STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES. v. Case No.

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1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION GARY KREITMAN, Petitioner, v. Case No THE DECOPLAGE CONDOMINIUM ASSOCIATION, INC., Respondent. / SUMMARY FINAL ORDER This order is entered pursuant to Rule 61B , Florida Administrative Code, which permits the arbitrator to enter a summary order where there are no disputed issues of material fact. FINDINGS OF FACT 1. Gary Kreitman (petitioner) owns a unit in the Decoplage Condo minium, managed by the Decoplage Condominium Association, Inc. (respondent). The petitioner alleges that the association prohibits petitioner and other owners from renting their units for less than a six-month period and has fined the petitioner for renting to tenants for less than six-month periods Article XXII, Sect ion 22.03, of the original declaration of condominium provided that the units could only be used for residential or resort transient purposes. The petitioner and many others purchased their units as investment property to rent on a transient basis. Af ter the petitioner purchased his unit, the developer added a third amendment to the declaration of condominium, 1 The association states that it has only fined the petitioner for renting his unit for periods of less than 30 days. Whether the association is fining the petitioner or not for rentals of less than six months is immaterial as it is clear from the record that the association seeks to apply to the petitioner the restriction against renting a unit for less than six months.

2 Article XV, Section 15.17, which limited unit owners to two rental agreements, each of a minimum period of six (6) months, in any twelve (12) month period, unless the Owner has contracted with the designated, exclusive, on-site rental agent, as set forth below, in which cases there shall be no restriction on the term of a rental or the number of rentals in a twelve (12) month period Article XV, Section was subsequently amended at a special meeting of the membership held on September 26, 1996, to provide that [a]fter the date of October 1, 1996, all leases shall be for a minimum period of 30 consecutive days. The certificate of amendment to the declaration of condominium encompassing this amendment was dated October 1, 1996, and recorded in the public records that same day. 4. Pursuant to the above amendment to Article XV, Section 15.17, the association s board of directors incorporated the substance of it into Rule II of the Decopl age Condominium Rules and Regulations. The new rule provided that [u]nit owners have the right to rent their units... All rentals must be for a minimum of 30 consecutive days. 5. After the amendment to Article XV, Section was approved, several unit owners, including the petitioner, filed an arbitration petition objecting to a July 6, 1996, amendment of Article IX, Section 9.01 of the declaration which provided that the declaration could be amended by a majority of the unit owners (thus replacing the previous requirement that a two-thirds majority must approve any amendments to the declaration). In the final order in that case, Lansing v. The Decoplage Condominium Association, Inc., Arb. Case No (August 25, 1997), the arbitrator held that the amendment to Article IX, Section 9.01 was invalid because the meeting at which it was adopted was not conducted in accordance with the requirements of Chapter 718, Florida Statutes, or Article IV of the bylaws of the association. The association filed a complaint for trial de novo in Lansing (Decoplage Condominium Association, Inc. v. Lansing et al., Case No CA 32, 2

3 Dade County Circuit Court) following entry by the arbitrator of an order denying motion for rehearing on October 23, The complaint for trial de novo was filed on November 21, 1997, and the case is still pending. 6. A total of 39 amendments, including the amendment to Article XV, Section 15.17, were adopted by the association in accordance with the amendment provision which was struck down by the arbitrator in Lansing. Approval of the amendment to Article XV, Secti on 15.17, was by more than a majority of the unit owners present, in person or by proxy, at a meet ing, but less than the two-thirds total vote of the members which was required by Article IX, Section 9.01, as it existed prior to the amendment invalidated in Lansing. 7. The board in November, 1997, apparently in response to the arbitrator s decision in Lansing, published without a meeting Addendum to Rule II of the Decoplage Condominium Rules and Regulations. The addendum limited unit rentals to two (2) rental agreements, each of a minimum period of six (6) months, in any twelve (12) month period, unless the owner has contracted with the designated exclusive, on-site rental agent. 8. On February 13, 1998, this petition for arbitration was filed. 9. On March 5, 1998, the board adopted a Reso lution and Notice Suspending the Effect of Certain Amendments to The Declarat ion of Condominium for The Decoplage, A Condominium. The resolution recounts the foregoing background and resolves that the amendment struck down in Lansing, as well as the 39 amendments adopted using the lowered approval margin contained in the amendment, are hereby conditionally withdrawn and have no force and effect except as hereinafter set forth. The resolution further provides that if the circuit court rules that the amendments were not properly adopted then the condit ional withdrawal of the amendments will become permanent and the amendments will have no force or effect; if the court rules that the amendments were properly 3

4 adopted, then the effect of the notice will expire and the amendments will be recognized as legally adopted and in full force and effect. Finally, the resolution provides that: By virtue of the suspension of the amendments described herein, the Third Amendment to the Declaration of Condominium shall control leasing of condominium units. In the Third Amendment, Section stated: Due to the inability of the Association to monitor transient occupancy within the property, an Owner shall be limited to two (2) rental agreements, each of a minimum period of six (6) months, unless the Owner has contracted with the designated, exclusive on-site rental agent, as set forth below, in which case there shall be no restriction on the term of a rental or the number of rentals in a twelve (12) month period... To the extent the Association has not previously enforced these provisions, it is further resolved that the Association will strictly enforce such restrictions in the future and this resolution is made in that regard and in accordance with Chattel Shipping and Investment, Inc. v. Brickell Place Condominium Association, 481 So.2d 29 (Fla. App. 3 Dist. 1985). The Association shall mail to each owner a copy of this resolution indicating its intention to so enforce Section in the future. 10. According to an affidavit executed June 22, 1998, by Joseph Oramas, Secretary of the Decoplage Condominium Association, Inc., notice of the meeting of the board at which the resolution was adopted was mailed or delivered to all owners at least 14 days in advance of the meeting on March 5, The notice included as an agenda item for the meeting enforcement of condo documents regarding rentals. The petitioner contends that the notice of the meeting at which the resolution was adopted did not identify the resolution as an agenda item; however, the petitioner does not dispute the foregoing specific facts attested by Oramas. CONCLUSIONS OF LAW The sole issue in this case is whether the association may enforce the Third Amendment to the declaration of condominium as it relates to minimum occupancy restrictions. The Third Amendment contains a provision limiting rentals to six months or more, unless the owner contracts with the designated, exclusive, on-site rental agent. The respondent attempted to subsequently 4

5 amend this provision and reduce minimum rentals to 30 days for all unit owners. The process followed by the association was that contained in the newly amended declaration--permitting amendments to the declaration by a lower voting margin. The amendment was invalidated in another arbitration proceeding. See Lansing v. The Decoplage Condominium Association, Inc., Arb. Case No (August 25, 1997). However, the validity of the amendment and others adopted using the procedure contained in the subsequently invalidated amendment was not addressed in Lansing. The association s action of reinstating the Third Amendment is reasonable. Given the decision in Lansing, above, any challenge to the association s enforcement of Article XV, Section 15.17, adopted using the lower margin effectively invalidated in Lansing, would be decided against the association. The association s only option for having an enforceable restriction on unit rentals was to acknowledge the problem wit h relying on the September 26, 1996, amendment to Article XV, Section 15.17, and to indicate its intention to rely on the Third Amendment. As there appeared to be some concern that the associat ion had not always consistent ly enforced the Third Amendment, the association adopted a resolution indicating its intent to strictly enforce the Third Amendment, and republished the Third Amendment by recording it in the public records. In addition, there is no allegation that the association has failed to consistently enforce the Third Amendment since its republication. See Ladner v. Plaza del Prado Condominium Association, 423 So.2d 927 (Fla. 3rd DCA 1982)(despite predecessor developer s lax enforcement of rules, association would be permitted to enforce rules where it consistently performed its duty to enforce it since it inherited the responsibility); Estates of Fort Lauderdale Property Owners Association, Inc. v. Kalet, 492 So.2d 1340 (Fla. 4th DCA 1986)(original developer failed to totally enforce restriction against permanent residence of children under the age of sixteen. Where association had made a consistent effort to 5

6 enforce the restriction since it acquired the right to do so, claim of selective enforcement rejected). The petitioner argues that the notice of the March 5, 1998, meeting at which the resolution was adopted was inadequate because the notice did not identify the resolution as an agenda item. Section (2)(c), Florida Statutes, provides that adequate notice of all board of directors meetings shall specifically incorporate an identification of agenda items. The failure to list an item on the meeting agenda invalidates board action on the item. See Dehne v. Ocean Club III Condominium Association, Inc., Arb. Case No , Summary Final Order (Jan. 31, 1994)(board violated s (2)(c), F.S., by appointing replacement board members at board meeting where replacement of directors was not an item listed on the agenda. Replacement of board members deemed void). The agenda in the instant case contained as an item enforcement of condo documents regarding rentals. This statement was sufficient to place unit owners on notice that the issue of unit rentals would be considered by the board and was, therefore, adequate. Compare Palmer v. Bellamy Forge Association, Inc., Arb. Case No , Summary Final Order (July 28, 1994)(where agenda listed only committee reports as an item where the board was considering adopting a use fee for use of the clubhouse, agenda and notice were insufficient to give unit owners notice and an opportunity to present their opinions on the imposition of a use fee. Accordingly, the use fee was not lawfully adopted). 2 It is also noted that the pet itioner attended and participated in the meeting, thus waiving any objection he might otherwise have to the adequacy of the notice. Fla. Jur. 278 Associations; Section (5)(b), Florida Statutes (attendance of a member at a meeting 2 As this final order was being drafter, the respondent filed a second affidavit executed by Joseph Oramas, dated July 24, Oramas states that the board notified unit owners by letter dated October 31, 1997, of its decision to revert to the rental restrictions contained in the Third Amendment. Furthermore, the resolution confirming the decision was read at the board s February 5, 1998, meeting. With this background, the agenda reference to enforcement of condo documents regarding rentals would be even more definite. 6

7 constitutes a waiver of notice and a waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened). The petitioner contends that the restriction conflicts with Article XXII, Section of the original declaration of condominium, which provides that the units may o nly be used for residential or resort transient purposes. The provisions are not in conflict, however. A restrict ion that requires a unit to be leased for periods of six months or longer is consistent with residential use of the unit. Furthermore, units may be rented for a shorter period of time if the designated, exclusive, on-site rental agent arranges the rental, permitting the units to be used for resort transient purposes. The petitioner also contends that the association was not required by the Lansing arbitration decision to disregard the September 26, 1996, amendment to Article XV, Section 15.17, providing that [a]fter the date of October 1, 1996, all leases shall be for a minimum period of 30 consecutive days because the Lansing case involved only the amendment to Article IX, Section 9.01, concerning amendments to the declaration. As noted above, if the association were to rely on the amendment to Article XV, Section 15.17, its enforcement could be successfully challenged by any unit owner based on the Lansing decision and the doctrine of res judicata; that is, the issue has been decided already. The petitioner also attacks the board s action of adopting without a meeting an addendum to Rule II of the rules and regulations to reflect the republication of the Third Amendment. Nonemergency action taken by an association without a duly noticed meeting is invalid. See Dehne v. Ocean Club III Condominium Association, Inc., above. Whether the addendum was validly adopted or not is irrelevant to the instant dispute, however, as the rule is surplusage since it merely reiterates the Third Amendment, the application of which has been upheld. The petitioner also argues that even if the Lansing decision affected the October 1, 1996, 7

8 amendment to Article XV, Section 15.17, pursuant to Section 718,1255(4)(k), Florida Statutes, an arbitration decision is not final if a party files a complaint for trial de novo. The association in the instant case has filed a complaint for trial de novo. It is correct that an arbitration decision is final only if a complaint for a trial de novo is not filed in a court of competent jurisdiction within 30 days. It does not follow, however, that an arbitration order which is appealed is not valid and not enforceable. Section (4)(m), Florida Statutes, which provides for enforcement of arbitration orders, specifically states that [i]f a complaint for a trial de novo has been filed, a petition may not be granted with respect to an arbitration award that has been stayed. (emphasis supplied). Moreover, Rule 61B (9), Florida Administrative Code, provides that [a] final order... is effective upon its issuance unless a stay has been issued. It has not been alleged that a stay has been imposed on the final order in Lansing. Therefore, the decision in Lansing is in effect. Under the circumstances, the action of the association was reasonable and within the bounds of the Condominium Act. RELIEF AND REMEDY Based on the foregoing, it is ORDERED: The relief requested by the pet itioner, an order requiring the association to permit unit rentals of 30 days or more and to cease enforcing paragraph 5 of the Third Amendment to the declaration, is DENIED. DONE AND ORDERED this 30th day of July 1998, at Tallahassee, Leon County, Florida. Patricia A. Draper, Arbitrator Department of Business and 8

9 Professional Regulation 1940 North Monroe Street Tallahassee, Florida

10 RIGHT OF APPEAL In accordance wit h Section , Florida Statutes, a part y adversely affected by this final order may appeal from the order by filing, within 30 days of entry and mailing of the order, a complaint for trial de novo with a court of competent jurisdiction within the circuit in which the condominium is located. This order does not constitute final agency action and is not appealable to the district courts of appeal. CERTIFICATE OF MAILING I HEREBY CERTIFY that a true and correct copy of the forego ing was mailed by U.S. mail, postage prepaid, to David C. Arnold, Esq., 8301 S. W. 164 Street, Miami, FL and David H. Rogel, Esq., 5201 Blue Lagoon Drive, Suite 100, Miami, FL this the 30th day of July Patricia A. Draper, Arbitrator 10