THE NEED TO TAKE ACTION CONSISTENT WITH THE DECLARATION AND THE NEED TO KEEP ACCURATE RECORDS

A necessary duty of Florida’s community associations is to levy and collect assessments to ensure the upkeep of the community. In a perfect world, all owners would timely pay their assessments. Unfortunately, this is not always the case. When owners do not pay, their association often takes legal action including the filing of a lien and filing of an assessment foreclosure lawsuit.

In the case of Berg v. Bridle Path Homeowners Association, Inc., decided on January 20, 2002 by Florida’s Fourth District Court of Appeal, the association, Bridle Path Homeowners Association, Inc. (“Bridle Path”), sought to foreclose on Ms. Berg, the homeowner, for her failure to pay assessments since her acquisition of the property. In response, Berg asserted that Bridle Path did not comply with its own declaration of restrictive covenants or bylaws in the making and levying of the assessments.

By way of background, in 1993, Berg purchased two lots in Bridle Path. The lots were subject to the Declaration of Covenants, Conditions and Restrictions for Bridle Path and Bridle Path’s authority to make and collect assessments. In 1997, Bridle Path filed a lien foreclosure lawsuit against Berg, alleging Berg failed to pay the assessments levied against her two lots from the time of the 1993 purchase through the end of 1997.

Berg raised five affirmative defenses to the lien foreclosure lawsuit including: (1) that the property manager, and not the board, determined the budget, which act was inconsistent with the bylaws; (2) there was no evidence that board meetings were held where budgets and lot assessments were adopted; (3) there was no evidence that Berg received notice of the annual meetings; (4) there was no evidence that notice of the annual meetings were posted to the property; and (5) minutes of any meetings conducted were not kept in accordance with the bylaws. In plain English, an “affirmative defense” raised by a defendant in a civil lawsuit is a fact or set of facts other than those alleged by the plaintiff which, if proven by the defendant, defeats or mitigates the legal consequences of the allegations set forth in the complaint.

The trial court ruled in favor of Bridle Path. The trial court also determined that Berg did not prove her affirmative defenses that Bridle Path failed to comply with the recorded covenants, bylaws, and Florida Statutes. As a result, Berg appealed. On appeal, Berg claimed that the trial court erroneously shifted the burden of proof for the assertion of the proper levying of the assessments from the association, Bridle Path, to Berg. The appellate court noted that, although Berg framed her response to the complaint as affirmative defenses, those affirmative defenses were actually denials of the condition precedent that Bridle Path properly levied the assessments in accordance with the declaration.

The appellate court determined that Bridle Path was required to prove that the assessments were properly levied pursuant to the recorded covenants by a preponderance of the evidence and that Berg did not have to prove that association did not do so. In citing to another case, the appellate court noted that, “it is well-settled in Florida law that the plaintiff is required to prove every material allegation of its complaint which is denied by the party defending against the claim.”

The appellate court held that a homeowners’ association must show that it properly levied the assessment in accordance with the community’s declaration of restrictive covenants when the owner challenges the lack of compliance. This concept applies to all types of community associations. Furthermore, the appellate court also found that the trial court erred by requiring Berg to prove that Bridle Path did not comply with its governing documents rather than requiring Bridle Path that it did so comply. With that, the appellate court remanded (meaning, sent back) the case back to the trial court for a new trial consistent with the appellate court’s holding… meaning that Bridle Path would have to prove that it did, in fact, properly levy the assessments.
The general rule is that an association has the burden of proving it performed the required conditions precedent to enforce the provisions of the declaration of restrictive covenants. At any contested trial or hearing the association has to prove that it complied with all applicable provisions of its declaration. The owner being sued does not have to prove that the association did not do so. In this case, at a minimum, Bridle Path would need to prove that the board lawfully passed the budget(s) in accordance with the declaration and bylaws, that the board authorized the lawsuit to commence and that the 45 day intent to lien letter and 45 day intent to foreclose letters were sent.

The nugget of hidden gold in this case’s holding is that an association needs to keep accurate minutes and records of its activities. The minutes and records should be sufficient to show the business being conducted. The level of detail required depends on the scope of the activity the association is addressing. For instance, the minutes should at least minimally reflect that proper notice was provided, who made the motion and who seconded it, and the board’s ultimate decision on the issue at hand. This does not, however, mean that the association should be keeping overly detailed minutes such that the minutes would be a transcript of the meeting.

Posted in Uncategorized.