Article Courtesy of The Sun Sentinel

By Daniel Vasquez

Published April 6, 2011

A new court ruling has determined new rules may not apply to your condominium or homeowners community.

A new Florida Supreme Court ruling makes one thing crystal clear about new condominium and homeowners association laws: They may not apply to your community if your governing documents do not specify they are subject to Florida laws and contain the words "as amended from time to time" or similar language.

Unless your documents specify they are subject to new amendments passed by lawmakers, your documents may lock your community into the laws in effect when the community was built and the association was incorporated. For example, if your community was incorporated in 1990, and the governing documents do not contain as-amended-from-time-to-time language, your association may be governed by the laws in effect in 1990 - and not many of those passed after 1990.

Also, if lawmakers pass a law being considered now that would allow an association to file a lien to recover costs racked up by a management company in its efforts to collect past due payments from a delinquent owner, the law would not apply to condos if the governing documents do not have the proper language saying new laws apply.

The ruling could also affect other laws being considered by lawmakers, including provisions that would ban felons and delinquent owners from serving on a condo board and clarify that condo boards would not be obligated to hold a hearing before cutting common areas off from delinquent owners.

"The timing of this case is ironic, considering we have legislators beating their brains out to come out with new condo and HOA laws. But as a result of this decision, they are wasting their time for communities that don't have this specific language in their documents," said Eric Glazer, a South Florida attorney specializing in community association law.

Glazer explained that in essence it could mean "you could have 10 condos on a single block, all under different sets of laws depending on when they were built."

Glazer lost his case before the Supreme Court representing a condo owner arguing that state laws should usurp association governing documents related to whether owners should have the majority of board members in a mixed community. "This ruling is the most important to come down in a decade when it comes to community association law," Glazer said. "This ruling throws condo and HOA laws into chaos."

Glazer's stance is supported by some experts, while others say it merely supports and strengthens laws that few people realized existed.

The ruling handed down late last week upholds existing state laws that protect vested property agreements - meaning they protect the terms and value of a contract as stated when all parties involved signed the contract.

Nonetheless, many expect the impact of the ruling to come as a big, unwelcome surprise to condo and HOA communities counting on recent laws enacted to help financially struggling communities pressure owners behind in maintenance payments to pay up. They include sweeping laws passed after July, 2010 which allow condo associations to ban delinquent owners from common areas, such as pools and club houses, prevent delinquent owners from serving on boards of directors and requiringtenants in units owned by owners in arrears to pay associations rent money until the owner is current in past due maintenance payments.

The lessons offered by this case for shared communities across the state, include: Check your documents to see if they contain "from time to time" language. If the they do not, then your community should consult with an attorney to determine what new laws may or may not apply to your community.

And you should know that communities with documents missing such language may vote to amend the documents to add them. In some cases it would take a vote of 75 percent of owners to amend the documents, in other cases, depending on what governing documents state, it may take a simple majority vote.

"The best advice is to stay tuned. A lot is happening in this very hot area of the law right now," Rosenbaum said. "The Courts have to find the proper relationship between the need for new laws and the constitutional rights that protect contracts, both federal and state, and find the right balance for the times."

In the Cohn vs. Grand Condo case, what was at stake was a provision inserted by the developer that the 7-member board would be made up of two residential condo representatives, two retail representatives, two hotel representatives and one at-large representative – even though there are about 800 residential units vs. about 400 commercial residents (or about 250 businesses and 150 hotel units), which mean residential units outnumber commercial by a ratio of 2 to 1. The grand was built in 1986. But, a state law passed in 1995 states that boards in mixed-use communities must have a majority of residential members if there are more residential than commercial units. A 2007 amendment made the law retroactive, meaning it applied to all condos no matter what year they were created.

Susan Cohn, an owner in the Grand condo community wanted her board to have a majority of owners on the board, as stated by state law. However, attorneys representing the association argued that the documents did not contain as-amended-from-time-time language and that the 2-2-2-1 makeup of the board was not only legal, but required by the contract and that changing it would make the contract less valuable and therefore unconstitutional.

"The Supreme Court said that since The Grand was formed in 1986 by the recording of its Governing Documents, which set forth how directors are elected, the 2007 statutory change is unconstitutional as applied to The Grand because there is no language in the Governing Documents that automatically accepts future statutory changes to the Condominium Act," said Daniel Rosenbaum, of Rosenbaum Mollengarden Janssen & Siracusa, a law firm based in West Palm Beach which represented the Grand Condominium Association.

The lessons offered by this case for shared communities across the state, include: Check your documents to see if they contain "from time to time" language. If they do not, then your community should consult with an attorney to determine what new laws may or may not apply to your community.

And you should know that communities with documents missing such language may vote to amend the documents to add them. In some cases it would take a vote of 75 percent of owners to amend the documents, in other cases, depending on what governing documents state, it may take a simple majority vote.

"The best advice is to stay tuned. A lot is happening in this very hot area of the law right now," Rosenbaum said. "The Courts have to find the proper relationship between the need for new laws and the constitutional rights that protect contracts, both federal and state, and find the right balance for the times."