CAN UNIT OWNERS AVOID PAYMENT OF MAINTENANCE OBLIGATIONS?

Community Association Legal Update  Can Unit Owners Avoid Payment of Maintenance Obligations?    By: Andrew Cuevas, Esq. E-mail: acuevas@cuevaslaw.com Tel:      (305) 461 9500 Fax:     (305) 448 7300 Cuevas, Ortiz & Cubas, P.A. 7480 SW 40th Street, Suite 600 Miami,FL 33155 In our efforts to prosecute association foreclosure cases, we have seen many different defenses and counter claims presented by unit owners in an effort to justify their failure to meet their obligations to pay monthly maintenance.  We have seen claims that repairs to their units have not been conducted, landscaping is not presentable, the Association is not properly insured, counter claims for breach of fiduciary duty due to mishandling of funds, and many other creative defenses and counter claims.  Unfortunately from time to time judges will either agree with unit owners and not grant the Association’s Motion for Summary Judgment on the issue or otherwise utilize their discretion to give unit owners more time to meet their obligations. A recent decision of the Third District Court of Appeal clarified this issue and clearly came down on the side of the Association’s arguments.  In Coral Way Condominium Investments, Inc. vs. 21/22 Condominium Association, Inc., 36 Fla. L. Weekly D 1677 (Fla. 3rd DCA, August 3, 2011), the question posed to the Court of Appeals was whether the owner of six commercial condominium units was justified in not paying association dues.  A Special Assessment was passed by the Association in the amount of $348,703.75 to pay for flood damage repairs and cleaning of the air conditioning system’s condenser coil.  The Condominium had suffered flood damage when a pipe burst in the building’s air conditioning system caused by sediment build-up in the air conditioning system’s lines.  The Unit Owner disputed the need and validity of the Special Assessment and demanded that the Association provide proof of the need for such an extensive assessment.  The Unit Owner’s review of Association records allegedly revealed that the Association had paid, as a common expense and as a charge to all unit owners, expenses that were not common expenses, including payments for maintenance expenses that did not concern common elements and improper payment of legal fees that were not incurred by the Association.  Additionally, the Unit Owner claims that the records revealed that the Association had received a lump sum payment in connection with a rooftop lease that had not been accounted for.  The Association demanded payment of the Unit Owner’s portion of the Special Assessment, plus interest, attorneys’ fees and costs and provided Unit Owner with notice that it would record separate claims of lien against each ofCoral Way’s respective units. The Unit Owner refused to pay the special assessment and the claims of lien were subsequently recorded, and thereafter the Association foreclosure action was filed.  The Unit Owner claimed that: (1) the validity of the special assessment was at issue; and (2) that the Board breached its fiduciary duty with regard to usage of Association funds.  The Court ruled that there was no genuine issue of material fact existing as to the validity of the special assessment, and that the Association has the power to make and collect assessments for common expenses. See §§718.111(4), 718.115(2).  The common expenses of an association include expenses incurred in the operation, maintenance, repair or replacement of the common elements, and any other expense designated as a common expense by the association’s declaration or bylaws. §718.115(1).  The common elements of a condominium include condominium property which is not included within the units. § 718.108(1)(a).  Furthermore, the process of passing the assessment was correct. The Unit Owner contended that the special assessment would not have been necessary were it not for the Association’s alleged breach of fiduciary duty, which the Unit Owner argues depleted the Association’s funds. The Court ruled that avoidance of the payment of a valid assessment, however, is not a remedy available to unit owners to cure unauthorized acts by officers or directors of an association.  The Court further stated that “if the officers or directors of an association act in an unauthorized manner, the unit owners should seek a remedy through elections or, if factually supported, in an action for breach of fiduciary duty.”  A unit owner’s duty to pay assessments is conditional solely on whether the unit owner holds title to a condominium unit and whether the assessment conforms to the declaration of condominium and bylaws of the association, which are authorized by chapter 718, Florida Statutes. The Court concluded that the foreclosure claim and breach of fiduciary duty counter claim were properly severed, as the facts giving rise to each claim are not inextricably interwoven, and that the Association could proceed with its foreclosure action.  Mr. Andrew Cuevas, Esq., is the President of Cuevas, Ortiz & Cubas, P.A., and oversees its Community Association Division of the firm.  If you have any questions regarding this article or any other questions, you can contact Mr. Cuevas at (305) 461-9500 or at acuevas@cuevaslaw.com. The Law Office of Cuevas, Ortiz & Cubas, P.A. is providing this newsletter as a brief summary of certain aspects of community association law.  The information provided herein is for informational purposes only and should not be construed as legal advice.  The publication of this news letter does not create any attorney-client relationship between the reader and Cuevas, Ortiz & Cubas, P.A..  The hiring of an attorney is a decision that should not be based solely on advertisements or this newsletter.  Before you decide, ask us to send you free written information about our qualifications and experience.

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