Enter the Twilight Zone: The IconBrickell Case and Mixed-Use Condominiums.

• Date: 01 January 2021
• Author: Schwartz, Martin A.

As Florida has become more citified, mixed-use developments have become much more common. Typically, these buildings consist of a single structure housing a number of different uses. The Four Seasons in downtown Miami has an office component, a hotel component, a gym component, and hotel and residential condominium units. A building with multiple uses renders the building more interesting from a street view and allows the different uses to enhance the operation of the project. Guests of the office portion or the residential portion can spend an overnight requirement at the hotel. A retail operation can serve as an amenity to residential occupancy.

One issue faced by developers of mixed-use projects with integrated elements, e.g., a common lobby area or the building exterior, is assigning responsibility for the maintenance of these integrated or common areas to one of the building components. This issue becomes critical in projects with a national branded hotel, since such hotels require the adherence to "brand standards." This term refers to the look and feel of each hotel bearing the brand name. The branding entity, the hotel company, wants each hotel bearing its name to look and feel similar. Brand standards involve both operational and maintenance requirements. These brand standards are imposed upon the owner of a branded hotel through a management or licensing agreement.

In the simplest case, a mixed-use project containing a hotel and a residential condominium, if a common lobby were maintained by the residential component, the owner of the hotel could not insure that the lobby would meet brand standards and, therefore, would likely be unable to acquire a national brand for the operation or the name of the hotel.

Faced with this problem, developers of mixed-use projects containing a residential condominium have been extracting from the condominium portions of the project that might otherwise be considered common elements.

Initially, the Division of Florida Condominiums, Timeshares and Mobile Homes took the position that such extraction violated the Condominium Act. At least 15 years ago, however, the division changed its position and allowed residential condominiums in mixed-use projects to proceed without all those traditional common elements, typically included in a non-mixed-use residential condominium, it is believed, upon understanding that otherwise they would not be viable.

The Case

With this background in mind, we examine the recent case of IconBrickell Condominium No. Three Association v. New Media Consulting, 2020 WL 5931882 (Fla. 3d DCA 2020). The IconBrickell development consists of three towers, including a W Hotel in Tower Three. The development is governed by a master association and each tower contains a separate condominium. Tower Three, the subject of the litigation, was formed as a condominium in 2009. The condominium consists of 509 units, 501 residential units, seven commercial units, and one "hotel unit." The hotel unit contains the hotel rooms and all of the amenities, plus everything that would otherwise be considered common elements, including the residential lobby, hallways, and elevators.

The plaintiff, New Media Consulting, purchased its unit in Tower Three in 2015. In 2017, there was a serious problem with a community pool, and the owners of units in Tower Three were specially assessed a total of $72,216.01 for pool restoration. Plaintiff brought suit in 2018 claiming that the condominium documents violated the Condominium Act because portions of the building that might otherwise be deemed common elements were included in the hotel unit and characterized as "shared facilities." The sole defendant in the case was the condominium association. The most important party, the owner of the hotel unit, was not made a party in the lawsuit. Plaintiff's claim was for reformation of the declaration of condominium to address this perceived injustice of unlawful expropriation of the common elements of the condominium by the hotel unit.

The association raised five defenses to the plaintiff's reformation action: failure to state a cause of action, statute of limitations, limited duties of the...