Condominium Association’s Power to Suspend Voting Rights Called Into Question
On June 2nd, 2021, Florida’s Third District Court of Appeal issued an Order in the case of De Soleil South Beach Residential Condominium Association, Inc. v. De Soleil South Beach Association, Inc., et. al., which may impact a condominium association’s authority to suspend voting rights for non-payment of assessments.
In De Soleil, a condominium association suspended the voting rights of owners for nonpayment of assessments based upon s. 718.303(5), Fla. Stat., which provides, in relevant part, as follows:
An association may suspend the voting rights of a unit owner or member due to nonpayment of any fee, fine, or other monetary obligation due to the association which is more than $1,000 and more than 90 days delinquent. . . .
One of the owners whose voting rights was suspended was the developer of the condominium. The developer challenged the association’s authority to suspend voting rights arguing the statute which authorized such suspension – which was adopted by the legislature in 2010 – could not be applied to De Soleil because the statute was not in existence when that condominium was created in 2006.
Specifically, the owner argued that the condominium’s declaration did not contain “Kaufman” language incorporating future changes to the Condominium Act. The Condominium Act as it existed on the date of recording of the declaration therefore was “engrafted” into the declaration, and that future changes to the Condominium Act could not then be retroactively applied to the condominium without impairing the contract (i.e., the declaration of condominium) in violation of Article I, Section 10 of the Florida Constitution, which provides that “No . . . law impairing the obligation of contracts shall be passed.”
The appellate court affirmed the trial court’s ruling holding that, indeed, s. 718.303(5), Fla. Stat., which authorizes suspension of voting rights for nonpayment of assessments, was adopted in 2010 and could not be retroactively applied to the condominium created in 2006, where that declaration did not expressly incorporate future changes to the Condominium Act.
The Third DCA’s opinion joins other recent court decisions in which courts have held that certain other changes to the Condominium Act cannot be applied to condominiums created prior to the adoption of the change unless their declarations specifically incorporate future changes to the Condominium Act (i.e., contain “Kaufman” language), including Pudlit 2 Joint Venture, LLP v. Westwood Gardens Homeowners Association, Inc., 169 So.3d 145 (Fla. 4th DCA 2015) (post foreclosure sale assessment liability); Tropicana Condo. Ass’n, Inc. v. Tropical Condo., LLC, 208 So. 3d 755 (Fla. 3d DCA 2016) (changes to the termination provisions; and Cohn v. Grand Condo. Ass’n, Inc. 62 So. 3d 1120 (Fla. 2011) (change in distribution of voting power in mixed use condominium).
The rationale in this case could apply equally to homeowners’ associations. As such, community associations should consult with legal counsel to determine whether, given their particular declaration and the ruling in De Soleil, such right to suspend is available to it before engaging in any suspensions of voting rights.