Opinion
No. 5D98-2532.
Decision filed January 7, 2000.
Appeal from the Circuit Court for Orange County, W. Rogers Turner, Judge.
Michael E. Marder and Stephanie A. Yelenosky of Greenspoon, Marder, Hirschfeld, Rafkin, Ross Berger, P.A., Orlando, for Appellant.
David J. Kohs and Houston E. Short of Pohl Short, P.A., Winter Park, for Appellee.
AFFIRMED.
ANTOON, C.J., and GOSHORN, J., concur.
Appellants are the owners of various units in a condominium which at the time of purchase had certain designated common elements. The initial declaration also contained a general power to amend:
Except as provided below, this Declaration may be amended at any regular or special meeting of the unit owners called and convened in accordance with the by-laws by the affirmative vote of voting members casting not less fifty-one (51) of the total vote of the members of the association.
At a properly called meeting and based on the authority of the above general amending provision, the association, appellee herein, adopted the following amendment to its declaration by adding for the first time a specific power to change the common elements:
The Association shall have the power to alter, amend, or improve the common elements for the use and enjoyment of all unit owners upon fifty-one percent (51%) of the vote of the Board of Directors. Such alteration, amendment, or improvements may include the construction of facilities such as management offices, security guard houses, security gates, recreational facilities, etc.
The issue in this case is whether this amendment may be applied retroactively to defeat the previously vested rights in and to the common elements held by the original owners. The majority approves such retroactive application and I dissent.
The effect of the majority opinion is that one purchasing a condominium unit can never acquire a vested interest in or to the common elements if the condominium declaration contains a provision generally permitting amendments to the declaration because such subsequent amendments, if held retroactive as in this case, may cut off all previous rights. For example, if one pays a premium to purchase a condominium at a tennis complex, he should expect that the majority of the owners, as they grow older, might use the power to generally amend the declaration to convert the tennis courts into shuffleboard courts. Likewise, if one opts to purchase a golf course condominium, he should expect that the golf course might later be converted through the general power to amend, into a passive park with picnic tables. In either event, the purchaser's complaint that the amendment interferes with his contractual rights negotiated with the developer by taking away his vested interest in the amenities will be met with the admonition that by accepting a declaration which authorized even general amendments, he cannot now complain.
Because of the importance that many condominium owners place in "their" common elements, it is crucial, when interpreting a declaration containing merely a general power to amend, to consider the statutory law and other provisions of the declaration and by-laws applicable when the condominium was purchased in order to determine existing rights.
If at the time of purchase the declaration or by-laws provide how and under what circumstances the common elements may be altered, then the purchaser takes subject to such provisions. It is quite a different thing, however, to suggest that a purchaser can lose vested contractual rights because the association later amends the declaration under a general power to amend by adding a provision relating to the alteration of common elements which is inconsistent with the by-laws and the condominium law in effect at the time of purchase.
See Highland Lakes Property Owners Ass'n. Inc. v. Schlack, 724 So.2d 621 (Fla. 5th DCA 1998).
A general power to amend the Declaration of Condominium is insufficient to satisfy the requirements of section 718.113 (2) and section 718.110(4), Florida Statutes (1989), the law in effect when the condominium documents were recorded. Section 718.113(2) provided:
There shall be no material alteration or substantial additions to the common elements except in a manner provided in the declaration.
The law has been amended to now provide that such changes, if not provided for in the declaration, may be made upon a 75 percent super-majority vote. Whether the amendment affects this case is immaterial since the association did not garner such majority.
Section 718.110(4) provided:
Unless otherwise provided in the declaration as originally recorded, no amendment may . . . materially alter or modify the appurtenances to the unit . . . .
At the time the condominium project was placed on the market, there was no provision in the Declaration of Condominium which permitted alterations or additions to the common area. A general power to amend, while it might authorize the addition of such a provision which would be effective against those who subsequently purchase, is not itself a provision which permits common elements to be altered or increased. A purchaser of a unit should be able to rely on the provisions of the declaration and by-laws then in effect in order to anticipate the cost of owning a unit, including the costs associated with the common elements, and thus determine whether he or she can afford it. And, in the absence of a provision permitting the common elements to be altered, the purchaser should be permitted to rely on their continued availability.
The majority has determined not only that the general power to amend the declaration is sufficient notice that the common elements may subsequently be altered, but also that any amendment to the declaration in that regard will be retroactive to the date of the declaration and not be effective merely from the date of the amendment. Hence, the majority holds that an event (the subsequent amendment permitting alteration of common elements) occurring long after the declaration is recorded can satisfy the legislative condition precedent that any amendment authorizing the alteration of common elements must appear in the declaration as originally recorded.
The majority's position is contrary to sections 718.113(2) and 718.110(4), Florida Statutes (1989). The purpose of these provisions was to protect the consumer against unanticipated changes in the common elements which could dramatically affect the cost and enjoyment associated with owning a condominium. Hence, when the legislature provided that "[u]nless otherwise provided in the declaration as originally recorded, no amendment may . . . materially alter or modify the appurtenances to the unit" (section 718.110(4)) and "[e]xcept as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements . . . except in a manner provided in the declaration," it was talking about a provision existing in the declaration at the time of purchase which would put one on notice whether and under what conditions the common elements could be modified, not merely that the declaration itself might be subsequently amended to set forth whether and under what conditions the common elements may be altered.
And it is clear that the developer, in preserving the right to amend the declaration, did not intend that this right to amend should be interpreted to void vested rights in the common elements acquired prior to any such amendment. The declaration must be construed in light of the by-law provision specifically incorporated into the declaration and which prohibits additions or alterations to the common elements "except asspecifically provided for in said condominium(s) Declaration of Condominium [and there were none at the time the condominium was put on the market], as provided by section 718.403 [phase construction], or where such additions or alterations are needed to maintain the quantity and quality of the common elements presently existing." (Emphasis added). By specifically providing in the by-laws under what circumstances the common elements may be altered, the declaration, by incorporating the by-laws, has limited the general right to amend the declaration so that such amendment may not affect existing rights.
Appellee relies on the language added to section 718.110(4) the year following the recording of the declaration in this case. At the time this condominium was put on the market, the statute specifically required that any amendment which altered the "appurtenances to the unit" had to be approved by all of the unit owners unless it was provided otherwise in the declaration as originally recorded. This provision was interpreted by this court in Downey v. Jungle Den Villas Recreation Association, Inc., 525 So.2d 438, 440 (Fla. 5th DCA 1988), as follows:
Under section 718.110(4), Florida Statutes (1985) a material alteration or modification of the appurtenances to a condominium cannot be made absent unanimous approval of all unit owners. (Citations omitted). The purpose of this provision obviously is to prevent a majority of the members of a condominium association from making capital acquisitions and dispositions and material alterations and modifications (as distinguished from normal maintenance) which a majority of the unit owners might desire but which some unit owners might not want or be able to afford. Therefore, for a "condominium association" to acquire property, construct a pool on it, and assess each member for the cost, unanimous approval of each unit owner would be required.
Some years after this interpretation of section 718.110(4) by this and other courts, the legislature amended the language of the act to provide that the association's acquisition of property and its alterations or additions to the common elements, if accomplished in accordance with certain specific sections of the Condominium Act, "shall not" constitute a material alteration or addition of the appurtenances. Appellee urges that this language, which it contends is remedial in nature, relates back to the original declaration and makes Downey and the other cases construing this section of no precedential value. First, there is no indication that the legislature, by inserting this new provision, was "correcting" Downey. The new insertion merely reflects a policy shift in which the legislature has decided to grant more power to the homeowners' association than it had intended when the statute was first enacted. Notice that the legislature did not apply this provision to a developer who controls the project until a specified number of units are sold before the project is turned over to a homeowners' association. Further, the change is not remedial but substantive. Before the amendment, neither the developer nor the homeowners' association could alter or modify the common elements without unanimous consent of the owners who had purchased in reliance on the declaration and by-laws. This became a vested right of such owners. After the amendment, the common elements can now be altered or modified by the association upon a vote of "75 percent of the total voting interest." This is a substantial and substantive change. Permitting this provision to "relate back," in my view, unconstitutionally interferes with the owners' contractual rights with the developer. Finally, even if the amendment applies to our case and even if its application is held to be constitutional, the association did not garner the necessary vote.
Although this action appears to merely involve a dispute between a large group of owners (through the association) who wish to build an office for their rental agent on a portion of the common area owned by all and a very few owners of units who wish to rent their own (and perhaps other's) units independently of the rental agent and do not wish to contribute their interest in the common area for this competing, commercial venture, there is more at stake. Because sixty percent of the owners approved this change in the declaration, our holding making such change retroactive places the interests in the common elements of all the owners, and their purse strings, at risk. The majority of the owners who were so intent on passing this proposal in order to get an office for their rental agent gave unrestricted power to present and future directors to do with the common elements as a majority of the directors see fit. Their victory celebration may well turn into a colossal hangover.
Suppose a majority of some future board of directors are tennis enthusiasts who decide the owners should build an indoor, air-conditioned tennis complex. A special assessment and higher maintenance fees and bank financing might follow. Voting the rascals out may not seem adequate after the intervening interests of a financial institution become involved. Further, a majority of that new board of directors which follows the departure of the rascals may have their eye on that expensive thirty acres next door that would make a great 3-par golf course. But I get ahead of myself. Today, our decision is the cause of the celebration. Cheers!