STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA CONDOMINIUMS, TIMESHARES AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION MICHAEL DAYTON, Petitioner, v. Case No. 2014-00-3013 SURFSIDE TOWER ASSOCIATION, INC., Respondent. / FINAL ORDER Pursuant to notice, the undersigned arbitrator of the Division of Florida Condominiums, Timeshares and Mobile Homes conducted a telephonic final hearing in this case on September 22, 2014. During the hearing, the parties presented the testimony of witnesses, entered documents into evidence and cross-examined witnesses. The parties were ordered to file post-hearing memoranda by October 13, 2014. Both parties have filed their post-hearing memoranda. This Final Order is entered after consideration of the complete record. Appearances For Petitioner: For Respondent: Alexander Scott Dennison, Esq. Florida Defense Law, P.A. 1227 Second Street Sarasota, FL 34236 Richard A. Zacur, Esq. Zacur, Graham & Costis, P.A. PO Box 14409 St. Petersburg, FL 33733 1
Statement of the Issue Whether Petitioner may lease his unit for a period of less than 30 days, if his unit is only leased once during each 30-day period. Findings of Fact 1. Petitioner, Michael Dayton, owns #305 within Surfside Tower Association, Inc. (the Association) and has owned this unit since November 4, 2004. 2. Respondent, Surfside Tower Association, Inc. (the Association), is the corporate entity responsible for the operation of Surfside Tower, a Condominium. 3. Section 12.5 of the Association s Declaration of Condominium states, in pertinent part: (Emphasis supplied.) Leasing of Units. After approval by the Association required herein, entire Units may be rented provided the occupancy is only by the Lessee, his family and guests.... No lease shall be for a period of time less than thirty (30) days.... 4. The Association s Rules and Regulations, recorded as Exhibit E to the Declaration of Condominium, state, in pertinent part: (Emphasis supplied.) Leasing: Leasing of the unit by the unit owner is not prohibited; subject, however, to the provisions of Articles 12.5 and 13 of the Declaration of Condominium.... 5. The petition alleged that the Association has always interpreted and enforced Section 12.5 of its Declaration to mean: No lease shall be for a period of time less than thirty (30) days. If leased for less than thirty (30) days, the unit may not be leased for the balance of the thirty (30) day period. In other words, Petitioner contended that the 2
Association had a long-standing policy of permitting unit owners to lease their unit for less than 30 days, provided that there was only one rental per 30-day period. 6. The petition further alleged that in 2009, the Association began selectively asserting a new position on its rental policy as it pertained to Petitioner. Petitioner claimed that the Association now sought to enforce a prohibition on any rental of Petitioner s unit that was for less than 30 days, contrary to its long-standing policy and practice. Petitioner alleged that the Association was conducting selective enforcement as to its rental policy. 7. As relief, Petitioner requests an Order requiring the Association to: 1) Allow Petitioner to continue renting his unit under the Association s long-standing policy of permitting unit owners to lease their unit for less than 30 days, provided that there was only one rental per 30 day period; 2) Cease its selective enforcement of its rental rule against Petitioner; and 3) Allow Petitioner to advertise his unit for rentals of less than 30 days. 8. The Association contended in its answer that at no time had it ever interpreted Section 12.5 of its Declaration and its rental policy to allow any lease for a period of time less than 30 days. The Association further contends that Section 12.5 is not vague or ambiguous and the provision must therefore be construed in its normal and natural meaning, and the meaning most commonly understood, when considered in reference to the subject matter and circumstances. 9. In connection with Petitioner s purchase of his unit in 2004, Petitioner signed a statement to the Association acknowledging that, as prospective purchaser, he had received and acquainted himself with the Association s Declaration of Condominium. In 3
this same statement, Petitioner agreed to abide by the Association s Declaration of Condominium. 10. For many years, the Association has published a member directory that contained the names, addresses and phone numbers of the members. The member directory also contains a copy of the Association s Rules and Regulations. The Leasing Policy portion of the 2004 member directory, which was the directory distributed at the time Petitioner purchased his unit, states: No lease shall be for a period of time less than 30 days. If leased for less than 30 days, the unit may not be leased for the balance of the 30-day period. This same language appears in the Association s 2001 and 2002 directories. 1 However, the evidence established that the Association amended its directory in 2005 and subsequent years to provide only that: No lease shall be for a period of time less than 30 days. The second sentence allowing unit owners to lease their unit for less than 30 days, provided that there was only one rental per 30 day period, was deleted. 11. Petitioner testified that he spoke with a member of the Association s board of directors prior to closing on his unit in 2004 and that board member told him that it was permissible to rent his unit for less than 30 days, provided that it was not rented again within the 30-day period. 12. On July 2, 2009, the Association through its then-president, Jim Everett, sent correspondence to all unit owners within the Association, including Petitioner. The correspondence acknowledged some confusion regarding the leasing of our units. However, after researching the Association s governing documents, speaking with its 1 The 2003 directory was not introduced into evidence. 4
management company and consulting with its attorney, the Association s correspondence advised the unit owners that, There is no provision allowing leases to be less than 30 days. So, the practice of leasing for a week or two and not leasing your unit again within the same 30 day period is not permissible under our governing documents. The July 2, 2009 correspondence warned unit owners that any noncompliant owners would be notified and asked to comply, and that the failure to comply would merit further action. 13. Shortly after the July 2, 2009 correspondence to the unit owners, the Association formed a committee to study whether the Association should amend Section 12.5 of its Declaration to change the rental policy to allow for rentals of less than 30 days. Petitioner served on this committee. The committee s work did not result in any change to Section 12.5 of the Declaration, and did not otherwise result in any change to the governing documents to allow for rentals of less than 30 days. 14. The minutes of the Association s board of directors meeting, held on December 14, 2012, state the following motion was approved unanimously: That the Board of Directors will fully and completely enforce all the rules and regulation [sic] as set forth in the Declaration of Condominium, Articles of Incorporation, By-Laws and House Rules of Surfside Tower Condominium Association including, but not limited to enforcement of the rules and regulations regarding the minimum thirty (30) day lease period. 15. Paul Bahmiller, a unit owner within the Association testified that he had rented his unit for less than 30 day periods for many years since he bought the unit in 2002. However, he testified that he stopped doing so upon receiving a demand letter from the Association s attorney in 2012. 5
16. Petitioner admitted that, in 2009, a representative of the Association s management company informed him that a policy prohibiting rentals of less than 30 days was in place. 17. The Association sent Petitioner a warning letter dated June 29, 2009, in which it informed him that no leases less than 30 days were allowed. 18. By letter dated January 11, 2013, the Association s counsel advised Petitioner s counsel that the Association would take action against Petitioner if he did not abide by the Association s rental policy. 19. By letter dated June 25, 2013, the Association s management company reminded Petitioner that leases less than 30 days did not comply with the Association s governing documents. 20. By letter dated September 20, 2013, the Association s counsel again advised Petitioner s counsel that the Association would take action against Petitioner if he did not abide by the Association s rental policy. 21. The Association has not amended its Declaration or its Rules and Regulations to allow units to be leased for less than 30 days. 22. By Order of the undersigned, this dispute has previously been referred to mediation. The mediation did not result in a settlement of the dispute. Thereafter, the parties agreed to return to binding arbitration. 6
Conclusions of Law The undersigned has jurisdiction of the parties and this dispute pursuant to Section 718.1255, Florida Statutes. The Association is a condominium pursuant to Section 718.103, Florida Statutes. The primary issue in this case is whether Petitioner has the right to rent his unit for less than 30 days, provided that it is not rented again within the same 30-day period. Before analyzing this issue, it is important to note that the arbitrator concludes that Section 12.5 of the Association s Declaration, which provides, No lease shall be for a period of time less than thirty (30) days. is clear and unambiguous. As this language is not ambiguous, it is not subject to interpretation by the arbitrator. See Constellation Condominium Association, Inc. v. Harrington, 467 So. 2d 378, 381 (Fla. 2d DCA 1985). The plain meaning of the words in Section 12.5 prohibit leases for less than 30 days. Furthermore, as the 30-day minimum lease requirement is part of the recorded Declaration, it is, [C]lothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed. Such restrictions are very much in the nature of covenants running with the land and they will not be invalidated absent a showing that they are wholly arbitrary in their application, in violation of public policy, or that they abrogate some fundamental constitutional right. Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637, 639-40 (Fla. 4th DCA 1981). Accordingly, the arbitrator finds that the 30-day minimum lease requirement in Section 12.5 is not wholly arbitrary in its application, is not in violation of public policy, and does not abrogate some fundamental constitutional right. Thus, the arbitrator concludes that 7
unit owners within the Association are precluded from leasing their units for less than 30 days, regardless of whether they do not lease their unit again within the 30-day period. Therefore, the question becomes whether Petitioner is entitled to be exempted from the 30-day minimum lease requirement. The legal theories advanced by Petitioner in order avoid the application of the 30-day minimum lease requirement are estoppel, waiver and selective enforcement. In order to establish estoppel, Petitioner must demonstrate a representation as to a material fact, reasonable reliance on that representation, and a change in position to the detriment of the party claiming reliance on that representation. Enegren v. Marathon Country Club Condominium West Ass'n, Inc., 525 So. 2d 488, 489 (Fla. 3d DCA 1988). In the case at bar, Petitioner claims that he relied upon the 2004 member directory which stated that it was permissible to rent his unit for less than 30 days, provided that it was not rented again within the same 30-day period. Furthermore, Petitioner testified that he relied upon a member of the Association s board of directors, who told him that it was permissible to rent his unit for less than 30 days. As to both of these items, the arbitrator finds that Petitioner could not have reasonably relied on such statements given the clear and unambiguous language in Section 12.5 of the Association s Declaration precluding leases of less than 30 days. Furthermore, Petitioner signed a statement to the Association acknowledging that, as a prospective purchaser, he had received and acquainted himself with the Association s Declaration of Condominium and he agreed to abide by the Association s Declaration of Condominium. Therefore, Petitioner s claim of reliance fails because no reasonable reliance can take place when recorded documents are presented and Petitioner agreed to 8
abide by them. Thus, Petitioner cannot avoid the application of the 30-day minimum lease requirement based on estoppel. Waiver is the intentional or voluntary relinquishment of a known right, or conduct which implies the relinquishment of such a known right. Mizell v. Deal, 654 So. 2d 659, 662 (Fla. 5 th DCA 1995) In order to establish waiver, Petitioner must demonstrate: (1) the existence at the time of the waiver of a right, privilege, advantage, or benefit which may be waived; (2) the actual or constructive knowledge of the right; and (3) the intention to relinquish the right. Id. Furthermore, in the context of restrictive covenants, there must be a long-continued waiver or acquiescence in the violation of a restrictive covenant and conscious acquiescence in persistent, obvious and widespread violations for waiver or abandonment to occur. Siering v. Bronson, 564 So. 2d 247, 248 (Fla. 5th DCA 1990). In the case under consideration, Petitioner claims that the Association waived its right to enforce a minimum 30-day lease by publishing the member directories in 2001, 2002 and 2004 which stated that it was permissible to rent a unit for less than 30 days, provided that it was not rented again within the 30-day period. As to waiver, the arbitrator finds that Petitioner has failed to prove all three required elements. First, nowhere in the Association s documents is the board, or even a single director, given the authority to waive the 30-day minimum lease, which is a part of the covenant running with the land. Therefore, Petitioner did not establish the first element of waiver because the 30-day minimum lease was not subject to being waived. Second, Petitioner failed to prove that the Association knowingly permitted him to lease for less than 30 days. The Association s witnesses all testified that they were at first unaware that Petitioner was leasing his unit for less than 30-day periods, and then when 9
the Association became aware of this, it began sending violation and warning letters to Petitioner. Therefore, Petitioner did not establish the second element of waiver, knowledge. Finally, Petitioner failed to produce any lease application, which would have been required by the governing documents, demonstrating that the Association approved of a lease for less than 30 days. Thus, Petitioner did not establish the third element of waiver, intention to relinquish. Accordingly, Petitioner cannot avoid the application of the 30-day minimum lease requirement based on the doctrine of waiver. However, even if Petitioner had demonstrated that the Association had in the past waived the 30-day minimum lease, the undersigned finds that the Association properly revived the 30-day minimum lease. The Association s president sent the July 2, 2009 correspondence to all unit owners within the Association, including Petitioner. The correspondence informed the owners, There is no provision allowing leases to be less than 30 days. So, the practice of leasing for a week or two and not leasing your unit again within the same 30 day period is not permissible under our governing documents. The correspondence also warned unit owners that any noncompliant owner would be notified and asked to comply, and that the failure to comply would merit further action. Furthermore, the owners were notified at the December 14, 2012 board meeting that the Association would enforce the 30-day minimum lease. Finally, the evidence established that the Association took action against Petitioner and at least one other person, Mr. Bahmiller, upon notice of the violation of the 30-day minimum lease. Thus, the undersigned concludes that the Association properly adopted and implemented a uniform policy requiring a 30-day minimum lease and the owners, including Petitioner, were placed on specific notice that any subsequent violation would not be permitted. These 10
actions were sufficient to reinstitute the 30-day minimum lease, even assuming the Association had abandoned it at some point in the past. See Chattel Shipping and Investment, Inc. v. Brickell Place Condominium Association, Inc., 481 So. 2d 29 (Fla. 3 rd DCA 1986). As to selective enforcement, Rule 61B-45.019(3), Florida Administrative Code, provides, in pertinent part, The defense of selective enforcement shall contain all examples of selective enforcement upon which the respondent depends, shall indicate the unit(s) to which each example pertains, shall identify the unit owner(s), how long the violation has existed, and shall indicate whether the board knew of the existence of the violation(s) Selective enforcement is not a cause of action, it is a defense. In other words, selective enforcement is a shield, not a sword. See Platero v. Lighthouse Village Condominium Association, Inc., Arb. Case No. 97-0160, Summary Final Order (May 1, 1997). Therefore, selective enforcement cannot be used as an offensive weapon, as Petitioner is attempting to do in the instant case. However, while selective enforcement cannot be used as a cause of action, the arbitrator can consider the equitable considerations implicit in the defense in fashioning a relief. Id. For example, the arbitrator could use these equitable considerations to preclude the Association from acting in an arbitrary and capricious manner. See The Palm Club Association, Inc. v. Callahan, Arb. Case No. 98-3994, Summary Final Order (January 19, 1999)(Selective enforcement based on the premise of discriminatory treatment and/or arbitrary and capricious enforcement of a rule or regulation). However, in the case at bar, the arbitrator concludes that the Association did not act in an arbitrary and capricious manner in choosing to uniformly enforce the 30-day 11
minimum lease. The provision is in its Declaration and its language is clear and unambiguous. The Association has a duty to enforce its governing documents. Furthermore, the evidence did not show that the Association had knowledge that other specifically-identified unit owners were breaking the 30-day minimum lease rule, much less how long the Association knew the violation(s) existed. Finally, the only witness other than Petitioner who testified that he had leased his unit for less than 30 days, Mr. Bahmiller, stated that he stopped doing so upon receiving a demand letter from the Association s attorney in 2012. Thus, there was at least one other unit owner against whom the Association enforced the 30-day minimum lease, and Petitioner failed to credibly demonstrate that there were other unit owners leasing for less than 30 days that the Association was ignoring. Accordingly, Petitioner cannot avoid the application of the 30-day minimum lease requirement based selective enforcement. As all of the bases upon which Petitioner seeks to avoid the application of the 30- day minimum lease requirement have been rejected by the arbitrator, Petitioner s requests for relief must be denied. Petitioner must lease his unit for no less than 30 days. Based upon the foregoing, it is ORDERED: Petitioner s requests for relief are DENIED. DONE AND ORDERED this 22 nd day of January, 2015, at Tallahassee, Leon County, Florida. David R. Slaton, Arbitrator Department of Business and Professional Regulation Arbitration Section 1940 North Monroe Street Tallahassee, Florida 32399-1029 Tel. (850) 414-6867/Fax (850) 487-0870 12
Attorney s Fees 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, Florida Administrative Code. 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 22 nd day of January, 2015: Alexander Scott Dennison, Esq. Florida Defense Law, P.A. 1227 Second Street Sarasota, FL 34236 Attorney for Petitioner Richard A. Zacur, Esq. Zacur, Graham & Costis, P.A. 5200 Central Avenue PO Box 14409 St. Petersburg, FL 33733 Attorney for Respondent David R. Slaton, Arbitrator 13