NEW ARBITRATION RULING SENDS SHOCKWAVES TO ALL COMMUNITY ASSOCIATIONS REGARDING ELECTIONS

In 2011, I argued a case in front of The Supreme Court of Florida called Cohn v. The Grand Condominium.  Here’s a quick summary of the facts:

The Grand is a large condo building built in 1986 in Dade County.  The declaration of condominium was recorded in 1986.  It contains 1,200 units.  800 of the units are residential.  400 of the units are commercial.  Some of you may know this very large condominium.  The residential units are shared with hotel units and many stores for shopping.

Despite the fact that the residential units outnumber the commercial units, 800 to 400, the bylaws of The Grand allow the commercial unit owners to elect a majority of the Board of Directors.  Sounds unfair? Well, The Florida Legislature thought this was unfair too.  So, 19 years later, in 2005 The Florida Legislature passed a law that said despite what the governing documents say, if in a condominium, the residential units outnumber the commercial units, the residential unit owners get to elect a majority of the Board of Directors.

The commercial unit owners appealed and The Florida Supreme Court said that since this new law impaired the contractual voting rights of the commercial unit owners, it could only apply at The Grand if the declaration contained Kaufman  language or language which put the parties on notice that future changes to Florida Statute 718 (The Florida Condominium Act) would automatically apply at The Grand.  Unfortunately for the residential unit owners, the declaration for The Grand Condominium only adopted The Florida Condominium Act when the Declaration of Condominium was filed in 1986.  There was no “and as amended from time to time” language.  Therefore, the court held that as applied to The Grand Condominium, this statute would be unconstitutional there.

Now fast forward to 2024 and we have the case of Maureen Short v. Windhover Condominium 2024-00-4504.  In this case, the association argued that pursuant to Florida Statute 718.112 (2)(d)4.a   in order for a condominium election to be valid, only 20 % of the eligible voters must participate.   Windhover is a 132 unit condominium.  20% equals 26. However a “quorum” of owners would be 68. 

The arbitrator ruled that because there was no “as amended from time” language in the original bylaws, and that voting rights are “substantive rights” the subsequent 20% law does not come into play and we need to look at the statutes that existed when the condominium was built in 1963!  The statutes that existed in 1963 said the election gets decided by the terms of the bylaws.  The bylaws required a quorum at the annual meetings in order to have an election, meaning persons entitled to cast a majority of the votes or 68!

This is a major decision.  Unless overruled by a court decision, condo attorneys now have extra work on their hands when administering the annual meeting.  It is imperative to know when the condominium was built and if the association has “as amended from time to time” language in their governing docs.  If there is, the 20% rule would apply.  It’s easy.  If there is not, a determination needs to be made if the condo dec was recorded before the 20% rule came into effect in 1992.  If it was, a determination needs to be made as to what the statutory law was regarding elections at the time the condo was created.  It probably defers to the bylaws.  A determination must then be made as to what the bylaws say as to how directors get elected and that is what needs to be applied.  

Before you run your next election, especially if you do not intend to use legal counsel at the election, you better get legal advice as to what statute applies in governing your annual meeting and what your bylaws say.  Failure to do so can require you to do the election all over again and cost the association additional costs and attorney’s fees, especially if you wind up in arbitration for doing the election incorrectly.  

Leave a reply

Your email address will not be published. Required fields are marked *