Author: rembaumlaw

For some home buyers, financing the purchase of their new home can be a barrier to entry. Many home buyers need the benefit of an FHA backed loan for their lower interest rates. The Federal Housing Authority (FHA), a part of the Department of Housing and Urban Development (HUD), has provided mortgage insurance on loans made by FHA-approved lenders since its inception in 1934. Until a recent FHA rule change, any buyer interested in purchasing a condominium unit backed by an FHA loan faced the additional hurdle requiring that the condominium project itself must be FHA approved.

The FHA approval process for condominium projects can be complex and time-consuming. Prior to the recent FHA rule change, if the condominium project was not approved by the FHA, then prospective condominium purchasers could only obtain conventional loans, making it more difficult to secure financing. In fact, according to the FHA, only 6.5 percent of the country’s more than 150,000 condominium projects are approved to participate in the FHA’s mortgage insurance program. However, a new FHA rule that goes into effect on October 15, 2019 will change the approval process for condominium units and allow more buyers to receive approval for an FHA loan.

The new rule introduces several changes to the FHA approval process. The most notable is that the FHA will now allow an individual condominium unit owner to be eligible for an FHA backed mortgage even if the condominium project as a whole is not approved. However, the FHA will only approve a limited number of units in any condominium project. For projects with 10 or more units, no more than 10 percent of the individual units can be FHA-insured, and for projects with fewer than 10 units, no more than two individual units can be FHA-insured. Board members, owners, managers, and anyone else can access HUD’s database to find the number of FHA backed loans in a condominium project at https://entp.hud.gov/idapp/html/condo1.cfm.

The following are some of the essential requirements for a condominium project to be FHA approved, which have not been changed by the new rule:

• The condominium project must consist of two or more units
• No more than ten percent of the units can be owned by one investor or entity in a project with more than 10 units. In a project with 10 or fewer units, an investor may not own more than one unit. Unsold units are not considered investor-owned.
• No more than fifteen percent of the total unit owners can be in arrears of association fees.

While the FHA allows limited restrictions on leasing, a condominium project will not be approved if the declaration or by-laws require that a prospective tenant be approved by the association. However, the association may require leases to be in writing and subject to the declaration and by-laws of the condominium, request a copy of any sublease and the name of all tenants who will occupy the unit, and establish a maximum allowable lease term and maximum number of rental units within the project. The FHA leasing requirements are the same for condominium and homeowners associations, but the new rule changes apply only to condominium associations.
The new FHA rule requires that approved condominium projects have a minimum of 50 percent of the units occupied by “owners” for most projects. In 2015, the FHA clarified that a condominium unit is considered to be owner-occupied provided that it is not: (i) tenant occupied, (ii) vacant and listed for rent, (iii) vacant and listed for sale, or (iv) under contract to a purchaser who does not intend to occupy the unit as a principal residence or secondary residence. For approved projects, the FHA will insure up to 50 percent of the units in the project.

The new FHA rule has extended the allowable amount of commercial/non-residential space for an approved condominium from 25 percent to 35 percent of total floor space. It also extended the re-certification deadline for approved condominium projects from two years to three years. An approved condominium project may request renewal of its approval by submitting a request no earlier than six months prior to the expiration or no later than 6 months after expiration of the approval.

Getting your condominium project approved by the FHA allows more buyers the opportunity to purchase units in your community utilizing FHA backed loans. However, the approval process is complex, and may require that your declaration and by-laws be amended to conform with FHA requirements – most especially in regard to leasing. Each association will have to balance the benefit of FHA backed loans versus having lease approval powers. If an owner’s neighboring tenant turns out to be previously convicted of rape, murder, or other heinous crime, then there is a great probability that such owner would have preferred stringent lease approval requirements as compared against providing for FHA backed loans in the community. Your association’s legal counsel can be of great benefit in navigating issues concerning the FHA approval process.

The complaint heard often from condominium and HOA board members is in regard to the influx of assistance animals in their “no pet” or pet restricted communities. Few other topics within the body of community association law cause more consternation then the application of the Federal, State and local Fair Housing laws. In fact, one relatively minor misstep from a board member or manager can cost an association tens of thousands of dollars in damages, as well as attorney’s fees and costs. Not only that, but this is one of the very few areas where board members could potentially face individual liability for their actions. Under most circumstances, board members will have protection from liability under the “business judgment rule,” but this is not necessarily the case in the Fair Housing arena.

I have read applications for assistance animal requests, believed to be prepared by lawyers with knowledge in this field, which are used as a method to obtain new community association clients by selling the applications for a very low cost, even below several hundred dollars. Unfortunately, these application packages, while seemingly inexpensive, can expose the association to significant monetary penalties.

One such application package is a nightmare waiting to happen to an unsuspecting board because it requires the application to be completed in order for the board to review the matter. While Fair Housing laws encourage a uniform policy be implemented, an association’s assistance animal application package cannot be made a prerequisite. It can be suggested that providing a completed application will assist in expediting the review process, but it cannot be mandated to be considered for approval. Also, without good cause, an association cannot demand regularly updated medical information concerning a claimed disability, regardless of the use of an application created by an association demanding otherwise.

Recent decisions point out the legal exposure to an association when board members or other agents of the association attempt to curtail the rights of assistance animal owners in an apparent effort to placate the rest of the community.

In a recent Fair Housing consent order entered September 28, 2018 by and between an applicant for an assistance animal and Hudson Harbor Condominium Association, Inc., located in New Jersey, the association was ordered to pay $30,000 to the assistance animal applicant for failing to grant a reasonable accommodation to its policy of requiring the animal be carried in a crate or carrier in the common elements and that the owner of the animal only use a service door when accompanied by the animal.

In another case, Pekiun v. Tierra Del Mar Condominium Association, Inc., 2015 WL 8029840, the association’s motion for summary judgment was denied where the plaintiff’s estate sued the association due to its failure to allow an assistance animal and argued that the association caused the intentional infliction of emotional distress and violations of both Florida and Federal Fair Housing Acts. In this case, the association demanded an assistance animal be removed from the premises due to another individual’s allergies and required, not only that a specific application be completed by a particular time. After the assistance animal was approved, the association’s management company changed and the new management company required the owner to “recertify” his assistance animal. Later, the owner committed suicide. Had the Association not given the owner such a hard time, would the owner still have committed suicide? We will never know. The damage award could easily exceed six figures given these occurrences and resulting suicide.

Remember, when considering an assistance animal request, all that is necessary is that the applicant has a disability recognized by the Fair Housing laws and that the animal helps ameliorate the symptoms or effects of the disability. This information can come to the association from a doctor, psychiatrist, social worker, mental health worker or any other qualified individual.

If the association desires a uniform application for assistance animals to assist in trying to streamline request procedures, the board should be looking to work with an attorney/law firm familiar in this area of law, and not simply go for the low cost option.

Unless and until the Federal, State, and local laws are modified to address this ever-growing situation, when considering assistance animal applications, the association would be wise to seek legal counsel before taking any action. This is particularly true if the association is going to request additional information, implement limitations or restrictions on the owner or assistance animal within the community, or perhaps deny the request.

While gasoline powered vehicles are still dominant on Florida’s roads, the ever-growing presence of electric vehicles cannot be ignored. The number of electric vehicles on our highways and streets continue to climb as they become more and more affordable. As consumers continue to embrace a greener lifestyle, Florida’s lawmakers have paved the way for condominium unit owners’ need to have access to electric vehicle charging stations. Effective July 1, 2018, new legislation, section 718.113(8) of the Florida Statutes, became effective which facilitates a unit owner’s ability to install and use an electric vehicle charging station within the unit owner’s limited common element parking space.

This new legislation prohibits the condominium association’s board of directors and a declaration of condominium provision or other restrictive covenants from prohibiting (or being enforced to prohibit) any unit owner from installing an electric vehicle charging station within the boundaries of the unit owner’s limited common element parking space, subject to certain conditions as laid out in this new legislation.

It is important to note that the right of installation of an electric vehicle charging station is ONLY applicable to the “limited common element” parking space and does not apply to a “common element” parking space. There is an important difference between a common element and a limited common element parking space. While all unit owners own an undivided interest in both, the limited common element parking space vests an individual use right to the owners of the unit to which the limited common element is appurtenant (connected to). Therefore, associations may prohibit the installation of electronic vehicle charging stations within the common elements or other portions of the condominium property that are maintained for the general use and benefit of all unit owners, but not as applied to a limited common element parking space, subject to the limitations and conditions of the legislation.

Thus, section 718.113(8) of the Florida Statutes, provides that, in considering a unit owner’s request to install an electric vehicle charging station, the association first must determine whether the charging station is to be installed within the boundaries of the requesting unit owner’s limited common element parking space. Whether a parking space is a limited common element is determined by the provisions of the declaration of condominium designating the parking space for the exclusive use and benefit of the owners of a specific unit.

If it is determined that the parking space is a limited common element, the unit owner may have the electric vehicle charging station installed subject to the requirements of the new legislation. These requirements provide that:

1) The installation cannot cause irreparable damage to the condominium property.

2) The unit owner is responsible for the costs of installation, operation, insurance, maintenance, repair, and removal of the charging station.

3) The electricity for the electric vehicle charging station must be separately metered and payable by the unit owner.

All of the above costs, if left unpaid by a unit owner, are enforceable by the association as any other assessment due pursuant to section 718.116, Florida Statutes, meaning if left unpaid their condominium unit can be foreclosed.

Additionally, as provided by the new legislation, the association can and should require that the unit owner:

1) comply with bona fide safety requirements, consistent with applicable building codes or recognized safety standards, for the protection of persons and property;

2) comply with reasonable architectural standards adopted by the association that govern the dimensions, placement, or external appearance of the electric vehicle charging station, provided that such standards may not prohibit the installation of such charging station or substantially increase the cost thereof;

3) engage the services of a licensed and registered electrical contractor or engineer familiar with the installation and core requirements of an electric vehicle charging station;

4) provide a certificate of insurance naming the association as an additional insured on the owner’s insurance policy for any claim related to the installation, maintenance, or use of the electric vehicle charging station within 14 days after receiving the association’s approval to install such charging station; and

5) reimburse the association for the actual cost of any increased insurance premium amount attributable to the electric vehicle charging station within 14 days after receiving the association’s insurance premium invoice.

Although your condominium association may not have received a request for the installation of an electric vehicle charging station as yet, your board of directors should be prepared for such a request. After all, it is only a matter of time. Therefore, condominium boards should consider adopting rules and regulations governing the process by which a unit owner is required to make such a request and provide for procedures by which the board of directors is to conduct its review and approval of the request.

While a unit owner desiring to install and use an electric vehicle charging station within his or her limited common element parking space will be able to do so by way of this new legislation, the association still has the authority to govern certain aspects of the installation and use and should be proactive in making rules and regulations in line with this authority. Your association’s legal counsel can be of great benefit to the board in creating a clear and concise process governing the electric car charging stations installation and use.

A good reason why society provides for prevailing party attorney fees and costs is to make a potential plaintiff think twice before filing a lawsuit. Imagine being able to sue your adversary in court without worry that if you lose you will NOT have to pay prevailing party attorney fees and costs to the other side. Such a situation could lead to an avalanche of lawsuits, and that is exactly what happened when Florida laws permitted contractors holding an “assignment of benefits” in their favor, who were unhappy with the award from the insurance company, to sue the insurance company with nothing to lose but to pay for their own attorney. Simply put, an assignment of benefits is an agreement transferring a homeowner’s insurance benefits to a contractor who may then file a claim against the homeowner’s insurance policy without the involvement of the homeowner. Notwithstanding the assignment of benefits, the homeowner is still responsible to pay the insurance premium and deductible. If the contractor then makes a claim against the insurance policy and is unhappy with the insurance proceeds received, the contractor can sue the insurance company with no threat of having to pay prevailing party attorney fees if the contractor lost its lawsuit against the insurance company. Without the fear of a prevailing party attorney fees award, these types of lawsuits became very prevalent. Insurers claim that this led to ever increasing insurance premiums. Not anymore!

Due to the passage of House Bill 7065 (“HB 7065”), officially taking effect on July 1, 2019, consumers may begin to notice a decrease in their insurance premiums as HB 7065 creates liability for the contractor for attorney fees and costs based upon the difference between the amount recovered and the amount offered during settlement negotiations as compared to the disputed amount. When HB 7065 takes effect, if the contractor holding the assignment of benefits sues and the difference between the judgment obtained by the contractor and the presuit settlement offer by the insurer is less than 25% of the disputed amount, the insurer is entitled to an award of reasonable attorney fees. On the other hand, if the difference between the judgment obtained by the contractor and the presuit settlement offer by the insurer is at least 50% of the disputed amount, the contractor is entitled to an award of reasonable attorney fees. Finally, if the difference between the judgment obtained by the contractor and the presuit settlement offer by the insurer at least 25%, but less than 50%, of the disputed amount, no party is entitled to an award of attorney fees.

Insurers claim that the old system resulted in abuse of property insurance claims, as contractors were inflating repair costs and essentially operating without significant financial risk during insurance litigation, thus allowing contractors to assert numerous claims in hopes that one would stick. As a result, insurance companies were left bearing the costs of these lengthy litigations, and thus, sought to recover their litigation expenses through the consumer – the homeowner – by increasing insurance premiums. While a homeowner is still able to enjoy the benefits of the one-way attorney fee privilege, this right is no longer transferable to the contractors through assignment of benefits. Clearly, this is a drastic change that will affect contractors around the entire State.

With hurricane season approaching, in the event you experience a casualty, before signing an assignment of benefits in favor of the contractor who shows up, often uninvited, not only do you need to read the fine print, but it is strongly suggested you have an attorney review the assignment of benefits contract first.

If you have any questions regarding the impact of this new law, please discuss them with your association’s attorney.

Excluding certain covenants, including a condominium association’s declaration of condominium, Florida’s Marketable Record Title Act (MRTA) may begin to extinguish covenants not sooner than 30 years after they are initially recorded. At times, a master condominium association may administer its declaration of condominium and other covenants recorded against non-condominium property. Therefore, it is crucial to determine whether these “other covenants” can be preserved or revitalized by the master condominium association. In addition, under current law, certain master condominium associations are governed by Chapter 718, F.S., (the “Act),” while others are not. There is great debate as to whether or not master condominium associations should be regulated by the Act, or Chapter 617, F.S., the Florida Not For Profit Corporation Act, or Chapter 720, F.S., the Homeowners’ Association Act.

Where it all began – a history lesson of the genesis of the master condominium association. Raines v. Palm Beach Leisureville Community Association, decided in 1982 by the Florida Supreme Court (the “Court”), was the first significant court decision regarding the definition of “association” as relates to a master condominium association. The Court ruled that a master condominium association was not an “association” governed by the Act because it is not the entity responsible for the operation of a condominium. Similarly, in the 1985 case of Department of Business Regulation, Division of Land Sales v. Siegel, the Court ruled that the Act does not apply to a master condominium association when the development is not complete and the developer could add non-condominium units to the development.

Then, in the 1988 case of Downey v. Jungle Den Villas Recreation Association, Inc., decided by Fifth District Court of Appeals created a two-pronged test where both prongs must be met to determine whether a master association is a master condominium association subject to the Act: the “constituency test,” requiring that an “association” consist exclusively of condominium unit owners; and the “function test,” requiring the court to look at how an association was being managed. If the functions and actions of an association are “in substance and in equity” those of a condominium association, then the entity would meet the “function test” regardless of the intent behind its formation.

With the apparent intent of codifying the Jungle Den decision, the Florida Legislature addressed master condominium associations in 1991 by broadening the definition of “association” in the Act. Though, fundamental differences between traditional condominium associations and master condominium associations were left unaddressed. Sadly, today, the definition of “association” is substantially similar to its 1991 counterpart.

Then, in 2012 in the case of Heron at Destin West Beach & Bay Resort Condo Association, v. Osprey at Destin West Beach, it was determined that a master condominium association meets the definition of an “association” as defined in the Act, “if it is primarily responsible for the operation of real property or facilities that are not common elements of an individual condominium or property of a condominium association and i) condominium unit owners have user rights in the master association’s property; ii) the voting membership is exclusively condominium unit owners; iii) membership in the association; and iv) the master association is authorized to assess its members for assessments and has lien rights.”

Prior to recent amendments to the Florida Statutes to broaden the abilities of all property owners’ associations to preserve and revitalize covenants from the effects of MRTA, such abilities were limited to a “homeowners’ association” as defined in MRTA to mean “a homeowners’ association as defined in s. 720.301, or an association of parcel owners which is authorized to enforce use restrictions that are imposed on the parcels.” This left a question in practitioners’ minds as to whether the covenants of a statutory master condominium association may be preserved and revived if it is deemed subject to the Act but not saved by any exception to MRTA as would a traditional declaration of condominium.

Finally, an answer: in the January 2019 case of Eastwood Shores Property Owners Association v. Florida Dept of Economic Opportunity, the master condominium association was subject to the Act and operated pursuant to its covenants which did not fall under any exception to MRTA. Because the non-condominium declaration covenants were being extinguished by MRTA, the master condominium association undertook revitalization efforts to save them. However, the revitalization was disapproved by the Department of Economic Opportunity (a necessary step in revitalization) because of the condominium form of ownership. Essentially, the Department substituted the term “condominium parcel” as defined in the Act for the term “parcel” as defined in MRTA, resulting in the inability of the master condominium association to revitalize its covenants. However, the case was decided in favor of the master condominium association finding that the Department “erroneously interpreted the applicable sections of MRTA and chapters 718 and 720.” As such, master condominium associations can take advantage of revitalization when necessary.

Community associations have an interest in the safety and integrity of their communities. Generally speaking, boards of community associations would like to be reasonably certain that potential owners, renters and other occupants have the financial capability to meet their financial obligations. Also of concern are potential purchasers’ and tenants’ criminal backgrounds, if any, so as to avoid endangering the overall safety and welfare of the community.

To address these concerns, many associations have purchaser and tenant approval procedures set out in their governing documents, usually the declaration, which often authorize the association to obtain “consumer information reports” on all applicants as part of the screening process. This leads to the question of when and how a community association can utilize a background check that includes both a credit report and criminal history.

The first step is to determine if the governing documents provide for the approval process. The second step is to ensure there is meaningful criteria by which to evaluate the results of the consumer information report. The consumer information report (a/k/a the background check) is typically compiled by a consumer reporting agency or company, which is engaged in the business of gathering credit scores, reports on previous rental history, criminal background information, employer history, and verification of income amongst other information. The consumer information report cannot be used for any other purpose other than for the determination of approval. Importantly, it cannot be used in a discriminatory manner to reject housing based on race, color, religion, national origin, sex, disability, or familial status.

If the community association makes an unfavorable determination on the applicant’s status based on information contained in the consumer report, then the association MUST provide certain information to the applicant pursuant to the terms of the Federal Fair Credit Reporting Act.

1. The association must provide the applicant verbal or written notice that the applicant was denied based on the information supplied in the consumer report.

2. The verbal or written notice of adverse determination must include:

a) the name, address, and phone number of the consumer reporting company that supplied the report,
b) a statement that the company that supplied the report did not make the decision for the unfavorable action and cannot give reasons for the denial;
c) a notice of the applicant’s right to dispute the accuracy and completeness of the information in the credit report and that the applicant may request a free report from the credit reporting company within 60 days.

For the protection of the association, this notification should always be done in writing so as to provide proof positive of compliance with the Fair Credit Reporting Act. Additionally, there are local Broward and Miami-Dade County Ordinances requiring that a written notice be mailed to the rejected applicant which provides with some degree of specificity the basis for the disapproval, in addition to the notice required by the Federal Fair Credit Reporting Act.

The information that the association relied on in making the adverse determination CANNOT be released to the applicant, but the applicant may request from the credit reporting agency to see the information in the consumer information report and correct any inaccurate information. Even if the information provided a small role in the total determination of the application, the applicant must be provided the required notice by the association.

What is to be done with the consumer information report after a decision has been made? The general rule is that all information in the consumer report must be destroyed in such a manner that it cannot be reconstructed. But arguably, Florida law requires community associations to keep such records, as all written records of an association must generally be kept for seven years. Therefore, the association will want to store the consumer report in the applicant’s file, which will need to be designated as confidential with restricted access. It is NOT part of the official records open to inspection and, thus, not available upon a request to inspect the association’s official records.

If a declaration has general language providing for the purchaser and tenant approval but does not provide the standards and procedures necessary to make such a decision, then in all likelihood, the association’s approval is on thin ice and subject to challenge. This is a good time to check your declaration and seek advice from the association’s lawyer as to whether your association’s declaration approval process needs to be updated.

From a recent Fourth District Court of Appeal case, Seminole Lakes Homeowner’s Association, Inc. v. Esnard, decided December 19, 2018, we once again learn that application of prior case law sometimes creates strange and convoluted results. Just because an association negligently creates obvious conditions for an accident to occur does not necessarily mean the association will have liability for such accident when the conditions created by the association did not directly lead to the accident. This is the circumstance where, in-spite of the negligent acts of the association, a supervening incident occurred which directly led to the accident even though the accident may not have occurred had the conditions not been created by the association in the first place. Yes indeed, the law can be cruel.

In the Seminole Lakes case, the association ignored its own declaration of covenants and the municipality’s parking ordinances by allowing vehicles to park on both sides of the association’s streets thereby creating bottleneck conditions. As a result, at various and unpredictable times, only one car could pass between the two parked vehicles located on both sides of the street. During one such occasion, on their way to their rented home within the association’s community, the Esnards encountered a bottle neck condition and had to stop their vehicle to wait for the oncoming vehicle to pass between the two parked cars. While waiting, they were rear ended from behind and were caused significant personal injuries. The case went to trial.

The jury determined that the association was 30% responsible for the accident for having created the bottleneck conditions. The driver of the vehicle which caused the accident was found to be 70% responsible. Unhappy with the result, the association appealed on the grounds that a motion for a directed verdict which was made and denied by the judge during the trial court proceedings should have been granted.

As to such motion, at the close of the Esnards’ presentation of evidence, the lawyers for the association moved for a directed verdict arguing that the association’s decision to allow cars to pack on both sides of the streets was not a “proximate cause” of the accident. You see, in order to have legal liability, and thus monetary responsibility, for causing an accident, the act which led to the accident must be the “proximate cause” of the accident.

In reviewing the situation, the appellate court looked to a prior case which held that, “a remote condition or conduct which furnishes only the occasion for someone else’s supervening negligence is not the proximate cause of the result of the subsequent negligence… conduct prior to an injury or death is not legally significant in an action for damages like this, unless it is a legal or proximate cause of the injury or death – as opposed to a cause of the remote conditions or occasion for the later negligence.”

Applying those principles to the Seminole Lakes case, the Fourth District Court of Appeal determined that the association’s decision to allow parking on both sides of the streets was not a proximate cause of the accident. The Court reasoned that “[i]t is within common experience while driving on the streets of Florida to encounter traffic that is slowed or stopped… The law requires every driver to maintain a safe distance from the traffic in front of them to avoid rear-end collisions… The parking situation was patently obvious to any and all drivers using the streets in Seminole Lakes.” Thus, the Court held that the association’s failure to enforce its parking rules was not a cause in fact of the accident, but rather the association’s negligence only furnished the occasion for the driver of the other vehicle to hit the Esnards. Therefore, given the general conditions of the residential neighborhood at hand, the Court held that the driver’s negligence was not reasonably foreseeable by the association, and the failure of the association to enforce its parking rules was not the proximate cause of the Esnard’s injuries.

Notwithstanding the reversal of the trial court’s ruling against the association, the association in this case would appear to be extremely and unpredictably lucky. After all, when an association allows haphazard parking in direct violation of both city ordinance and its own declaration of covenants, it certainly could be foreseeable that accidents will occur. However, unlike this author’s opinion, the opinion of the appellate court becomes the law of the land.

The aforementioned case should not be interpreted to mean that an association can escape liability for its negligent acts. For example, in a recent Daily Business Review summary of Florida’s top verdicts and settlements of 2017, there are three noteworthy trial court decisions that act to temper the Seminole Lakes outcome:

1) A tenant claimed a hose left on the sidewalk caused a tripping hazard and was awarded over $1 million dollars;

2) A plaintiff claimed a poorly repaired sidewalk resulted in a slip and fall causing personal injury and was awarded $1.4 million dollars;

3) A plaintiff argued that the association’s failure to replace a “no driving” sign resulted in an accident which caused paralysis and was awarded over $10 million dollars.

Notwithstanding the outcome of the Seminole Lakes case, associations should either abide by the provisions set out in their declaration of covenants or amend them if they are unhappy with a particular provision and do not want to enforce it as written. Board members and managers with questions regarding the Seminole Lakes case, should discuss them with their association’s attorney.

In the recent Fourth District Court of Appeal case of Charterhouse Associates, Ltd., Inc. v. Valencia Reserve Homeowners Association, Inc., decided November 28, 2018, the Court determined whether a homeowner is entitled to bring their own personal trainer to the association’s fitness center where the association’s board of directors enacted a new rule prohibiting private trainers, instructors, physical therapist, and massage therapists from working in the fitness center.

In this case, Charterhouse Associates, Ltd., Inc. owned the lot within the association’s community and authorized Kenneth and Gail Browne to reside at the property and assume the ownership rights of the corporation, which included membership within the association. The Browne’s brought their personal trainer to the clubhouse on several occasions but were later prohibited from doing so because of the aforesaid rule adopted by the board.

The association’s Declaration of Covenants, provided in relevant part, that the association property, which includes the fitness center, was reserved for the private use and enjoyment of… “the owners, and their family members, guests, invitees and tenants, but only in accordance with this Declaration.” In addition, the owners, their family members, guests, tenants, agents, and invitees, all had a permanent and perpetual, nonexclusive easement for ingress and egress over, enjoyment in, and use of the association property. Also, the Declaration provided the board the right to establish rules and regulations pertaining to the use of the association property. Because the association entered into a contract with a private provider, it enacted the rule prohibiting private personal trainers, amongst others.

Initially, the trial court, as a result of the summary judgment hearing, ruled in favor of the association. On appeal, the appellate court reviews trial court decisions stemming from summary judgment hearings in a light “most favorable to the non-moving party.” The appellate court, in addition to focusing on whether the trainer was an “invitee” of the Browne’s who was prohibited by the adopted rule in question, also focused its analysis on whether the board had the authority to enact the rule which prohibited the Browne’s trainer in the first place.

The appellate court looked to an often-cited case, Beachwood Villas Condominium v. Poor, a 1984 Fourth District Court of Appeal case. In this appellate decision, the Court looked to a decision from yet an older 1981 appellate case, Hidden Harbor Estates, Inc. v. Basso, which suggested that condominium rules fall into two classifications: those rules set out in a declaration of condominium and thus approved by the membership, as compared against those rules adopted by the board. The rules contained in the declaration itself are clothed with a strong presumption of validity. However, board adopted rules are reviewed by first determining whether the board acted within its scope of authority and then whether the rule reflects reasoned or arbitrary and capricious decision-making.

As to the board adopted rule prohibiting private trainers, the appellate court held that the board’s adopted rule prohibiting the member’s private trainer directly conflicted with the declaration’s provision granting all owner’s invitees access to the fitness center. Therefore, the appellate court held that the board adopted rule contravened an express provision of the declaration and thus, the board exceeded their scope of authority by enacting the rule in the first place.

Ultimately, what can be gleaned from this case is that before determining whether a board adopted rule is reasonable as compared against being arbitrary and capricious, is to first ensure that the requisite authority exists for the board to adopt a rule in the first place. Since the appellate court determined that the rule should not have been adopted because it was contrary to the terms of the declaration, the appellate court reversed the trial court and remanded the case back to the trial court for further proceedings consistent with their opinion.