STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION John Franklin, Petitioner, v. Case No. 00-0129 Vista Verde North Condominium Association, Inc., Respondent. / follows: SUMMARY FINAL ORDER Comes now, the undersigned arbitrator, and issues this summary final order as Petitioner Franklin filed his petition in this matter on January 20, 2000. Petitioner seeks to challenge the validity of a bylaw concerning unit guests and a rule requiring parking stickers. The parking rule requires owners to affix a parking sticker decal to the bumper of their automobiles. Petitioner indicates that his automobile, a Corvette, has no bumper, and that to affix the sticker to the body would damage the painted finish of the automobile. The guest bylaw requires an owner who will have a guest staying at his unit to fill out a family registration form that lists the names of family members who will use the unit for the next year. Petitioner objects to the bylaw and the form that requires the owner to submit the name, address, and relation of the guests and family members. With reference to the parking decal issue, on February 14, 2000, the arbitrator ordered the parties to mediate the issue or otherwise settle the issue as there was 1
evidence in the file that the association would permit the petitioner to place the permit in an alternate location. The parties ultimately settled the parking decal issue. The only issue remaining in the case is the validity of the guest/family bylaw. The arbitrator issued an order setting informal proceedings on March 21, 2000, that allowed the parties an opportunity to file memoranda on the issue of the reasonableness of the rule. Each party filed a memorandum of law, with the last being filed on April 13, 2000. Subsequently, the arbitrator required the association to indicate the location of the application fee requirement. The association filed its response on June 23, 2000, and indicated that at a duly noticed meeting of the board in April, 1999, the board adopted an amendment to the bylaws establishing a $50 processing fee for all rental and guest applications. The bylaws are unusual in that they permit the board to amend the bylaws upon prior notice. For regular meetings of the board, notice must be posted at least 48 hours in advance of the meeting, as required by article VIII of the bylaws. Article XXII requires that the notice contain a full statement of the proposed amendment. Any amendment passed without substantially complying with these notice provisions is invalid. The association purported to include a copy of the notice with its response, but the notice attached is a notice sent to the owners after the fact summarizing the new bylaw amendment. Regardless, the petitioner has not challenged the bylaw on grounds of inadequate notice, and accordingly no ruling will be made on this issue. A brief history of the family registration bylaw is in order. The declaration of condominium permits leasing and provides that no lease shall be for a term of less than seven days. Under the declaration, the association may regulate the form of leases, and the owner is required to promptly supply the association with any additional information 2
pertaining to the tenant that the association reasonably requires. The declaration empowers the board to adopt reasonable rules and regulations providing guidance in the use of the condominium property. follows: A letter dated December 7, 1999, sent by the board to the membership, stated as As you know, the board of directors adopted a new rule last April in regard to the rental/guest registration procedure and parking decal system. The reason for the change was due to the number of owners who are renting privately, signing the guest application that the guest is not paying rent and circumventing the $50.00 processing fee. There are three very important reasons that this rule must be enforced. The State requires the association and its registered agent (Resource Property Management) to know who is occupying each unit at all times. The second and third reasons are related in that the processing fee is necessary to help defer[sic] extra wear and tear costs to the property with frequent rentals, and the fee also helps subsidize your budget and thus keeping maintenance fees as low as possible. Since this was a new rule and the past year has been a trial period we have found it necessary to adjust the registration form and rules for the use of the family registration form. Enclosed you will find a new Family Registration Form. This form must list all immediate family members that will use your unit for the period of January 1, 2000--December 21, 2000.If no form is received and you currently do not have one on file, then anyone staying in your unit during the year 2000 will pay a $50.00 processing fee each time they are staying in your unit.once your form is received it cannot be added to or changed in any way during the next twelve month period The form attached to the letter appears as follows: VISTA VERDE NORTH CONDOMINIUM ASSOCIATION, INC. FAMILY REGISTRATION FORM The following persons listed are members of my immediate family and are to be granted occupancy of my unit without subjecting me to the $50.00 application fee. I understand that the persons listed below are to be 3
brothers, sisters and spouses; parents, children and their spouses and grandparents and grandchildren. Name Address Relation The minutes of the April 1, 1999 meeting of the board provide in part as follows: Parking problems Vice-President Donadio presented a detailed review of the last 180 guest permits for occupancy at Vista Verde North. It was determined that a number of owners renting privately are circumventing the Association By-Laws of assessing a processing fee for those guests who pay a rental amount. All renting agencies are conforming to the Rules. Another long discussion followed with specific examples being presented of owners who have knowingly bypassed the fee while attesting on the guest registration that no money is being received from the guest The Association has lost $3,000.00 in processing fees from owners who have privately rented and bypassed paying the fees. The petitioner objects to the family registration form that requires him to list the names, addresses, and relation of each person in his family who may stay at his unit for the upcoming year. Petitioner cites privacy and security concerns with submitting this information to the association where it will be maintained among the association s official and public records. Section 718.111(12)(a)13., F.S., does provide that all rental records are official records where the association is acting as rental agent. Although it is not clear that the association in this case is acting as rental agent by offering units for rent in the 4
condominium on behalf of a pool of owners, and by managing the rental program, it requires no stretch of reasoning to conclude that where, as here, the association requires the identification of all prospective residents to be indicated on an association form, the records generated thereby are related to the operation of the association within the meaning of s. 718.111(12)(a)15., F.S., and are therefore official records open to inspection. Nor do the exemptions from the right of access contained in the statute appear to apply. Section 718.111(12)(c)2., F.S., exempts from disclosure information obtained by an association in connection with the approval of the lease, sale, or other transfer of a unit. This language has been construed by the Division to exempt rental records only where the association is involved in approving or disapproving a prospective tenant. See, In re Petition for Declaratory Statement; St. Augustine Ocean and Racquet Club Condominium Association, Inc., Docket No. DS 98182 (February 1, 1999) aff d St. Augustine Ocean and Racquet Club Condominium Association, Inc. v. Department of Business and Professional Regulation, 25 F.L.W. D839 (Fla. 5 th DCA March 21, 2000). In affirming the declaratory statement, the District Court concluded that nothing in the constitutional right to privacy or in the caselaw conferred privacy on rental records of the association. In the instant case, the association does not approve or disapprove guests or family members staying within a unit, and the exemption from the right of access to records does not apply. Hence, the family registration form is an official association record subject to inspection under s. 718.111(12), F.S. Petitioner also suggests that the family registration form is nothing other than a revenue-producing mechanism. He submits that he has fully complied with the filing fee requirements of the documents as to tenants. Petitioner asserts that the new form was adopted under false pretenses; that there is no State law requiring the association to 5
maintain a list of current occupants. Petitioner also asserts that the association has impermissibly assumed regulatory authority over individuals who are not unit owners. 1 Finally, petitioner suggests that by operation of the bylaw, the association is permitted to collect lease processing fees from the owner even if the unit is being used by a family member without the payment of rent, since if the owner does not fill out the registration form, the association assesses a $50.00 fee for each occupant. In its memorandum, the association cites the following reasons for the rule: (1) There has occurred frequent use by unknown third parties of motor vehicles which are designated for the exclusive use by unit owners. (2) There has occurred repeated and frequent entry upon the properties of Vista Verde North and use of common elements and facilities, including the swimming pool, by parties who are not unit owners, family members and guests of unit owners, approved tenants and guests of tenants. (3) There has occurred frequent and repeated short term occupancy and use of condominium units during the absence of unit owners by persons who are not related to the unit owner or otherwise approved as tenants, resulting in repeated violations of the occupancy and use restrictions set forth in the Declaration. The use of units and common elements by multiple temporary occupants has impaired the abilities of the Board of Directors of the Association to reasonably enforce the Rules and Regulations of the condominium. The association also states that the bylaw amendment attempts to permit the association to have reasonable advance notification of persons lawfully entering the condominium, to permit the association to issue temporary parking passes to lawful occupants, to permit the association to provide printed rules to each legitimate occupant, and to permit the association to reasonably enforce the occupancy and use restrictions pertaining to approval of tenants. 1 This rationale is rejected. Section 718.303(1), F.S., provides that each owner, tenant, and other invitee is required to comply with the statute and the documents. Hence, it is the Legislature that has extended 6
Where, as here, the reasonableness of the action of the board is challenged, the rule of reason comes into play: The requirement of reasonableness in these instances is designed to somewhat fetter the discretion of the board of directors. By imposing such a standard, the board is required to enact rules and make decisions that are reasonably related to the promotion of the health, happiness, and peace of mind of the unit owners. In cases like the present one where the decision to allow a particular use is within the discretion of the board, the board must allow a particular use unless the use is demonstrably antagonistic to the legitimate objectives of the condominium association; i.e., the health, happiness and peace of mind of the individual owners. Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637, 639-40 (Fla. 4 th DCA 1981). The court in Basso invalidated the action of the board in refusing to approve the installation of a well, where the board failed to demonstrate that its action was reasonably related to the fulfillment of the desired objectives. Certainly, the association is not at liberty to adopt arbitrary or capricious rules bearing no relationship to the heath, happiness and enjoyment of life of the various unit owners. On the contrary, we believe the test is reasonableness. If a rule is reasonable the association can adopt it; if not, it cannot. Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. 4 th DCA 1975). Applying this test to the facts in this case, it appears that certain of the objectives of the association are legitimate. It is plain that at the time of the adoption of the amendment and form, based on the minutes of the board meetings and on communications from the board to the owners, the board viewed the bylaw amendment primarily as a revenuegenerating instrument, notwithstanding its more recent characterizations contained in its memorandum of law relating to security and enforcement considerations. Regardless of the association s authority to third persons. 7
the timing of these emergent motives, it is concluded that keeping assessments low is a legitimate association objective. See, Island Sun Condominium Association, Inc. v. Olsen, Arb. Case No. 99-1070, Final Order (March 29, 2000), holding that where the board enacted a rule limiting the use of common element electricity in limited common element storage rooms in order to keep common expenses and assessments low, a proper purpose for the rule had been shown. Other objectives advanced by the board at the time of the adoption of the amendment and form do not, however, share the same fate. The board at that time offered its unsubstantiated opinion that state law requires it to maintain a roster of current occupants of all the units. It is not stated who the association is to share this roster of occupants with, or what state or local authority requires this to be compiled and updated. Understandably, this objective does not appear in the current statement of position of the association as expressed in its memorandum recently filed. Suffice to say this rationale, if ever accurate, has, under scrutiny, been jettisoned by the association. The second and third reasons for the change in the bylaws, as set forth in the board s letter of December 7, 1999 to the membership, is that collection of the $50.00 processing fee was necessary to help defray the extra wear and tear costs to the property. This rationale is not particularly compelling either, considering that where a tenant leases the unit, the owner is typically absent and thus dual usage of the common elements does not occur. See, s. 718.106, F.S., providing that when a unit is leased, a tenant shall have all the use rights in the property. The association is also given the authority to adopt rules prohibiting dual usage of the common elements. Thus, the extra wear and tear rationale advanced by the board at the time of adoption of the amendment, is of doubtful 8
significance. 2 The other more recently developed objectives of the association are related to enforcement of its usage restrictions and parking regulations. Although there exists some question regarding whether the rule is actually related to these objectives, it cannot be stated that the objectives themselves are illegitimate or fallacious. Based on the foregoing, it is concluded that the first part of the Basso test of reasonableness has been satisfied. What remains is to determine whether the means chosen by the board to accomplish the stated objectives are reasonably related to the objectives. As stated previously, the association has a legitimate interest in collecting its fees, keeping assessments low, and enforcing its documents relating to rental conditions. Requiring the owner to state the name of the occupants of a unit will assist the association in determining whether an occupant is a family member or a tenant. Similarly, requiring an owner to state the relationship, if any, between the occupant and the owner will assist the association in determining whether the occupant is a family member or an unrelated guest, thereby permitting the association to decide whether the $50 fee applies. For these reasons, the means chosen by the association are reasonably designed to accomplish its valid stated objectives, and the bylaw amendment is determined to be valid. WHEREFORE, the relief requested by the petitioner is hereby denied. The bylaw amendment is declared to be valid. DONE AND ORDERED this 26 th day of July, 2000, at Tallahassee, Leon County, Florida. Karl M. Scheuerman, Arbitrator Department of Business and 2 It is possible that this rationale would assume greater importance, where, for example, a number of the owners were seasonal residents and rented their units during their normal periods of vacancy. 9
Professional Regulation Arbitration Section Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-1029 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 26 th day of July, 2000, to Ray McLarney, 1137 Edgewater Circle, Bradenton, Florida 34209, and to David A. Bacon, Esquire, P.O. Box 13576, St. Petersburg, Florida 33733. Karl M. Scheuerman, Arbitrator Right to Appeal As provided by s. 718.1255, 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 final order. This order does not constitute final agency action and is not appealable to the district courts of appeal. If this final order is not timely appealed, it will become binding on the parties and may be enforced in the courts. Attorney s Fees As provided by s. 718.1255, F.S., the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney s fees. Rule 61B-45.048, F.A.C., requires that a party seeking an award of costs and attorney s fees must file a motion seeking the award not later than 45 days after the rendition of the final order. The motion must be actually received by the Division within this 45 day period and must conform to the requirements of rule 61B-45.048, F.A.C. The filing of an appeal of this final order does not toll the time for the filing of a motion seeking prevailing party costs and attorney s fees. 10