Oftentimes, condominium associations amend their documents in an attempt to prevent an owner from owning more than one condominium unit. The question is, can that legally be done?
The case of Tropicana Condominium Ass’n, Inc. v. Tropical Condominium, LLC, 208 So.3d 755, 759 (Fla.App. 3 Dist., 2016) truly lays out many tests that courts must follow.
The court held that The Condominium Act allows a Declaration to establish restrictions on the transfer of units. § 718.104(5), Fla. Stat. (2013). Courts have acknowledged that condominium associations may impose restrictions on unit owners’ ability to transfer their units, either by lease or sale. Woodside Vill. Condo. Ass’n, Inc. v. Jahren, 806 So.2d 452 (Fla.2002); White Egret Condo., Inc. v. Franklin, 379 So.2d 346 (Fla.1979). Due to the uniqueness of condominium living, condominium associations have a degree of control over the ownership of units and, concomitantly, individual owners tolerate a degree of intrusion into their property ownership. Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180 (Fla. 4th DCA 1975). While a restriction on alienation of a conminium might be permissible, it still must be reasonable. Id. at 182; Seagate Condo. Ass’n, Inc. v. Duffy, 330 So.2d 484, 486 (Fla. 4th DCA 1976) (“The test which our courts have adopted and applied with respect to restraints on alienation and use is reasonableness.”). Properly enacted condominium Declaration restrictions are presumed valid, and the challenger of such restrictions has the burden to establish arbitrariness, unreasonableness or violation of law. Woodside Vill. Condo. Ass’n, Inc., 806 So.2d at 457.
The court continued by stating that in terms of the amendment limiting ownership to only two units, the court disagreed with the trial court’s determination that the owner met its burden of establishing that the ownership restriction is unreasonable. The record reflects that the majority of unit owners approved the restriction after a fellow owner, who owned six units in the building, allowed all six units to go into foreclosure. Given the relatively small size of Tropicana—forty-eight units—multiple foreclosures caused by a single owner’s financial circumstances, could have a significant, detrimental financial impact on the Association.
An additional and important consideration in our evaluation of the Association’s limit of not more than two units per owner is whether such a restriction impedes the improvement or marketability of a property. Aquarian Found., Inc. v. Sholom House, Inc., 448 So.2d 1166, 1168 (Fla. 3d DCA 1984) (citing Iglehart v. Phillips, 383 So.2d 610 (Fla.1980)).
Again, given the relatively small size of the Tropicana Condominium, in an area of Sunny Isles Beach that in recent decades has seen abundant development of large condominium buildings, the restriction will have a negligible effect on marketability. Tropicana unit owners are free to sell their units to the public at large (subject to the ordinary condominium association approval process), and are excluded only from selling to a tiny, almost inappreciable class of persons who already own two Tropicana units.
Before you rush to make the amendment, suppose the unit is bought in the name of the other spouse, a different corporation or LLC, a child? That’s when enforcement gets confusing.
By Eric Glazer, Esq.
