Tropicana Condominium Assoc. v. Tropical Condominium, LLC

Third District Court of Appeal
State of Florida

Opinion filed November 16, 2016.
Not final until disposition of timely filed motion for rehearing.

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No. 3D15-2583
Lower Tribunal No. 15-389
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The Tropicana Condominium Association, Inc.,
Appellant,

vs.

Tropical Condominium, LLC, etc., et al.,
Appellees.

An Appeal from the Circuit Court for Miami-Dade County, Rosa I.
Rodriguez, Judge.

Heller Waldman, P.L., and Glen H. Waldman and Jason Gordon, for
appellant.

Shubin & Bass, P.A., and John K. Shubin, Juan J. Farach and Katherine R.
Maxwell, for appellees.

Before SUAREZ, C.J., and FERNANDEZ and SCALES, JJ.

SCALES, J.
 Appellant, the defendant below, The Tropicana Condominium Association,

Inc. (the “Association”) appeals an order of the Miami-Dade County Circuit Court

granting summary judgment to Appellee, the plaintiff below, Tropical

Condominium, LLC (“Tropical”). We affirm in part and reverse in part.

I. Facts

The 2007 Florida Legislature amended section 718.117 of the Condominium

Act to facilitate the termination of condominiums. In particular, the amendment

provided that a condominium could be terminated upon an approval vote of eighty

percent of unit owners, so long as not more than ten percent of the unit owners

opposed the termination. § 718.117(3), Fla. Stat. (2013). This amendment also

provided that “[t]his section applies to all condominiums in this state in existence

on or after July 1, 2007.” § 718.117(1), Fla. Stat. (2013).

For economic benefits to accrue to its unit owners, the Association sought to

take advantage of amended section 718.117 and to terminate the condominium

status of the forty-eight unit Tropicana Condominium, located in Sunny Isles

Beach, Florida. This condominium, established in 1983, was governed by a

Declaration of Condominium that lacked “Kaufman”1 language, meaning that,

when referencing Florida’s Condominium Act, the Declaration did not contain the

words “as amended from time to time.” Absent this language in a Declaration, any

1 Kaufman v. Shere, 347 So. 2d 627 (Fla. 3d DCA 1977).

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changes made by the Legislature to the Condominium Act subsequent to the

effective date of the Declaration do not become a part of the Declaration

automatically.

In 2012, the Association’s board submitted to the unit owners a series of

amendments to the Declaration. Among these amendments was one that responded

inadequately to the 2007 amendment to section 718.117: it reduced from one

hundred percent to sixty-five percent the vote required to consent to a termination

of condominium. A second attempt occurred in March of 2013, which changed the

consent threshold to eighty percent of unit owners, a percentage that aligned with

section 718.117(3). Neither these first nor second Declaration amendments

included the condition set forth in section 718.117(3), allowing for an eighty

percent approval of unit owners so long as not more than ten percent did not object

to termination.

A majority of Tropicana unit owners approved the Association’s

amendments. Section 14.5 of the Declaration, however, requires the unanimous

approval of unit owners to alter the Declaration’s termination provision.2 The

2 Section 14.5 of the Declaration provides: “This §14 cannot be amended without
the consent of all Unit Owners and of all record owners of institutional Mortgages
upon the Units.” The termination provision is in section 14.1 of the Declaration,
which provides: “The Condominium may be terminated at any time by the written
consent of all of the Owners of Units in the Condominium and all Institutional
Mortgages holding Mortgages on Condominium Parcels.” The record reflects that
the Association did not obtain approvals of mortgage holders of units.

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Association had not pursued a simultaneous amendment of section 14.5’s

requirement of a unanimous vote.

The Association submitted additional amendments to the unit owners during

this 2012-13 time period.3 Among those was a restriction on unit ownership that

limited unit owners from obtaining any kind of real estate interest in more than two

units in the Tropicana Condominium. A majority of unit owners also voted to

approve this amendment.

Tropical is composed of five unit owners who appear to oppose

condominium termination (and who represent more than ten percent of unit owners

who may object and halt a termination effort). The Association alleges that the

Tropical owners are associated with the developer of an adjacent condominium

tower, who does not favor a re-development of the Tropicana Condominium. In

January of 2015, Tropical filed a complaint for declaratory relief, seeking a

declaration that the Association’s amendments are invalid because: (1) the

amendments relating to condominium termination were not approved by the

required unanimous vote; and (2) the prohibition on having an ownership interest

in more than two units represented an unreasonable restraint on alienation.

3 The Association submitted and a majority of voters approved an amendment to
the Declaration’s right of first refusal provision. The trial court found this
amendment to be void. On appeal, the Association concedes its invalidity, and so
we do not address it here.

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 On August 31, 2015, the trial court granted summary judgment on all counts

in favor of Tropical. After first finding that the Association failed to comply with

its own Declaration’s requirement of unanimous consent of unit owners in order to

terminate condominium status, the trial court then found that the Legislature’s

2007 amendments to section 718.117 could not be retroactively applied without

causing a constitutional impairment of contract. The trial court also determined

that the Association’s attempt to prevent a unit owner from having an ownership

interest in more than two units constituted an unreasonable restraint on alienation.

Accordingly, on September 10, 2015, the trial court entered final judgment on

Tropical’s complaint for declaratory relief. The Association’s appeal ensued.

II. Analysis4

A. The Retroactive Application of Section 718.117

We agree with the trial court that the Association failed to amend its

Declaration properly by accepting amendments that were not approved

unanimously. On appeal, the Association argues that its effort to amend its

Declaration was unnecessary and without import because the Florida Legislature’s

intent was that its 2007 amendment to section 718.117 had retroactive application

to Tropicana, notwithstanding an absence of Kaufman language in its Declaration.

4The trial court’s summary final declaratory judgment is based on pure questions
of law. Therefore, our review of both issues on appeal is de novo. Courvoisier
Courts, LLC v. Courvoisier Courts Condo. Ass’n, Inc., 105 So. 3d 579 (Fla. 3d
DCA 2012).

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The issue on appeal thus becomes whether a retroactive application of the statute

exists to override the procedural defect of the Declaration amendments; and, if so,

whether such retroactive application is constitutional.

Absent Kaufman language, an amendment to the Condominium Act will not

have retroactive application to a condominium’s Declaration if it impairs

contractual obligations. Cohn v. Grand Condo. Ass’n, Inc., 62 So. 3d 1120, 1121-

22 (Fla. 2011) (holding that an amendment to section 718.404(2) of the Florida

Statutes, which altered voting rights for mixed-use condominium boards,

constituted an impairment of contract under Article 1, section 10 of the Florida

Constitution). Tropicana’s Declaration, established in 1983,5 sought to protect unit

owners from any undesired effort to terminate condominium status. As a result, the

condominium unit owners had a vested right in this contractual provision; indeed,

the Declaration bestows this veto right on every unit owner. To what extent will

impairment of this right be tolerated?

The question of tolerating impairment was examined in Pomponio v.

Claridge of Pompano Condo., Inc., 378 So. 2d 774, 780 (Fla. 1979) (“To determine

how much impairment is tolerable, we must weigh the degree to which a party’s

5 It bears noting that, in 1983, the drafters of Tropicana’s Declaration had the
benefit of our 1977 Kaufman decision and could have chosen to qualify the
Declaration to include any subsequent revisions to Florida’s Condominium Act
enacted by the Florida Legislature. The drafters chose not to include such Kaufman
language.

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contract rights are statutorily impaired against both the source of authority under

which the state purports to alter the contractual relationship and the evil which it

seeks to remedy.”). In Pomponio, the Florida Supreme Court adopted a three-prong

balancing test to determine whether a statutory change in the Condominium Act

can be applied retroactively without running afoul of Florida’s Constitution. Id. at

779. The third prong is relevant in this case: “Does the law effect a temporary

alteration of the contractual relationship of those within its coverage, or does it

work a severe, permanent, and immediate change in those relationships irrevocably

and retroactively?” Id.6

The Association argues that the third Pomponio prong is satisfied because

the 2007 amendment to section 718.117 effects only “a temporary alteration of the

contractual relationship.” Id. The Association argues that section 718.117 should

be retroactively applied because it expands the contractual right of condominium

unit owners to terminate their condominiums; and further, the 2007 amendment

increases options and creates a more equitable situation because of the difficulty of

achieving unanimous consent. This argument, however, loses focus on whether the

2007 amendment impairs contractual rights.

6 The other two prongs are: (1) “Was the law enacted to deal with a broad,
generalized economic or social problem?” and (2) “Does the law operate in an area
which was already subject to state regulation at the time the parties’ contractual
obligations were originally undertaken, or does it invade an area never before
subject to regulation by the state?” Pomponio, 378 So. 2d at 779.

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 The trial court correctly determined that, irrespective of Tropical’s motives,

the 2007 amendment, if retroactively applied, would eviscerate the Tropical

owners’ contractually bestowed veto rights. According to Pomponio’s third prong,

the amendment would “work a severe, permanent, and immediate change” in those

unit owners’ safeguards against condominium termination that are built into the

Declaration. Id.

Therefore, we affirm the trial court’s ruling that the retroactive application

of section 718.117 is impermissible, and that the Association’s amendment to

section 14.1 of the Declaration is invalid.

B. The Restraint on Alienation

On October 17, 2012, prior to the individual Tropical owners’ acquisitions

of their five units, the Association amended the Declaration to add a new section

13.107 in order to limit a unit owner from owning more than two Tropicana

Condominium units at any given time. The trial court determined that this

provision constituted an unreasonable restraint on alienation.

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

7 This amendment was approved by a majority of the Tropicana unit owners.
Section 14.5’s requirement of unanimous consent applies only to amendments to
section 14 of the Declaration.

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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 condominium 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.

We disagree with the trial court’s determination that Tropical 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

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caused by a single owner’s financial circumstances, could have a significant,

detrimental financial impact on the Association.8

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.

8 Tropical argues that the two-unit ownership restriction unreasonably restricts
alienability because it would impede a single lender from underwriting mortgage
loans for more than two Tropicana condominium units. The definition of “Unit
Owner” in section 2 of the Declaration provides: “Unit Owner . . . means the
owner of a Condominium Parcel (including the Developer when applicable).”
Despite the broadness of this definition, in light of the Association’s intent in
adding section 13.10 to its Declaration, we conclude that, for the purposes of
section 13.10, a unit owner does not include a foreclosing mortgage holder.

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 For these reasons, we reverse the trial court’s ruling that section 13.10 of the

Declaration unreasonably restrains alienation of Tropicana units and remand to the

trial court for entry of an amended judgment consistent herewith.

III. Conclusion

For the reasons stated above, we affirm the trial court’s invalidation of the

Association’s amendment to section 14.1 of the Declaration. We reverse the trial

court’s ruling that declared the Association’s amendment to section 13.10 of the

Declaration an unreasonable restraint on alienation.

Affirmed in part, reversed in part. Remanded with instructions.

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