A whole lot is going on concerning transfers! The Florida’s Fourth District Court of Appeal laid down a strict construction test, and took a whack at unreasonable transfer fees in Cool Spaze, LLC v. Boca View Condominium Association, Inc., Case No. 4D18-2446 (Fla. 4th DCA January 22, 2020).
Shefet bought a unit in Boca View Condominium. He transferred the unit to his limited liability company, Cool Spaze, LLC. Cool Spaze, LLC submitted two lease applications for Association approval.
The Declaration of Condominium includes the following:
Maintenance of the Community Interests. In order to maintain a community of congenial residents who are financially responsible and thus protect the value of the units, the transfer of units by any owner other than the [d]eveloper shall be subject to the provisions hereinafter set forth as long as the Condominium exists.
It shall be necessary for the [b]oard of [d]irectors of the [a]ssociation, or its duly authorized officers, agent[s] or committee to approve in writing all leases, subleases, or other occupation of a Unit before lease, sublease or occupation shall be valid and effective . . . .
. . .
The [b]oard of [d]irectors of the [a]ssociation shall be responsible for interpreting the provisions hereof and of any of the Exhibits attached hereto. Such interpretation shall be binding upon all parties unless wholly unreasonable. An opinion of counsel that any interpretation adopted by the [a]ssociation is not unreasonable shall conclusively establish the validity of such interpretation.
(Emphasis supplied by court.) In addition, the Association’s Articles of Incorporation provided:
All persons owning a vested present interest in fee title to any of the Units in [the association] . . . shall be members.
. . .
[I]n the event a unit is owned by a legal entity other than a natural person, the officer, director or other official so designated by such legal entity shall exercise its membership rights.
The Association denied the lease applications, requiring that the unit’s title be transferred back to Shefet as an individual.
Cool Spaze filed suit seeking: injunctive relief concerning the Association’s regulation of sales and title; declaratory relief concerning whether the Association could require approval of a sale or transfer of title; and, damages for slander of title when the manager allegedly told a realtor that the application could not be processed because there was a “problem with title to the unit.”
The trial court granted Cool Spaze’s motion for partial summary judgment finding that $200.00 lease processing fee was unreasonable but denied another portion of the motion finding that Cool Spaze was required to comply with the Association’s reasonable requests.
The appellate court began by identifying the standard for interpreting a declaration of condominium. The declaration “must be strictly construed” citing Cali v. Meadowbrook Lakes View Condo. “B”, Inc., 59 So. 3d 363, 367 (Fla. 4th DCA 2011). Despite strict construction boundaries, the court did tip a proverbial hat to traditional efforts to seek the intent of the document, with the court’s citation to Cali requiring that
“‘[i]t is fundamental that . . . the intention of the parties . . . be determined from examination of the whole contract and not from the separate phrases or paragraphs.”’
Continuing, the appellate court found that the Declaration did not authorize approval of transfers, holding that the Declaration “does not use the term unit transfer, title transfer, or sale.” The court differentiated different types of transfers citing to Webster v. Ocean Reef Cmty. Ass’n, 994 So. 2d 367, 370 (Fla. 3d DCA 2008), in which a gift transfer was differentiated from a sale, purchase or lease. Thus, all summary judgments against Cool Spaze were reversed and the matter remanded.
This decision may be notable for a multitude of reasons. First, is the strong test for interpreting a declaration, “strictly construed.” Will this test complement precedent that allowed what this writer refers to as judicial rules of interpretation, providing that only when there is an inability to resolve an ambiguity, rule in favor of the free use of property?
Second, flowing from strict construction of the Declaration, regulation of “leases” is not to be construed as the regulation of other transfers. The decision reminds that transfers do not come in plain vanilla or plain chocolate, but there are many varieties of flavors including gifts and transfers between related entities for less than fair market value. Drafters may need broad language if the intent is to effectively regulate the many varieties of transfers.
Third, there is the continuing issue over reasonable transfer fees, or as the saying goes: pigs get fat, hogs get slaughtered. The court in a footnote affirmed the trial court’s order that a $200.00 transfer fee was unreasonable, allowing a $100.00 fee based upon the Declaration’s language which stated that “such fee shall not exceed one-hundred dollars ($100.000).” Interestingly the court did not rely upon § 718.112(2)(i) Fla. Stat. and the limit on transfer fees at $100.00.
Further, though the opinion is unclear as to exactly how the slander of title issues were disposed by the trial court, it does appear that the trial court granted the Association’s motion for a partial summary judgment because the manager’s statement of a title issue was not slanderous but instead true, in essence that the Association was not going to approve the application unless the unit transfer was approved. In reversing summary judgment it may appear that while a manager’s statement as to the intent of an association may be true, if the statement is based upon a false premise, here perhaps the implication that the Association had the right to approve a unit transfer, then that may be actionable!
Purists among us may be put out by the court’s writing of the intent of the parties, plural parties, when the Declaration is a unilateral document, there being only one party, if there is a party to a unilateral document, when the Declaration is created.
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 Lawyers
Gelfand & Arpe, P.A.
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