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

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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 Ocean Inlet Yacht Club Condominium Association, Inc., Petitioner, v. Case No Irving Cordy, Respondent. / follows: SUMMARY FINAL ORDER Comes now, the undersigned arbitrator, and issues this summary final order as Introduction The association filed its original petition in this matter on December 20, 1999, and filed its amended petition on January 18, The association in its petition named two separate respondents, Donald Sanderson and Irving Cordy. This dispute concerns the maintenance, repair, or replacement of certain marina facilities and the financial responsibility for the related expenses such as dock replacement and re-dredging of a boat basin. Cordy has the use and benefit of a limited common element boat slip. Sanderson does not have the use or benefit of a boat slip. The condominium contains 40 units and 22 boat slips (the declaration provides for 28 boat slips, but the difference is not material here); therefore, each owner is not assigned a slip. The association has already undertaken certain repairs and replacements within the marina facility, and plans to 1

2 undertake additional projects including the dredging of the basin containing the marina facilities. The association is charging only the slip holders collectively for the costs of repairing the finger piers containing the individual boat slips. Each of the 11 finger piers services 2 boat slips, one on each side of the finger pier. The remainder of the expenses are treated as regular common expenses. According to the amended petition, Sanderson sent a letter to the association demanding that the association cease using common expense monies collected from all owners to pay for the costs of repairing the dock and for dredging the basin. Sanderson, who does not have the use of a slip, had at one point taken the position that only those owners having use of a slip should be required to pay for these expenses. However, once this proceeding commenced, it was shown that Sanderson, prior to the filing of the petition, had already withdrawn from the dispute and had acquiesced to the position of the association on this issue. Accordingly, Sanderson was removed as a party based on mootness in an order entered on February 17, Also according to the amended petition, unit owner Cordy, who has been assigned a boat slip, sent the association a letter demanding reimbursement of his portion of a special assessment used to replace the finger piers. According to the letter, Cordy objected to treating the costs of replacing the dock and the finger piers as a limited common element expense; Cordy stated that these expenses should be borne equally by all owners. Cordy also demands that the expenses of dredging the basin as a common expense to be borne by all owners. Respondent Cordy filed his answer on January 24, Cordy states that he does not oppose the association s position that only the users of the boat slips should be required to pay for the maintenance of the slips and supporting finger piers, as that obligation is clearly spelled out in the documents, but he takes the 2

3 position that the obligation does not include the costs or repair and replacement of the finger piers. He seeks to make a distinction between maintenance of the slips and maintenance of the finger piers containing the boat slips. Findings of Fact In response to an order entered by the arbitrator, the association on March 9, 2000, filed certain supplemental materials including numerous labeled color photographs, a description and graphic layout of the marina facilities, and a schedule of anticipated expenditures for the marina facilities. Sketches A and B, attached to this order, are particularly useful in helping to identify the features involved in this case. The boat basin was created by dredging out the original property and connecting the basin to the Intracoastal Waterway. The boat basin is situated half on the property of this condominium and half on property belonging to a separate community. Originally, the developer had planned to build the entire parcel of real property as a phase condominium. Only phase I was built and added to the condominium; the property that was to contain phase II was never added as a subsequent phase, and ultimately the property was developed as a separate community. Within that part of the basin immediately adjacent to the condominium, the original developer constructed a series of finger piers with each containing a boat slip. The slips are used by the assigned members to moor their boats. The end sections of the finger piers connect together to join a section of decking called The Promenade, which is essentially a wooden walkway built on pilings and providing a basis for the construction of the finger docks. Running parallel to the Promenade is a revetment formed by large rocks; behind the revetment is a sandbag wall that protects the property during high tides and storm surges. The basin was constructed and dredged in the 1970 s either by the developer or by 3

4 the association with funds secured by the developer. Over time, the basin has become filled with silt. At low tide, the bottom of the boat basin becomes exposed and cannot accommodate a boat in the marina area. The association believes the basin to be real property owned as common elements by all members. The expenses of re-dredging are planned to be shared as a common expense by all members. The promenade walkway, according to the association, is owned by all members, and the expenses of repair and replacement are shared by the entire membership in accordance with each unit s responsibility for sharing common expenses. The walkway was replaced in 1999, and the cost ($23,332.00) was shared as a common expense. The sandbag wall was part of the original construction by the developer. The revetment that runs the length of the bag wall was added by the association approximately two years ago, with the cost of installation shared by all members. The bag wall is likewise repaired and maintained as a common element, with the expenses shared by all members. A question exists regarding ownership of the finger piers holding the individual boat slips. The finger piers themselves can be used for crabbing and fishing by any member, but the boat slips featured within the finger piers can only be used by the assigned member. Expenses for the replacement of the finger piers have been shared only by the group of owners who have the right to use a boat slip. According to the association, the slips themselves, as contrasted with the finger piers holding the slips, are composed only of airspace and therefore require no maintenance or repair. The 22 slip users each pay approximately $600 per year to the association for electricity and water expenses or daily maintenance. The finger piers were replaced recently at an aggregate cost of $8, This expense was assessed only to those owners having use of boat slip. 4

5 The fishing pier is owned by all the unit owners and its expenses are shared by the owners as a common expense. The pier was added in approximately 1980 with monies given to the association by the developer at turnover. The pier was replaced in 1997 due to its deterioration. The concrete walkway running on the property behind the rock wall and sandbag wall is owned by all members as a common element; its expenses are shared as common expenses. The concrete pathway has been recently replaced. Conclusions of Law Section (4), F.S., provides that the association has the power to make and collect assessments and to lease, maintain, repair, and replace the common elements. Common expenses include the expenses of the operation, maintenance, repair, replacement, or protection of the common elements and association property, costs of carrying out the powers and duties of the association, and any other expense designated as a common expense by the condominium documents. Section (1), F.S. With certain notable exceptions, common expenses in a condominium are to be shared in accordance with ownership interest in the common elements. Section (1), F.S. provides that the maintenance of the common elements is the responsibility of the association. According to this section: (1) Maintenance of the common elements is the responsibility of the association. The declaration may provide that certain limited common elements shall be maintained by those entitled to use the limited common elements or that the association shall provide the maintenance, either as a common expense or with the costs shared only by those entitled to use the limited common elements. If the maintenance is to be by the association at the expense of only those entitled to use the limited common elements, the declaration shall describe in detail the method of apportioning such costs among those entitled to use the limited common elements, and the association may use the provisions of s to enforce payment of the shares of such costs by the 5

6 unit owners entitled to use the limited common elements. The prospectus describes the boat basin and the boat slips as recreational facilities of the condominium. The survey for phase I shows the boat basin area is situated half on the property included in phase I and half on the phase II property. The declaration describes the common elements as follows: 3.5 Common Elements The Common Elements shall consist of all parts of the Real Property, building improvements and facilities not included in the individual Units as hereinabove defined and described. The declaration further provides that the boat slips are limited common elements, and provides for their maintenance as follows: 3.6 Appurtenances of Units As appurtenances to each Unit, the owner or owners thereof shall be entitled to the following: * * * C. Limited Common Elements 1. The Real Property contains twenty-eight (28) boat slips located in the boat basin as shown on the Amendment to the survey, which is filed herewith, said boat slips being numbered 1 through 28. The said boat slips may be assigned by the Developer to the owners of Condominium Units within the Condominium. Once having been so assigned, the boat slips shall then be Limited Common Elements appurtenant to the Unit to which it was assigned. 3. The Board of Directors shall determine the cost of the actual maintenance of the boat slips and shall charge such maintenance pro rata (that is on the basis of 1/28 th to each boat slip) to the Unit Owner to whom the boat slip has been assigned. In addition, any utilities which are utilized by the assignee of a boat slip shall be charged to the Unit Owner if they are separately metered, or if they are not, on a pro rata basis, but taking into account the boat size and utility usage. In its argument in favor of summary final order, the association explains that there are two primary issues involved in the case. The first issue is whether the cost of dredging the boat basin should be considered a common expense or a limited common element 6

7 expense. The second issue is whether the cost of repair and/or replacement of the finger piers should be a common expense or an expense divided among the number of persons having the exclusive use of a boat slip. The parties agree that the basin is a common element of the condominium and not a limited common element. An examination of the survey and the declaration supports this conclusion. The survey demonstrates that the basin was included in the condominium property, and the fact that the basin is not designated as a limited common element shows that it was not intended to constitute a limited common element. See, s , F.S., defining limited common element as those common elements reserved for the exclusive use of a certain unit or units, as specified in the declaration. As the declaration does not designate the basin areas as limited common element property, the basin constitutes general common elements, and it follows that the expenses of the operation, maintenance, and repair of the boat basin are common expenses to be shared in the manner provided in the documents for sharing common expenses among all owners. The fact that not all owners use the basin, if this is the case, does not warrant a different conclusion. At a basic level, it should be observed that liability for assessments cannot be avoided by nonuse of the common elements. Section (2), F.S. No owner may be excused from the payment of his share of the common expenses unless all owners are likewise excused, with certain exceptions not pertinent here. Section (9), F.S. The fact that a unit owner does not utilize the pool, the tennis courts, or does not take the community elevator to the top floor does not excuse the owner from paying his share of a special assessment to repair or replace the pool, tennis courts, or elevator. Compare, Levinson v. Victoria Towers Condominium Association, Inc., Arb. Case No , Final Order (February 11, 1997), in which the arbitrator determined that pursuant to the documents, the association 7

8 was responsible for repairing structural problems in the limited common element balconies, with the costs thereof to be shared as a common expense, despite the fact that exclusive use of the balconies was vested in the individual owners. Even where an owner or group of owners benefit primarily from the use of a portion of the common elements, as here in the case of the boat basin, the fact that the property constitutes common elements (and not limited common elements made the financial responsibility of one or more but less than all owners) requires that the expenses of upkeep and maintenance to be shared among all owners. Section (1), F.S., authorizes the declaration to distribute liability for maintenance of certain designated limited common elements among the owner or owners authorized to use the limited common elements. However, the documents in this case do not make the basin a limited common element. The declaration simply requires the board to assess the cost of the actual maintenance of the boat slips to the owners authorized to use the slips. No reasonable definition of boat slip would include the entire separate basin area. If the documents had intended the expenses of maintaining the basin to be shared only among the group of boating owners, the documents must be more specific in this regard. Accordingly, it is ruled that the expenses associated with dredging the basin, including without limitation architectural and engineering fees, consultation fees, as well as the expense of the actual dredging itself, are common expenses to be shared by all owners including the users of the slips. The second general issue is which group of owners is responsible for work done on the finger piers. The specific questions presented are whether maintenance of the slips includes replacement of the slips, and, if so, whether the owner s responsibility for maintenance to the slips includes maintenance of the finger docks. The declaration 8

9 provides that the cost of the actual maintenance of the boat slips shall be charged to the owners having use of boat slips, such that each authorized user shall be responsible for 1/28 th of the designated costs. Cordy argues, not without some initial appeal, that maintenance does not include outright replacement of the any structures included in the boat slips. Under respondent s interpretation, owners having a slip are not made responsible among themselves for replacement, but only for day-to-day maintenance and repair of the finger piers servicing the boat slips. In other words, respondent has no objection to being assessed along with the group of boat owners for ordinary repairs to the finger docks, but takes the position that extraordinary expenses involved in replacement of the facility must be borne by all owners in the condominium. Respondent argues that this result is consistent with s (1), F.S., permitting the declaration to specify that the owner or owners having exclusive use of a limited common element have the corresponding obligation to maintain the limited common element. Respondent also points out that section (1), F.S., uses only the word maintenance while section (1), F.S., authorizes the association to assess for certain expenses, including the expenses of the operation, maintenance, repair, replacement, and protection of the common elements. The argument continues that since the legislature used numerous maintenance-related terms in the latter section, and since it used only the bare-bones term maintenance in the former section, the legislature did not intend to permit a declaration to specify that the owner with the exclusive right to use a limited common element facility must pay for the maintenance, repair, protection, and replacement of the facility. The association makes a parallel argument, pointing out that in certain places the declaration uses the phrase maintenance, repair, or replacement, while Section 3.6 simply provides that the owners given exclusive use rights in the slips shall be responsible for 9

10 maintenance of the slips. The various arguments made by the parties contain certain logical inconsistencies. The association argues on the one hand that the slips are defined as the airspace within the structure of the finger piers, and therefore maintenance of the slips does not include the cost of dredging the basin area. On the other hand, the parties appear to argue that for purposes of determining the extent of the maintenance responsibilities of the slip users, the slips, composed of mere airspace previously, should for these purposes be considered to include repairs to the structure of the finger piers. The point is made that to interpret the declaration to impose a maintenance obligation on the slip users for mere airspace would be to render the declaration meaningless on this point; airspace requires no maintenance. The declaration should not be construed to create an illusory obligation. Therefore, in order to give meaning to the declaration, the arbitrator agrees that the slips should be interpreted to include the physical structure permitting the slips to operate as boat slips. It is concluded, then, that maintenance of the slips includes maintenance of the finger piers. The question remaining is the meaning to be given the word maintenance. Black s Law Dictionary 859 (5 th edition 1979) defines the word maintain as follows: The term is variously defined as acts of repairs and other acts to prevent a decline, lapse, or cessation from existing state or condition; bear the expense of; carry on; commence; continue; furnish means for subsistence or existence of; hold; hold or serve in any particular state or condition; keep from change; keep from falling, decline, or ceasing; keep in existence or continuance; keep in force, keep in good order; keep in proper condition; keep in repair, keep up; preserve; preserve from lapse, decline, failure, or cessation; provide for; rebuild, repair; replace, supply with means of support.[emphasis added]. Black s Law Dictionary 1167 (5 th edition 1979) defines repair as follows: 10

11 To mend, remedy, restore, renovate. To restore to a sound or good state after decay, injury, dilapidation, or partial destruction. [citation omitted]. The word repair contemplates an existing structure or thing which has become imperfect, and means to supply in the original existing structure that which is lost or destroyed, and thereby restore it to the condition in which it originally existed, or near as may be. Black s Law Dictionary 1168 (5 th edition 1979) defines replace as: To place again, to restore to a former condition. [citation omitted]. Term, given its plain, ordinary meaning, means to supplant with substitute or equivalent. A review of the definitions set forth above shows overlap among these various definitions. The definition of maintain includes rebuild, repair; replace. Thus the definition of maintenance adopts concepts from rebuilding, repairing, and outright replacement. 1 The definition of repair includes to restore after partial destruction, and to supply in the original existing structure that which is lost or destroyed. The concept of repair thus includes elements of replacement. The definition of replace means to restore to a prior condition, which may entail repairs, needed maintenance, or outright replacement depending on the severity of the damage involved. Given these broad, overlapping definitions, it cannot be concluded with any degree of assurance either in the context of the statute or the documents at hand, (neither of which define these operative terms), that the authors thereof intended any precise differences to attach to these words. What is capable of realization, however, is that both the legislature and the drafter of the documents intended that those assigned exclusive right of a boat slip would pay for expenses associated with their exclusive use. This would logically include day-to-day costs 1 Compare, Wrobleski v. Grand Trunk Western Railway Co., 276 N.E 2d (Ind. App. 1972), where the court in a personal injury action against the railroad held that the duty to maintain a warning sign included the 11

12 necessary to keep the existing structure in operation as well as the costs of replacing the structure, or portions thereof, when necessary. 2 Also reinforcing these conclusions is a recognition of the large degree of uncertainty that would otherwise arise, given the intersecting definitions, in deciding whether particular expenses are ordinary maintenance, repair, or replacement. For example, while adding a coating of marine varnish may be viewed as maintenance, replacement of one or two boards on the finger dock, or replacing a piling that has been damaged by waves is not so easily categorized as either daily maintenance or replacement. 3 WHEREFORE, based on the foregoing, it is declared that the expenses associated with dredging the basin are common expenses to be assessed to all owners. The cost of repairing, maintaining, replacing, and otherwise keeping the finger docks in a state of good repair, use and operation are expenses to be shared only by those who benefit from exclusive use of the slips. duty to restore and rebuild after decay or destruction. 2 Cordy s argument that other owners are entitled to perform lesser activities on the piers, such as crabbing, misses the point that those entitled to exclusive use of the piers for the purpose of mooring their boats are guaranteed the exclusive use of the highest, best, and most beneficial use of the piers. 3 In a letter filed on April 14, 2000, Cordy suggests that reserves pursuant to s (2)f., F.S., should be maintained for the finger piers. Even grouping the finger piers together as allowed by rule 61B , F.A.C., for reserve purposes, since the cost of replacing the docks according to historical data is less than $10, for all piers combined, statutory reserves are not required to be funded for this purpose. However, even assuming the statutory threshold was met, since statutory reserves are set aside for deferred maintenance, where the declaration makes the owners using the piers collectively responsible for maintenance of these assets, limited common element reserves would be the responsibility of the owner or owners using the piers. 12

13 Florida. DONE AND ORDERED this 24th day of April, 2000, at Tallahassee, Leon County, Karl M. Scheuerman, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida 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 persons on this 24 th day of April, 2000: Paul L. Wean, Esquire, Wean & Malchow, P.A., 1305 E. Robinson Street, Suite A, Orlando, Florida 32801, to Donald Sanderson, 2100 North Peninsula Avenue, Ste. 213, New Smyrna Beach, Florida 32169, and to Irving H. Cordy, Unit 216, 2100 North Peninsula Avenue, New Smyrna Beach, Florida Right to Appeal Karl M. Scheuerman, Arbitrator As provided by s , F.S., this final order may be appealed by filing a complaint for trial de novo with a court of competent jurisdiction in the circuit in which the condominium is located, within 30 days of the entry and mailing of this order. If this final order is not timely appealed, it will become binding on the parties and may be enforced in the courts. 13

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