A Differing Tale of Two Terminating Condominiums by Rembaum’s Association Roundup
A Differing Tale of Two Terminating Condominiums
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An extremely similar fact pattern leads to diametrically opposed results between Florida’s Fourth District Court of Appeal and Florida’s Third District Court of Appeal.
In the case before the Fourth District Court of Appeal, Fellman v. Mission Viejo Condominium Association, Inc., Case No. 4D22-1260, (Fla. 4th DCA April 6, 2023), 175 of the 176 condominium units were acquired over time by a bulk owner, and the bulk owner sought termination of the condominium. However, Fellman as the single holdout objected to the plan of termination. At trial, the trial court entered a summary judgment in favor of terminating the condominium, which Fellman then appealed to the Fourth District Court of Appeal.
The Mission Viejo Declaration of Condominium was recorded in 1980 and required 100 percent consent of all unit owners as necessary to terminate the condominium form of ownership. Forty-one years later, on February 5, 2021, the bulk owner amended the required vote to terminate the condominium from 100 percent to 80 percent, using the general amendatory provision set out in the Declaration of Condominium, which required only 80 percent consent of the voting interests. Therefore, notwithstanding the original 100 percent requirement necessary to terminate the condominium, only 80 percent of the owners had to vote in favor of lowering the consent needed from 100 percent to 80 percent, which resulted in fully divesting Fellman of the right to object to the termination of the condominium.
Obviously, Fellman did not vote in favor of the amendment. Fellman argued that by allowing 80 percent of the unit owners to amend the otherwise required 100 percent consent of all owners to terminate the condominium, it fully eviscerated his right to object to the termination of the condominium and his voting rights—a right bestowed upon him when he purchased the unit. There are few things more sacrosanct than an owner’s right to vote. Nevertheless, neither the trial court nor the Fourth District Court of Appeal agreed.
While Fellman should have been able to rely on the 100 percent termination approval requirement as originally required in the declaration of condominium, the trial court believed that if the 100 percent requirement was to be protected from being amended with a lower percentage of voting interests, then the provision in the declaration of condominium should have clarified that it could only be amended by nothing less than 100 percent approval of the unit owners. Since it did not, the trial court found no issue with the bulk buyer eviscerating the 100 percent vote needed to terminate the condominium with 80 percent of the voting interests casting their vote in favor of the amendment.
Fast forward eleven months to March 13, 2024, when Florida’s Third District Court of Appeal, in Avila v. Biscayne 21 Condominium, Inc., Case No. 3D23-1616 (Fla. 3d DCA Mar. 13, 2024), noted that the provision in the Biscayne 21 Declaration of Condominium (requiring 100 percent of the voting interests to vote in favor of the termination could NOT be amended using the lower vote threshold needed to amend the declaration of condominium) was likely to prevail. As you will note, this decision diametrically opposes the outcome in the Fellman case. In this case, Avila sought a temporary injunction to stop the plan of termination. The trial court denied it. Avila appealed, and the Third District Court of Appeal agreed with Avila that Avila’s claim stood a substantial likelihood of success on the merits. The declaration of condominium at issue in the Avila case had an additional provision that required “100 percent approval for amendments that alter the voting power of unit owners.” However, it should be axiomatic that to obliterate an owner’s right to vote by terminating the condominium where the declaration had required 100 percent of the owners to vote in favor of termination could not be amended by a termination provision of anything less than 100 percent of the owners.
The Third District Court of Appeal commented that the change to the termination vote threshold materially altered the unit owners’ voting rights. By requiring a unanimous vote for termination, the declaration of condominium originally gave every unit owner an effective “veto” over any termination plan, which would be lost if the amendment adopted by using the general amendatory powers set out in the declaration of condominium were to stand. The Court even cited the Tropicana Condominium Association, Inc. v. Tropical Condominium , LLC, 208 So. 3d 755 (Fla. 3d DCA 2016), finding that nonunanimous amendments to a declaration reducing the vote threshold for termination of condominium could not be applied where the declaration expressly required the unanimous vote to amend the termination provision, and the amendment, if retroactively applied, would eviscerate the unit owners’ contractually bestowed veto rights.
In fact, Fellman also argued the Tropicana case to the trial court, which rejected the argument; and to add insult to injury, such decision was affirmed by the Fourth District Court of Appeal. So, in the world of inconsistent decisions, Fellman was denied by the Fourth District Court of Appeal the right to veto the plan of termination and is in process of potentially losing his unit, while the Avila court found his right to veto the plan of termination seemingly protected by the Third District Court of Appeal as evidenced by issuance of the temporary injunction in his favor. Unfortunately, even once the Avila case reaches a final judgment, and if in Avila’s case that decision is appealed and upheld by the Florida Supreme Court, Fellman still loses his right to veto the plan of termination as initially bestowed upon him and, even more unfortunately, will lose ownership of the unit.
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Many associations are considering whether to adopt online voting (or “E-Voting”). Legislation took effect enacting Section 718.128, back in July 2015. Florida Statutes, permitting condominiums, cooperatives and homeowners’ associations to conduct elections and other owner votes through the use of “an Internet-based online voting system.” This article will discuss how to do so and what the advantages are.
