owned by a person or private entity, then one may see that the landlord includes in the lease a requirement that the tenant pay ad valorem taxes as a pass through.

There was a vigorous dissent; however, the dissent was primarily based upon whether there was equitable ownership. The dissent seemingly assuming that the renegotiation text mandated the renewal, an assumption that the majority opinion rejected.

A couple of matters of interest. First, of course, is the reminder that a name does not dictate the type of ownership. The “homeowners association” name still requires a review of the governing documents because, as the opinion reported, the property was a condominium. Second, is the import of a requirement to negotiate an extension of time and how does that obligate the parties. This decision assumes that such a duty does not mean that the parties must renew which may raise secondary issues.

Michael J. Gelfand

Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar
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© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator:
Civil Circuit Court & Civil County Court
Fellow, American College of Real Estate Attorneys

P Please consider the environment before printing this e-mail

New Decision: Electronic Docketing on Rehearing (Emerald Coast Utilities v. Bear Marcus Pointe). Email Protocols

Michael Gelfand 10/9/2017

Hear Ye, Hear Ye! If you are used to traditional methods of communication wise up quickly, or get out of the way before your client, and you, personally, have a very bad experience.

Doubling down on last month’s stern e-mail technology lesson to attorneys on Friday the First District Court of Appeal denied appellant’s motion for rehearing, rehearing, and for certification in Emerald Coast Utilities Authority v. Bear Marcus Pointe, LLC, Case No. 1D15-5714 (Fla. 1st DCA, October 6, 2017).

Instead, a substitute opinion went far beyond a tweak here and there. Adding pages to its original opinion, the court reinforced its directive that counsel’s e-mail systems must be designed to do more than just deliver most email, and do more than implying that attorneys need to know how their messages are handled if they have a shot at claiming a failure amounts to excusable neglect. Two duties of care were projected.

Counsel has a duty to have sufficient procedures and protocols in place to ensure timely notice of appealable orders. This includes use of an email spam filter with adequate safeguards and independent monitoring of the court’s electronic docket. In cases where rendition of an appealable order has been delayed for a significant period of time, it might also include the filing of a joint motion for a case management conference to ensure that the order has not slipped through the cracks. Odom & Barlow made no effort to do any of these things, reflecting an overall pattern of inaction and disengagement.

One duty involves the need to have a properly working e-mail system. The second duty described is for an attorney to move the court’s docket when there is no apparent reason for delay.

Driving home that this is not a new issue, a five year old Alabama decision was used seemingly to flog the technologically inept:

An inability to manage an office e-mail system to properly receive notices of filing does not qualify as excusable neglect.

Crocker v. Child Dev. Sch., Inc., No. 3:10-CV-759-WKW, 2011 WL 4501560, at *5 (M.D. Ala. Sept. 29, 2011). Nailing down the message, citing to the Southern District of New York:

The fact is that all sorts of things go awry in the electronic universe in which we now live, and lawyers are obliged to protect their clients’ interests even if that requires something more than blind reliance on the proper and timely transmission, receipt and filing of computer generated electronic mail. Thus, even if one were to characterize as excusable the error attributed to the IT staff, the lawyer’s failure to check the docket sheet, knowing that he had a motion pending before the magistrate judge and that an adverse recommendation would have to be objected to within fourteen days of its entry, was not.

Pinks v. M & T Bank Corp., No. 13 Civ. 1730(LAK), 2014 WL 2608084, at *1 (S.D.N.Y. June 5, 2014).

The message seems to be: no more reliance on the same methods of snail mail, not to say that waiting for the town crier to bring you news is definitely passé. Further, perhaps to ensure catching your attention, old methods maybe below the standard of care.

The concept of an attorney pushing the trial court’s docket is new, at least in print. Each of us has recounted the year waiting for a judgment or order, and being hesitant to make another call to the judicial assistant out of concern of creating a fear of retribution. While not absolutely mandating a duty to call out the judge, respectfully of course with a proper motion, the substitute opinion places pressure on the Bar’s rules committees to set a process that will inevitably become a standard of care.

In essence, the District Court announces that the time for pussyfooting around the electronic age has ended. If you are participating in the legal system you literally must be up to speed and connected!

In other words, the unsupported assertion that my spam folder ate my important e-mail will no longer fly! The courts want the technological equivalent of the chewed document, and perhaps proof that not only did you feed the monster recently, but fed it well!

The original decision can be found at: Emerald Coast Utilities Authority v. Bear Marcus Pointe, LLC, ___ So. 3d ___, 42 Fla. L Weekly D 1753, (Fla. 1st DCA, August 10, 2017).

Many thanks to Susan Spurgeon for providing the decision on rehearing promptly. [Obviously she has been monitoring her email!]

Have a great week.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

Citizens Begins taking claims in Big Pine Key on Wednesday

Neil B. Shoter 9/20/2017
Press Release_Big Pine Key_Keys response

New Decision: Derivative Action (Collado v. Baroukh)

Michael J. Gelfand 9/18/2017

The strict enforcement of conditions precedent to a derivative action in a condominium association context was addressed in Collado v. Baroukh, Case No:. 4D 16-2075 (Fla. 4th DCA, August 30, 2017). In remanding the Court commented upon the circumstances for when a fiduciary duty exists and when an election claim is moot.

As with many other disputes, this matter began, at least as reported by the Court, when a condominium unit owner demanded Association records pursuant to §607.07401(2) Fla. Stat. (2016). The Association denied access because the Association was not a Chapter 607 corporation. The owner then corrected the demand on October 7, 2015, by citing §617.07401 Fla. Stat. (2015). To the second demand the Association responded that “it would consider appointing an independent committee to investigate the owners’ allegations at the next Board of Directors meeting.” On December 14, 2015, the owner filed a complaint pursuant to Section 617.07401. The trial court dismissed the verified claim complaint without leave to amend.

The appellate court held that as a not-for-profit corporation the owners’ October 7, 2015, letter was a new demand triggering the statute’s 90 day waiting period. Further the verified complaint failed to allege that the demand was refused or ignored, or that the waiting period would cause irreparable harm. Thus, failure to comply with the statutory requirements required dismissal, in addition to convoluted pleading without detail which apparently violated Fla. R. Civ. P. Rule 1.420(b).

The Court did note that leave to amend should not be prematurely denied; thus, the case was remanded to allow for an amended complaint. In doing so the court noted that a claim for breach of fiduciary duty against the Association was improper because there is no fiduciary duty citing Tower House Cd’m, Inc. v. Millman, 475 So. 2d 674, 676 (Fla. 1985). Similarly claims against certain directors individually would have to be dismissed as the court held that they may be liable only “in the representative capacity for breach of fiduciary duty as officers and directors” citing Section 617.0834 Fla. Stat. (2016). Apparently, the complaint did not allege any office-holding status.

A challenge to the including directors on a ballot due to term limits was declared moot because the election occurred; however, the eligibility of directors may still be challenged.

The moral to this story may be the consequences of over-litigating. The opinion does not explain why a records request turned into a derivative action. The court did not take the opportunity to educate the parties as to the mandatory arbitration provisions; however, if the plaintiff was determined to bring this as a breach of duty damages tort claim, then the plaintiff lives with the result.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Law Firm Defective Email (Emerald Coast Utilities Authority v. Bear Marcus Pointe)

Michael Gelfand 9/18/2017

Is your firm’s email system and the firm’s docket monitoring procedures a trap for your clients and you? This is not a “condo case” but it should grab your attention.

A firm’s email system configuration and the firm’s court docket monitoring process lead the First District Court of Appeal to affirm the denial of a motion for relief of judgment. The opinion in the Emerald Coast Utilities Authority v. Bear Marcus Pointe, LLC, ___ So. 3d ___, 42 Fla. L Weekly D 1753, (Fla. 1st DCA, August 10, 2017), may become a case study for attorneys and their firms’ administrators.

In gross summary, Bear Marcus Pointe’s motion for attorney’s fees, was heard in January 2013. Over a year later, no order had been entered. In the interim Bear Marcus Pointe’s counsel assigned a paralegal to check the Court’s website every three weeks to confirm whether any orders were entered. In response to Bear Marcus Pointe’s attorneys request for a joint motion for a case management, conference, the Authority’s attorney “categorically refused to join such a motion.”

Shortly before a status conference was to occur, an order was entered awarding attorney’s fees. The Authority’s asserted that its law firm did not receive the order and was not aware of the order until Bear Marcus Pointe began execution efforts.

The opinion recited a cascade of expert testimony at trial regarding the processes necessary for an effective email system. This includes:

Not being configured to drop and permanently delete emails perceived to be spam without alerting the recipient of the deletion;

Online backup system; and,

Email logs.

Pursuant to Fla. R. Civ. P. Rule 1.540(b), the Court focused on whether there was excusable neglect. No mistake was apparent because there is no proof that the emailed order from the Court was intentionally deleted. Instead, the Court found that the Authority’s law firm’s server was deliberately configured in such a way that it could delete legitimate emails as spam without notifying the recipient, despite Odom & Barlow being warned against this configuration.

Further the law firm was warned against the configuration, and the law firm rejected recommendations for a third-party vendor and online backup system.” Thus,

Based on this testimony, the trial court could conclude that [law firm] made a conscious decision to use a defective email system without any safeguards or oversight in order to save money. Such a decision cannot constitute excusable neglect.

Citation deleted. The court also made specifically commented that the law firm could have undertaken, as its opposing counsel did, a check of the website on a regular basis.

This decision may raise the bar for those who have not been technologically astute. The appellate court took cognizance of the lack of a properly configured email system, including appropriate spam filters and backups. In addition, the court implicitly recognized the ease of taking advantage of the court’s online services.

Moving forward, it may appear now that when counsel is waiting for an order or for an event that presents a type of “drop dead” deadline, that the appropriate court’s docket be regularly checked. As a practical matter, it may also behoove attorneys to cooperate on docket review.

One may also wonder why the trial court just did not accept at face value counsel’s representations as potentially within the trial court’s discretion and instead embarked on what must have been a long hearing.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

New Decision: Bankruptcy: Anti-Modification of Lien (In Re: Hock)

Michael Gelfand 9/18/2017

Whether a Chapter 11 plan may modify a mortgage upon the Debtors’ principal residence which contains leaseholds was at issue in In Re: Hock, Case No: 14-32157-BKC-PGH, Chapter 11, US BKY, SD Fla., August 15, 2017. (Unfortunately, I do not have a non-copyrighted link, thought I understand it is on Westlaw.) The Debtors’ historical Delray Beach property included a main house in the front which was the Debtors’ residence, and a carriage house in the back which included three units. Two of the units were leased continually since the debtors purchased the property over 10 years earlier. The third unit was vacated after seven years of occupancy by a single tenant.

US Bank held a first mortgage that originally contained a primary residency which was deleted by a “1-4 Family Rider.” Legacy Bank held a second mortgage.

The Debtors moved to value the property, to determine the secured status of Legacy Bank’s second mortgage, and to modify the rights of both lenders. Hock asserted that the mortgages exceeded the value of the property rendering at least a portion of Legacy Bank’s claim as unsecured.

The Court’s analysis turned upon the Bankruptcy Code requirement that in Chapter 11 a plan may

… modify the rights of holders of secured claims, other than a claim secured only by security interest in real property that is the debtor’s principal residence.

11 U.S.C. §1123(b)(5) (Emphasis applied by Court). If the Code is unambiguous the Court should not undertake further interpretation; thus, the Court determined no ambiguity. The term “secured only” modifies the term “security interest” not modifying “real property.”

The term “debtor’s principal residence” is not exclusively the debtor’s principal residence, but may be a residence that includes incidental nonresidential property. As a result, the Code section 1123(b)(5) does not allow Debtors to modify US Bank’s first mortgage because US Bank’s claim is secured only by a security interest in real property that is debtor’s principal residence. Legacy Bank’s second mortgage may be solely unsecured for which another evidentiary hearing would have to be scheduled.

The Court generously acknowledged that this issue has not been addressed by the U.S. 11th Circuit, and that different conclusions have been reached between Florida Districts, and even between judges within the Southern District of Florida. Perhaps the Court is foreshadowing that this matter will or should be addressed by a District Court and then the 11th Circuit!

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

Court Closure State Wide Friday, and time extensions to Monday

Michael J. Gelfand 9/6/2017

Attached is Chief Justice Larbarga’s Administrative Order, No. AOSC17-46, announcing the closure of all court’s statewide on Friday, and a corresponding extension of most time limits for deadlines falling from the close of business on Thursday, September 7, 2017, until the close of business on Monday, September 11, 2017.

Note that most firms in south Florida will be closed Friday, and many for a good portion of on Thursday.

May all who are the path of the storm find safe shelter, fortitude and calm. May everyone find patience and understanding.

 

Michael J. Gelfand
Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar
Click www.RPPTL.org  for Breaking News
About Florida’s Largest Substantive Law Section!
Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section
© 2017 Michael J. Gelfand

New Decision: Covenant Cancellation (Victorville West, LP v. The Inverrary Ass’n.)

Michael J. Gelfand 8/24/2017

Fore!

Just as a golfer warns of a pending shot, yesterday the Fourth District Court of Appeal warned golf course and other Florida property owners to beware when seeking to dissolve covenants based on “changed circumstances” such as unprofitability, addressing the threshold for cancelling a covenant, the application of the Doctrine of Unreasonable Restraints on Alienation to an automatically renewing covenant, and when does the statute of limitations run on a claim to cancel a covenant. Victorville West LP v. The Inverrary Ass’n Inc., Case No. 4D16-2266 (4th DCA August 23, 2017)

THE ISSUE & POSTURE.

Though the Victorville opinion addressed three distinct matters, the court defined the issue, what likely for many is the main issue, as:

Whether a property owner may cancel a restrictive covenant when that covenant has become financially onerous.

Following a non-jury trial, Victorville’s claim was found to be time-barred, that the covenant remained beneficial to the surrounding community, and the covenant would not be vacated.

THE FACTS.

In 1971, the Inverrary golf course was encumbered by a restrictive covenant requiring the course to “be used solely for recreational purposes.…” Perhaps with wishful thinking, the covenant limited the club roster, if there were 1,500 golf memberships, then non-Inverrary residents could not be admitted as members. The covenant was binding for twenty-five years, followed by ten year successive renewals, unless amended, modified or terminated by the owners of two-thirds of the land.

In 2006, Victorville purchased the golf course “SUBJECT TO… all covenants… listed in the Public Records of Broward County, Florida.” [Recall in twenty-twenty hindsight that 2006 was an auspicious year to purchase Southeast Florida real property.] Membership “significantly” dropped after the purchase.

The Inverrary Association refused to cooperate with Victorville’s request for a vote to change the covenant. In perhaps a classic South Florida response, community members:

Indicated they like the golf course, even if they did not have a membership, because it provided a tranquil view, prevented overcrowding, and preserved the nature of the community.

It appears the community wanted the golf course, but did not want to pay for it!

COURT’S ANALYSIS.

Cancellation.

The appellate court’s test to cancel the restrictive covenant is summarized as:

  1. Whether the original intent of the parties can be carried out despite alleged material changed circumstances; or,
  1. Whether changed conditions frustrated the object of the covenant without fault or neglect on the party seeking to be relieved.

See Essenson v. Polo Assocs., 688 So. 2d 981, 984 (Fla. 2nd DCA 1997). Reciting the trial court’s factual findings, the covenant continues to benefit the dominant estate which was the residential properties. This benefit was preserving the character the community including the pleasant view.

Despite Victorville’s argument, the covenant’s text did not show an intent for the course to be profitable. Citing Essenson, cancellation should not occur just to accommodate the best or most profitable use of property. The trial court’s decision on this issue was affirmed.

Restraint on Alienation.

The covenant was not an invalid restraint on alienation. The covenant’s duration was not perpetual because of the ability to terminate by the two-thirds vote. Further, there is no restriction on “the type of alienation precluded” or “the size of the class precluded from taking.” The trial court’s decision on this issue was affirmed.

Limitations.

A claim begins to run when the action may be brought. The claim was not present when the covenant was created, or upon Victorville’s purchase, clarifying the court’s holding in Harris v. Aberdeen POA, 135 So. 3d 365, 368 (Fla. 4th DCA 2014). Not until “a substantial change in circumstances” occurred would the action accrue and the statute of limitations start to run. The trial court’s statute of limitations holding was reversed; however, that did not provide effective relief to Victorville in light of the affirmances on the first two issues.

CONCLUSION.

Cancellation hung on the specific text of the covenant. The covenant was not conditioned on profitability. Instead, the condition for termination was an owner vote. Without expressly saying, the District Court of Appeal would not re-wrtie the covenant to save an investor from what ultimately became a bad deal.

Reinforcing this conclusion is the Court’s determination that “nothing in the covenant shows that its intent is for the golf course to be a profitable enterprise.” That may be so, but assuming that the golf course was a for-profit effort, this quote may cause consternation regarding what some would say is an “obvious” assumption. The Court may be signaling that if it is important, then write it down.

The decision, also without expressly saying, shifted the focus from the servient estate, the restricted party, to those the covenant was intended to benefit, the “dominant estate,” in this case the residential owners. The dominant estate just wanted their view and ambiance.

In the long run, communities are experiencing their golf courses shuttering and literally becoming brown fields. Whatever the desire on ambiance, in the midst of all this, whatever are your prejudices for or against owners, developers and golf courses, there is the ultimate question of how does a golf course remain green and manicured if there are not enough paying members/players funding maintenance. Covenants with strict provisions may force owner operators and their lenders to depreciate the valuation of their investments or close, and perhaps deed the property to their lender. Of course, if there are covenants in the drafting stage, it is anticipated that the fine print will become more friendly to operators. Finally, it is noted that in many golf course communities the covenants have terminated by the passage of time and what happens to the green space shifts to a zoning forum, a largely political matter for county or municipal governing boards.

Remember all eagles, no bogeys.

Michael J. Gelfand
Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar
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New Decision: Freedom of Speech (Fox v. Hamptons at Metrowest)

Michael Gelfand 7/26/2017

Friday the Fifth District Court of Appeal addressed in a condominium association harassment and nuisance context pre-publication restraints as penalty for contempt in Fox v. Hamptons at Metrowest Cd’m. Ass’n., Inc., Case No. 16-1822 (Fla 5th DCA, July 21, 2017).

In sum, the decision does not extend “Constitutional free speech” rights to condominium unit owners to injure associations or association volunteers. The decision does not address an association’s authority, if included in a covenant, to restrict speech.

The Association’s injunction claim alleged that Mr. Fox, a resident of the Hamptons at MetroWest:

…engaged in a continuous course of conduct designed and carried out for the purpose of harassing, intimidating, and threatening other residents, the Association, and its representatives.

The parties settled resulting in a Final Judgment ordering the parties to comply with the settlement agreement and retaining jurisdiction to enforce. The terms of the agreement were not recited in the opinion.

Thereafter, the trial court granted the Association’s Motion for Contempt. Instead of simply enforcing the settlement agreement, the trial court’s civil contempt order entered penalties apparently beyond what was agreed and beyond what was incorporated in the final judgment.

The trial court’s expansive order required Fox to:

· Stop posting, circulating, and publishing any pictures or personal information about current or future residents, board members, management, employees or personnel of the management company, vendors of the Hamptons, or any other management company of the Hamptons on any website, blog, or social media.

· Take down such information currently on any of his websites or blogs.

· As punishment, not start any new blogs, websites or social media websites related to the Hamptons or the Association.

Fox appealed.

Despite first impressions by many readers, the decision was not a loss for the Association as the decision affirmed without comment enforcement of the settlement agreement’s terms. Only penalties not included in the settlement agreement were reversed. The appellate court seemingly could stopped there, the reversal on the excessive portion of the Judgment merely on procedural grounds.

But the appellate court continued, detouring to State and Federal constitutional “Freedom of Speech,” Amend. I, U.S. Const.; Art. I, § 4, Fla. Const., and further citing to decisions that court crafted injunctions are subject to freedom of speech constraints, Alexander v. United States, 509 U.S. 544, 550 (1993). Near v. Minnesota ex rel. Olson, 283 U. S. 697, 712 (1931) (“…suppression is accomplished by enjoining publication….”). The court explained there are boundaries demarcating constitutional protection, including “obscenity, defamation, fraud, incitement, true threats, and speech integral to criminal conduct”, but a speaker’s “public criticism of his business practices” is protected from prior restraint, including judicial injunctions. The court remarked that businesses and associations are not powerless to respond, and do not just have to take it. Instead, if there is damage the civil or criminal proceedings are the remedy.

[a] free society prefers to punish the few who abuse rights of speech after they break the law than to throttle them and all others beforehand.

Citations omitted.

The opinion is less than a direct First Amendment decision. The determination that the trial court’s penalties went beyond the settlement agreement, and no less affirming the penalties for violating the agreement, would lead one to conclude that the remainder of the opinion was pure dicta. This is especially as courts are usually directed to avoid constitutional issues unless necessary.

Perhaps reinforcing the nature of the dicta, Quail Creek P.O.A., Inc. v. Hunter, 538 So.2d 1288 (Fla. 2nd DCA 1989), was not cited. Note that the Quail Creek decision reversing a summary judgment invalidating a “For Sale” sign restriction was also limited:

…very simply hold that neither the recording of the protective covenant in the public records, nor the possible enforcement of the covenant in the courts of the state, constitutes sufficient "state action" to render the parties' purely private contracts relating to the ownership of real property unconstitutional.

The Quail Creek court expressly sidestepped whether there was state action.

There have been at least two so-called “flag case” decisions from Florida’s Federal District Courts. Many readers have focused on one, Gerber v. Longboat Harbour North Condominium, 724 F. Supp. 884 (MD Florida, 1989), in which one could conclude that the District Court was annoyed (the writer’s wording) that the case was pursued after the Florida Legislature granted flag display rights, albeit after the initial alleged violation. In turn this may have provoked the Court:

This Court cannot agree with its conclusion that judicial enforcement of racially restrictive covenants is state action and judicial enforcement of covenants which restrict one's right to patriotic speech is not state action. Enforcement of private agreements by the judicial branch of government is state action for purposes of the Fourteenth Amendment, as the Highest Court in the land declared it to be in Shelley; it cannot be said that the terms of the agreement either increase or decrease the extent to which government is involved. It is an exercise in sophistry to posit that courts act as the state when enforcing racially restrictive covenants but not when giving effect to other provisions of the same covenant.

Id. at 886-887. The District Court doubled down on re-consideration, vacating the summary judgment referenced above, except reaffirming the state action holding. Gerber v. Longboat Harbour North Condominium, Inc., 757 F. Supp. 1339 (M.D. Fla. 1991).

Another Federal District Court took the opposite stance, Murphree v. Tides Cd’m. at Sweetwater, Case No. 3:13-cv-713-J-34MCR (M.D. Fla. 2014), and rejected that enforcement of a flag covenant amounted to state action in the condominium context. Murphree cited to Loren v. Sasser, 309 F. 3d 1296, 1303 (11th Cir. 2002) which included a “For Sale” sign covenant dispute and held that private enforcement of a private covenant was not state action sufficient to invoke the remedies of The Civil Rights Act, 42 U.S.C. § 1983, and commented that Shelley v. Kraemer, 334 U.S. 1, 19-20, 68 S.Ct. 836, 845, 92 L.Ed. 1161 (1948), has not been extended beyond race discrimination contexts. Id. at 1303. Interestingly, Loren did not cite to Gerber.

Noting that this issue has not been addressed by the United Stated Eleventh Circuit, nor the United States Supreme Court, there have been significant questions whether the Gerber decision on the politically charged flag waiving issue would survive further review. This is perhaps a more interesting question in the post-Citizens United era in which the First Amendment is seen as more protective.

Florida appellate courts have not cited Gerber with enthusiasm. Gerber was been distinguished in Latera v. Isle Mission Bay Homeowners, 655 So. 2d 144 (Fla. 4th DCA, 1995), (No constitutional right to satellite dish.).

Pre-dating many of these decisions is White Egret Condominium, Inc. v. Franklin, 379 So. 2d 346 (Fla. 1979), which held that when found in a condominium

age limitations and restrictions may be enforced if reasonably related to a lawful objective and not applied in an arbitrary or discriminatory manner.

Interestingly, the decision reinforced basic covenant law citing Hidden Harbor Estates, Inc. v. Norman, 309 So.2d 180, 181-82 (Fla. 4th DCA 1975) and did not address the state action component as part of an equal protection analysis which would appear to be different from a freedom of speech analysis. The one citation that did not involve a state actor was a California decision that did not address the U.S. Constitution.

Michael J. Gelfand

Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar
Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator:
Civil Circuit Court & Civil County Court
Fellow, American College of Real Estate Attorneys

RPPTL New Decision: Short Term Rentals, VRBO (Santa Monica Beach P.O.A. v. Acord)

Michael J. Gelfand 4/30/2017

Dear Colleagues

Florida community associations verses “vacation rental” owners. The battle is now joined!

Hot off the presses, the first appellate court decision between these dueling interests was issued Friday morning!

The decision, exceedingly narrow, is still instructive. Santa Monica Beach P.O.A. v. Acord, Case No. 1D16-4782, (Fla. 1st DCA, April 28, 2017), addressed a “VRBO” short term home rental. Vacation Rentals By Owner is somewhat similar to AirBnB, at least in terms of the use of a property. Among the distinctions is the relationship between the owner and internet company and very significantly how money is handled between them.

The facts are short and sweet. The Acords listed homes (plural) on the VRBO website and proceeded to rent. The Association, and, interestingly, its board of directors, sought a declaratory judgment that the Acords’ “short term rentals” violated the Santa Monica Beach subdivision restrictive covenants which stated:

Said land shall be used only for residential purposes, and not more than one detached single family dwelling house and the usual outhouses thereof, such as garage, servants' house and the like, shall be allowed to occupy any residential lot as platted at any one time; nor shall any building on said land be used as a hospital, tenement house, sanitarium, charitable institution, or for business or manufacturing purposes nor as a dance hall or other place of public assemblage.

(Emphasis added by the Court.). The Association asserted that the Acords advertised transient facilities, obtained transient rental licenses in the name “Acord Rental,” and had to collect and remit state sales and local bed taxes. The trial court granted a motion to dismiss with prejudice finding that the rental use was residential, not a business.

The First District Court of Appeal helpfully started its analysis by framing the novel Florida issue:

… whether short-term vacation rentals violate restrictive covenants
requiring property to be used only for residential purposes and
prohibiting its use for business purposes….

Focusing upon the restrictive covenant’s limited text, the Court identified the threshold as the actual use, not the duration of the rental, and implicitly not examining advertising or organization.

Citing with agreement other decisions, the Court reasoned that a rental, even rentals for a profit, in-and-of-itself, does not transform a home’s use from residential to either business or commercial. The Acords’ tenants were eating and sleeping in the homes and that use is residential. Apparently there was no allegation of a business use by the occupant tenants. Thus, the Court distinguished other decisions which found improper uses based upon the frequency of use and types of uses, as well as the difference in covenants, and affirmed the trial court’s dismissal.

Dicta addressed drafting a short term rental restriction. Based upon the premise that leasing restrictions

…are not favored and to be strictly construed in favor of the free and
unrestricted use of real property…

(citations omitted), the Court stated that an “explicit prohibition” was necessary, a restriction would not be implied. (Emphasis in original). Further dicta encouraged “explicit language” where a “question is common and predictable.”

The decision did not address why the individual directors were plaintiffs. Are they now liable as parcel owners for attorney’s fees? The decision did not state the actual duration of the rentals, a day, a week, or otherwise. The decision did not indicate any outward adverse manifestations of the rentals. These matters likely were not relevant in the context of a claim focused on a narrow restriction.

Looking forward, where do associations go from here? The starting point if short term rentals are to be prohibited, the covenants should be restricted. A mere “no business use” limitation is not sufficient. Simply stated, if you desire to prohibit something, then have a covenant that addresses text the issue.

If the covenants are perhaps too brief, then consider amending to add a short term limitation. Consider other covenant tools that would serve a community’s valid goals which tools may include limitations on who can own, how many can own, registration of guests and vehicles. Perhaps limits on what can be advertised in conjunction with other restrictions.

What can associations do in the interim? Surrendering is not an option when there are blights and disturbances. Concentrate on a rental’s negative impacts. If there is too much noise, blight, lack of maintenance, trash, improper parking, or other annoyances, then focus on those manifestations and how they may trigger other use restriction violations.

Consider recommending other avenues of assistance. Are municipal or county codes violated? Call code enforcement! Is there a significant disturbance of the public welfare and peace, or endangerment of minors or others? Call law enforcement! Are taxes properly remitted? Call the Tax Assessor! Is the property shown as homestead? There may be grounds for the Property Appraiser to re-evaluate the Parcel Card!

More formal tools are available: fining, pre-suit mediation/arbitration and court. The tenant may be far away, but no tenant wants to receive formal demands while on vacation.

Of course, each tool or option requires a careful examination of the situation.

Kudos to: Condominium and Planned Development Committee Chair Sklar for the Court’s call out to his February Florida Bar Journal Article: Bill and RPPTL Legislative Co-Chair Steve Mezer for their discussion Friday afternoon at Stetson Law School; and, to Committee Vice-Chair Ken Direktor for coordinating a very practical CLE Friday covering many new topics which you can access through www.RPPTL.org.

 

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County CourtMichael J. Gelfand

Immediate Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

image002.png@01D01152.BB680010" >

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About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

RPPTL Sponsors Minority Mentoring Picnic

Jesse Friedman 2/13/2017

On Saturday, February 4, 2017, the Real Property, Probate & Trust Law Section of the Florida Bar was again a sponsor of the Kozyak Foundation's Annual Minority Mentoring Picnic (the "MMP"), held at Amelia Earhart Park in Hialeah, Florida. The MMP is the Kozyak Foundation's premiere event and gives every law student, lawyer, or judge who attends the opportunity to connect with or serve as a mentor or mentee, supporting the Foundation's goal of mentoring as a means to foster diversity and inclusion in the legal profession.

The Real Property, Probate & Trust Law Section of the Florida Bar is dedicated to diversity and inclusion. Hung Nguyen and Jesse Friedman co-chaired the RPPTL Section's sponsorship of the MMP. Section members helped make the event a true success by volunteering of their time and energy at the RPPTL tent. At the RPPTL tent, attendees were able to learn about the benefits of the Section and upcoming meetings, meet RPPTL members, join the Section, take away recent issues of ActionLine and other fun Section-branded goodies, and most importantly - engage in mentorship. This year's 13th Annual MMP and the Section's involvement was the most successful yet!

New Decision: Selective enforcement-Flooring (Laguna Tropical the v. Barnave)

Michael Gelfand 2/1/2017

Wednesday the Third District Court of Appeals narrowed two significant defenses to enforcement actions, selective enforcement and waiver/estoppel in Laguna Tropical, a Condominium Association, Inc. v. Barnave, Case No. 3D16–1531 (Fla. 3d DCA, January 25, 2017).

At issue was the enforcement of two restrictions. The declaration of condominium prohibited:

A unit owner from altering, modifying or replacing the interior of a unit without the prior consent of the Association’s Board of Directors.

Another provision specifically applicable to flooring captioned “noise” stated:

Unless expressly permitted in writing by the Association, no floor covering shall be installed in the units other than any carpeting or other floor covering installed by the Developer. In any event, each unit owner shall have the duty of causing there to be placed underneath such floor covering, so as to be beneath such floor covering and the concrete slab, generally accepted and approved materials for diminution of noise and sound, so that the flooring shall be adequately soundproof.

(Footnote deleted.) It is unclear whether the noise rule was part of the declaration or adopted pursuant to the declaration because the Court stated that the rule was “under the recorded Declaration of Condominium.”

You know what happened next. The second story unit owner replaced her unit carpeting with laminated flooring. The following year, the decision does not provide better specificity, the resident in the unit below the now laminated floor complained about noise. After an unsuccessful arbitration filing and mediation, the Association sought injunctive “and other” relief against the owner and tenant. After a nonjury trial, the owner prevailed. The Association appealed.

There was an important threshold consideration, the burden of proof. Thus, the court commenced by holding that the unit owner bore the burden of proof for the defense of selective enforcement and the defense of waiver or estoppel. “[T]he Owner assumed of the burden of proof as to each of these issues.”

On the substantive issue, it helps to understand the condominium’s somewhat unusual design. There are 94 units: 11 were only upstairs “units;” 11 were only “downstairs” units; and the remaining 72 units first and second floor units.

This configuration was relevant to the selective enforcement defense because owners of upstairs and downstairs units who installed hard flooring upstairs would presumably not complain about their own flooring. Similarly, hard flooring installed by in a downstairs unit normally would not generate flooring complaining.

Thus, the Court focused on complaints actually made to the Association. The flooring restriction “is plainly intended to avoid noise complaints.” The Association enforced the noise rule when there was a complaint by a downstairs owner. Because there were no complaints that were not acted upon, the apparent existence of hard flooring that did not generate a complaint did not constitute no selective enforcement!

Concerning the waiver or estoppel argument, the court held that the president’s communications to the unit owner could not constitute an alteration of flooring approval. The declaration required written approval by the board of directors, not one of the officers.

The final judgment was reversed and remanded for “enforcement of the flooring restrictions as sought by the Association.”

This decision should assist association enforcement efforts. Procedurally, this reinforces that owners have to prove their defenses. Substantively, when a restriction is intended to protect neighboring owners from nuisances such as noise, it appears that if there is no complaint then the Association’s failure to enforce does not automatically create a selective enforcement defense. While it may be inviting to extend this relaxed concept to all types of restrictions not immediately enforced by the Association, it would appear that this holding may be limited to restrictions protecting others, perhaps not applying to general restrictions that impact the community such appearance restrictions. Finally, though because the owner failed to introduce the actual email communications upon which the waiver/estoppel claim was based if there is a clear approval procedure in the declaration that is not followed, an oral statement in violation of procedure cannot be reasonably relied upon by an owner.

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County CourtMichael J. Gelfand

Immediate Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

image002.png@01D01152.BB680010" >

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

RPPTL SECTION STARTS BICYCLE CLUB

Robert Swaine 1/30/2017

The RPPTL Section recently formed a bicycle club bicycle rides at upcoming Executive Council meetings. Both causal and experienced cyclists are invited to join in on the fun. Custom Riding Reptile bike jerseys are available for order now!

Are you a cyclist? Wanna try?

Marty Solomon and others have formed the RPPTL Riding Reptiles Bicycle Club, and you are invited to join for FREE. The club will work to organize bike rentals and bike routes at upcoming Executive Council meetings.

Don’t feel like wearing spandex? Not a problem. There will be groups and ride routes for normal people who just want to go for a ride, as well as the Mike “Big Ring” Bedke die-hard group. The point is, this is an opportunity to ride in new cities with friends at your own pace. We are going to start with Deb Goodall’s Austin meeting. If you are interested in participating, please RESIST THE URGE TO RESPOND TO THIS EMAIL and email Marty at msolomon@carltonfields.com<mailto:msolomon@carltonfields.com>.

If you are a cyclist, you will definitely want to purchase the custom Riding Reptile jersey that Marty designed. You can view the logo on the attachment and purchase your jersey from the link below within the next 20 days. Orders should be delivered by March 9, unfortunately not in time for the Austin rides.. You can view the logo on the attachment and purchase your jersey from the link below within the next 20 days. Orders should be delivered by March 9, unfortunately not in time for the Austin rides.

Your online store is ready for ordering at: http://shop.jakroo.com/RPPTL-Reptiles

New Decision: Mortgage Lien (Heartwood II v. Dori)

Michael Gelfand 1/27/2017

Whether a mortgage with a correct legal description can be foreclosed if the deed to the mortgagor/borrower contained a defective legal description was at issue and Heartwood II. LLLC v. Dori, Case No. 3D1-2576 Fla. 3d DCA, January 11, 2017). The trial court dismissed the lender’s mortgage foreclosure action and reformation action.

Two instruments were involved a deed to Mr. Dori and a mortgage from him to the lender. The deed would make a title underwriter cry. The legal description in the deed to Dori stated as a legal description:

Unit 918, Mirador 1200, a Condominium, together with an undivided interest in the common elements, according to the Declaration of Condominium thereof, as recorded in Official Records Book , Page , of the Public Records of Miami-Dade County.

This Commitment will be endorsed at the time of the recordation of the Declaration of Condominium to complete the legal description.

The unit’s street address was stated.

The same date Dori obtain the deed, he executed the mortgage for unit which is the subject of the foreclosure action. The mortgage contained the proper legal description, including the recording book and page numbers missing from the deed, and including the same street address.

The deed likely was created by copying the legal description from the title commitment which was created before the declaration of condominium was recorded. The court also surmised that the mortgage has the correct legal description because the mortgage was created by the lender.

The lender’s complaint sought to foreclosure the mortgage and to reform the deed’s legal description. Dori answered admitting that he owned the property, and not raising any affirmative defense concerning the deed’s legal description. The lender’s unopposed motion for leave to amend to add the deed’s grantor was denied because the case was set for trial the following month.

The ultimate bottom line was that as Dori acknowledged ownership and there was no dispute that the mortgage contained the proper legal description, the mortgage was valid. The result was that the matter was remanded, not just for further proceedings, but for entry of a judgment of foreclosure. The lender at its option could pursue the reformation action.

Interestingly, the appellate court did not address whether the deed is adequate. Normally, the test is whether the deed provides sufficient identification of the property. In this instance the name of the condominium and the unit was present together with the street address which might have been a sufficient identification of the property; thus, alleviating the need to reform. In the same regard, if the deed was not sufficient, then the foreclosure action should not have been allowed proceed without naming the owner of property.

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator: Civil Circuit Court & Civil County Court

Michael J. Gelfand

Immediate Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

New Decision: Mortgage Lien (Heartwood II v. Dori)

Michael Gelfand 1/27/2017

Whether a mortgage with a correct legal description can be foreclosed if the deed to the mortgagor/borrower contained a defective legal description was at issue and Heartwood II. LLLC v. Dori, Case No. 3D1-2576 Fla. 3d DCA, January 11, 2017). The trial court dismissed the lender’s mortgage foreclosure action and reformation action.

Two instruments were involved a deed to Mr. Dori and a mortgage from him to the lender. The deed would make a title underwriter cry. The legal description in the deed to Dori stated as a legal description:

Unit 918, Mirador 1200, a Condominium, together with an undivided interest in the common elements, according to the Declaration of Condominium thereof, as recorded in Official Records Book , Page , of the Public Records of Miami-Dade County.

This Commitment will be endorsed at the time of the recordation of the Declaration of Condominium to complete the legal description.

The unit’s street address was stated.

The same date Dori obtain the deed, he executed the mortgage for unit which is the subject of the foreclosure action. The mortgage contained the proper legal description, including the recording book and page numbers missing from the deed, and including the same street address.

The deed likely was created by copying the legal description from the title commitment which was created before the declaration of condominium was recorded. The court also surmised that the mortgage has the correct legal description because the mortgage was created by the lender.

The lender’s complaint sought to foreclosure the mortgage and to reform the deed’s legal description. Dori answered admitting that he owned the property, and not raising any affirmative defense concerning the deed’s legal description. The lender’s unopposed motion for leave to amend to add the deed’s grantor was denied because the case was set for trial the following month.

The ultimate bottom line was that as Dori acknowledged ownership and there was no dispute that the mortgage contained the proper legal description, the mortgage was valid. The result was that the matter was remanded, not just for further proceedings, but for entry of a judgment of foreclosure. The lender at its option could pursue the reformation action.

Interestingly, the appellate court did not address whether the deed is adequate. Normally, the test is whether the deed provides sufficient identification of the property. In this instance the name of the condominium and the unit was present together with the street address which might have been a sufficient identification of the property; thus, alleviating the need to reform. In the same regard, if the deed was not sufficient, then the foreclosure action should not have been allowed proceed without naming the owner of property.

Michael J. Gelfand
Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator: Civil Circuit Court & Civil County Court

Michael J. Gelfand
Immediate Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar
Click www.RPPTL.com for Breaking News
About Florida’s Largest Substantive Law Section!
Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section
© 2017 Michael J. Gelfand

New Decision: Lis Pendens (Ober v. Town of Lauderdale By-the-Sea)

Michael Gelfand 1/25/2017

It Lives! What? The lis pendens statute!

This morning the Fourth District Court of Appeal granted a motion for rehearing in Ober v. Town of Lauderdale By-the-Sea, Case No.: 4D14-4597 (Fla. 4th DCA, January 25, 2017) This decision withdrew the panel’s decision in Ober v. Town of Lauderdale By-the-Sea, 41 FLW D1978, Case No.: 4D14-4597 (Fla. 4th DCA, August 26, 2016), substituting with a new decision arriving at the opposite conclusion, reversing and remanding.

The decision is of significant importance to real estate practitioners because the decision reinstates the vitality of the lis pendens statute.

The Facts.

The appeal arose from a quiet title action following a lengthy, seemingly nondescript foreclosure action with the following chronology:

November 26, 2007 - Bank files Complaint accompanied by a Lis Pendens recorded pursuant to §48.23, Fla. Stat.;

September 22, 2008 - Final Judgment of Foreclosure which expressly retained jurisdiction “to enter further orders that are proper including, without limitation, a deficiency judgment.” (Note: quote obtained from the Record on Appeal, not in decision)

July 13, 2009 through October 27, 2011 - the Town records seven code enforcement liens against the foreclosed property allegedly resulting from post-judgment violations;

September 27, 2012 – Bank is the high bidder at the clerk’s sale and subsequently transfers the property to Ober.

Examining the express language of the lis pendens statute, the statute provides in pertinent part:

[T]he recording of . . . notice of lis pendens . . . constitutes a bar to the enforcement against the property described in the notice of all interests and liens . . . unrecorded at the time of recording the notice unless the holder of any such unrecorded interest or lien intervenes in such proceedings within 30 days after the recording of the notice. If the holder of any such unrecorded interest or lien does not intervene in the proceedings and if such proceedings are prosecuted to a judicial sale of the property described in the notice, the property shall be forever discharged from all such unrecorded interests and liens.

Section 48.23(1)(d), Fla. Stat. (2014) (Emphasis in decision). The Court acknowledges that “foreclosures are unlike many civil lawsuits,” and that the