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 Mr. and Mrs. Samuel Irving, Mr. and Mrs. Abe Mandell, Mr. and Mrs. Morton Grayson, Mr. and Mrs. Leslie Lavy, Mr. Milton Freedman, Mr. and Mrs. Arnold Leon, Mr. and Mrs. Joe Karpf,, Mr. and Mrs. Robert Klufer, Mr. and Mrs. Gerald Benjamin, Mr. and Mrs. Nicholas Vinios, Mr. and Mrs. William Tatz,, Mr. and Mrs. Kenneth Lasser, and Mr. and Mrs. Charles Maravell, Petitioners, v. Case No Sutton Place Condominium Association, Inc., Respondent. / SUMMARY FINAL ORDER Comes now, the undersigned arbitrator, and issues this summary final order as follows: Petitioners filed their petition in this matter on April 18, According to the petition, there are 76 residential units in the condominium and 13 cabana units. Petitioners are the owners of cabanas in the condominium. A dispute has arisen concerning whether the owners of the cabanas are entitled to cast a vote by virtue of their ownership of the cabanas. The association filed its answer to the petition on June 15, On June 18, 2001, the arbitrator issued an order permitting argument, noting that the issues raised in the case involved the proper interpretation 1

2 of the declaration. Petitioners filed additional information on June 29, 2001, and the association filed its memorandum of law on July 17, It is plain based on a review of the declaration that the cabanas are to be considered units. The cabanas are not part of the common elements, they are not limited common elements; they were deliberately made units and were even assigned a percentage ownership in the common elements and share of responsibility for the common expenses. According to the declaration: 2.9 Condominium Parcel means a unit together with the undivided share in the common elements which is appurtenant to the unit Unit means a part of the condominium property which is to be subject to private ownership. The terms, unit and condominium parcel are used interchangeably in this document. There will be residential units and cabana units as described herein. 3.1 Sharing by Unit Owner. The common elements, common expenses, and common surplus of the condominium will be shared proportionately by the unit owners. The proportionate share of the common elements, common expenses, and common surplus of each residential unit shall be the percentages set forth in Exhibit B 3.6(b) Units. The Condominium will contain the following residential unit types: * * There will also be thirteen (13) cabana units identified as Cabana Unit 1 through Cabana Unit UNITS. The seventy-six residential units and thirteen cabana units of this condominium are described more particularly and the rights and obligations of their owner are established as follows: 4.1 Appurtenances to Unit: Each condominium parcel is a separate parcel of real property recognized by law and shall be comprised of a unit, together with the following appurtenances: 2

3 (a) Common Elements and Common Surplus. An undivided share in the land and other common elements and in the common surplus which is appurtenant to each unit and inseparable therefrom as set forth in Paragraph 3.1 hereof. (b) Air Space. An exclusive easement for the use of air space occupied by the unit (c) Association Membership. Membership in the Association and an undivided share in the common surplus of the Association. The survey attached to the declaration as exhibit A shows the cabana units numbered 1 through 13. Exhibit B to the declaration lists each unit contained in the condominium along with a corresponding percentage ownership share in the common elements. Each cabana unit owns.15% of the common elements and is therefore responsible for.15% of the common expenses of the condominium. 1 The declaration itself does not address voting rights distributed among the units. The articles of incorporation provide as follows: Article IV Members 4.4 The owner of each unit shall be entitled to at least one vote as a member of the Association. The exact number of votes to be cast by owners of a unit and the manner of exercising voting rights shall be determined by the By-Laws of the Association. The bylaws provide in part as follows: 2.4 A quorum at members meetings shall consist of persons entitled to cast a majority of the votes of the entire membership. 2.5 Voting a. In any meeting of members, the owners of unit shall be entitled to cast one vote for each unit. In addition to the foregoing provisions, according to the association, the bylaws were 1 By way of contrast, the percentage of ownership assigned to other unit types varies from to In practical terms, where the annual budget is $100,000.00, each cabana unit would be assessed $1, annually. 3

4 amended in 1982 to prohibit overnight sleeping accommodations in the cabana units. The bylaws also provide pursuant to the amendment that cabana units may only be owned by persons who own condominium apartment units. The arbitrator finds that neither this amendment nor the remainder of the document provisions recited by the parties find relevance to the dispute. The association argues that the documents create a distinction between residential units and dwelling units, that no one is allowed to reside in a cabana unit, and that consequently, [t]here cannot be a unit within the Association that has a restriction of use by its members or their guests for overnight accommodations. Doing so would contravene the purpose and use of a residential unit. The association appears in this argument to take the position that the cabanas do not comprise units. The association also argues that an interpretation that gives the owner of a residential unit along with a cabana unit two votes instead of one, is inequitable. If the Division was to treat both as one, then the Association must be commanded to maintain the cabana units as it does the residential ones. Clearly, this is not contemplated by the [documents or by historical practice]. The arbitrator is mindful of the distinction running through the documents between residential units and nonresidential (cabana) units. This distinction finds some relevance in the insurance provisions contained in the declaration where the condominium buildings are impacted by various casualties. For example, section 8.2(f) of the declaration in discussing procedures to be employed in the event of total destruction, defines substantial damage to mean two-thirds or more of all residential units are or have been rendered untenantable If this distinction was carried 4

5 forward into the portion of the bylaws setting forth the voting rights, the conclusion would be inevitable that cabana units, being indisputably nonresidential, would not be entitled to a vote. There is certainly nothing in the Condominium Act that specifically requires that each unit be assigned one vote, or any vote at all, or that only residential units may possess voting rights. The documents are generally free to assign voting rights as the creator of the condominium sees fit, and if the documents only assigned voting rights to residential units, this would not, in the absence of additional facts not present here, violate any provision in the controlling statute. But the fact remains that the bylaws, in setting forth the voting rights of the membership, make no such distinction but simply provide that the owner of each unit shall be entitled to at least one vote. 2 The fact that the documents deliberately create and maintain a distinction between residential and nonresidential units in other areas, while failing to distinguish in the portion of the documents setting forth voting rights, compels the conclusion that the drafters intended that voting rights attach to the cabana units. The arbitrator does not find that the equitable arguments advanced by the association lead to a contrary conclusion. The cabana units are considered units for all purposes, and each cabana unit shares in the ownership of the common elements and surplus. Presumably the owners of the cabana units advanced additional consideration for the purchase of the cabana units. In addition, corresponding to the 2 While one may wonder at the precise import of the phrase at least one vote, this inquiry need not be addressed in order to conclude that the owner of each unit is entitled to vote. It may be that this particular phraseology simply contemplates and confirms that where an owner owns both a residential unit and a cabana unit, that owner has more than one vote in the affairs of the association; hence in this sense each owner has at least one vote, and has 2 votes if he owns more than one unit. 5

6 assigned ownership interest in the common elements is a corresponding obligation to pay a proportionate share of the common expenses. Thus the owners of the cabana units pay assessments in addition to assessments levied upon their residential units. While perhaps it may have been more equitable in retrospect to have assigned 3 only a fractional vote to the cabana units instead of an entire vote, it cannot be said that the equities as a whole speak wholly in favor of one or the other position in this case. In any event, the equities cannot rewrite the documents and the documents simply do not support the association s position. WHEREFORE, the arbitrator declares that the owners of the cabana units are entitled to one vote per cabana unit in addition to one vote for their residential unit. DONE AND ORDERED this 7th day of August, 2001, at Tallahassee, Leon County, Florida. Karl M. Scheuerman, Arbitrator Department of Business and Professional Regulation Arbitration Section Northwood Centre 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 on this 7th day of August to the following persons: Bernice Mandell 2778 South Ocean Boulevard Apartment Ph4 Palm Beach, Florida Naturally, the bylaws at this point may not be amended to diminish the voting rights except in a manner consistent with s (4), F.S. 6

7 Guy M. Shir, Esquire Becker & Poliakoff, P.A. 500 Australian Avenue South, 9 th Floor West Palm Beach, Florida Karl M. Scheuerman, Arbitrator Right to Appeal As provided by s. 718,1255, F.S., this final order may be appealed by filing a petition for trial de novo with a court of competent jurisdiction within 30 days of the entry and mailing of this final order. This order does not constitute final agency action and may not be appealed to the district courts of appeal. 7