Source: http://www.rubinlawflorida.com/category/caselaw/page/2/
Timestamp: 2019-04-22 04:07:00+00:00

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What remedies does a unit owner have if the condominium association fails to collect assessments and pay the bills? Perhaps the owner could sue each director for breach for fiduciary duty or sue the association to compel it to comply with its duties under the governing documents and Chapter 718. Another remedy might be the appointment of a receiver for the association. A receiver is a person or corporation who is disinterested and is given the authority to collect income and pay expenses for the association in lieu of the board of directors. The receiver accounts to the court and the association for the income received and expenditures made, and is entitled to reasonable compensation for its services.
However, statutory authority for appointing a receiver for a not for profit condominium association does not include the circumstance of a mismanaged association. Chapter 718 authorizes the appointment of a receiver only if the association fails to fill vacancies on the board, or to conclude the affairs of the association after a natural disaster. Chapter 617 authorizes the appointment of a receiver only to wind down the affairs of the corporation.
In Florida, common law can be applied by a court to determine the outcome of a legal dispute, unless its application is otherwise restricted or prohibited by statute or the constitution. “Common law” is the non-statutory law developed over the ages in England and passed down to the courts of the United States when England colonized North America. It consists of some of the most basic principles of law which evolved over time as the courts decided cases, and the older cases became precedent for more recent ones. For example, you will not find a statute which defines what the legal elements of a binding Florida real estate contract are. Instead, a review of Florida case law is required to make this determination. If there is no Florida case on point, you could look at case law in other common law states as persuasive authority on the issue presented.
In the recent case of Granada Lakes Villas Condominium Association, Inc. v. Metro-Dade Investments Co, So.3d (Fla. 2013), the Florida Supreme Court reaffirmed the applicability of common law in Florida if it has not been prohibited or restricted by statute. With respect to receiverships, common law permits the appointment of a receiver in cases of fraud, self-dealing, and waste, and a court has wide equitable discretion to appoint a receiver under those circumstances.
The Florida Supreme Court concluded that there is nothing in Florida Statutes Chapter 718 or 617 which restricts or prohibits the court’s equitable common law power to appoint a receiver for reasons other than those enumerated in the Statutes. Thus, a Florida court does have the common law authority to appoint a receiver when there is condominium association mismanagement which causes waste, for example, if an association fails to pay certain maintenance and utility expenses causing “health nuisances on the property”.
When a person buys a new home, the contract for sale and purchase with the developer typically contains construction warranties for the major structural components of the home. If the home is located in a subdivision, the developer also usually constructs and installs essential subdivision infrastructure to make the home habitable, such as roads for ingress and egress, sewer lines for disposing of waste, electrical conduit for electricity, and drainage to remove rainwater. The issue arose whether there are any implied warranties of fitness and merchantability for subdivision infrastructure improvements installed by the developer, even though the contract for sale between the developer and purchaser only contains warranties for the home itself, and if so, can a homeowners association bring suit against the developer on behalf of the homeowners for breach of the implied warranties for defective subdivision improvements. Two Florida District Courts of Appeal came to opposite conclusions and the Florida Supreme Court had to resolve the conflict.
In Maronda Homes Inc. of Florida v. Lakeview Reserve Homeowner’s Association, 38 Fla.L.Weekly S859(Fla. November 21, 2013), the Florida Supreme Court sided with the Fifth District Court of Appeal and held that a homeowner’s association can bring an action for breach of implied warranty of fitness and merchantability against the developer for defects in subdivision infrastructure which directly impact the homes and provide services essential to the habitability of the residences. In Moranda, there was inadequate drainage which caused flooding of retention ponds and negatively impacted the habitability of the homes by creating child safety issues, mosquito infestation, and other “dangerous conditions.” Based upon the association’s allegations, the Court ruled it did state a valid cause of action for breach of implied warranty of fitness and merchantability.
But the Court had to consider one final issue. During the pendency of the case, in 2012, the Florida Legislature adopted Florida Statute Sec. 553.85 (the “Act”), effective July 1, 2012. The Act essentially states that there is no implied warranty of fitness or merchantability for subdivision infrastructure improvements when there is no damage to the home itself (or under or on the lot), and the improvement does not immediately and directly support the habitability of the home. The Act states that “it applies retroactively . . .to all cases accruing before, pending on, or filed after” July 1, 2012. If the Act applied retroactively to the Maronda case, the association’s cause of action could be barred by the Act. The Florida Supreme Court concluded that even though the Legislature intended the Act to be applied retroactively, it could not be applied retroactively because of the constitutional prohibition against the impairment of vested contract rights.
Thus, what the Florida Supreme Court giveth to a homeowner who purchases a new construction home, the Florida Legislature taketh away (at least to the extent of any cause of action accruing on or after July 1, 2012).
WHEN IS A NON-FINAL ORDER A FINAL ORDER?
The Florida Rules of Appellate Procedure designate all post-final judgment orders as “non-final” orders for purposes of an appeal. The Florida Rules of Civil Procedure only authorize motions for rehearing of “final orders”. Can a post-final judgment order simultaneously be a “final order” under the Rules of Civil procedure so that the trial court can rehear the matter, and be a “non-final order” under the Rules of Appellate Procedure, or is every post-final judgment order a “non-final order” which is not subject to rehearing? In the recent case of Popescu v. Laguna Master Association, Inc., 126 So.3d 449 (Fla.4th DCA 2013), the Court held that a post-final judgment order can be a “final order” under the Rules of Civil Procedure subject to a valid motion for rehearing, if it adjudicated separate and distinct rights of the parties that arose subsequent to the entry of the final judgment. Thus, such a “final order” is subject to rehearing by the trial court under the Rules of Civil Procedure even though the same order is classified as a “non-final order” under the Rules of Appellate Procedure.
In Popescu, a homeowner’s association obtained a final judgment of foreclosure on a claim of lien for unpaid assessments. However, after the final judgment of foreclosure had been entered but before the foreclosure sale occurred, the lot owner sold the lot to the buyer in a short sale transaction. The association was paid off (a redemption), but due to mistake, accident, or clerical error, the foreclosure sale was not canceled. The foreclosure sale was conducted by the Clerk of Court, the lot was sold to a third party bidder, and the certificate of title was issued.
Thereafter, the association requested the trial court to vacate the foreclosure sale and certificate of title based upon the redemption and mistake. The trial court denied the motion to vacate and the association requested the court to rehear the motion to vacate to correct the court’s erroneous ruling. The trial court reconsidered its denial of the motion to vacate, and set aside the order denying the motion to vacate and granted rehearing. The Appellate Court denied the foreclosure sale purchaser’s attempt to prevent the trial court from rehearing the motion to vacate. The Appellate Court held that because the redemption and mistake occurred after the final judgment was entered, the order denying the motion to vacate qualified as a “final order” under the Florida Rules of Civil Procedure and was subject to rehearing, notwithstanding the fact that is is classified as a “non-final order” under the Florida Rules of Appellate Procedure.
It Means What It Says But What Does It Mean?
In a residential development governed by a homeowner’s association, it is common for the declaration of covenants and restrictions to require lot owners to properly maintain their lots in good condition. Typically, the association will periodically inspect the lots, and if a lot is not in compliance, it will send a written notice of violation to the lot owner to correct the deficiencies. If the lot owner does not comply, the declaration grants the association the authority to sue the lot owner to obtain a court order compelling the lot owner’s compliance (i.e. injunctive relief).
In Boyle v. Hernando Beach South Property Owners Assoc., Inc., 38 Fla. L. Weekly D2072 (Fla. 5th DCA 10/04/13), the Court held that the Association failed to sustain its burden to prove the lot owner breached the declaration provision which required the lot owners to “keep their lots in a neat, clean, and orderly condition.” The Association submitted sworn proof that the lot owner failed to properly maintain his lot because the “landscaping and trees need to be trimmed and properly maintained.” The Court stated that the Association failed to show how the landscaping and trees had not been properly maintained and trimmed, i.e. , was the grass dead or uncut, were the trees dead, or how were the trees untrimmed? The Association’s lack of evidence led the Court to conclude that it was unclear how the lot owner violated the declaration and what steps he was supposed to take to bring his lot into compliance. Thus, while the words used in a declaration may have a clear meaning, the party enforcing the provision has the burden to clearly show how it has been violated and what the breaching party must do to come into compliance.
MRTA: When is an Easement NOT an Easement?
Florida Statute Section 704.08 grants to relatives of any person buried in a cemetery an “easement for ingress and egress for the purpose of visiting the cemetery at reasonable times and in a reasonable manner.” A cursory comparison of the MRTA exception language and the language in 704.08 (both refer to “easements”) might lead one to reasonably conclude that the easement created by 704.08 is a MRTA exception. Not so, says the Third District Court of Appeal majority.
It is difficult to understand why the Court concluded that the interest created by 704.08 is not an easement (which is an interest in land), when 704.08 expressly states that the relative of the person buried in the cemetery “shall have an easement . . . “ It seems that even if 704.08 creates an easement, it was extinguished by MRTA because the unrecorded easement was not used. Senior Judge Schwartz dissented. For now though, the “easement” stated in 704.08 is not an easement.
In Florida, common law marriages are not recognized. But can a court award one party in a cohabitation relationship an interest in the other person’s solely owned real estate after the relationship turns sour? Under certain circumstances, a court can impose a constructive trust to do equity between unmarried cohabitants. But the burden of proof and the elements of the claim are very difficult to prove. The cohabitant asserting the claim must prove beyond a reasonable doubt by clear and convincing evidence that: (1) a promise was made to grant an interest in the real estate; (2) there was a transfer of some property by the cohabitant to the other person and the cohabitant relied on the transfer in creating the interest; (3) a confidential relationship existed; and (4) the other person was unjustly enriched.
In the recent case of Castetter v. Henderson, 38 Fla.L.Weekly D1166 (Fla. 5th DCA May 24, 2013), the Court reversed a trial court decision which imposed a constructive trust in favor of a woman and against her former live in boyfriend’s solely owned real estate. She testified that she had cooked and cleaned for the both of them, had paid all of the expenses related to their son, and had paid their food and cleaning expenses for a period of 15 years. She argued that by paying for those expenses, her former boyfriend was able to invest his money in real estate. The Appellate Court found that the woman made no financial contribution to the properties purchased and she did nothing to improve or manage the properties: “defraying mutual living expenses is not enough to create an interest in real estate.” Not only did the woman lose her constructive trust on appeal, but as a result of the reversal of the trial court’s decision, she was ejected from the former live- in residence.
Florida’s recording act, codified in Chapter 695 of the Florida Statutes, generally grants priority to an interest in real property based upon when the instrument creating that interest has been recorded. First in time is first in right. However, there is an exception to this priority scheme: when the person who records first had knowledge at the time he acquired the interest in the real property of the claim of a person who records after him, the person who records after him (assuming he did not have knowledge of the first person’s claim when he acquired his interest in the real property), has priority over the person who recorded first! Thus, Florida’s recording act is called a “race notice statute”.
Chapter 162 of the Florida Statutes allows cities to enforce their codes against their residents and the real property that they own. Code enforcement matters typically involve the enforcement of building, zoning, and fire safety codes. A lien against real property is created when the certified code enforcement order is recorded. However, many cities in Florida have enacted ordinances which grant super priority to a code enforcement lien; it is superior to all prior recorded interests in real property (with few exceptions), including prior recorded mortgages.
As you can imagine, lenders (and other prior recorded interest holders) were not happy with these super priority code enforcement liens. The lender would not know, whether years after the mortgage was recorded, a super priority code enforcement lien might be recorded and take a priority position over the lender against property which has limited equity. In addition, a title insurance policy contains a standard exception for governmental laws and ordinances, so the lender is not covered for this type of claim by title insurance.
Wells Fargo Bank decided to challenge the asserted super priority of a city code enforcement lien. In City of Palm Bay v. Wells Fargo Bank, N.A., 38 Fla.L.Weekly S322 (Fla. May 16, 2013), the Florida Supreme Court held that Chapter 695 of the Florida Statutes is the legislative scheme that governs recording priority, and the City’s Ordinance was inconsistent with that scheme. The Court reasoned that when a municipal ordinance is inconsistent with a Statute, then it is not concurrent, and is invalid. The Court would not allow a municipality to “destroy rights that the Legislature established by state law.” The Palm Bay Ordinance was stuck down because it was “inconsistent” with State law.
The dissent argued that there is nothing in Chapter 695 or Chapter 162 which expressly preempts city code enforcement lien priority in the statutory scheme and that the legislature has enacted numerous exceptions to the “first in time first in right” recording rule, such as for special assessment liens (Chapter 170), tax deeds (Chapter 197), condominium liens (Chapter 718), and construction liens (Chapter 713).
For now, however, with respect to the priority of municipal code enforcement liens, timing is everything.
The Economic Loss Rule: Florida Supreme Court’s Stunning Reversal of Precedent or Just a Clarification of Existing Contract Law?
In the early 1990’s, the Florida Supreme Court ruled that the economic loss rule (“ELR”) could be raised as a complete defense to a cause of action asserting the “negligent” performance of a contract where there was no personal injury or injury to other property. As an example, in a real estate contract which has a purchase price of $150,000.00, if the contract provides that the seller is entitled to $5,000.00 in liquidated damages if the buyer breaches the contract, the ELR could be raised as a defense by the buyer to prevent the seller from suing the buyer for “negligent” performance of the contract to recover more than the agreed upon amount of damages. The reasoning of the ELR is that the parties to a contract have agreed upon the remedy in the event of a breach, and a court must look solely to the contract terms to determine whether there has been a breach and what remedy the contract provides for that breach, unless there has been a tort committed which is independent of the breach of contract (e.g., fraud).
How this new case will affect existing and subsequent real estate related litigation remains to be seen.
Lesson Re-learned: Get It in Writing!
We have all heard this at least 1,000 times: “Don’t rely on an oral promise; get it in writing!” Yet, time and again, parties to an agreement will not reduce the agreed upon terms to writing thereby creating unintended ambiguities and consequences in the transaction. Worse, with respect to the sale of real property, an action on a contract cannot be brought unless the promise upon which such action is brought is in writing and signed by the party (or his authorized agent) who made the promise. See Section 725.01(2004), Florida Statutes, which is known as the “Statute of Frauds”. Thus, an oral contract to sell land is not enforceable.
What about an oral modification to a written and signed contract to sell land? Is that enforceable under some theory of law? The Florida Supreme Court recently reversed a Florida District Court of Appeal decision which had upheld an oral modification to a written and signed contract to sell land. The District Court of Appeal ruled that the party attempting to enforce the oral modification had reasonably relied upon the other party’s oral promise by taking action on the oral promise thereby making it unjust if the oral promise was not enforced. This legal theory is called the doctrine of “promissory estoppel”. Specifically in that case, the seller had orally promised to extend the due diligence period in the contract. The buyer relied upon the promise and did not cancel the contract prior to the end of the original due diligence period. Instead, the buyer sought to cancel the contract during the orally extended due diligence period and then demanded the return of its deposit. The seller refused to return the deposit and defended on the basis that its oral promise to extend the due diligence period was unenforceable in violation of the Statute of Frauds, and the doctrine of promissory estoppel was not a valid exception to the Statute of Frauds. The Florida Supreme Court agreed with the seller. See DK Arena, Inc. v. EB Acquisitions I, LLC, 38 Fla.L.Weekly S187a (Fla. March 28, 2013).
As is not uncommon in other cases, the Florida Supreme Court’s decision left some questions unanswered. What weight, if any, did the Court give to the fact that the written contract contained a clause which stated that any modifications to the contract would not be binding unless in writing, signed and delivered by the party to be bound? If the contract did not contain that clause, would the result be the same (the Statute of Frauds does not require any anti- oral modification language in a contract)? The Court also remanded the case to the District Court for the District Court to determine whether the seller “waived” any of its rights in the contract or materially breached the contract itself, thereby entitling the buyer to receive the return of its deposit. So while there still may be hope for the buyer, had the buyer reduced the seller’s oral modification to writing and required the seller to sign the written modification, years of litigation and uncertainty could have been avoided (the original contract was signed in 2004, and the trial was held in 2008).
Update September 2013: On remand, the District Court of Appeal allowed the seller to retain the buyer’s deposit as liquidated damages due to the buyer’s failure to cancel the contract within the original due diligence period.
A canal, which was the means of water access into a recreational lake, separated two lots. One lot (“West Lot”) was located west of the canal and the other lot (“East Lot”) was located east of the canal. West Lot owner and East Lot owner acquired their lots from the same grantor. East Lot owner acquired his lot first, and the common grantor described the land in the East Lot owner’s deed as including the property “Lying East of the Canal”. West Lot owner acquired her property a few months later from the common grantor, and her deed described the property conveyed as excluding the land “Lying East of the Canal”. Who owns the canal?
East Lot owner wanted to build a dock and boathouse in the canal. When East Lot owner applied for permits to build the improvements, West Lot owner objected and claimed that West Lot owner owned the entire canal because East Lot owner’s deed only included land lying east of the canal, not any portion of the canal itself, and West Lot owner’s deed included the entire canal because only the land lying east of the canal was excluded from her deed. A lawsuit ensued.
On appeal, the Court reviewed the law in Florida and other jurisdictions. The Court explained that when the legal description of land in a deed references a natural monument, the presumption, in the absence of a contrary intent of the grantor, is that the ownership extends to the centerline of the monument. The statutory definition of “natural monument” includes a canal, and thus, because there was no evidence of a contrary intent of the grantor, the Court held that East Lot owner owned the land to the centerline of the canal, even though the deed to East Lot owner did not expressly state that the boundary line of East Lot owner’s parcel extended to the centerline of the canal. See Bischoff v. Walker, 38 Fla.L.Weekly D326, February 8, 2013 (Fla. 5th DCA).

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