The Woodside covenants.

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

Once every decade, the Florida courts issue an opinion that profoundly changes the face of condominium law. Such is the case in Woodside Village Condominium Association, Inc. v. Jahren, 806 So. 2d 452 (Fla. 2002). Simply stated, the opinion holds that a condominium's governing documents may be amended to ban or restrict a unit owner's right to lease his or her unit, even where the resident purchased in reliance on the lack of such a restriction. However, the impact of this decision will not be limited to leasing restrictions. Instead, this decision will affect how a community association may properly amend its controlling documents (1) to impose new restrictions, including rental restrictions, on preexisting residents.

Prior to examining the Woodside decision, some unique aspects of condominium and community association law must be noted. First, a condominium is created and is closely regulated by statute. See Florida's "Condominium Act," F.S. Ch. 718, and particularly, [section] 718.102, providing that the purpose of the statute is to give statutory recognition to the condominium form of ownership. Accordingly, the statute controls the day-to-day operations of the condominium association (2) and, except where the statute permits flexibility in drafting the controlling documents, (3) the statute dictates the operation of the community. By way of example, an association, as a general proposition, is only entitled to exercise the remedies specified by statute. (4) A provision in the declaration, articles of incorporation, or bylaws that conflicts with the statute is void. (5) Finally, where a particular grant of authority does not appear in the statute, that power does not exist in the association. (6) Legislative efforts to expand an association's power beyond that prescribed by statute have largely failed. (7)

Of further significance is the courts' recognition that condominium living is unique, impacting the case law in this area. As stated in Seagate Condominium Association, Inc. v. Duffy, 330 So. 2d 484 (Fla. 4th DCA 1976):

Our courts have on several occasions pointed out the uniqueness of the problems of condominium living and the resultant necessity for a greater degree of control over and limitation on the rights of the individual owner than might be tolerated given more traditional forms of property ownership. [citations omitted]. As this court said, in Hidden Harbor Estates, Inc v. Norman at 181-2: "[I]nherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic subsociety of necessity more restrictive as it pertains to use of condominium property than may be existent outside of the condominium organization."

Our Legislature also has expressly recognized the necessity for restrictions upon the use, occupancy and transfer of condominium units. Fla. Stat. [section] 711.08(2) (1973).

The court admonished unit owners in Sterling Village Condominium, Inc. v. Breitenbach, 251 So. 2d 685, 686 (Fla. 4th DCA 1971) as follows:

Every man may justly consider his home his castle and himself as the king thereof; nonetheless his sovereign fiat to use his property as he pleases must yield, at least in degree, where ownership is in common or cooperation with others. The benefits of condominium living and ownership demand no less. The individual ought not be permitted to disrupt the integrity of the common scheme through his desire for change, however laudable that change might be.

Against this backdrop of case law, a brief review of the method prescribed by statute for amending the declaration will highlight the following case discussion. Pursuant to F.S. [section] 718.110(4):

Unless otherwise provided in the declaration as originally recorded, no amendment may change the configuration or size of any unit in any material fashion, materially alter or modify the appurtenances to the unit, or change the proportion or percentage by which the unit owners share the common expenses of the condominium and owns the common surplus of the condominium unless all the record owners of the unit and all record owners of liens on the unit join in the execution of the amendment and unless all the record owners of all other units in the same condominium approve the amendment.

The section of the statute quoted above lists those rights deemed most sacrosanct by the legislature? Unless the contemplated amendment is encompassed within the scope of F.S. [section] 718.110(4) or (8), which addresses the addition of timeshare estates to a condominium, the amendment comes under the general amendatory provisions of the declaration as described by [section] 718.110(1), providing that:

(1)(a) If the declaration fails to provide a method of amendment, the declaration may be amended as to all matters except those described in subsection (4) or subsection (8) if the amendment is approved by the owners of not less than two-thirds of the units. Except as to those matters described in subsection (4) or subsection (8), no declaration recorded after April 1, 1992 shall require that amendments be approved by more than four-fifths of the voting interests.

Consistent with this statutory scheme, courts have uniformly held that changes to those fundamental property interests identified in the statute can only be accomplished with the concurrence of all of the owners. (9) For example, in Theiss v. Island House Association, Inc., 311 So. 2d 142 (Fla. 2d DCA 1975), the court invalidated an amendment to the declaration purporting to change the percentages by which the owners shared in the common expenses without the unanimous consent of the owners. The court stated that in the absence of a statement in the declaration that an owner's parcel could be modified or changed without his consent, the owners "had a right to rely on the fact that their proportionate obligation to share in the common expenses could not be altered unless they agreed to it." (10)

As a final introductory note, prior to the decision of the Second District in Woodside, (11) there was unanimity among the various district courts concerning the application of additional leasing restrictions on existing owners. Different districts had achieved similar results utilizing dissimilar theories. In Holiday Out in America at St. Lucie, Inc. v. Bowes, 285 So. 2d 63 (Fla. 4th DCA 1973), the court held that a provision in a declaration governing a travel trailer resort condominium, which granted the developer the exclusive right to rent condominium units, did not constitute a restraint on alienation because the owners could transfer the fee at any time. Further, since the provision was not unlimited in time, the owners could amend the declaration to delete the provision.

In Kroop v. Caravelle Condominium, Inc., 323 So. 2d 307 (Fla. 3d DCA 1975), the court held that an amendment to a declaration restricting leasing to one time during the ownership period did not violate the condominium statute, did not constitute a restraint on alienation, and was a wholly reasonable regulation on leasing. The court found that as a matter of fact and law, the owner acquires title with knowledge that the declaration might thereafter be amended.

In Seagate, the court ruled that an amendment to a declaration of condominium that eliminated leasing as a regular practice but allowed hardship exemptions was reasonable (12) and did not unduly restrict alienation, even as applied to existing owners. The court noted:

Given the unique problems of condominium living in general and the special problems endemic to a tourist oriented community in South Florida in particular, appellant's avowed objective--to inhibit transiency and to impart a certain degree of continuity of residence and a residential character to their community--is, we believe, a reasonable one, achieved in a not unreasonable manner by means of the restrictive provision in question.

Seagate, 330 So. 2d at 486-87.

Another pre-Woodside case that explored the validity of rental restrictions is Flagler Federal Savings and Loan Association of Miami v. Crestview Towers Condominium Association, Inc., 595 So. 2d 198 (Fla. 3d DCA 1992). In that case, an amendment to the declaration prohibiting leasing was held to...