Florida Community Association Law: Contracts Clause Application in an Ever-Changing Legislative Landscape

When representing a Florida condominium association, you have to know and follow a lot of laws. This includes the Condominium Act and the Not-For-Profit Corporation Act. You also have to look at the association’s documents like the declaration of condominium, the bylaws, the articles of incorporation, and the rules and regulations. Sometimes, arbitrators from the Department of Business and Professional Regulation make decisions about associations. There are also rules in the Florida Administrative Code, and the courts make decisions about condominium laws. For example, in the Cohn v. The Grand Condominium Association, the Florida Supreme Court decided that in a mixed-use condominium with more residential units than commercial units, the residential owners should get to vote for most of the board of directors, even if the bylaws say something different. The Grand Condominium case involved a dispute over a new law that affected the voting rights of commercial unit owners. The Florida Supreme Court ruled in favor of the commercial unit owners because the Grand’s declaration did not include a provision incorporating future legislative changes. If it had, the new law would have applied. The case shows the importance of carefully reviewing and interpreting governing documents to understand how laws impact the rights of all parties involved in a community association. Community associations have two types of rights: statutory rights (e.g. right to inspect records) and vested rights in governing documents (e.g. right to vote for directors). If a new law impairs a vested right, it cannot be applied to the governing documents. However, if the governing documents include “Kaufman language,” new laws become part of the documents. Without this language, new laws only apply to existing documents under specific circumstances. When deciding if a new law can be applied to existing rules, first determine if the law is just about how to do something or if it changes people’s rights. If it’s just about how to do something, it can be applied to existing rules. If it changes people’s rights, it can only be applied if it’s meant to apply to old rules and fix them. In Florida, new laws usually only apply to things that happen after the law is passed, unless the law is meant to fix old rules. If a statute says it applies to past situations or is meant to clarify existing laws, it might be okay under the constitution, but only if it passes three tests. First, the court looks at whether the state has the right to make the law, even if it affects people’s contracts. If the answer is no, the law is unconstitutional. If the answer is yes, the court moves on to the second test. The second test asks if the problem the law is trying to fix is more important than leaving people’s contracts alone. If the answer is no, the law is unconstitutional. If the answer is yes, the court moves on to the third test. To decide if a law affecting a contract is okay, courts look at how much the contract is affected. If it’s affected a lot, it’s usually not okay. This makes it hard for laws to pass the test and be considered okay under the law. For our clients, it’s important to know which laws apply to their association and which ones don’t so they don’t get into trouble. When we take on a new client, we check their contract to see what laws apply to them. If there’s a certain type of language in the contract, it means all laws will apply to them, whether they like it or not. If the rules for your condo are not clear, you need to find out which laws were in place when the condo rules were made and if they have a specific type of language. This will help you understand your rights and duties as a condo owner. Not all condos in Florida follow the same rules, so it’s important to know the specific laws that apply to your condo. Eric Glazer has been practicing community association law in Florida since 1992 and is the owner of a law firm with offices in Ft. Lauderdale and Orlando. He has certified over 10,000 Floridians to serve on community association boards and hosts a radio show about condos and HOAs. Louis Goetz is a paralegal in Florida with a focus on civil litigation and appellate matters. This column is submitted on behalf of a law section.

Source: https://www.floridabar.org/the-florida-bar-journal/florida-community-association-law-contracts-clause-application-in-an-ever-changing-legislative-landscape/