Florida’s condominiums are governed by
both Florida’s Condominium Act and their own Declaration of
Condominium and rules. The Act’s requirements must be
followed by all condominiums. Each condominium is governed
by separate rules and regulations unique to that
condominium.
A condominium is governed by a condominium association. The
Act requires each association created after 1976 be a
Florida corporation. Even though there was no such
requirement for earlier created associations, almost all of
those older associations are also corporations. That means
each has a board of directors and officers.
Officers and directors of a condominium association have a
fiduciary duty to unit owners. That means they are
prohibited from self-dealing. It also means they must
exercise their independent business judgment to manage the
association and the condominium in accordance with its
Declaration of Condominium and Florida law. Part of that
duty is to enforce the rules applicable to that particular
condominium.
Some of the rules of a condominium may be found in its
Declaration of Condominium. Others may be adopted by the
board of directors within the scope of its authority under
the Declaration.
A purchaser of a condominium automatically becomes subject
to the condominium’s rules and is presumed to at least have
knowledge of those in the Declaration because the
Declaration and any amendments are recorded in the Public
Records. Rules adopted by the board are not as easily known,
but the Act requires a condominium seller provide a buyer
with a copy of the Declaration and all rules upon request.
The buyer has three days to back out of the contract after
receipt of those documents.
Availability of the Declaration in both Public Records and
from a seller along with the buyer’s right to a copy of all
rules means every buyer has opportunity to review ALL of the
governing documents and rules before acquiring title.
Opportunity to review the rules is important, as a buyer
buying a condominium will become an owner subject to all of
those rules. Obligation to follow the condominium rules is
not just common sense or stated in a Declaration, it is also
mandated by statute.
Section 718.303 of Florida Statutes provides that all
associations and all owners, tenants and invitees must
comply with the Declaration, the documents creating the
association and the association bylaws. Documents creating
the association generally empower the board of directors to
adopt rules. Hence, the statute also appears to mandate
condominium owners follow rules adopted by the board in
addition to those in the Declaration.
The statute also provides that no provision of the
Condominium Act may be waived if the waiver would adversely
affect the rights of a unit owner or the purpose of the
provision but allows waiver of notice of meetings in writing
if allowed by the bylaws. It is next to impossible to think
of a rule that could be waived without affecting rights of
other owners. Waiver would certainly violate the statutory
mandate that all owners comply with the governing documents.
That means the board of directors mandate to enforce rules
is not only based on a fiduciary duty but also on statute.
Years ago, enforcing the rules meant going to court. Many
associations did not want to spend money to do that. Others
went to court but many thought these cases should be
resolved without using the court system.
In 1991, Florida’s legislature amended the Condominium Act
to require mandatory, non-binding arbitration in most
disputes between an owner and the association. That process
requires one party file a petition with the Florida Division
of Condominiums, Timeshares and Mobile Homes. A decision
will ultimately be rendered by an arbitrator employed by the
Division. If one party is unhappy with the decision, that
party can proceed to court where the dispute is heard as if
arbitration never took place. If that party does not do
better in court, that party pays the other side’s attorney
fees.
That process worked pretty well for a while, but personnel
at the Division began favoring mediation and a lot of these
cases were referred to mediation by the arbitrators.
Mediation means the parties meet with a mediator who tries
to get them to agree on settlement. When mediation is not
successful, the case cannot proceed with arbitration unless
both parties agree to continue arbitration.
It is not uncommon for an owner to refuse continued
arbitration as the owner thinks the owner will lose and that
means the association must decide if it is willing to pay
for an expensive court case to proceed. Many are not so
willing and the case is left worse than before the statutory
amendment, as the parties have often hired lawyers and taken
time and money only to get back to where they started.
The statute was recently amended to give the parties the
option of mediation as an alternate to arbitration as a
prerequisite to suit. Many will now choose mediation. It is
cheaper and since it appears to be what the Division
personnel prefer, many associations will decide there is
little point to starting with arbitration.
For decades, a few associations were using fines to enforce
their rules. Most Declarations lacked fining authority, so
fines were not an option for those associations.
Florida’s legislature added fining authority to association
powers in 2010, giving all associations the ability to fine
as an additional option in rule enforcement. There are two
shortcomings with fines.
First, the maximum fine is $100 per incident and up to
$1,000 for a continuing violation. That is often considered
a small price to pay to violate an association’s rental
rules when there is money to be made from short term
renters. Second, a fine is not a lien against a unit. That
leads many owners to thumb their noses at the association’s
fining process.
To enforce a fine, an association can pursue collection in
court. Since fines are generally below the jurisdictional
amount for Small Claims Court, these cases can usually be
pursued at relatively low cost. Occasionally an owner will
want to make a statement, punish the association by making
it expensive, hire a defense attorney and demand a jury
trial to make the association pay.
That strategy can backfire, since almost all of these cases
are decided in the association’s favor. The statutes and
most Declarations provide the loser in these cases pays the
winner’s attorney fees and the owner ends up paying two
lawyers. Most of the cases start because the owner did not
like and refused to follow rules that were often in place
before the owner even bought into the condominium.
To an owner who does not like a rule, the association’s
action to enforce may seem arbitrary. To the association,
enforcement of its rules is mandated by both statute and
fiduciary responsibility. These disputes can most easily be
resolved by an owner simply complying with the rules of the
condominium the owner bought. Enforcement can prove
expensive.