STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES

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1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION THE TRADEWINDS OF VOLUSIA, INC., Petitioner, v. Case No OROPEZA HOLDINGS, INC., Respondent. / SUMMARY FINAL ORDER Relevant Procedural History On August 4, 2012, The Tradewinds of Volusia, Inc. (the Association ) filed a petition for arbitration alleging that Respondent was renting its unit for periods of less than one month in violation of the Declaration of Condominium. On September 10, 2012, Respondent filed an answer admitting to renting the unit less than one month, but asserting five affirmative defenses. On October 10, 2012, the arbitrator entered an order requiring Respondent to file a memorandum of law to support its affirmative defenses including affidavits and documents to support its legal arguments. On November 2, 2012, Respondent filed its memorandum and documents and an affidavit in support. On November 30, 2012, the Association filed a responsive memorandum and included an affidavit in support. On December 3, 2012, Respondent filed a motion to strike the Association s affidavit in support. 1

2 Statement of Facts 1. Petitioner, The Tradewinds of Volusia, Inc., is the entity responsible for the operation and maintenance of The Tradewinds of Volusia Condominium. 2. Respondent Oropeza Holdings, Inc. owns Unit 906 in the condominium. 3. Section 11.3 of the Declaration of Condominium states in pertinent part: With the exception of leases of Developer owned units, no lease of a unit shall be for a term less than thirty (30) days or one (1) month whichever is less. 4. The current version of Section 11.3 was the result of an amendment that was recorded December 15, 1993 in the public records of Volusia County. month. 5. Respondent admits it rents its unit for period of less than thirty days or one 6. In its answer, Respondent asserts the following affirmative defenses: a. Respondent did not have actual knowledge of the amendment because it was not given to it at the time of purchase. Respondent admits that the Amendment to the Declaration had been recorded in the public records six months prior to Respondent s purchase. b. Petitioner has waived the right to enforce the rental restriction. c. Petitioner is estopped from enforcing the rental restriction because a previous property manager had requested that Respondent rent the unit in violation of the rental restriction on at least three separate occasions since statute of limitations. d. Petitioner is selectively enforcing the rental restriction. e. Petitioner may not enforce the restriction due to laches and the 2

3 7. Section 13.4 of the Declaration of the Condominium states: 13.4 No Waiver of Rights. The failure of the Developer, or the Association, or any unit owner to enforce any covenant, restriction or other provision of the Condominium Act, this Declaration, the Articles of Incorporation, the By-Laws, or the Rules and Regulations adopted pursuant thereto, shall not constitute a waiver of the right to do so thereafter. 8. Respondent, as proof for its selective enforcement defense, filed a rental receipt for Unit 1003 that states the check-in date was December 1, 2012 and check-out date was December 31, Respondent alleges it has been violating the rental provision since it purchased the unit in 1994, however Respondent has not alleged or offered any proof that the Association s board of directors had knowledge of its practice. Conclusions of Law Pursuant to Section , Florida Statutes, the Division has jurisdiction over a dispute involving the authority of the board to require an owner to take action with respect to the owner's unit or appurtenances, including common elements. Because there is no issue of material fact in dispute after the filings provided to date by the parties, this case is appropriate for summary disposition pursuant to Rule 61B , Florida Administrative Code. It is undisputed that Respondent is renting Unit 906 for periods of less than thirty days or one month. Respondent asserts five affirmative defenses. Actual Knowledge Respondent claims it did not have actual knowledge of the amendment even though it admits it was recorded in the public records of Volusia County six months before it purchased Unit 906. This defense fails because where a provision is contained 3

4 in the condominium documents, which are recorded in the public records, a unit owner is on constructive notice of the documents. See Centre Court I. Condo. Ass n. Inc. v. Kish, Arb. Case No , Partial Summary Final Order and Order Requiring Supplemental Information (June 26, 2001)(unit owner's assertion that association should be estopped from enforcing the pet ban because the condominium documents that she received at the time she purchased her unit were incomplete and did not contain the relevant provision was rejected because the owner was on constructive notice of the recorded documents). 1 Waiver Respondent alleges that the Association has waived its right to enforce the rental restriction as a result of the failure to enforce the provision in the past. Waiver is the intentional or voluntary relinquishment of a known right, or conduct which implies the relinquishment of a known right. Mizell v. Deal, 654 So. 2d 659, 663 (Fla. 5th DCA 1995). The elements of waiver are: (1) the existence at the time of the waiver of a right, privilege, advantage, or benefit that may be waived; (2) the actual or constructive knowledge of the right; and (3) the intention to relinquish the right. Id. In addition, in the context of restrictive covenants, there must be a long-continued waiver or acquiescence in the violation of a restrictive covenant and the conscious acquiescence is persistent, obvious and widespread violations for waiver or 1 In its memorandum of law, Respondent attempts to challenge the procedures of the unit owner vote that enabled the recording of the amendment. Even if this defense had been included in its answer, it would fail because the unit owner vote occurred in See Kaufman et. al. v. International Village Ass n, Inc., Arb. Case No , Summary Final Order (September 10, 2012)(Challenge to the administration of a unit owner vote was barred by the affirmative defense of laches because the Association is only required to maintain documentation regarding the unit owner vote for one year under the state statute so the Association is prejudiced if required to defend the administration of the vote three years after the expiration of the time the Association is required to maintain the records related to the vote). 4

5 abandonment to occur. Id. citing Siering v. Bronson, 564 So. 2d 247, 248 (Fla. 5th DCA 1990). Respondent has alleged only three incidents since 1994, where an employee of the Association, and not the directors of the Association, requested that Respondent rent the unit for less than thirty days. Respondent has failed to show that the Association intended to relinquished its right to enforce the rental restriction. Given that Section 13.2 of the Declaration expressly states that the mere lack of enforcement does not constitute waiver, Respondent would need to allege an overt act of the board of the directors to demonstrate its intent to relinquish its right to enforce the rental restriction, in order to maintain the affirmative defense of waiver. Respondent has not done so and the affirmative defense of waiver fails. Estoppel Respondent has alleged that because an employee of the Association requested that Respondent rent the unit for less than thirty days, the Association is estopped from enforcing the rental restriction. The essential elements of estoppel are: (1) a representation as to a material fact that is contrary to a later-asserted position, (2) reliance on that representation, and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. State v. Harris, 881 So. 2d 1079, 1084 (Fla. 2004). See also WSG W. Palm Beach Dev., LLC v. Blank, 990 So. 2d 708, 715 (Fla. 4th DCA 2008). Respondent knew it was buying a unit within a new condominium that would be governed by a declaration of condominium. The declaration of condominium, which is the condominium's constitution, creates the condominium and strictly governs the 5

6 relationships among the condominium unit owners and the condominium association. Woodside Vill. Condo. Ass'n, Inc. v. Jahren, 806 So. 2d 452, (Fla.2002). A declaration of condominium must be strictly construed. Palm Beach Hotel Condo. Ass'n, Inc. v. Rogers, 605 So. 2d 143, 145 (Fla. 4th DCA 1992). Section 11.2 of the Declaration prohibits rentals of units for terms of thirty days or one month, whichever is less. In Esplanade Patio Homes Homeowners' Ass'n, Inc. v. Rolle, 613 So. 2d 531 (Fla. 3d DCA 1993), the court did not find an estoppel where only the developer's agent, and not the homeowner's association, gave permission to the homeowner to install a satellite dish contrary to the declaration of covenants. The association was not estopped from enforcing the restriction, even where the developer occupied positions on the board of the association. The court ruled that two elements of estoppel were lacking: a statement by the party sought to be estopped and reasonable reliance on the representation. In the instant case, the Association s employee and not the Association is alleged to have made the requests. Respondent could not reasonably rely on the requests from an employee, therefore the affirmative defense of estoppel fails. Selective Enforcement Respondent asserts the defense of selective enforcement. Rule 61B (3), Florida Administrative Code, provides, in pertinent part: The defense of selective enforcement shall contain all examples of selective enforcement upon which the respondent depends, shall indicate the unit(s) to which each example pertains, shall identify the unit owner(s), how long the violation has existed, and shall indicate whether the board knew of the existence of the violation(s). 6

7 As the only proof that the Association is selectively enforcing the rental provision, it has perplexingly filed a rental receipt for the rental of Unit This receipt clearly shows that the owners of Unit 1003 are complying with the rental restriction as the term of the lease is 31 days. The affirmative defense of selective enforcement fails. Laches Respondent has asserted the affirmative defense of laches. 2 Laches is an equitable defense which weighs the totality of the circumstances to determine whether it would be fair to grant affirmative relief to a party. The elements of laches are as follows: that there is conduct on the part of the association giving rise to a situation of which complaint is made; that the association, having knowledge or notice of Respondent's conduct, and having been afforded the opportunity to institute suit, is guilty of delay in asserting its right by suit; that there is a lack of knowledge on the part of Respondent that the Association will assert the right on which it bases its suit; and there is injury or prejudice to Respondent in the event relief is afforded to the Association, or in the event suit is not held to be barred. Niagra Fire Ins. Co. v. Allied Elec. Co., 319 So. 2d 594 (Fla. 3d DCA 1975). Given that Section 13.2 of the Declaration expressly states that lack of enforcement does not preclude the Association from enforcing the restriction thereafter, Respondent had constructive knowledge that the Association may assert its rights anytime in the future. Additionally, Respondent has not alleged that the Association s 2 The answer asserted the affirmative defense of the statute of limitations using only legal conclusions without any facts to support the defense. Additionally, Respondent s legal memorandum failed to address the statute of limitations defense, therefore the arbitrator deems that Respondent has abandoned this defense. 7

8 board of directors had any knowledge of Respondent s conduct. Therefore, the affirmative defense of laches fails. Conclusion The Association s Declaration prohibits rental of units for terms of less than thirty days or one month, whichever is less. Respondent admits that it rents its unit for terms of less than thirty days. As all of Respondent s affirmative defenses fail, the Association is entitled to relief. Additionally, Respondent has filed a Motion to Strike the affidavit included with the Association s legal memorandum. The affidavit was not needed, or used, by the arbitrator for summary disposition, therefore the motion is moot. Based upon the foregoing, it is ORDERED: 1. Respondent s Motion to Strike is DENIED as moot. 2. Beginning January 30, 2013, Respondent is prohibited from leasing Unit 906 for terms of less than thirty days or one month, whichever is less. 3. No later than December 31, 2012, Respondent shall permanently remove all advertisements of rental of Unit 906, for terms of less than thirty days or one month, whichever is less. DONE AND ORDERED this 21st day of December, 2012, at Tallahassee, Leon County, Florida. Terri Leigh Jones, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida Telephone (850) / Fax (850)

9 Trial de novo and Attorney s Fees This decision shall be binding on the parties unless a complaint for trial de novo is filed in accordance with section , Florida Statutes. As provided by section , Florida Statutes, the prevailing party in this proceeding is entitled to have the other party pay reasonable costs and attorney s fees. Any such request must be filed in accordance with Fla. Admin. Code R. 61B Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail and facsimile to the following persons on this 21st day of December, 2012: Keith E. Broll, Esq. Becker & Poliakoff, P.A Maitland Center Parkway, Suite 209 Maitland, FL Fax: Attorney for Petitioner Barbara Billiot Stage, Esq. Law Offices of Stage & Assoc., P.A Ashley Park Court, Suite 503-T Orlando, FL Fax: Attorney for Respondent Terri Leigh Jones, Arbitrator 9