Associations are charged with the duty to operate, maintain, repair and replace the common areas of the community. The question that often plagues the minds of members of a board of directors is, who is going to pay for that? The association? The owners? Which owners? An insurance carrier? Whose insurance carrier? Is it even the association’s responsibility to repair or replace? More often than not, the answer depends on a very similar question and which is typically answered in the community’s declaration of covenants – who is responsible to maintain, repair or replace the item in need of maintenance, repair or replacement? The answer may also depend on who created the need for the repair. For example, in the event repairs are needed in the recreation room because a member’s child attempted to do a skateboarding trick and instead put a hole in the wall, the association is likely responsible to conduct the repair, but the owner is likely responsible to reimburse the association for the cost of the repair. The answers to these types of questions rely heavily upon what is contained in your association’s governing documents and will have an important impact on the amount of assessments the owners will have to pay. These types of questions, along with the right answers, would have been very helpful to the parties in the March 6, 2015 Second District Court of Appeals case of Fern v. Eagles’ Reserve Homeowners’ Association, Inc.
In Fern, Ms. Fern, an owner of a newer townhouse, who was sued by her homeowners’ association for failure to pay special assessments for repairs made to the community’s older townhouses, challenged the association’s levy of such special assessments. When the townhouse community was developed, the first townhouses were poorly constructed and required extensive reconstruction. However, the newer townhouses were properly built and required few or no repairs. The association conducted the reconstruction of the older townhouses and minor repairs to the newer townhouses and levied a special assessment against all of the owners for all of the repairs notwithstanding the language of the association’s declaration which provided that the association was responsible for the maintenance, repair and replacement of the “exterior of the Dwelling Unit.”
In examining this phrase, it’s important to note a fundamental difference between owning a condominium unit versus owning a home in a homeowners’ association, even if it is a townhome as did Ms. Fern. Typically, in a homeowners’ association, the owner of a townhome, or perhaps all of the owners whose townhomes comprise a singular townhome building, are responsible for the exterior walls. So, even if the association is required to effectuate the repairs, only the owner of the repaired home pays for the repairs to that home. This is further evidenced by section 720.308, Florida Statutes, which allows different levels of assessments assessed against different owners based on the level of services provided by the association.
At trial, Fern asserted that the special assessments were improper expenditures of the association and were therefore unenforceable. Other owners who felt the same had previously sued the association in the case of Klak v. Eagles’ Reserve Homeowners’ Association, Inc., 862 So.2d 947 (Fla. 2nd DCA, 2004). In Klak, the Court held that the association’s obligation to repair the townhouses, and therefore its authority to assess the owners for such repairs, was limited to only the exterior surfaces of the exterior walls of the townhouses. This interpretation was based on language in the association’s declaration which provided that the association was responsible for the maintenance, repair and replacement of the “exterior of the Dwelling Unit” and is much narrower than what the association had hoped or believed. Hoping and wishing could be some very dangerous tools to employ in interpreting a declaration of covenants.
The Court provided that the owners should be assessed for their share of the expenses to repair the building exteriors but that the association would need to seek payment or reimbursement for the remaining expenses from the individually benefited owners and return money to those owners who paid more than their fair share of the repairs.
In the meantime, because of the terrible condition of the older townhouses, the association was ordered by the trial court to continue conducting the repairs. Due to the various lawsuits the association was facing as a result of this special assessment, many years passed, and the association filed for Chapter 11 bankruptcy. The bankruptcy plan permitted the Association to continue its collection efforts but did not address Ms. Fern’s asserted defense of whether the special assessments against her were actually unenforceable. The case against Ms. Fern was ultimately sent back to the trial court because of her asserted defense of whether the special assessments were actually enforceable was required to be determined by the trial court. What happened next? Well, it’s too soon to know. In reviewing the judicial decision, and to add another level of both complexity and absurdity, it does appear that while this case was pending in the appellate court, Ms. Fern actually lost her home as a result of the association’s foreclosure.
This case provides great insight into the importance of properly interpreting the maintenance, repair and replacement provisions set out in the declaration and the assessment authority that goes with it. While the questions may sound simple, the answers often require in depth analysis of your association’s governing documents and the application of Florida case law to reach the right conclusion.