STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION NICK KOVACS, Petitioner, v. Case No. 2014-01-4752 COVE POINTE CONDOMINIUM ASSOCIATION, INC., Respondent. / SUMMARY FINAL ORDER This Summary Final Order is being entered pursuant to Rule 61B-45.030(2), Florida Administrative Code, which states: At any time after the filing of the petition and answer, if any, and if no disputed issues of material fact exist, the arbitrator shall summarily enter a final order denying relief pursuant to the petition if the arbitrator finds that no preliminary basis for relief has been demonstrated in the petition. Statement of the Issue The issue presented in this case is whether Respondent, Cove Pointe Condominium Association, Inc. ( Association ), has properly adopted, and can enforce against Petitioner, a 2013 amendment to the Declaration of Condominium (Declaration) that prohibits unit owners from leasing their boat slips, which are limited common elements, to anyone other than unit owners within the condominium. Procedural History On April 3, 2014, Petitioner filed a petition for mandatory non-binding arbitration against the Association. The petition asks for an Order requiring the Association to Page 1 of 8
declare the amendment to the declaration a nullity for failure of the Association to abide by the amendment process of the declaration. On April 16, 2014, an Order Requiring Answer was entered, and on May 7, 2014, the Association filed an Answer to the petition. This Order is entered upon consideration of all of the pleadings and documents filed by both parties. Findings of Fact 1. Petitioner owns a unit in The Pointe at Mariners Cove, a Condominium, and is a member of the Association. 2. The Association is the entity responsible for maintenance and operation of the Association. 3. There are twenty four (24) units within the Association and The Pointe at Mariners Cove, a Condominium. Each unit has a Boat Slip appurtenant thereto. 4. Article V., Section 5.1, of the Declaration defines the boundaries of the units within The Pointe at Mariners Cove, a Condominium. The units do not incorporate boat slips within their boundaries. 5. Article III., Section 3.4, of the Declaration defines Boat Slip as a boat mooring area in that part of the Basin Easement: Parcel 1 described in Section 1.3, bounded on one side by a wooden Dock and on the opposite side by pilings placed in the water, as depicted on Exhibit A. A Boat Slip is a limited common element as provided herein. (Emphasis added.) 6. Article III, Section 3.16, of the Declaration defines Limited Common Elements as those portions of the common elements which are reserved for the use of Page 2 of 8
a certain Condominium unit or units, to the exclusion of other units, as may be provided in this Declaration. 7. The Declaration, at Article XXII entitled Amendments, Section 22.2 entitled Resolution, states: An amendment may be proposed either by the Board or by the owners of 10% or more of the total number of units in the Condominium. An amendment shall be adopted by the affirmative approval of a resolution adopting such amendment, except as elsewhere provided, in the following manner: a. The affirmative approval of not less than 75% of the entire membership of the Board, and by the owners of not less than 75% of the units; or b. By the affirmative approval of the owners of not less than 80% of the total number of units in the condominium. 8. The Certificate of Amendment to Declaration of The Pointe at Mariners Cove, a Condominium, for the amendment to Section 19.8(k) states, in relevant part: the following Amendment to the Declaration, amending Section 19.8(k) of Article XIX of the Declaration, was proposed by resolution adopted unanimously by the entire Board of Directors and adopted by affirmative vote of not less than seventy-five (75%) percent of the voting interests of the members of the Association at a special meeting of the Association held on March 5, 2013 9. The minutes of the meeting held on March 5, 2013, as attached to the petition, state, in pertinent part: A quorum of (24) owners were present in person or by proxy. Motion was duly made by Jim Shepard and seconded to adopte the boat slip leasing amendment, copy attached. The motion passed by formal ballot 23 In Favor, 1 Opposed. Page 3 of 8
10. Prior to the 2013 amendment, Section 19.8(k) of the Declaration of The Pointe at Mariners Cove, a Condominium, stated: Leasing of Boat Slips. No owner may lease his Boat Slip except to another owner or to the owner of a unit in another Component Community of the Cove Basin Community. Copies of all leases shall be filed with the Association, and no such leases shall be for a term longer than three (3) years. All such leases shall provide, and if they do not so provide shall be deemed to provide, that both the lessor and the lessee, their respective successors and assigns, shall be jointly and severally liable for all assessments made in connection with such Boat Slip, and for any damages, costs, fees, fines or other charges attributable to such Boat Slip hereunder. 11. The 2013 amendment to Section 19.8(k) of the Declaration of The Pointe at Mariners Cove, a Condominium, states: Leasing of Boat Slips. No owner may lease his Boat Slip except to another owner of a unit in this condominium. Copies of all leases shall be filed with the Association, and no such leases shall be for a term longer than three (3) years. All such leases shall provide, and if they do not so provide shall be deemed to provide, that both the lessor and the lessee, and their respective successors and assigns, shall be jointly and severally liable for all assessments made in connection with such Boat Slip, and for any damages, costs, fees, fines or other charges attributable to such Boat Slip hereunder. The lessee of a Boat Slip may not assign his lease or sublet such Boat Slip. Boat Slip leases shall terminate at such time as either the lessee or lessor thereof no longer owns a unit in this Condominium. Any bona fide lease of a boat Slip to an owner of a unit in another Component Community of the Cove Basin Community, which lease was fully executed prior to the date on which the amendment to this Section 19.8(k) prohibiting such leases was adopted, shall be permitted to continue to the expiration of its original term, but no such lease may have its original term extended, whether by automatic or other renewal, or by amendment, extension agreement otherwise. Conclusions of Law The Division has jurisdiction over this matter pursuant to Section 718.1255, Florida Statutes. Petitioner argues that by enacting this amendment, the Association and its Page 4 of 8
members have altered a common area or element, in violation of Section 22.6 of the Declaration, which states: Proviso: Provided, however, that no amendment shall discriminate against any unit owner, nor against any unit, or class or group of unit owners or units, unless the unit owners so affected and their mortgagees, if any, shall unanimously consent in writing; and no amendment shall alter any unit, except as herein specifically provided; nor reduce the share of the common expenses, unless the owner of the units concerned and all record owners of mortgages on such units shall join in the execution of the amendment. Neither shall an amendment of this declaration make any change in any provision specifically providing that it may not be amended, nor shall any amendment make any change in the nature of the improvements and the restrictions upon the use of the units unless all the unit owners of record and all of the owners of record of all mortgagees (sic) upon units in the Condominium shall join in the execution of the amendment. No amendment shall make any change which would in any way affect any of the rights, privileges, powers or options herein provided in favor of or reserved to the Developer. (Emphasis provided on portion cited by Petitioner.) Petitioner argues that the amendment involving leasing restrictions affected the nature of improvements, i.e. the nature of the Boat Slips, and that all unit owners would have had to consent to the amendment for it to be effective. The crux of Petitioner s argument is that by limiting the pool of potential persons to whom unit owners could rent their limited common element boat slips, without obtaining the consent of all unit owners, the Association violated Section 22.6 of the Declaration. In its answer, the Association argues that the amendment did not make any change in the nature of the improvements and the restrictions upon the use of the units. Since the Boat Slips are not part of the units, the amendment did not change the use of the units as referenced in Section 22.6 of the Declaration. Nor did the amendment change the nature of the improvements as referenced in the Declaration, Page 5 of 8
since the Boat Slips are unchanged physically or functionally. The Association asserts that the Declaration was amended properly. The undersigned arbitrator finds the Association s position to be correct. If the Boat Slips were defined by the Declaration as part of the units, a restriction on their leasing might be affected by Section 718.110(13), Florida Statutes, which states: An amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment. However, the boat slips are not part of the units, they are limited common elements. Sections 718.106(2)(b), and 718.110(4), Florida Statutes, specifically address the issues raised by petitioner, stating: 718.106(2) There shall pass with a unit, as appurtenances thereto:.. (b) The exclusive right to use such portion of the common elements as may be provided by the declaration, including the right to transfer such right to other units or unit owners to the extent authorized by the declaration as originally recorded, or amendments to the declaration adopted pursuant to the provisions contained therein. Amendments to declarations of condominium providing for the transfer of use rights with respect to limited common elements are not amendments that materially modify unit appurtenances as described in s. 718.110(4). However, in order to be effective, the transfer of use rights with respect to limited common elements must be effectuated in conformity with the procedures set forth in the declaration as originally recorded or as amended under the procedures provided therein. This section is intended to clarify existing law and applies to associations existing on the effective date of this act. 718.110(4) Unless otherwise provided in the declaration as originally recorded, no amendment may change the configuration or size of any unit in any material fashion, materially alter or modify the appurtenances to the unit, or change the proportion or percentage by which the unit owner shares the common expenses of the condominium and owns the common surplus of the condominium unless the record owner of the unit and all record owners of liens on the unit join in the execution of the amendment and unless all the record owners of all other units in the same condominium approve the Page 6 of 8
amendment. The acquisition of property by the association and material alterations or substantial additions to such property or the common elements by the association in accordance with s. 718.111(7) or s. 718.113, and amendments providing for the transfer of use rights in limited common elements pursuant to s. 718.106(2)(b) shall not be deemed to constitute a material alteration or modification of the appurtenances to the units. A declaration recorded after April 1, 1992, may not require the approval of less than a majority of total voting interests of the condominium for amendments under this subsection, unless otherwise required by a governmental entity. (Emphasis added.) To find that an amendment to the Declaration restricting the rental of limited common element Boat Slips to persons who own units within the condominium somehow changed the nature of the Boat Slips involves too strained an interpretation of the Declaration. The Boat Slips are unchanged physically, are unchanged functionally, and can still be rented out by the owner of the unit to which they are appurtenant. Article XXII, Section 22.2, of the Declaration sets forth the approval process for the amendment that is the subject of this arbitration, and it is undisputed that this process was followed. Florida. Based upon the foregoing, IT IS ORDERED: The relief requested by Petitioner is DENIED. DONE AND ORDERED this 4 th day of June, 2014, at Tallahassee, Leon County, Leslie O. Anderson-Adams, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Suite 16 Tallahassee, Florida 32399-1030 Telephone (850) 414-6867 Facsimile (850) 487-0870 Page 7 of 8
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 718.1255, Florida Statutes. As provided by section 718.1255, 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 Rule 61B-45.048, F.A.C. Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail to the following person on this 4 th day of June, 2014: Steele T. Williams, Esq. Steele T. Williams, P.A. 1381 McAnsh Square Sarasota, FL 34236 Attorney for Petitioner Leah E. Ellington, Esq. Lobeck & Hanson, P.A. 2033 Main Street, Suite 403 Sarasota, FL 34237 Attorney for Respondent Leslie O. Anderson-Adams, Arbitrator Page 8 of 8