The phantom of the condominium.

• Author: Poliakoff, Gary A.
• Position: Florida

Critical to whether a developer must pay assessment for declared but unbuilt units id determining precisely when the existence of a condominium commences.

There are times when the simplest of concepts can be the most difficult to explain or comprehend. Perhaps that is why, in deciding whether a condominium developer was obligated to pay its share of assessments for declared but unbuilt units, Florida's Fourth District Court of Appeal utterly misconstrued the condominium act.(1)

Background

On November 16, 1987, RIS Investment Group, Inc., f/k/a Resort at Indian Springs, Inc. (the "developer"), filed a declaration of condominium for Briarwood at Indian Springs Condominium. The declaration submitted to condominium ownership the entirety of the tract of land, upon which was to be built 40 townhouses of four units each, for a total of 160 condominium units. Although the developer retained the right to build out the condominium in phases,(2) it elected instead to declare the entire parcel to condominium in its initial declaration of condominium, notwithstanding the fact that only a few of the contemplated buildings had been constructed at that time.

The recorded declaration of condominium provided that "the Developer shall be treated the same as any other unit owner for the purpose of payment of its share of the common expenses and assessments relating to those units owned by the Developer from the recording of the declaration as long as said units are owned by the Developer."(3) However, in electing not to pay its share of assessments on declared but unbuilt units, the developer relied instead upon a contradictory note in Briarwood's proposed operating budget indicating that "[the] Developer shall, beginning when a certificate of occupancy is issued for a unit, be responsible for paying the same monthly assessments for that unit as every other unit owner until that unit has been sold" (emphasis added).

As a result of the developer's failure to pay its share of assessments for the declared but unbuilt units, the Florida Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes (the "department") issued a notice to the developer to show cause why the department should not enter a cease and desist order and/or impose civil penalties and/or an order requiring the developer to take certain affirmative action as a result of its violation of the condominium act.(4) Following a hearing, the department issued its final orders, determining that the developer was liable for the assessments from the date the declaration was recorded, November 16, 1987, through the date of the sale of the units.

The developer appealed the department's findings to Florida's Fourth District Court of Appeal. Relying on its prior opinion in Welleby Condominium Association One, Inc., v. The William Lyon Co., 52 So. 2d 35 (Fla. 4th DCA 1987),(5) and on its interpretation of the RIS declaration's intended definition of "unit,"(6) the Fourth District Court of Appeal held that the developer was not obligated to pay its share of the common expenses until the units were built.

Critical to the question of whether a developer is obligated to pay assessments for declared but unbuilt units is a determination of precisely when the existence of a condominium commences. The RIS court, relying heavily on its Welleby analysis, interpreted the condominium act(7) as granting the scrivener of the declaration "the option of describing a condominium unit (that object of any condominium assessment) in any number of different ways. . . ." The court reasoned that, since the scrivener of the Briarwood documents had intended a "unit" to encompass only a "condominium parcel" or an "individual private dwelling," the developer need not pay...