July 21, 2014, CLE Presentation

CLE PRESENTER: Cary Wright, Shareholder with Carlton Fields Jorden Burt, out of Tampa, FL

Mr. Wright discussed the recent 11th Circuit decision in J.B.D. Construction, Inc. v. Mid-Continent Casualty Company, Inc. The J.B.D. decision is another case interpreting the J.S.U.B. and Auchter line of cases regarding coverage under a standard CGL policy for construction defects. In J.B.D. the 11th Circuit found that there was a duty to defend but not a duty to indemnify. The court found that the insurer breached its duty to defend, and remanded to the District Court to determine the amount, if any, of consequential damages. It is instructive on how to plead a complaint to at least trigger the duty to defend.

CLE CREDIT 1 HR; REFERENCE No.: 1500637N; CERTIFICATION CREDIT: Construction Law

J.B.D. Construction, Inc. v. Mid-Continent Casualty Company, Inc.

NEWS

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" >

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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 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 lis pendens statute addresses “all interests and liens,”

The court held that the Town’s liens, recorded between the entry of final judgment and the judicial sale were discharged. The holder of a lien arising before a judicial sale must seek to intervene in a pending foreclosure action concerning the property within the statutory thirty day window. The court believes that this holding is consistent with the text in Florida Rules of Civil Procedure form 1.996(a) foreclosing liens.

The court reflects on how we arrived at this point.

The practical problem in this case is the long lag time between the foreclosure judgment and the foreclosure sale. Resolution of the competing interests—of the Town, the lending and title insurance industries, property owners, and buyers at foreclosure sales—is in the province of the legislature.

This is yet one more call to the Legislature to redress the gross inequities creating hardships and problems plaguing the legal system when lenders fail to timely proceed with foreclosures. In this regard, recall that these foreclosures are not delayed just a week, a month, a year, two years or three years. Instead, there are many years of delays.

Perhaps the courts lament to the Legislature may prompt action, being heard better than individual property owners, hardworking families and retirees, who have pleaded for assistance for nearly a decade over the lender delay problem. Perhaps now that another group is hurt, municipalities, there will be action, speeding up the process or alternatively reimbursing associations bearing the burden of protecting the lenders’ security.

A substantive issue of note, the gap of time between the judicial sale and issuance of a certificate of title. Ober did not contest the attachment of liens claimed to have been perfected after the judicial sale. This gap may be significant, particularly concerning the start of a chain of title for examination purposes.

The list of counsel of record includes a significant handful of Section members. This includes Ober counsel’s Manny Farach. The court called out recognition to the Florida Land Title Association’s brief, one of the authors being Marty Solomon.

The opinion’s rationale may sound familiar to readers as it paralleled discussions at Section meetings, and including the Section’s Amicus Brief ably drafted by Kenneth Bell, John Little and Robert Goldman to whom we provide great thanks for their continuing, steadfast and excellent efforts.

Michael J. Gelfand

Immediate 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

© 2017 Michael J. Gelfand

NEW DECISION: LIEN V. MORTGAGE FORECLOSURES (JALLALI V. KNIGHTSBRIDGE VILLAGE HOA ON REHEARING WITH ATTACHMENT)

Michael Gelfand 1/12/2017

The new year includes a reprise, a rehearing decision issued in Jallali v. Knightsbridge Village HOA, Inc.¸ Case No. 4D-15036 (Fla. 4th DCA, January 4, 2017). The decision addresses an association’s ability to file an independent action to foreclose a lien while a mortgage foreclosure action protected by a lis pendens is pending, a very meaty issue, so plenty of analysis.

THE FACTS.

To bring new readers up to speed, and as a quick reminder to those on line last year, the quick sequence of events which spans two separate foreclosure actions, lien and mortgage, and appeals of each:

2007: Parcel owner Jallali’s first mortgagee filed a mortgage foreclosure action including as defendants the owner and the condominium association.

2011: The mortgage foreclosure still pending (surprised?), the Association filed a lien foreclosure naming the owner as a defendant, but not the lender.

2014: A final judgment in the Association’s lien foreclosure action was per curium affirmed. Jallali v. Knightsbridge Village HOA, Inc.¸ 185 So.3d 1251 (Fla. 4th DCA, 2017). It is unclear when the final judgment was entered, but that is not relevant, except that judgment was apparently before the mortgage foreclosure judgment which was also in 2014. Jallali v. Christina Trust, 184 So.3d 559 (Fla. 4th DCA, 2016).

After entry of the mortgage foreclosure judgment, the owner moved to vacate the Association’s final judgment of foreclosure relying upon US Bank Nat’l Ass’n. v. Quadomain Cd’m. Ass’n, 103 So. 3d 1977 (Fla. 4th DCA, 2012). The trial court denied the motion to vacate.

DIGRESSION: QUATOMAIN.

As a quick very short summary, Quadomain addressed an association lien foreclosure based on a lien, both filed after US Bank filed a re-foreclosure action with a supplemental notice of lis pendens. The association named as a defendant lender US Bank, and (surprise!) US Bank did not respond and was defaulted. The trial court denied US Bank’s motion to vacate, the motion asserting that the trial court not having jurisdiction because of the Bank’s lis pendens. Reversing, the Quadomain court held:

the only way to enforce a property interest that is unrecorded at the time the lis pendens is recorded is by timely intervening in the suit creating the lis pendens — all other actions are barred.

* * *

Accordingly, the court in the Association's lien foreclosure action did not have jurisdiction to foreclose the lien. If the Association wanted to recover its unpaid Association fees, it was statutorily required to intervene in the re-foreclosure action as prescribed in section 48.23(1)(d).

(Citations omitted.)

THIS APPEAL.

Back to the appeal of the Association’s lien foreclosure judgment. The original decision was issued in January 27, 2016. A rare successful rehearing resulted in the Association prevailing, affirming the trial court’s order denying the owner’s motion to vacate the final judgment of foreclosure. In this January, 2017, decision the appellate court denies the owner’s motion for rehearing. To allow readers an easy method to follow and observe what was changed from June, attached is a red-line comparison of the June 2016 decision with the January 2017.

JUNE REHEARING.

In the first rehearing decision, June of last year, the appellate court referred to Quadomain’s concluding jurisdiction” text as “dicta,” and distinguished the decision on the basis that the Association in Jallali was not seeking to foreclose the first mortgagee’s interest. In addition,Quadomain did not address the impact of the Association’s declaration of covenants, a recorded instrument, and that:

Moreover, we note that, in the context of this case, a lis pendens recorded by a mortgage holder serves to protect the mortgage holder from liens unrecorded at the time of the filing.

(Emphasis in original.)

THIS, JANUARY 2017, DECISION.

This decision provides clarity to the June 2016 decision on rehearing by explaining how the lien foreclosure proceeding is not an interest barred by the lis pendens statute. The declaration of condominium which created the lien right was recorded before the lis pendens. The declaration “constitutes a recorded interest and thus takes the case out of the purview of Section 48.23 Fla. Stat.” Thus, because the declaration contained a relation-back provision, the Association was not pursuing an interest that was unrecorded at the time of the notice of lis pendens which would otherwise be barred by the lis pendens if there was no intervention.

ERRATA.

The decision reinforces the cry that “Quadomain is dead” at least to the extent of allowing associations to file an independent action to foreclose during the pendency of a first mortgagee’s foreclosure. This ability is especially important as we have seen that many first mortgage lenders have stalled, whether intentionally or otherwise and an association is stuck between a proverbial “rock and hard place” as it is and does not need to additional issues arise as Quadomain reported.

Manny Farach in a posting to the Real Property Litigation Committee list-serve recognized that two of the three panelists in the decision Jallaliwere panelists in the recent decision of Ober v. Town of Lauderdale by-the-sea, 41 Fla. Law. W. 198, Case No.: 4D-144597 (Fla. 4th DCA, August 24, 2016). The Ober decision held that a town’s code enforcement lien recorded after a final foreclosure judgment, but before the issuance of a certificate of sale, was an enforceable lien against the property pursuant to the lis pendens statute, Section 48-23 Fla. Stat. It is noted that the RPPTL Section has filed a rare amicus brief in the Ober court seeking re-hearing because of the adverse impact of the decision and the apparent improper limitation of the effectiveness of a lis pendens in a foreclosure through only a final judgment, not to the end of the case which ususally is the certificate of title.

There has been a question as to whether the Jallali decision conflicts with Ober. The January 2017 rehearing in Jallali decision identifies that the interest at issue, the declaration was created before the lender’s lis pendens which differentiates Ober where the interest, the town’s claim of lien was not created until it was recoded after the final judgment.

The Jallali determination that the declaration of condominium is a recorded real property interest raises other interesting consequences for the association practitioner. Primary is that the rational would presumably support a lis pendens as of right for in communities recorded covenant enforcement matter. Quite some time ago Tetrault v. Calkins, 79 So. 3d 213 (Fla. 2d DCA, 2012), indicated that a restrictive covenants was not an interest in property sufficient to support a lis pendens without bond, a decision that was criticized, and seemingly challenged by 100 Lincoln Rd SB, LLC v. Daxan 26 (FL), LLC, 180 So. 3d 134 (Fla. 3rd DCA, 2015) (citing §48.23(1)(b)), and now the determination in Jallali.

Of course, there is always the need to “read the documents.” Importantly the declaration language in Jallali apparently contained express relation-back language. Not all declarations have that language. It may be appropriate for associations to review their declaration’s lien language and perhaps suggest amendments, taking careful note not to violate protected first mortgagee rights or run afoul of Fannie Mae underwriting guidelines.

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

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

Immediate Past Chair

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

Click www.RPPTL.com for Breaking News

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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

New Decision: Ripeness/Enforcement (Zweig v. Il Villaggio Cd'm)

Michael Gelfand 1/12/2017

Kicking off the year is a decision from Florida’s Third District Court of Appeals addressing when a unit owner’s challenge to a neighbor’s alteration plans was ripe. In Zweig v. Il Villaggio Cd’m. Ass’n., Inc., Case No. 3D16-934 (Fla. 3d DCA, January 4, 2017) Ms. Zweig sought an injunction to prohibit the Association from approving the “vertical unit combination” of two neighboring units. The trial court granted the Association’s motion for summary judgment.

Though the Association allowed the neighboring unit owner to commence structural feasibility testing, the neighboring unit owner did not apply for Association permission to combine the units. As the court commented, an application may not be filed, or if filed the application may not be approved. If an application was not properly approved then there may be sufficient legal remedies to address a harm. Thus, the complaint was “too attenuated.”

Interestingly, the decision does not address the role of Mandatory Pre-Suit Arbitration pursuant to §718.1255. Especially as there is no indication of a motion for a temporary injunction or emergency, there does not appear to be a reason why this dispute was not heard in arbitration.

This decision is of interest as it draws a line for associations that are frequently threatened by parcel owners, in essence requiring the threatening owner to wait until the application process plays out until the end. Presumably, at that point, if construction is imminent, then the threatening owner can seek a temporary injunction.

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

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: Lenders Lien for Insurance Proceeds (Alvarez-Mejia v. Bellissimo Prop.)

Michael Gelfand 1/12/2017

A straggling brief holding over from last year, this considers a decision addressing a mortgage lender’s ability to retain casualty insurance proceeds and an owners consistency in representations to the lender and insurer were at issue in Alvarez-Mejia v. Bellissimo Prop., LLC, Case NO.: 3D15-1258 (Fla. 3d DCA, December 28, 2016).

The owner’s mortgaged property was damaged by fire. Similar to many mortgages, the owner’s mortgage included a “property insurance” provision that stated:

Unless Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or not the underlying insurance was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender’s security is not lessened. . . . If the restoration or repair is not economically feasible or Lender’s security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower.

Also similar to many mortgages, the owner’s mortgage also provided that the lender:

shall have the right to hold the insurance proceeds until Lender has had an opportunity to inspect such Property to ensure the work has been completed to Lender’s satisfaction. . . .

The owner’s licensed contractor initially estimated the repairs to be $98,717. In reliance on this estimate the insurer issued checks for $94,162.52, the check payees including the owner and the lender. The lender obtained an appraisal of the exterior of the home at $90,000, less than the repair estimate. The lender asserted that considering the property’s value and the repair estimate, it was not economically feasible to undertake repairs. Alvarez-Mejia then provided a revised repair estimate of $53,117.

In response to the lender continuing to retain the insurance proceeds the owner sued the lender for breach of contract, breach of an implied covenant of good faith and fair dealing, a declaratory judgment, and unjust enrichment. The trial court granted the lender’s motion for summary judgment finding “that it was not economically feasible to repair the property because of the cost to repair was greater than the value of the property.”

The appellate court reversed the summary judgment. The owner’s affidavit submitting the revised repair estimate indicated that the repair was economically feasible. The lender failed to provide an estimate of the property’s value after the requested repairs; thus, the lender did not fulfill the lender’s burden to rebut the owner’s responding assertions.

A vigorous dissent attacked underlying evidentiary issues, and in particular whether the owner properly authenticated the revised affidavit which if not admissible would leave only the original repair estimate which exceeded the home’s value.

This decision highlights what many overlook, a lender’s ability to impound insurance proceeds. The court did not comment upon, but the mortgage provisions purports to allow the lender to not only withhold the proceeds until construction starts, but to withhold the proceeds until after construction. Impounding proceeds may create a cash flow problem for some owners and associations, especially if the owner is unable to have a contractor that will “float” the work until the completion of all work, or obtain and pay for a loan. Impoundment provisions may take on a new significance when counsel negotiates repair contracts for casualty work expected to be paid from insurance proceeds.

The majority decision is silent concerning the practical contradiction between owner’s original repair estimate utilized to obtain insurance proceeds, and the “revised” estimate utilized to justify disbursement from the lender. Does this silence acknowledge a double standard for repair estimates, allowing high estimates to insurers and low estimates for lenders and others. Will looking the other way be allowed when good faith estimates are submitted for issuance of permits and permitting fees? Traditionally, a party cannot offer a witnesses affidavit after a deposition testimony, the affidavit submitted to contradict the testimony. One must wonder what the justification for allowing dueling estimates.

I still have one decision from last year to follow up. An oldie but goodie. More to come.

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

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

Save Calusa Trust v. St. Andrews Holdings, Ltd

Manuel Farach 1/9/2017

When does a local government ordinance become a restrictive covenant that is subject to being extinguished through application of the Marketable Record Title Act, Florida Statute section 712.01 et. seq.? That was the question in Save Calusa Trust v. St. Andrews Holdings, Ltd., 193 So. 3d 910 (Fla. 3d DCA 2016), where the Third District Court of Appeal held that a restrictive covenant imposed by government as part of development order is not subject to and cannot be extinguished by the Marketable Record Title Act.

I. Facts

This case begins in 1967 when a developer sought to create a golf-course in Miami-Dade County. The real property was zoned General Use (“GU”), which did not permit a golf course, so the developer sought and obtained an “unusual use” that same year with the County's Zoning Appeals Board (“ZAB”) adopted a resolution with the condition that a restrictive covenant be recorded that limit the future use of the property to a golf course. This first developer sold to a second developer who, in fact, recorded a restrictive covenant as follows:

The aforedescribed property may only be used for the following purposes:

A golf course and for the operation of a country club which may include a clubhouse, pro shop, locker rooms, swimming pools, cabanas, liquor, beer and wine facilities, dining room facilities, parking, tennis courts, putting greens, golf driving ranges and all other uses incidental thereto.

These restrictions shall continue for a period of ninety-nine years unless released or revised by the Board of County Commissioners of the County of Dade, State of Florida, or its successors with the consent of 75% of the members of the corporation owning the aforedescribed property and those owners within 150 feet of the exterior boundaries of the aforedescribed property.

“[t]hat restrictive covenants running with the land in proper covenant form, meeting with the approval of the Zoning Director, be recorded to ensure that the golf course be perpetually maintained as such....”

Save Calusa, 193. So. 3d at 912.

The property was developed as a golf course, and a “ring” of 140 homes were built around the golf course. These owners in the “ring” paid no dues for the maintenance of the golf course and did not otherwise maintain the course. Id. at 912 – 23. This arrangement stayed in place until the golf course closed in 2011. A later developer sought to re-develop the golf course, and to no one’s surprise, failed to get 75% of the “ring” homeowners to approve the proposed change. Accordingly, the county refused to let the newest developer change the zoning of the parcel. Id at 913. This litigation followed.

II. Case

Rather than filing an administrative challenge to the county’s decision, the owner of the now defunct golf-course filed suit seeking to invalidate the deed restriction under the Marketable Record Title Act (MRTA) and joined the “ring” homeowners and the county. The trial court entered a detailed summary judgment finding for the developer that the restrictive covenants were barred by MRTA. The homeowners and the county appealed to the Third District.

III. Analysis

The Third District reversed and held that the use restrictions were exempt from MRTA:

While we are not unsympathetic to Owner's arguments, we cannot so readily divorce the covenant from the governmental approval process that spawned it. The record reflects that ZAB's approval of Developer's unusual use application for the golf course acreage was final administrative agency action. ZAB's unusual use approval was not a recommendation to the County Commission, but rather, a final approval conditioned on the recordation of the restrictive covenant. The record clearly reflects that the ZAB Resolution imposed a condition that a restrictive covenant be generated and recorded. As the unusual use approval was final as of August 16, 1967, the date of the ZAB Resolution, so was the prescribed restrictive covenant. That the Developer's successor took seven months to record the restrictive covenant is of no significance.

Id. at 915.

In other words, the Third District held the fact that the restrictive covenant arose out of the governmental approval process imbued it with the ability to withstand extinguishment under MRTA since it was now a government regulation. This decision has created a great deal of concern among some because almost all planned subdivision restrictions are created through a “governmental approval process” and could conceivably be exempt from MRTA. The concern is that MRTA is intended to clear land titles and there should be no exceptions to its extinguishment provisions other than those specifically set forth in the statute. Moreover, the Save Calusa opinion contains some imprecise language that restrictive covenants imposed by government do not constitute defects in marketable, a position rejected by most real estate practitioners. The landowners sought discretionary review in the Florida Supreme Court, but its petition was rejected.

IV. Conclusion

It remains to be seen whether Save Calusa Street will be a “one-off” opinion that is limited to its facts, or whether later courts will adopt its view that government-approved restrictive covenants as being exempt from MRTA’s extinguishment provisions. Real estate practitioners are cautioned to be aware of the case and its facts as it has created uncertainty in the application of MRTA.

New Decision: Validity of Amended Covenants (Van Loan v. Heather Hills POA)

Michael Gelfand 1/6/2017

Transforming a voluntary “recreational and shareable neighborhood association” into a mandatory association restricting use was the subject in Van Loan v. Heather Hills POA, Inc., Case No. 2-D 15-5430 (Fla. 2d DCA, December 30, 2016). Issues raised included the authority to amend recorded covenants and the consequences of an overly broad or otherwise improper recorded instrument.

The background facts reach back literally half a century:

1967: The Heather Hills subdivisions were created, each subdivision restricted by separately recorded plat and restrictive covenants. The covenants reserved the right to amend to the developer or the developer’s successors. No association was mentioned.

1969: The POA was incorporated as a voluntary organization for the “purpose of promoting recreational and charitable interests for those living in Heather Hills.”

2012: The POA amended its articles of incorporation to provide that “the record title holder of all lots [in Heather Hills] shall be members” and changing the corporate purpose to “managing and operating Heather Hills” as “a community intended and operated” as ‘housing for older persons.’” The amended articles of incorporation were filed with the Florida Secretary of State but not apparently recorded.

An “Additional Declaration of Covenants, Conditions[,] and Restrictions” were recorded in the county’s public records which included an “over 55 community” restriction, and stated that the covenants were “applicable and binding upon the lots of all consenting property owners situated in Heather Hills” and also stated that “the owners who consent to and join in this Declaration do hereby impose upon the lots, blocks[,] or parcels of such owners in Heather Hills … and all members of the POA“ the restrictions. (Emphasis in decision).

The plaintiff lot owners brought an action for declaratory relief, quiet title and slander of title, all of which the trial court dismissed.

The appellate court focused on the apparent contradiction in the amended declaration, which stated it applied to those who consented and “all members of the POA.” The court remarked that there is no indication as to which owners consented. The court held that the amended declaration which stated that it would run with the land contained a “ambiguity” and that the amended declaration placed “a cloud on the titles of the Homeowners’ Lots.”

Concerning the authority to amend, the court recited that the original covenants did not mention an association or delegate the right to amend to third parties. Thus:

Because there is no express delegation of authority to the [POA] to amend the restrictive covenants, the restrictive covenants can only be amended by the consent of all the property owners in the subdivision.

Thus, the court held that a cause of action for declaratory relief was sufficiently stated.

The court also held that a quiet title claim was stated, building upon the above holdings that the plaintiff homeowners owned the property in controversy, that a cloud on title exists, that there are facts that give the cloud on title apparent validity, and that the alleged facts show the restriction is invalid.

Concerning the slander of title claim, the dismissed complaint alleged that the POA falsely declared to the public that POA membership was mandatory, posted signs that the community was age restricted and distributed fliers with the same alleged false statement. The homeowners’ claimed they suffered damage by loss of value in the lots and inability to convey clear title without the asserted approval of the POA. The appellate court held that the lack of clarity in the amended covenants “results in the appearance that the homeowners’ lots are subject to the amended restrictive covenants.” Thus, a cause of action for slander of title was stated.

In hindsight, this decision reinforces the need for caution when attempting to create a mandatory association to enforce existing covenants, or to convert a voluntary association with covenants, to a mandatory association. A recorded instrument may slander title leading to damages. The facts also indicate a need to confirm that the person or entity signing the new covenant instrument has the authority to do so, both in terms of a right confirmed by a chain of title and whether the original restrictions permit the substantive changes.

Interestingly, the decision does not indicate and does not address whether a statute of limitations issue was pled. Noting that the amended covenants were recorded in 2012 and that there were three complaints filed, the original complaint, and amended complaint and a second amended complaint, there may have been a relatively short period of time between the recording of the amended covenants and filing of the suit which seemingly would have avoided a statute of limitations defense. Otherwise, if there was a sufficient passage of time, there may have been a valid limitations defense under Harris v. Aberdeen, POA, Inc., 135 So. 3d 365 (Fla. 4 DCA, 2014) as well as Hilton v. Pearson, ___ So. 3d ____ Fla. 1st DCA, 2016; Silver Shells Corp. v St. Maarten at Silver Shells, 169 So. 3d 197 (Fla. 1st DCA, 2015) which under these decisions could have breathed life into the covenants.. Also interesting is the court’s recitation that both plaintiffs and defendant agree that the amended restrictive covenants did not apply to the Plaintiffs/

Many thanks to Mr. Christy, Ms. Hartley and Mr. Holtsberg for providing the decision.

Best wishes for a new year.

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

New Decision: Validity of Amended Covenants (Van Loan v. Heather Hills POA)

Michael Gelfand 1/6/2017

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

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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

Harding v. Orlando Apt’s, LLC, Case No.: 13-11805(11th Cir., April 14, 2014

4/24/2014

This Memorandum addresses last week’s decision issued by the 11th Circuit of Appeals in Harding v. Orlando Apt’s, LLC, Case No.: 13-11805(11th Cir., April 14, 2014) which reversed a summary judgment issue by the Middle District of Florida.  The appellate court held that the Fair Housing Act’s design and construction guidelines, 42 U.S.C §3604(f)(3)(C), do not create an ongoing duty upon subsequent owners to ensure that a dwelling conforms to the Fair Housing Act’s standards.  

The apartment property in question was built in 2009.  In November 2010 Harding, apparently a tester, visited the apartments and allegedly found the construction lacking in terms of the FHA’s design and construction guidelines.  A month later, in December 2010, BHDR purchased the property.  Thereafter Harding sued the prior owner, the builder, and BHDR for Fair Housing Act violations.  The trial court granted a summary judgment BHDR.

The 11th Circuit finding that the provisions of §3604(f)(3)(C) are “plain,” and thus not requiring interpretation, clearly rejected the assertion of liability for design and construction upon subsequent owners.   The Court did reference to HUD’s Administrative Guidelines, but sidestepped the is of authoritativeness.  

The Court buttressed its holding upon practical considerations, that to find subsequent owner liability, “potential owners would need to thoroughly investigate compliance with the guidelines prior to purchasing a covered dwelling or risk liability.”  But is not what they should be doing as part of due diligence?

This decision may have good and bad impacts for Florida community associations.  On one hand the decision may potentially protect associations from liability as rarely are associations are involved in the original design and construction.  The decision may also reduce damages in association claims for failure to design and construct pursuant to the FHA; however, in this regard, the association may retain the claims in light of its duties to owners.  

It is noted that the provisions of the Florida Fair Housing Act, 760.23, do not duplicate the Federal Fair Housing Act’s provisions in this regard.

Michael J. Gelfand
Director, Real Property Division
Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section
© 2014, Michael J. Gelfand

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