STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR BINDING ARBITRATION - HOA Indian Lake Estates, Inc., Petitioner, v. Case No. 2008-02-0238 Homeowners Voting For Recall, Respondent. / Richard Dureault and Susan Sohni, as representatives of Homeowners Voting for Recall, Petitioner, v. Case No. 2008-02-5986 Indian Lakes Estates, Inc., Respondent. / ORDER REOPENING CASE AND FINAL ORDER OF DISMISSAL Indian Lakes Estates, Inc. (the Association) filed a petition for mandatory binding arbitration of a recall dispute which was assigned case number 2008-02-0238. Richard Dureault and Susan Sohni, as representatives of the homeowners voting for recall, filed a request for expedited determination of jurisdiction which was assigned case number 2008-02-5986. Dureault and Sohni (Homeowners) filed a writ of prohibition in the Florida Second District Court of Appeal (Second District Court) seeking to challenge the constitutionality of the binding arbitration program and the jurisdiction of the Division. 1
A case management conference was held on May 22, 2008, during which the undersigned stated that he had yet to rule on the issue of jurisdiction as raised in the request for expedited determination of jurisdiction. During the case management conference, the parties indicated that they had no objection to consolidating the above referenced matters. Therefore, by order dated May 23, 2008, arbitration case numbers 2008-02-0238 and 2008-02-5986 were consolidated. While this matter was pending before the Second District Court, the undersigned found it appropriate to administratively close the case until the parties sought to reopen the matter. On June 30, 2008, Homeowners filed a motion to reopen the case on their request for expedited determination of jurisdiction. Homeowners state that all parties agreed to a motion filed on June 19, 2008, in the Second District Court requesting that the Court relinquish jurisdiction to the Department for the limited purpose of ruling on the request for expedited determination of jurisdiction. Additionally, Homeowners argue, citing Alonso v. State, 879 So. 2d 80 (Fla. 3d DCA) that it appears that the arbitration case has not been automatically stayed by the Second District Court s order requiring the Association to respond to the writ of prohibition. Based on consideration of the issue, the undersigned finds it appropriate to reopen this matter and rule upon jurisdiction. The dispute in this matter involves the recall of members of the Association s board directors. Pursuant to sections 720.303(10) and 720.311(1), Fla. Stat., the undersigned has jurisdiction over recall disputes involving homeowner s associations governed by chapter 720 of the Florida Statutes. Homeowners contend that the Association is not subject to the provisions of chapter 720 and, therefore, the undersigned does not have jurisdiction over this matter. 2
Section 720.301, Fla. Stat., provides the following definitions: (3) "Community" means the real property that is or will be subject to a declaration of covenants which is recorded in the county where the property is located. The term "community" includes all real property, including undeveloped phases, that is or was the subject of a development-ofregional-impact development order, together with any approved modification thereto. (9) "Homeowners' association" or "association" means a Florida corporation responsible for the operation of a community or a mobile home subdivision in which the voting membership is made up of parcel owners or their agents, or a combination thereof, and in which membership is a mandatory condition of parcel ownership, and which is authorized to impose assessments that, if unpaid, may become a lien on the parcel. The term "homeowners' association" does not include a community development district or other similar special taxing district created pursuant to statute. Homeowners argues that the Association does not meet the above definition of homeowner s association in that membership in the Association is not mandatory. In support of their argument Homeowners cite Article II, Section 3 of the Association s bylaws which defines a member of the Association as follows: [A]ny natural person who: (a) resides in Indian Lakes Estates a minimum of three (3) months per calendar year, (b) owns a legal or beneficial interest in real property located at Indian Lakes Estates (as demonstrated by a copy of the recorded instrument creating such interest or the record of the Polk County Property Appraiser), (c) has completed, executed, and delivered a membership application to the Secretary at least ten (10) days before any scheduled meeting of the Members (if not previously registered), and (d) has timely paid all annual maintenance fees assessed against every such property in which such person owns a legal or beneficial interest. Homeowners further argue that the Association does not meet the definition of homeowner s association because the Association s governing documents do not authorize the Association to file or record a claim of lien for unpaid assessments. The 3
Association does not deny that it lacks such authority, stating it is in the process of reforming its restrictive covenants in order to provide such authority. The Association contends that it is governed by Chapter 720. The Association further states that the community was platted between 1955 and 1960 prior to effective date of Chapter 720. The Association states that at that time enforcement of assessments was not considered. In support of its argument the Association relies upon section 720.302(1), Fla. Stat., which states: The purposes of this chapter are to give statutory recognition to corporations not for profit that operate residential communities in this state, to provide procedures for operating homeowners' associations, and to protect the rights of association members without unduly impairing the ability of such associations to perform their functions. The Association argues that section 720.302(5), Fla. Stat., further clarifies the application the chapter 720. This section provides Unless expressly stated to the contrary, corporations that operate residential homeowners' associations in this state shall be governed by and subject to chapter 607, if the association was incorporated under that chapter, or to chapter 617, if the association was incorporated under that chapter, and this chapter. This subsection is intended to clarify existing law. Clearly chapter 720 is intended to provide for the operation of limited types of corporations commonly referred to as a homeowner s association. Pursuant to section 720.301(9), Fla. Statutes, the key elements for the chapter s applicability are: 1. A Florida corporation responsible for the operation of a community; 2. Voting membership made up of parcel owners of the community or their agents; 3. Membership is mandatory; 4
4. Authority to impose assessments and if unpaid the assessments may become a lien on the parcel. All these requirements must be met. Sections 720.302 must be read in conjunction with these requirements, clarifying that any homeowner s association created under chapters 607 or 617 remains governed by either one of those chapters, and only those homeowner s associations that meet the above requirements are also subject to the provisions of chapter 720. It is clear that the Association does not meet all of the above requirements. Membership in the Association is not mandatory, but conditional. Additionally, it is not disputed that the Association lacks the authority to place a lien on parcels for unpaid assessments. Therefore, the Association is not subject to chapter 720 and the undersigned lacks jurisdiction over the dispute. Based upon the foregoing, it is ORDERED: The undersigned lacks jurisdiction over the dispute in this matter. Accordingly, arbitration case numbers 2008-02-0238 and 2008-02-5986 are dismissed. The parties may seek relief in a court of competent jurisdiction. Florida. DONE AND ORDERED this 21 st day of July, 2008, at Tallahassee, Leon County, James W. Earl, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida 32399-1029 Certificate of Service 5
I hereby certify that a true and correct copy of the foregoing final order of dismissal has been sent by U.S. Mail and facsimile to the following persons on this 21 st day of July, 2008: Albert C. Galloway, Jr., Esq. 202 E. Stuart Avenue P.O. Box 3339 Lake Wales, FL 33853 Facsimile: 863.679.5332 John E. DuBose, Jr., Esq. Keough & DuBose, P.A. 514 East Colonial Drive P.O. Box 1609 Orlando, FL 32802-1609 Facsimile: 407.849.6588 James W. Earl, Arbitrator 6